Revolution Beauty Announces Capital Raise, Strategic Reset: Shares Move Higher

Revolution Beauty shares (LON:REVB) are moving higher today, as the company announced a proposed equity placing and subscription aimed at raising approximately £15 million. The funds will be secured through an accelerated bookbuild of up to 345,132,401 new ordinary shares and a subscription of up to 154,867,599 ordinary shares, both priced at 3.00 pence per share.

The Issue Price represents a discount of approximately 14.16% to the closing mid-market price of 3.50 pence on August 21, 2025. Year-to-date, the stock has declined by 78%. The company is also planning a separate retail offer to raise up to £1.5 million.

Cornerstone Investors, who collectively hold approximately 57.60% of the existing ordinary shares, intend to participate in the placing or subscription. They are expected to invest approximately £8,965,108 through the issuance of 298,836,933 new ordinary shares.

The Placing and Subscription Shares in aggregate represent approximately 156.50% of the existing issued ordinary share capital. This significant dilution could weigh on existing shareholders in the near term.

A strategic reset is also underway, marked by the return of the Founders to the business. 

Financials Come With A Reset

This comes at the same time as FY25 results.

The company's revenue decreased by 25.5% year-on-year to £142.6 million, reflecting the impact of a planned rationalization of its product and brand portfolio.

Gross profit took a substantial hit, falling 38.5% to £54.4 million. This decline pushed the gross margin down to 38.2% from 46.2% the previous year. The primary driver was the planned clearance of non-core inventory, which resulted in losses and provision charges of £8.4 million. Excluding these charges, the gross margin would have been a more palatable 44.0%.

Adjusted EBITDA also suffered, dropping to £4.7 million from £12.6 million. This decrease resulted in a margin of 3.3% of sales, compared to 6.6% in FY24. Lower sales, stemming from the product portfolio adjustments, were the main culprit behind the margin compression. The adjusted loss before tax amounted to £5.5 million, a stark contrast to the £4.3 million profit reported in the prior year.

Despite the revenue and profitability challenges, Revolution Beauty made strides in cost control. Operating costs decreased to £58.1 million from £75.8 million, reflecting the ongoing impact of cost-saving programs. Net debt remained relatively stable at £26.2 million, even after adjusting for cash costs of £2.1 million.

The company reported a statutory loss before tax of £16.8 million, a significant swing from the £11.4 million profit in FY24. Diluted loss per share was (5.4) pence, compared to earnings per share of 3.2 pence in the previous year. Cash and cash equivalents decreased to £5.7 million from £8.6 million.

The capital raise and strategic reset introduce both opportunity and risk. The discounted share price may attract some investors, while the significant dilution could deter others. The success of the retail offer and the effectiveness of the Founders' return will be key factors to watch.