Coty’s QQ2 2025 report presents a mixed near-term performance with a modest revenue decline and continued margin expansion, underpinned by a disciplined cost structure and cash flow generation. Revenue for the quarter totaled $1.6699 billion, down 3.34% year-over-year and essentially flat versus the prior quarter (-0.10% QoQ). The company delivered EBITDA of $218.9 million and an operating income of $268.2 million, marking EBITDA margin around 13.1% and operating margin near 16.1%. Net income was modest at $23.7 million, with diluted EPS of $0.0233–$0.0234, reflecting an unfavorable mix and higher non-operating costs that constrained profitability despite significant gross margin leverage. Gross margin stood at approximately 66.7%, a substantial improvement versus prior baselines, driven by productivity gains, pricing actions, and favorable mix, with the full-year gross margin targeting an incremental ~100 bps versus fiscal 2023. Management emphasizes resilience and a clear path to outperformance of the beauty market, anchored by five growth drivers (global fragrance expansion, expanding prestige/color skincare, online penetration, and growth in key markets) and a commitment to deleveraging below 3x, funded by ongoing cost savings of $120 million and disciplined capital allocation. The call highlighted near-term Asia/China Travel Retail softness, stronger sell-out in prestige and fragrance during holidays, and a cautious inventory stance by retailers that depresses sell-in relative to sell-out. Management guidance contemplates margin stability and growth re-acceleration in fiscal 2026, aided by two major launches in H1 2026 and distribution expansion across prestige brands, alongside a shift toward non-Asian regions to rebalance growth. Investors should weigh the near-term headwinds in Asia and U.S. consumer beauty against Coty’s strong cash flow, deleveraging trajectory, and the potential for a meaningful lift from upcoming fragrance and prestige launches. Key takeaway: Coty remains in a multi-year turnaround with margin expansion and earnings leverage while navigating a challenging macro backdrop and selective region/channel headwinds.