Loading...
01/11 03:19
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presented mixed signals: a 12% YoY increase in net sales and expanded distribution at Walmart are positives, but declining gross margins and unchanged net loss are concerns. The Q&A revealed optimism about future growth and profitability, but management's vague responses on brand awareness and 2026 profitability raise uncertainties. The market may react neutrally due to these offsetting factors.
Net Sales $40.8 million, a 12% increase year-over-year. The increase was primarily due to expanded distribution at Walmart and incremental regional rotations at the club channel.
Gross Margin 45.6%, a 350 basis point decline from 49.1% in the third quarter of last year. The decline was due to $0.8 million in inventory obsolescence associated with the packaging refresh and the full realization of aluminum tariffs.
Selling and Marketing Expenses $12.7 million or 31% of net sales, compared to $12 million or 33% of net sales in the third quarter of 2024. The improvement in selling expenses was due to lower warehousing and freight transfer costs, while marketing expenses increased due to higher investments in brand marketing.
General and Administrative Expenses $7.7 million or 18.8% of net sales, compared to $7.4 million or 20.3% of net sales in the third quarter of 2024. The increase was primarily driven by higher accrued variable compensation expense.
Net Loss $2.8 million, unchanged from the prior year. The unchanged net loss was due to costs associated with inventory losses related to packaging refresh and higher brand marketing spend, offset by strong sales growth and operating efficiencies.
Adjusted EBITDA Loss $1.7 million, compared to $1.5 million in the prior year period. The decrease was due to costs associated with inventory losses related to packaging refresh and higher brand marketing spend, partially offset by strong sales growth and operating efficiencies.
Cash and Cash Equivalents Approximately $26 million at the end of the quarter, with an undrawn revolving credit line of $20 million.
New Product Launches: Zevia introduced several new flavors, including Strawberry Lemon Burst, Orange Creamsicle, and a fruity variety pack. Peaches & Cream became the fastest-selling new item on Amazon, and Strawberries & Cream was a top velocity driver at Kroger. The fruity variety pack is now the #1 Zevia SKU at Walmart.
Packaging Refresh: The company rolled out refreshed packaging featuring 'Soda Made Better,' highlighting zero sugar, no artificial colors, and no artificial sweeteners. This redesign increased purchase intent and will extend to legacy flavors in early 2026.
Distribution Expansion: Zevia expanded its distribution at Walmart, including a rollout to over half of Walmart's Canadian stores. Gains were also made in grocery and club channels, with increased sales velocity driving additional regional rotations.
Operational Efficiencies: Productivity initiatives reduced warehousing and freight transfer costs, contributing to improved selling expenses. Marketing investments increased, focusing on brand-building and consumer engagement.
Strategic Growth Pillars: The company focused on high-impact brand marketing, accelerated product innovation, and expanded distribution. These efforts aim to reshape the business and capitalize on changing consumer preferences for healthier products.
Gross Margin Decline: Gross margin declined by 350 basis points from 49.1% to 45.6% due to $0.8 million in inventory obsolescence associated with the packaging refresh and the full realization of aluminum tariffs.
Inventory Obsolescence: The company faced $0.8 million in inventory losses related to the packaging refresh, impacting profitability.
Aluminum Tariffs: The full realization of aluminum tariffs negatively impacted gross margins, adding cost pressures.
Adjusted EBITDA Loss: The adjusted EBITDA loss increased to $1.7 million from $1.5 million in the prior year, driven by inventory losses and higher brand marketing expenses.
Higher Marketing Expenses: Marketing expenses increased to $4.9 million (12.1% of net sales) from $3.5 million (9.7% of net sales) in the prior year, reflecting increased investments in brand marketing.
Economic Pressures on Costs: Higher accrued variable compensation expenses and increased marketing investments added to operational costs.
Full Year 2025 Net Sales Guidance: Raised to the range of $162 million to $164 million, up from prior guidance of $158 million to $163 million.
Full Year 2025 Adjusted EBITDA Loss Guidance: Improved to a range of $5 million to $5.5 million, compared to prior guidance of $7 million to $9 million.
Fourth Quarter 2025 Net Sales Guidance: Expected to be between $39 million to $41 million.
Fourth Quarter 2025 Adjusted EBITDA Loss Guidance: Expected to range between $0.25 million and $0.75 million.
2026 Product Portfolio Evolution: New packaging and a more sugar-like taste experience will be introduced across legacy and new flavors in early 2026.
2026 Regional Footprint Expansion: Thoughtful expansion in the convenience channel is planned, tracking in line with broader natural soda category trends.
The selected topic was not discussed during the call.
The earnings call presented mixed signals: a 12% YoY increase in net sales and expanded distribution at Walmart are positives, but declining gross margins and unchanged net loss are concerns. The Q&A revealed optimism about future growth and profitability, but management's vague responses on brand awareness and 2026 profitability raise uncertainties. The market may react neutrally due to these offsetting factors.
The earnings report shows strong financial performance with a 10.1% increase in net sales and improved margins. The company has made significant progress in reducing its net loss and achieving a positive adjusted EBITDA. While there are concerns about tariffs and increased marketing expenses, the overall sentiment is positive due to strong sales growth, successful product launches, and productivity gains. The Q&A section highlights positive analyst sentiment, despite some unclear responses from management. Given these factors, the stock is likely to see a positive movement over the next two weeks.
Despite improved gross margins and distribution expansion, Zevia's financial performance shows a net loss and declining sales, with no share repurchase program. Competitive pressures and regulatory issues pose risks, while management's lack of clear guidance on tariffs and pricing strategy adds uncertainty. The positive outlook on distribution expansion and product innovation balances these concerns, resulting in a neutral sentiment.
The earnings call highlights positive developments such as a significant Walmart expansion, improved EBITDA losses, and increased gross margins. Despite a drop in full-year sales, Q4 showed growth, and the company is optimistic about future distribution gains. The Q&A reinforced positive sentiment, with management confident in maintaining gross margins and expanding customer engagement. However, the lack of shareholder return plans and potential risks like supply chain challenges and increased promotional spending are concerns. Overall, the positive aspects outweigh the negatives, suggesting a positive stock price movement.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
