Where Food Comes From Reports Q4 Loss as Beef Sector Faces Challenges

Where Food Comes From, Inc.: Recent Performance Overview

Following the release of its fourth-quarter 2025 earnings, shares of Where Food Comes From, Inc. (WFCF) have dropped 2.7%. In contrast, the S&P 500 index saw a modest increase of 0.3% during the same period. Over the past month, however, WFCF stock climbed 7.3%, while the S&P 500 slipped by 1%.

Fourth Quarter and Full-Year Financial Results

For the fourth quarter, the company reported revenues of $6 million, down from $6.7 million a year earlier. This period saw a net loss of $0.2 million, or $0.04 per diluted share, compared to a net profit of $1 million, or $0.18 per diluted share, in the previous year’s quarter.

On an annual basis, total revenues for 2025 declined to $24.9 million from $25.7 million in 2024, reflecting weaker performance across major business segments. The verification and certification division, the company’s primary revenue source, generated $20.1 million, a slight decrease from $20.6 million. Product sales also fell to $3.6 million from $3.8 million. Net income for the year was $1.5 million, or $0.30 per diluted share, down from $2.1 million, or $0.40 per diluted share, in the prior year.

Price, Consensus, and EPS Trends

For more details, see the WFCF price-consensus-EPS-surprise chart and the latest stock quote.

Additional Financial Highlights

Gross profit for 2025 was $9.5 million, down from $10.6 million in 2024, due to lower revenues and increased costs. Selling, general, and administrative expenses (SG&A) edged down slightly to $8.3 million from $8.4 million, partially mitigating the decline in gross profit. Cash flow from operations reached $1.6 million, compared to $2.7 million the previous year.

Despite the earnings decline, the company’s liquidity position improved, with cash and cash equivalents rising 59% year-over-year to $3.2 million from $2 million. In 2025, the company repurchased 183,016 shares, bringing the total number of shares bought back since the start of the program to 1,374,652 at a cumulative cost of $15.2 million. During the fourth quarter alone, 66,469 shares were repurchased.

Segment results for the fourth quarter showed verification and certification revenues at $5 million (down from $5.4 million), product sales at $0.7 million (down from $0.9 million), and professional services at $0.3 million (down from $0.4 million). Quarterly gross profit fell to $2.2 million from $2.8 million, while SG&A expenses increased to $2.2 million from $2 million.

Management Insights

Company leadership attributed the year’s results primarily to challenges in the U.S. cattle sector. CEO John Saunders explained that while new customer acquisitions and growth in non-beef revenue streams contributed positively, these gains were offset by reduced beef-related verification activity, largely due to smaller cattle herds and tariffs.

Saunders pointed out that the U.S. cattle population is at its lowest in 70 years, resulting in record-high beef prices and causing some ranchers to cut back on verification spending, which impacted both verification and tag sales.

He also noted that fourth-quarter revenues were negatively affected by the unexpected closure of a packing plant that had been a significant contributor to the company’s NHTC Natural and EU export certification programs. In response, the executive team chose to forgo their discretionary bonuses, which will help reduce SG&A expenses in the first quarter of the following year.

Key Factors Affecting Performance

The main challenge for the company was the shrinking cattle herd, driven by drought and increased production costs—a trend management believes is nearing its cyclical low. While beef-related business softened, the company saw year-over-year growth in verifications for pork, dairy, and egg operations. Certification activity in organic, non-GMO, gluten-free, and upcycled categories also increased. Management highlighted the company’s ability to offer bundled services as a competitive advantage that supports both revenue and margins.

Strategic Initiatives and Outlook

The company introduced RaiseWell Certified, a new standard for animal care and traceability, initially targeting beef and with plans to expand to poultry, eggs, dairy, and pork. Whole Foods Market became the first major retailer to implement the RaiseWell program, which management believes will encourage broader adoption. Additionally, the company continues to play a key role in U.S. CattleTrace, serving as administrator and providing technical support for animal disease traceability.

Looking ahead, management is optimistic about long-term prospects, anticipating that the cattle cycle will stabilize and begin to recover in the coming years. The company intends to continue its share repurchase program in 2026, reflecting confidence in its valuation and future growth.

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