Executive Summary

Net sales grew 4% year over year to $7.03M, while gross margin was 17% (19% ex-inventory write-offs), and net loss improved to $(3.98)M; SG&A investments lifted OpEx and modified EBITDA loss to $(3.93)M .
Delivery and handling cost per case fell 14% YoY to $2.50, indicating operational efficiencies; lower transportation costs were the primary driver .
Management highlighted leadership additions, manufacturing program build-out, refinancing and partial debt repayment (~$650K), and a 1-for-6 reverse split effective Oct 31, 2025, with an anticipated uplisting as a future strategic catalyst .
Wall Street consensus for Q3 was unavailable; Q2 had only one estimate (Revenue: $10.29M*, EPS: -$0.24*), and REED missed both with actual revenue $9.52M and EPS $(0.41), underscoring limited coverage and the need for updated models post operational changes . Values retrieved from S&P Global*.

What Went Well and What Went Wrong

What Went Well

Net sales rose 4% YoY to $7.03M, driven by higher volumes with recurring national customers .
Delivery and handling costs per case decreased 14% YoY to $2.50 ($1.1M total), helped by lower transportation costs .
Strategic initiatives: “We continue to build out a robust manufacturing program…align production capacity…with current demand trends,” and leadership hires (CMO and Chief Go-To-Market and Customer Officer) to advance 2026 go-to-market and rebranding .

What Went Wrong

SG&A increased to $4.2M vs $3.1M YoY due to investments in personnel and marketing; modified EBITDA loss widened YoY to $(3.93)M from $(3.00)M, reflecting higher OpEx .
Cash used in operations was $(2.8)M vs +$1.1M in Q3 2024, and cash ended at $4.1M with total debt of $9.2M, highlighting liquidity pressure from working capital and operating losses .
Inventory write-offs of $0.11M in Q3 (and $1.61M in Q2) continue to weigh on reported margins despite operational optimization .

Financial Results

P&L and Earnings vs prior periods and consensus

Metric	Q3 2024	Q2 2025	Q3 2025	Q3 2025 Consensus
Net Sales ($USD Millions)	$6.75	$9.52	$7.03	n/a
Gross Profit ($USD Millions)	$1.22	$0.81	$1.22	n/a
Gross Margin % (reported)	18%	8%	17%	n/a
Delivery & Handling Expense ($USD Millions)	$1.28	$1.57	$1.10	n/a
Selling, General & Administrative ($USD Millions)	$3.10	$5.00	$4.20	n/a
Loss from Operations ($USD Millions)	$(3.14)	$(5.79)	$(4.10)	n/a
Net Loss ($USD Millions)	$(4.15)	$(6.05)	$(3.98)	n/a
Loss per Share (Basic & Diluted) ($USD)	$(4.91)	$(0.13)	$(0.48)	n/a
Modified EBITDA ($USD Millions)	$(3.00)	$(2.95)	$(3.93)	n/a

KPIs and margin quality

KPI	Q3 2024	Q2 2025	Q3 2025
D&H Cost per Case ($/case)	$2.99	$2.83	$2.50
Gross Margin % (ex-inventory write-offs)	n/a	25%	19%
Inventory Write-offs ($USD Millions)	n/a	$1.61	$0.11
Cash from Operating Activities ($USD Millions)	+$1.10	$(5.00)	$(2.80)

Balance sheet snapshot

Metric	Q4 2024	Q2 2025	Q3 2025
Cash ($USD Millions)	$10.39	$2.68	$4.14
Total Debt (net of deferred financing fees) ($USD Millions)	$9.57	$9.74	$9.16
Inventory ($USD Millions)	$8.11	$13.18	$10.57

Note: No Q3 2025 Wall Street consensus available; Q2 2025 consensus (EPS -$0.24*, Revenue $10.29M*, 1 estimate) vs actual (EPS -$0.41, Revenue $9.52M) signaled a miss amid inventory write-offs and higher SG&A . Values retrieved from S&P Global*.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Quarterly	Not provided	Not provided	Maintained (no formal guidance)
Gross Margin	FY/Quarterly	Not provided	Directional focus on margin improvement, no numeric guidance	Maintained (no formal guidance)
SG&A/OpEx	FY/Quarterly	Not provided	Investments in personnel/marketing; no numeric guidance	Maintained (no formal guidance)
Financing	N/A	N/A	Refinanced credit facility; repaid ~$0.65M debt	Update (financial actions executed)
Corporate Actions	N/A	N/A	1-for-6 reverse split effective Oct 31; preparing for anticipated uplist	Update (strategic positioning)

Management reiterated prior practice of not issuing explicit revenue guidance on earlier calls; Q3 materials continued without numerical guidance .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 2025)	Trend
Operational efficiency & manufacturing	Q1: Fulfillment improved (short shipments ~20% → ~2% by April); supply chain optimization; mid-30% gross margins expected; packaging shift to cans underway . Q2: Margin compression from $1.6M inventory write-offs; D&H/case up; OpEx elevated .	Continued build-out of robust manufacturing program; operational improvements cited; D&H/case down to $2.50 .	Improving (D&H cost metrics, process discipline) .
Leadership & organization	Q1: New CEO; Board addition (Ruud Becker) . Q2: No additional leadership changes noted in results PR.	New CMO (Tina Reejsinghani) and Chief Go-To-Market & Customer Officer (Keith Johnson); organizational realignment .	Strengthening (commercial + marketing leadership) .
Product & innovation	Q1: Launch of multifunctional soda line; early national distribution at Sprouts; selective innovation approach . Q2: Portfolio optimization drove inventory write-offs .	Rebranding initiatives across Reed’s and Virgil’s; continued focus on core portfolios .	Mixed (innovation proceeding, portfolio rationalization continues) .
Supply chain & logistics	Q1: Improved input pricing, co-packer partnerships; limited tariff exposure; cans shift . Q2: Transportation cost pressures raised D&H/case .	Lower transportation costs reduce D&H .	Improving (transport costs easing, efficiency gains) .
Financing & capital markets	Q1: Prior $10M private placement noted . Q2: Ongoing liquidity needs; Op cash usage .	Refinancing credit facility; ~$650K debt repaid; reverse split; anticipated uplist plan .	Proactive positioning (balance sheet actions, equity structure) .

Note: Q3 2025 earnings call transcript was not available via our sources; theme extraction relies on company’s Q3 press release and prior quarter transcript/press releases .

Management Commentary

“Our third quarter results reflect steady operational improvements and continued progress against our plan to strengthen Reed’s foundation for long-term growth and profitability.” — Cyril Wallace, CEO .
“We…are actively identifying new opportunities to streamline operations to enhance our efficiency, scalability, and overall performance.” .
“We’ve taken important steps to reinforce our balance sheet through our recent financing, repayment of approximately $650,000 of debt, and the refinancing of our credit facility. We are also preparing for an anticipated uplist to a major stock exchange…” .
Organizational update: appointment of Tina Reejsinghani (CMO) and Keith Johnson (Chief Go-To-Market and Customer Officer) to advance 2026 go-to-market and rebranding .

Q&A Highlights

Q3 2025 call transcript not available. From Q1 2025, management declined to provide revenue guidance, emphasizing focus on growth and operating efficiency, and flagged potential seasonal gross margin compression in Q2 tied to promotions and functional beverage launch .
OpEx discipline discussed: SG&A increases attributed to upfront investments in personnel and marketing to support strategic initiatives .

Estimates Context

Q3 2025: No S&P Global Wall Street consensus found for revenue or EPS; result comparisons to estimates are unavailable [GetEstimates output indicates actuals only].
Q2 2025: Consensus revenue $10.29M* vs actual $9.52M (miss); consensus EPS -$0.24* vs actual -$0.41 (miss); coverage limited (1 estimate), indicating thin sell-side engagement and higher dispersion risk . Values retrieved from S&P Global*.
Note: S&P Global shows Q3 2025 EPS actual of -$0.5168*, while company reported $(0.48); differences likely reflect share count effects and rounding around the October 31 reverse split . Values retrieved from S&P Global*.

Key Takeaways for Investors

Sequential reset: Q3 revenue fell QoQ to $7.03M as REED normalized from a Q2 inventory write-off event; YoY growth and margin ex-write-offs (19%) suggest underpinning demand with improving unit logistics (D&H/case down to $2.50) .
OpEx investment phase: SG&A at $4.2M elevated vs last year with a deliberate build-out of marketing and commercial capabilities; expect margin recovery to require OpEx leverage in 2026 .
Liquidity watch: Q3 cash used in ops $(2.8)M; cash $4.1M vs debt $9.2M. Monitoring working capital and financing flexibility is critical near-term .
Structural catalysts: Reverse split and anticipated uplist could broaden investor access; refinancing and partial debt repayment de-risk balance sheet optics .
Estimate mechanics: Sparse coverage (1 estimate in Q2) and portfolio changes limit read-through; models likely need to reflect lower D&H costs, inventory rationalization, and SG&A ramp before potential 2026 margin inflection .
Narrative trajectory: From supply chain stabilization (Q1) to portfolio optimization (Q2) and operational efficiency (Q3), execution consistency on manufacturing and commercial strategy is the key driver for sentiment and potential re-rating .

S&P Global disclaimer: Asterisk-marked values were retrieved from S&P Global and may reflect methodology or rounding differences.*

REED'S, INC. (REED)·Q3 2025 Earnings Summary