Rh Q4 FY2025 earnings call

• Strategy focus: Position RH as the arbiter of taste for the home, aiming to scale taste and build an admired brand.
• Product categories: Curate across seven major product categories and integrate across three product styles (traditional, contemporary, modern).
• New brand extension: RH Estates launching spring 2025, featuring RH bespoke furniture, RH Couture upholstery, and collections from talented designers, with launches including RH Milan gallery, dedicated sourcebook mailing, international advertising, and freestanding galleries.
• Multi-dimensional ecosystem: Physical-first global ecosystem going beyond typical multi-channel approach, creating emotional connection, as furniture is least digitized large retail category and stores are inspiring spaces blurring lines between residential and retail, indoors and outdoors, etc.

In 2025, RH achieved revenue growth of 8% and two-year growth of 15%, far outpacing furniture industry peers by 8 to 30 points. Adjusted EBITDA reached $597 million, or 17.3% of revenues versus $539 million or 16.9% of revenues in 2024. Free cash flow of $252 million versus negative free cash flow of $214 million in 2024, an increase of $466 million year over year. The product segments include furniture, upholstery, outdoor, lighting, linens, rugs, and decor, with RH Estates being a new brand extension launching spring 2025, which will address the traditional market where RH is under-penetrated and is expected to be the largest and highest margin brand extension driving growth.

• RH Estates is expected to become the largest and highest margin brand extension, driving significant growth over the next several years.
• Expectations that the physical manifestation of the brand will continue to be more valuable than online, and investments in building unique immersive experiences will accelerate growth.

• Challenges from compounding clutter from tariffs, global discord due to war, and the most dire housing market in decades making it difficult to separate signal from noise.