Mission Produce Q3 Revenue Up 10 Percent

Mission Produce (AVO) reported robust Q3 2025 results, with revenue rising 10% to $357.7 million and gross profit up 22% to $45.1 million, pushing gross margin to 12.6%. This performance was primarily driven by a strong rebound in international farming, notably increased yields in Peru, alongside expanded market penetration in Europe and Asia. Despite a 5% year-over-year decline in per-unit avocado prices, increased sales volume and strategic diversification into blueberries and mangoes contributed to margin expansion and enhanced resilience. Looking ahead, management anticipates higher industry avocado volumes but lower per-pound prices, with capital expenditures expected to moderate after FY2025 as major development projects conclude.

Analysis

Mission Produce (AVO) reported a robust third quarter for 2025, demonstrating significant operational leverage and successful strategic execution. Revenue increased 10% to $357.7 million, driven by a 10% rise in avocado volume sold that more than compensated for a 5% decline in average per-unit prices. The core driver of profitability was the International Farming segment, particularly in Peru, where increased yields from owned farms fueled a 22% year-over-year surge in gross profit to $45.1 million and a 120 basis point expansion in gross margin to 12.6%. This performance highlights the value of the company's owned-asset base in navigating commodity price cycles. Furthermore, the company's global expansion is gaining traction, evidenced by a 37% increase in European sales and a broadening reach in Asia, validating its integrated sourcing and distribution model. The diversification into blueberries is also proving successful, contributing $4.5 million in sales and positive adjusted EBITDA, with acreage set to expand until FY2028. However, management's forward guidance presents a key headwind, with an anticipated 15% increase in industry avocado volume expected to drive per-pound prices down by 20-25%. The plan to moderate capital expenditures after FY2025 suggests a strategic pivot towards maximizing free cash flow as major development projects conclude.

Key Decisions for Investors

• Investors should recognize the Q3 results as confirmation of Mission Produce's operational execution and global strategy, with moderating capital expenditures post-FY2025 poised to significantly enhance free cash flow generation.
• It is crucial to monitor the forecasted 20-25% decline in industry-wide avocado prices, as this presents the most significant near-term headwind to profitability and could offset the company's volume gains and operational efficiencies.
• The successful scaling of the blueberry segment, now contributing positively to EBITDA, should be viewed as a key de-risking factor and a source of margin stability that can partially mitigate future volatility in the core avocado market.