Freshpet Q3 2026: Net Sales Up 10% to $317.8M, Outlook Raised

Freshpet, Inc. (Nasdaq: FRPT) reported third-quarter 2026 net sales of $317.8 million on 4 November 2026, a 10.0% increase from $288.8 million a year earlier, according to the company's quarterly results release. Gross margin reached 44.5%, up from 39.5%, while Adjusted Gross Margin hit 50.0% against 46.0% in the prior-year period. Adjusted EBITDA rose to $64.5 million, or 20.3% of net sales, from $54.6 million, or 18.9%. The company raised and narrowed its full-year 2026 net sales growth guidance to 12% to 13%.

Context — why Freshpet's raised guidance matters now

Freshpet's prior full-year 2026 guidance called for net sales growth of 10% to 12%. The company now expects 12% to 13%, a raise that arrives while its third-quarter net sales growth of 10.0% sits below the new full-year floor. That gap implies the company expects acceleration in the fourth quarter, though the report does not state a fourth-quarter growth target.

The comparison to 2025 is complicated by a one-time item. Last year's third quarter included a $77.9 million deferred income tax benefit tied to the release of the majority of the company's valuation allowance. That benefit pushed prior-year net income to $101.7 million. Current-quarter net income of $29.7 million reflects income tax expense instead of a benefit, so the year-over-year net income decline is a tax-accounting artifact, not an operating reversal.

On the operating line, the direction reverses. Income from operations rose to $35.1 million from $24.9 million. Adjusted EBITDA climbed 18.1% year over year. The company said the improvement came from higher Adjusted Gross Profit, partially offset by higher Adjusted SG&A.

Management framed the quarter against a difficult backdrop. CEO Billy Cyr described "a challenging consumer and intense competitive environment" while pointing to double-digit sales growth and what he called the company's strongest Adjusted Gross Margin in more than seven years. The company credited improved use on plant expenses, reduced quality costs and lower input costs for the margin expansion.

Data — what the numbers show

SG&A told the opposite story in the quarter. SG&A rose to $106.2 million, or 33.4% of net sales, from $89.3 million, or 30.9%. Adjusted SG&A was $94.2 million, or 29.6% of net sales, versus $78.2 million, or 27.1%. The company attributed the increase to higher logistics costs and a larger variable compensation accrual, partly offset by lower media spend as a share of sales.

Metric	Q3 2026	Q3 2025
Net sales	$317.8M	$288.8M
Gross margin	44.5%	39.5%
Adjusted Gross Margin	50.0%	46.0%
Adjusted EBITDA	$64.5M	$54.6M
Net income	$29.7M	$101.7M

Through the first nine months of 2026, net sales rose 12.8% to $921.1 million from $816.8 million, driven by volume gains of 13.3% that were partly offset by unfavorable price/mix of 0.5%. Nine-month gross margin was 42.4% versus 39.9%, and Adjusted Gross Margin was 48.5% versus 46.2%.

Net income for the nine months was $97.7 million, down from $105.3 million, again reflecting the prior-year tax benefit. That decline came despite a $66.6 million gain on an equity investment recorded in the 2026 period.

The balance sheet shows cash and cash equivalents of $345.9 million against $399.0 million of debt outstanding, net of $3.5 million of unamortized debt issuance costs. Cash rose $67.9 million from $278.0 million at 31 December 2025, helped by $100.0 million of proceeds from selling an equity investment and $65.3 million of Free Cash Flow, partly offset by $102.3 million of share repurchases. Operating cash flow for the nine months was $145.5 million, up $40.1 million year over year.

Analysis — what it means for markets and sectors

Freshpet sits in the premium end of pet food, a category where volume growth is the scarce commodity. The 13.3% nine-month volume gain, with price/mix slightly negative, tells a specific story: the company is selling more units without leaning on price increases. That is a favorable mix in a consumer environment the CEO called challenging, because it suggests household penetration is still expanding rather than revenue being inflated by price.

The margin line carries the more consequential signal. A 50.0% Adjusted Gross Margin on a 44.5% GAAP gross margin means roughly 5.5 points of the gap is depreciation, non-cash share-based compensation and equipment disposal losses. Freshpet's heavy investment in its own manufacturing kitchens shows up in that depreciation load, and improved plant use is now converting that fixed cost base into margin. The company's 2027 target of at least 49% Adjusted Gross Margin implies management expects some giveback from the current quarter's 50.0% level.

The counter-argument is SG&A. Adjusted SG&A rose 120 basis points as a share of net sales in the quarter, and 200 basis points over nine months. Logistics costs and variable compensation are eating into the gross-margin gain. If gross margin normalizes while SG&A stays elevated, the Adjusted EBITDA margin expansion of 140 basis points in the quarter would compress.

One limitation: the report gives no competitor figures, so Freshpet's market-share claim cannot be sized against a named peer from the disclosure alone. The company said it continued to grow market share without quantifying the gain.

On positioning, the capital-allocation picture is mixed. Freshpet spent $102.3 million on buybacks over nine months while carrying $399.0 million of convertible notes. Free Cash Flow of $65.3 million did not cover the repurchase, with the equity-investment sale filling the gap.

Outlook — what to watch next

The company's full-year 2026 guidance now calls for net sales growth of 12% to 13%, Adjusted EBITDA of $215 million to $220 million, and positive Free Cash Flow with capital expenditures of $125 million to $150 million. The capex range is narrower than the prior ~$150 million figure, which frees cash.

For 2027, Freshpet reiterated net sales growth well in excess of the category growth rate, Adjusted Gross Margin of at least 49%, and an Adjusted EBITDA margin of 20% to 22%. The company does not provide net income guidance, citing the difficulty of estimating certain components without unreasonable effort.

Fourth-quarter net sales growth is the first checkpoint. A figure below 10% would put the raised full-year range under pressure. Adjusted Gross Margin holding near 50% versus the 49% 2027 floor is the second. SG&A as a share of sales, which rose in the quarter, is the third.

Frequently Asked Questions

Why did Freshpet's net income fall in Q3 2026?

Net income fell to $29.7 million from $101.7 million because the prior-year quarter included a $77.9 million deferred income tax benefit from releasing most of the company's valuation allowance. The current quarter recorded income tax expense instead. Operating income actually rose to $35.1 million from $24.9 million, and Adjusted EBITDA increased to $64.5 million from $54.6 million.

What does Freshpet's raised 2026 guidance mean for retail investors?

It means the company now expects faster full-year growth than it did previously. Net sales growth guidance moved to 12% to 13% from 10% to 12%, and Adjusted EBITDA guidance narrowed to $215 million to $220 million. The third quarter's 10.0% growth sits below the new full-year floor, so the fourth quarter carries the difference.

How is Freshpet funding its share repurchases?

Freshpet spent $102.3 million on share repurchases in the first nine months of 2026. Free Cash Flow of $65.3 million did not cover that, so the company also drew on $100.0 million of proceeds from selling an equity investment. Cash and cash equivalents still rose $67.9 million to $345.9 million, while debt outstanding stood at $399.0 million.

Bottom Line

Freshpet's 50% Adjusted Gross Margin and raised 12%-13% sales outlook are offset by SG&A growth that ran ahead of revenue.

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