Zevia PBC (ZVIA) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reflects positive sentiment due to improved financial metrics, such as adjusted EBITDA turning positive and reduced marketing expenses. The Q&A section highlights strategic partnerships and marketing efforts with Cardi B, expected to enhance brand visibility. Despite macroeconomic uncertainties, the company maintains a cautious yet optimistic outlook, with significant improvements in packaging and distribution. The lack of immediate price hikes and effective cost management further bolster the positive sentiment, suggesting a likely stock price increase in the short term.
Key Financial Performance
Net Sales $46.1 million in Q1 2026, a 21.2% increase year-over-year. The growth was primarily due to expanded distribution in the club channel and higher volume gains in the mass and e-commerce channels.
Gross Margin 48.4% in Q1 2026, a 170 basis point decline from 50.1% in Q1 2025. The decline was due to higher aluminum costs and a higher mix of club sales, partially offset by higher average selling prices and better price realization.
Selling and Marketing Expenses $14.5 million or 31.5% of net sales in Q1 2026, compared to $15.3 million or 40.3% of net sales in Q1 2025. The decrease was due to better warehousing, efficiency gains from automation, and a shift in timing of the national campaign.
General & Administrative Expenses $9.1 million or 19.7% of net sales in Q1 2026, compared to $7 million or 18.4% of net sales in Q1 2025. The increase includes $2.3 million in litigation expenses.
Adjusted EBITDA Approximately $0.9 million in Q1 2026, compared to an adjusted EBITDA loss of $3.3 million in Q1 2025. The improvement reflects better cost management and operational efficiencies.
Cash and Cash Equivalents $26.6 million at the end of Q1 2026, with an undrawn revolving credit line of $20 million.
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Operating Highlights
New Flavors: Introduced on-trend fruit flavors such as Orange Creamsicle, Fruit Punch, and Peaches & Cream. These flavors are outperforming medium velocities for the broader portfolio, driving incrementality of 38% and 53% at two top national retailers.
Packaging Innovation: Launched new vibrant package designs to enhance trial and communicate Zevia's clean label, zero sugar, and zero fake ingredients. This refresh has supported space gains and bolstered retailer confidence.
Seasonal Offerings: Plans to introduce a holiday limited edition pack to surprise and delight consumers.
Club Channel Expansion: Executed a successful national Costco rotation, broadening reach to new consumers in emerging markets and maintaining strong velocities in penetrated markets.
Mass Channel Growth: Expanded into Canadian Walmart stores and saw momentum in Walmart chain-wide, with notable outperformance in digital platform sales.
Grocery Channel Gains: Achieved space gains in Kroger, HEB, and Publix, driving market penetration nationally and in underdeveloped regions like the South and East Coast.
E-commerce Growth: E-commerce business outperformed expectations with strong performance from smaller packs, 24-pack, and variety pack offerings, supported by subscription services.
Cost Structure Optimization: Reduced $20 million in costs over the last two years, with additional savings opportunities identified.
Marketing Efficiency: Shifted marketing expenses to balance brand and performance marketing, achieving lower marketing expense as a percentage of sales.
Gross Margin Management: Gross margin was 48.4%, impacted by higher aluminum costs and club sales mix, partially offset by higher average selling prices.
Cardi B Partnership: Partnered with Cardi B to amplify brand awareness, generating 152 million editorial impressions in the first week and achieving the highest social media engagement since the brand's launch.
Marketing Campaigns: Launched 'Ztox' and 'Real Soda for Real Humans' campaigns, leveraging experiential marketing, digital platforms, and high-profile events to build awareness and demand.
Focus on Long-Term Growth: Revised full-year net sales guidance to $170-$175 million, reflecting 7% growth at the midpoint, despite macroeconomic uncertainties and cost pressures.
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Risk or Challenges
Gross Margin Decline: Gross margin declined by 170 basis points from the previous year due to higher aluminum costs and a higher mix of club sales, which could impact profitability.
Litigation Expenses: General & Administrative expenses included $2.3 million in litigation expenses, which increased overall costs and could strain financial resources.
Fuel and Aluminum Cost Pressures: The company faces significant cost pressures from higher fuel prices and aluminum costs, leading to an $11 million headwind to profitability for 2026.
Discontinuation of Tea Line: The planned discontinuation of the tea line is expected to impact growth by 1 to 1.5 percentage points, potentially affecting revenue streams.
Restructuring Costs: The company expects to incur $1 million in restructuring costs related to the relocation of a distribution center, adding to short-term financial burdens.
Macroeconomic Uncertainty: Ongoing macroeconomic uncertainty could impact consumer behavior and operational costs, posing risks to achieving growth and profitability targets.
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Guidance & Outlook
Full Year Net Sales Guidance: Zevia has raised its full-year net sales guidance to between $170 million to $175 million, reflecting 7% growth at the midpoint of the range. This includes the planned discontinuation of the tea line, which is expected to impact growth by 1 to 1.5 points.
Full Year Adjusted EBITDA Guidance: The company expects full-year adjusted EBITDA in the range of negative $2 million to negative $4 million. This incorporates an incremental $11 million in costs, primarily due to higher fuel and aluminum costs.
Second Quarter 2026 Net Sales Guidance: Net sales are expected to be between $43 million to $45 million. This guidance reflects the planned discontinuation of tea offerings, the lapping of sell-ins to Walgreens and Albertsons in the second quarter of last year, and a shift in marketing and promotional dollar spend from Q2 to Q3.
Second Quarter 2026 Adjusted EBITDA Guidance: Adjusted EBITDA loss is expected to be between negative $0.5 million and negative $1 million, reflecting a gross margin rate similar to the first quarter. This includes approximately $1 million in restructuring costs related to the relocation of a distribution center.
Gross Margin Outlook: Gross margin for the full year is expected to be roughly in line with the Q1 gross margin rate, with slight pressure anticipated in the back half of the year due to cost pressures.
Cost Management and Profitability: The company has taken $20 million of costs out of the business over the last two years and sees additional savings opportunities. However, these savings will take time to realize and will not come at the expense of growth.
Product Portfolio and Marketing Investments: Zevia plans to roll out enhanced classic flavors and new packaging in the second quarter of 2026. The company is also making intentional investments in marketing to amplify brand awareness and drive trial, positioning the business for future growth.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you discuss the new brand ambassador Cardi B's role and its impact on marketing strategies for the second half of the year?
A:Cardi B's partnership is part of the broader 2026 plan and within planned budgets. The focus is on shifting promotional dollars to summer, aligning with new packaging, flavors, and improved taste profiles. Cardi B's strong social media engagement will support product messaging organically. A summer advertising campaign, including traditional and digital media, will enhance reach and expand the consumer base. Grassroots efforts and retail trials are also part of the strategy.
Q:Are there plans to raise prices in the back half of the year to address cost pressures like tariffs and fuel prices?
A:No additional price increases are planned for the back half of the year. A price increase was implemented in Q1, and the company is balancing consumer value with profitability. Cost pressures are expected to subside over time, and other business levers are being used to address them.
Q:What is the current status of the rollout of new packaging and flavors, and when will it reach full nationwide distribution?
A:As of May, the rollout is in the second inning. By the end of Q2, shelves will be stocked with almost all new packaging. Early feedback from consumers and retailers is positive, and the new packaging is expected to drive velocity acceleration in the back half of the year.
Q:What is driving the acceleration in revenue growth in Q3?
A:The acceleration in Q3 is driven by the full rollout of new packaging by the end of Q2, increased promotional and marketing dollars in Q3, and the alignment of these efforts with peak consumer engagement periods.
Q:Are there any incremental club rotations planned for the back half of the year, and what is the impact of the Costco rotation?
A:There are no confirmed incremental club rotations for the back half of the year, but discussions are ongoing. The Costco national rotation in Q1 was additive and strengthened velocities in permanent distribution markets. It also opened discussions for future rotations and permanent distribution.
Q:What updates are there on the DSD network and its impact on the West Coast business?
A:The focus is on execution in regional pilots in the Northwest and Southwest. The DSD network is expected to drive incremental displays and leverage the excitement around Cardi B and summer promotions. There are no plans to expand DSD beyond the current footprint, but it is expected to help open new channels like convenience over time.
Q:What factors contributed to the Q1 outperformance in sales and EBITDA?
A:The base business was strong, with better-than-expected retail sales despite shifting promotions to summer. Velocity acceleration, new distribution contributions, and faster-than-anticipated price realization were key drivers. The Costco rotation was less dilutive than expected, and cost discipline also contributed.
Q:Why was the full-year revenue outlook only slightly raised despite Q1 outperformance?
A:The cautious outlook is due to macroeconomic uncertainties, including the impact on value consumers. While the business fundamentals are strong, the company is being prudent in its guidance to account for potential challenges.
Q:How will the $6 million in cost pressures be managed, and when will offsets be realized?
A:The cost pressures, primarily from increased fuel expenses, will impact the P&L ratably throughout the year. Incremental cost savings of $3 to $5 million are expected to begin flowing into the P&L by Q4 or Q1 of next year. The company remains focused on growth and long-term profitability.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific impact of macroeconomic uncertainties on future performance, using cautious language and emphasizing prudence without providing detailed data or concrete examples.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Ms
South
Walmart
ability
activation
advertising
brand campaign
campaign life
champion
channel grocery
commerce
confidence
consumer
flavor
human
incrementality
item
market
marketing
mass channel
measure
medium
momentum
month
offering
pack
pillar
platform
product distribution
reach
soda
space gain
spring reset
store
sugar label
trial
velocity
ZVIA Transcript
Zevia PBC (ZVIA) Q1 2026 Earnings Call Transcript
Positive5-7
The earnings call reflects positive sentiment due to improved financial metrics, such as adjusted EBITDA turning positive and reduced marketing expenses. The Q&A section highlights strategic partnerships and marketing efforts with Cardi B, expected to enhance brand visibility. Despite macroeconomic uncertainties, the company maintains a cautious yet optimistic outlook, with significant improvements in packaging and distribution. The lack of immediate price hikes and effective cost management further bolster the positive sentiment, suggesting a likely stock price increase in the short term.
Zevia PBC (ZVIA) Q4 2025 Earnings Call Transcript
Positive2-26
The earnings call highlights strong financial performance with revenue growth and improved margins. The guidance for 2026 shows optimism with raised sales and improved EBITDA loss guidance. The focus on product expansion and sustainability aligns with market trends, and the Q&A section didn't reveal significant concerns. The positive outlook on revenue and margin improvements, coupled with the raised guidance, suggests a likely positive stock reaction in the short term.
Zevia PBC (ZVIA) Q3 2025 Earnings Call Transcript
Unknown11-6
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.
Zevia PBC (ZVIA) Q2 2025 Earnings Call Transcript
Positive8-7
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.
ZVIA Slides
ZVIA Report
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