Genie Energy Q2 Earnings Decline Y/Y Amid Squeezed Margins

Shares of Genie Energy Ltd. GNE have declined 18.3% since reporting results for the second quarter of 2025, lagging the S&P 500 index’s 0.4% rise in the same period. Over the past month, the stock has fallen 26.1% against the S&P 500’s 3.7% advance. This contrasting trend highlights strong initial investor enthusiasm following the results, tempered by a subsequent pullback amid broader market strength.Earnings & Revenue EstimatesGenie Energy’s second-quarter 2025 revenues rose 16% year over year to $105.3 million from $90.7 million, driven by growth in both its retail energy and renewables segments. Despite the top-line improvement, profitability contracted sharply as gross profit dropped 29.6% to $23.5 million and the gross margin fell to 22.3% from 36.8%.Income from operations fell 81% to $2 million, while net income attributable to common stockholders declined 70.6% to $2.8 million, or 11 cents per diluted share, from 36 cents a year earlier. Adjusted EBITDA slid 74.9% to $3 million. Management cited increased wholesale power and gas costs, particularly in the PJM and MISO regions during an unseasonably hot early summer, as the primary factor behind the margin compression.Genie Energy Ltd. Price, Consensus and EPS Surprise  Genie Energy Ltd. price-consensus-eps-surprise-chart | Genie Energy Ltd. QuoteOther Key Business MetricsWithin Genie Retail Energy (“GRE”), revenues rose 14.2% year over year to $99 million, reflecting customer base expansion and higher consumption. GRE ended the quarter serving approximately 419,000 meters, up 14.8% year over year, and 414,000 residential customer equivalents (RCEs), up 20.5%. Electricity RCEs grew 25.3%, whereas natural gas RCEs rose 4.1%. Gross meter additions climbed 32.1%, and churn held relatively stable at 4.8%. Segment income from operations fell 72.7% to $4 million, and adjusted EBITDA plummeted 70.5% to $4.4 million, both reflecting the hit from commodity price spikes.Genie Renewables (“GREW”) delivered standout growth, with revenues soaring 57.3% to $6.3 million. The Diversegy brokerage and advisory business saw revenues rise 59.5% year over year, contributing the bulk of GREW’s revenues. GREW’s operating loss narrowed to $0.2 million from $1.4 million a year earlier, aided by improved profitability at Diversegy and reduced losses at Genie Solar. Genie Solar’s revenues were more than six times higher than the prior year, and its bottom-line loss fell 90%.Management CommentaryCEO Michael Stein described the quarter as mixed, noting double-digit revenue growth alongside significant margin compression at GRE. He highlighted strong operational progress, particularly in customer growth and renewable energy development. CFO Avi Goldin emphasized the pricing challenges in retail energy due to higher wholesale costs and explained that while GRE’s electricity sales volumes moved up 17%, the cost per kilowatt hour sold increased 20%. Both executives reaffirmed the 2025 adjusted EBITDA guidance of $40-$50 million, assuming a return to normalized retail margins and further growth at GREW.Factors Influencing the Headline NumbersThe main driver of the earnings shortfall was higher commodity costs. Unseasonably hot early-summer weather in key markets elevated electricity and gas procurement expenses, compressing margins despite hedging practices. While the company hedges a large portion of its expected load, management noted that even the unhedged 15-20% exposure can materially affect results in volatile markets. The retail segment’s gross margin fell by 1,567 basis points year over year, underscoring the scale of the impact.On the positive side, the GREW segment benefited from robust demand for energy brokerage services and stronger performance from operating solar arrays. However, recent U.S. legislation — the One Big Beautiful Bill — is expected to accelerate the phase-out of federal solar investment tax credits, prompting Genie Energy to reevaluate and pause early-stage solar projects.GuidanceFor 2025, Genie Energy reaffirmed its expectation of generating $40-$50 million in consolidated adjusted EBITDA. Management’s outlook assumes normalized retail margins and sustained growth at GREW, with contributions from Diversegy and Genie Solar. They expressed confidence that wholesale market conditions are stabilizing, which should support margin recovery in the second half of the year.Other DevelopmentsIn the quarter, Genie repurchased approximately 159,000 shares of its Class B common stock for $2.7 million and paid out its regular quarterly dividend of 7.5 cents per share, returning a total of $4 million to shareholders for the first six months of 2025.On the development front, the Lansing community solar project is expected to be commissioned in the third quarter of 2025. Genie Solar reduced its project pipeline following the legislative changes affecting tax credits, removing some early-stage projects and pausing additions. Outside of solar, the company has begun leveraging its insurance operations to offer health insurance products to retail customers, acting initially as a broker, with potential plans for expansion into other insurance lines in the future.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Genie Energy Ltd. (GNE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks