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ZP

Zevia PBC (ZVIA)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 delivered a clean top-line beat and stronger profitability vs guidance: net sales rose 12.3% YoY to $40.8M on 12.6% volume growth, and adjusted EBITDA loss of $1.7M was materially better than the prior quarter guide; EPS was -$0.04 . Versus S&P Global consensus, revenue beat ($40.8M vs $39.5M*) and EPS was modestly better (-$0.04 vs -$0.05*) .
  • Gross margin compressed 350 bps YoY to 45.6% due to ~$0.8M of inventory obsolescence from the packaging refresh and the full realization of higher aluminum tariffs; management reiterated tariff headwinds but highlighted ongoing cost-savings offsets .
  • Full-year guidance was raised: FY25 net sales to $162–$164M (from $158–$163M) and adjusted EBITDA loss to $5.0–$5.5M (from $7–$9M). Q4 guidance: net sales $39–$41M and adjusted EBITDA loss $0.25–$0.75M .
  • Catalysts: raised FY outlook, evidence of sustained distribution and velocity (Walmart, Club) and marketing traction; management reaffirmed a path to positive adjusted EBITDA in 2026, supported by remaining productivity savings and scale .

What Went Well and What Went Wrong

What Went Well

  • Net sales and EBITDA outperformed: Q3 net sales +12.3% YoY to $40.8M and adjusted EBITDA loss of $1.7M were better than expectations; CEO: “Our third quarter results exceeded our expectations” .
  • Distribution/velocity momentum: growth driven by expanded Walmart distribution (including Canada expansion) and incremental Club rotations; Fruity Variety Pack quickly became the #1 Zevia SKU at Walmart .
  • Brand/innovation traction: investments in marketing and new flavors (Strawberry Lemon Burst, Peaches & Cream) are driving engagement and trial; “double‑digit” gains in brand consideration/purchase intent noted from proprietary research .

What Went Wrong

  • Margin pressure: gross margin fell to 45.6% (-350 bps YoY) on tariffs and ~$0.8M inventory write-offs tied to the packaging refresh .
  • Continued losses: net loss was $2.8M (unchanged YoY) and adjusted EBITDA remained negative, reflecting higher brand marketing and packaging redesign costs despite operating efficiencies .
  • Tariff headwinds and near-term mix/promotions: management expects aluminum tariffs to be an ongoing headwind; Q4 also laps a large Walmart pipeline fill, dampening seasonal step-down dynamics .

Financial Results

Core P&L and Profitability (YoY and QoQ context)

MetricQ3 2024Q2 2025Q3 2025
Net Sales ($USD Millions)$36.37 $44.52 $40.84
Gross Profit Margin %49.1% 48.7% 45.6%
Net Loss ($USD Millions)$(2.84) $(0.65) $(2.85)
Diluted EPS ($)$(0.04) $(0.01) $(0.04)
Adjusted EBITDA ($USD Millions)$(1.51) $0.23 $(1.72)

Quarterly Trend – 2025

MetricQ1 2025Q2 2025Q3 2025
Net Sales ($USD Millions)$38.02 $44.52 $40.84
Gross Profit Margin %50.1% 48.7% 45.6%
Adjusted EBITDA ($USD Millions)$(3.27) $0.23 $(1.72)

Q3 2025 Actual vs S&P Global Consensus*

MetricActualConsensus*Surprise
Net Sales ($USD Millions)$40.84 $39.53*+$1.31M
Diluted EPS ($)$(0.04) $(0.05)*+$0.01
Adjusted EBITDA ($USD Millions)$(1.72) $(3.57)*+$1.85M

Notes: All consensus values marked with an asterisk (*) are Values retrieved from S&P Global.

