Traders should monitor gross margin trajectory in Q1 2026, as management expects improvement from 34–36%, with further expansion in H2 2026 due to tariff and FX tailwinds. The paper bags segment and supply chain diversification are key growth drivers to watch.
Price Chart
Executive Summary
Karat Packaging reported strong fourth-quarter and full-year 2025 results, with Q4 revenue up 13.7% to $115.6 million and net income up 22.8% to $7.2 million, despite a gross margin decline to 34.0% from 39.2% due to higher tariffs. The company maintained low double-digit revenue growth guidance for 2026 and expects margin improvement, supported by supply chain adjustments and strong demand in its paper bags segment.
Key Financial Metrics
Key Facts
- Q4 2025 revenue: $115.6M (+13.7% YoY), driven by volume and pricing/product mix
- Q4 gross margin declined to 34.0% from 39.2% YoY due to higher tariffs and duty costs
- Q4 net income: $7.2M (+22.8% YoY), net income margin improved to 6.2% from 5.8%
- Full-year 2025 revenue: $467.7M (+10.7% YoY), net income: $32.7M (+6.0% YoY)
- Adjusted EBITDA margin declined to 11.8% in 2025 from 13.1% in 2024
- Guidance: 2026 revenue growth expected in low double digits; Q1 2026 gross margin expected between 34–36%
- Company repurchased $3.0M in stock during Q4 2025; $12.0M remains in buyback program
Financial Impact
Revenue grew 13.7% YoY in Q4 and 10.7% for full-year 2025, with net income up 22.8% in Q4 and 6.0% for the year. Margins were pressured by $8.4M higher tariff costs, but operating expense discipline helped expand net income margin.
Risk Factors
- Continued exposure to global tariff fluctuations and foreign exchange volatility
- Gross margin remains below prior-year levels despite revenue growth
- Operating cash flow declined to $33.8M in 2025 from $48.0M in 2024, raising potential liquidity concerns
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 1 press release from GlobeNewswire.
| Document | Accession Number |
|---|---|
| PRESS-RELEASE Data (Synthetic) | press-3255096 |
Track record builds as more directional reports settle.
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 22, 2026 4d ago | Press Release | $53.84 | awaiting T+20 | — | $54.35 (+0.95%) |
Aug 19, 2026 9w ago | Press Release | $48.17 $50.38 | ▲ +4.59% | ▲ +6.54% | $54.35 (+12.83%) |
May 6, 2026 24w ago | 8-K | $29.68 $26.62 | ▼ −10.31% | ▼ −13.09% | $54.35 (+83.12%) |
Mar 12, 2026 32w ago | Press Release | $26.92 $29.50 | ▲ +9.58% | ▲ +5.99% | $54.35 (+101.89%) |
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