Good Company

Freshpet Grows Sales 10 Percent in Q3 and Raises Its 2026 Outlook as Margins Hit a Seven Year High

Freshpet reported third quarter sales of $317.8 million, up 10 percent on volume alone, with adjusted gross margin at 50 percent, and raised its full year sales growth guidance to 12 to 13 percent.

By Good Company Editorial Desk

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The News

Freshpet reported third quarter 2026 results on November 4, and the headline is growth with much better margins. Net sales rose 10.0 percent to $317.8 million for the quarter ended September 30, 2026, from $288.8 million a year earlier, driven entirely by volume gains of 10.0 percent.

Reuters reported the $317.8 million figure ahead of the IBES estimate of $312 million cited in its brief. The Associated Press earnings snapshot put profit at 58 cents per share.

Profitability moved faster than sales. Gross margin reached 44.5 percent, up from 39.5 percent, and adjusted gross margin reached 50.0 percent, up from 46.0 percent, its strongest in more than seven years, Chief Executive Officer Billy Cyr said.

"Our third quarter results demonstrate the strength and durability of the Freshpet business model," Cyr said in the release. "In a challenging consumer and intense competitive environment, we delivered double-digit net sales growth, expanded margins and achieved our strongest Adjusted Gross Margin in more than seven years, while continuing to grow market share."

Freshpet, based in Bedminster, New Jersey, also raised its 2026 outlook: full year sales growth of 12 to 13 percent, up from 10 to 12 percent, and adjusted EBITDA of $215 million to $220 million, narrowed from $210 million to $220 million.

Why It Matters

The first reason this matters is where the growth came from. Volume did all the work: sales rose 10.0 percent and volume rose 10.0 percent, so Freshpet did not need price increases for a double digit quarter. For the first nine months, volume gained 13.3 percent, partly offset by unfavorable price and mix of 0.5 percent. Shoppers are buying more Freshpet, even if mix is not helping.

The second reason is the margin story. The company said gross margin improved mainly because of better leverage on plant expenses, reduced quality costs and lower input costs. That matters for every fresh maker, because the category carries costs dry food does not: cold chain logistics, refrigerated shelf space and manufacturing scale. Freshpet says its advantages include product quality, manufacturing scale, an expanding omnichannel presence and loyal pet parents. This quarter, the numbers support the scale claim.

The third reason is the cost line underneath. SG&A rose to $106.2 million, or 33.4 percent of sales, from $89.3 million, or 30.9 percent, mainly on higher logistics costs and a variable compensation accrual, partly offset by lower media spend as a share of sales. Operations got more efficient while distribution got more expensive. That tension will decide whether the new margin level holds.

Net income needs context too. It fell to $29.7 million from $101.7 million, but the prior year included a discrete $77.9 million tax benefit. The drop is an accounting comparison, not a collapse in the business: adjusted EBITDA rose to $64.5 million from $54.6 million.

The Numbers

  • Q3 net sales: $317.8 million, up 10.0 percent from $288.8 million a year earlier, driven by volume gains of 10.0 percent
  • Analyst comparison: Reuters cited an IBES estimate of $312 million for Q3 sales; the Associated Press put Q3 profit at 58 cents per share
  • Q3 gross profit: $141.3 million, or 44.5 percent of sales, up from $114.2 million, or 39.5 percent
  • Q3 adjusted gross profit: $158.8 million, or 50.0 percent of sales, up from $132.8 million, or 46.0 percent
  • Q3 net income: $29.7 million, down from $101.7 million a year earlier, which included a $77.9 million deferred tax benefit
  • Q3 adjusted EBITDA: $64.5 million, or 20.3 percent of sales, up from $54.6 million, or 18.9 percent
  • Q3 SG&A: $106.2 million, or 33.4 percent of sales, up from $89.3 million, or 30.9 percent
  • First nine months sales: $921.1 million, up 12.8 percent from $816.8 million, on volume gains of 13.3 percent partly offset by unfavorable price and mix of 0.5 percent
  • First nine months: gross profit of $390.7 million, or 42.4 percent of sales, net income of $97.7 million, and adjusted EBITDA of $154.6 million, up from $134.5 million
  • Balance sheet at September 30: cash of $345.9 million, debt of $399.0 million
  • Cash flow, first nine months: cash from operations of $145.5 million, up $40.1 million; free cash flow of $65.3 million, with $102.3 million of share repurchases
  • 2026 guidance, updated: sales growth of 12 to 13 percent, adjusted EBITDA of $215 million to $220 million, positive free cash flow, capital expenditures of $125 million to $150 million
  • 2027 guidance, reiterated: net sales well in excess of the category growth rate, adjusted gross margin of at least 49 percent, adjusted EBITDA margin of 20 to 22 percent

What It Means For You

If you run a pet food brand, study the volume point first. Freshpet grew 10 percent in a quarter it called a challenging consumer environment, without relying on price. That is a distribution and repeat purchase story. Ask whether your growth plan would still work if you held price flat for a quarter. If not, your problem is trial, availability or repeat, not your price ladder.

If you operate in fresh, raw or refrigerated formats, treat plant leverage and quality costs as growth strategy, not back office detail. Freshpet credited both for its margin jump, and at 50 percent adjusted gross margin it now has more room to fund media, fridges and innovation than a competitor stuck in the low 40s.

If you sell through grocery, mass, club and pet specialty, watch logistics. Freshpet cut media as a share of sales and still grew, but logistics costs rose. Brands and retailers negotiating 2027 plans should price freight and cold storage into the deal up front, rather than discovering that volume growth ate the margin it created.

If you are a retailer, the takeaway is simpler: the fridge is still earning its space. Double digit volume growth in fresh, at premium prices, in a cautious market is a reason to protect refrigerated placement, not trade it away for a slower dry set.

What To Watch

Watch the fourth quarter against the raised bar. Full year growth of 12 to 13 percent, after 12.8 percent in the first nine months, implies another strong finish. A miss would suggest the volume pace is fading; a beat would confirm fresh is still taking share in a sluggish category.

Watch whether adjusted gross margin can hold near 50 percent, and deliver the reiterated 2027 target of at least 49 percent. Input costs, quality costs and plant leverage all helped this quarter. If any one reverses, the margin story changes quickly.

Watch SG&A next. If logistics stays hot, Freshpet will need more plant leverage or more volume to protect its 20 to 22 percent adjusted EBITDA margin target for 2027.

And watch capital discipline. Guidance now puts capital expenditures at $125 million to $150 million, down from about $150 million, with positive free cash flow still promised. Freshpet has moved from building capacity at any cost to proving the capacity pays, and this quarter suggests it is handling that transition well so far.

Sources

  • Freshpet, Inc., "Freshpet, Inc. Reports Third Quarter 2026 Financial Results," Globe Newswire, November 4, 2026: https://www.globenewswire.com/news-release/2026/11/04/3395120/33052/en/freshpet-inc-reports-third-quarter-2026-financial-results.html
  • Reuters via TradingView, "BRIEF: Freshpet Q3 Sales USD 317.8 Million Vs. IBES Estimate USD 312 Million," November 4, 2026: https://www.tradingview.com/news/reuters.com,2026-11-04:newsml_PLXLVD6VV:0-brief-freshpet-q3-sales-usd-317-8-million-vs-ibes-estimate-usd-312-million/
  • Associated Press via Yahoo Finance, summarized by BizToc, "Freshpet: Q3 Earnings Snapshot," November 4, 2026: https://biztoc.com/x/17ef2e880a4d30a7