KPIs

KPIQ3 2024Q3 2025
Volume Growth YoY—+12.6%
Selling Expense ($M; % of Sales)$8.5; 23.3% $7.7; 18.9%
Marketing Expense ($M; % of Sales)$3.5; 9.7% $4.9; 12.1%
G&A ($M; % of Sales)$7.4; 20.3% $7.7; 18.8%
Cash & Equivalents ($M)—$26.0
Inventories ($M)—$14.13
YTD Cash from Operations ($M)—$(4.20)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($M)FY 2025$158–$163 $162–$164 Raised
Adjusted EBITDA (Loss, $M)FY 2025$(7)–$(9) $(5.0)–$(5.5) Raised (less loss)
Net Sales ($M)Q4 2025—$39–$41 Introduced
Adjusted EBITDA (Loss, $M)Q4 2025—$(0.25)–$(0.75) Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2 2025)Current Period (Q3 2025)Trend
Marketing/BrandRecord engagement from “Get the Fake Outta Here” campaign; focus on awareness and trial Continued strong engagement; double‑digit gains in consideration/purchase intent; cross‑channel activations Improving
Product InnovationNew flavors (Strawberry Lemon Burst, Orange Creamsicle); variety packs rolling out broadly New flavors (Peaches & Cream, Salted Caramel LTOs) driving velocities; refreshed packaging resonating Improving
Distribution/Walmart & ClubNational Walmart rollout; variety pack top SKU; club rotations returning Additional Walmart Canada expansion (>400 stores post‑pilot); more club rotations; same‑store gains Improving
Tariffs/Gross MarginTariffs expected to be ~200 bps headwind; minimal Q2 impact due to timing; packaging refresh costs to hit Q3 GM declines 350 bps YoY; ~$0.8M inventory obsolescence and full tariff realization in Q3 Worsened near term
Packaging RefreshAnnounced redesign; $0.5M COGS one‑time expected in Q3 Positive consumer response; inventory write‑off impact recognized Executed; transitioning
Convenience/DSDEarly regional tests; DSD progress in West; Walgreens distribution broadened Early indicators encouraging; thoughtful expansion into 2026 Gradual build
Profitability PathProductivity initiative $15M annualized savings; FY25 EBITDA loss guided $(8)–$(11) initially FY25 EBITDA loss guidance improved to $(5.0)–$(5.5); positive adjusted EBITDA targeted 2026 Improving trajectory

Management Commentary

  • “Our third quarter results exceeded our expectations with net sales growth of 12% to $40.8 million and adjusted EBITDA loss of $1.7 million… we are raising our full‑year net sales and adjusted EBITDA guidance.” – Amy Taylor, CEO .
  • “Gross margin reached 45.6%… reflecting the $0.8 million in inventory obsolescence associated with the packaging refresh and the full realization of aluminum tariffs.” – Girish Satya, CFO .
  • “We are raising our full‑year 2025 net sales guidance to the range of $162–$164 million… adjusted EBITDA loss… to $5–$5.5 million.” – CFO .
  • “We continue to point towards being positive adjusted EBITDA in 2026… incremental $5 million [savings] will begin to be realized starting mid‑Q1 2026.” – CFO .

Q&A Highlights

  • Walmart Canada expansion: post‑pilot rollout to “just over half” of stores (>400), signaling brand health but not the main driver of the FY raise .
  • Seasonality and Q4: QoQ step‑down smaller than historical given distribution gains and club rotations; lapping last year’s Walmart pipeline fill .
  • Shelf space outlook: Walmart remains a key modern soda set anchor; opportunities across club, mass, value/dollar, and to move shelf placement toward eye level in grocery .
  • Profitability pathway: reaffirmed positive adjusted EBITDA in 2026, with remaining $5M productivity savings, scale, and pricing/pack architecture levers offsetting tariffs .

Estimates Context

  • Q3 beats vs S&P Global consensus: revenue $40.84M vs $39.53M*; EPS -$0.04 vs -$0.05*; EBITDA -$1.72M vs -$3.57M* .
  • Q4 setup: guidance midpoint ($40.0M sales; ~$0.5M EBITDA loss) broadly aligns with S&P consensus revenue $40.09M* and EBITDA -$0.63M*, implying limited revision risk near term, with bias to modest upward EBITDA revision if execution holds .
  • FY implications: Raised FY revenue and improved EBITDA loss range should prompt upward revisions to FY25 revenue and EBITDA tracks, with Street focus on 2026 positive EBITDA bridge (remaining $5M savings, scale, pricing) .
    Notes: All consensus values marked with an asterisk (*) are Values retrieved from S&P Global.

Key Takeaways for Investors

  • Execution is improving: a credible growth/EBITDA beat with a raised FY outlook, despite tariff and packaging headwinds .
  • The growth algorithm is working: distribution breadth (Walmart US/Canada, Club) plus innovation and brand spend are driving volume and velocity .
  • Near‑term margin headwinds are known and largely transitory (packaging refresh) or being offset (productivity, pricing/pack), supporting the 2026 positive EBITDA target .
  • Watch Q4 comps and club cadence: lapping Walmart pipeline fill tempers seasonality; club rotations and same‑store gains are incremental drivers .
  • Monitor tariff trajectory and aluminum costs: sustained pressure could cap near‑term GM; company plans productivity and price/pack actions to mitigate .
  • Medium‑term thesis: expanding household penetration (>5% and rising) within a growing better‑for‑you soda category, with affordable positioning and broad channel opportunity (mass, club, convenience) .
  • Trading lens: raised FY guide and consensus beats are supportive; catalysts include continued distribution wins, Q4 delivery vs guide, and 2026 profitability milestones .