Polaris reports Q2 2025 financial results amid industry headwinds
Polaris Inc. reported second-quarter 2025 revenue of $1.85 billion, down 6% year-over-year, citing planned shipment reductions, softer industry demand, and elevated promotional spending. Still, the company gained market share in key segments, generated strong free cash flow of $290 million, and touted the early success of several new product introductions.
Net loss for the quarter was $79 million, driven by a $52.6 million goodwill impairment in the On Road segment and a $49.4 million write-down on a strategic investment. On an adjusted basis, earnings came in at $0.40 per share, ahead of Wall Street expectations but down significantly from $1.38 in Q2 2024.
Polaris retail performance remained resilient. Off-road vehicle (ORV) retail grew 1%, outpacing the broader market, while Indian Motorcycle retail was up low double digits — despite a mid-teens decline in the heavyweight motorcycle segment overall. Marine segment revenue jumped 16% on strength from new Bennington pontoons, though margin pressure from product mix and inflation weighed on profitability.
“Despite the top-line decline, we executed well and outperformed in retail,” says Polaris CEO Mike Speetzen during the earnings call. “We gained share in every segment—off-road, on-road, and marine—and generated our highest Q2 operating cash flow in over five years.”
Ranger 500 and Indian Motorcycles
Polaris highlighted the recent launch of the 2025 Ranger 500, a simplified, $9,999 entry-level utility side-by-side designed to attract cost-conscious buyers while delivering strong dealer margins.
“The Ranger 500 hits a sweet spot—value-oriented customers, particularly in rural and utility use cases,” says Speetzen. “We’ve optimized it with a leaner feature set but retained Polaris capability. And with over 30 accessories, it’s an upsell opportunity for our dealers.”
Meanwhile, the Indian Motorcycle brand continues to outperform industry trends. The low double-digit retail growth was driven by strong demand for Scout and Chief models, as well as momentum from the 2025 Indian 101 Scout launched earlier this year.
Tariffs, Cost Controls, and Inventory Management
Tariffs continue to weigh on margins. Gross margin dropped 223 basis points to 19.4%, primarily due to higher promotional spending and $47 million in tariff-related costs.
“Tariffs are still a drag. While some relief came through midyear policy shifts, we’re still looking at $180 to $200 million in gross tariff impact for 2025,” says Speetzen. “We’re aggressively diversifying our supply base, and on track to cut China-sourced components by 35% by year-end.”
Operating expenses increased by 20% to $395 million, primarily due to one-time impairments, as well as higher engineering, R&D, and administrative costs.
Dealer inventory levels are stabilizing, with side-by-side and ATV inventories approaching target ranges.
“We’re seeing healthy, rational inventory levels at retail. That’s allowing us to reaccelerate model-year changeovers and help dealers prepare for Q4 and 2026 launches,” Speetzen adds.
Q&A Highlights:
Q: How is Polaris thinking about future pricing and promotional strategies, especially in Off-Road?
Speetzen: “We’re balancing price discipline with competitive response. Promotions have ticked up, but not irrationally. We’ve been offering surgical — targeted offers and low-rate financing. We’re still pricing for value and margin.”
Q: What gives you confidence in Marine, despite recent industry softness?
CFO Bob Mack: “Bennington’s new 2025 lineup has been a hit. Consumers are opting for premium configurations, and we’re gaining share even in a contracting market. Margins will improve as we optimize product mix.”
Q: Any update on powersports dealer sentiment heading into the back half?
Speetzen: “Dealer engagement remains strong. They’re excited about the new Ranger 500, refreshed Sportsman 570, and what’s coming for Q4. Our field teams are focused on training, accessories, and margin support.”
Q: Will we see more product innovation in the second half?
Speetzen: “Yes. We’re not slowing down. Our model-year 2026 launches are already locked and loaded. Expect new entries in Off-Road and at least one surprise in On Road before year-end.”
Q2 2025 Key Metrics
| Metric | Q2 2025 | Y/Y Change |
|---|---|---|
| Revenue | $1.85B | –6% |
| Adjusted EPS | $0.40 | –71% |
| Free Cash Flow | $290M | +65% |
| Gross Margin | 19.4% | –223 bps |
| Off-Road Sales | $1.41B | –8% |
| On Road Sales | $289M | –1% |
| Marine Sales | $155M | +16% |
Outlook
While the company did not issue full-year earnings guidance due to macro uncertainty, Polaris expects Q3 revenue in the range of $1.6–$1.8 billion, with adjusted EPS potentially negative due to continued tariff headwinds and incentive compensation.
“We’re executing on what we can control — innovating, managing costs, and supporting dealers,” Speetzen says. “We know the environment is choppy, but we’re focused on long-term value creation.”
Polaris reaffirmed its goal of achieving $40 million in lean-related savings by 2025, with over half of the target already realized.
