Jones Soda Co. Q1 FY2026 earnings call

• Overall Q1 2026 Performance

  • Delivered $12.4 million in total Q1 2026 revenue, up 194% year-over-year, exceeding prior guidance and achieving GAAP net income profitability, marking a key inflection point for the company.
  • Gross profit increased 179% year-over-year to $3.9 million, while gross margin decreased slightly to 31.3% from 32.9% year-over-year, driven by the loss of higher-margin HC9 sales.
  • SG&A increased 53% year-over-year in absolute terms to $2.04 million, but fell as a percentage of revenue to 16.4% from 26.3% year-over-year, showing improving operating leverage.
  • GAAP net income was positive at $150,000, a $1 million improvement from a $852,000 net loss in Q1 2025. Adjusted EBITDA was positive at $0.6 million, a $1.6 million improvement from a $1.1 million adjusted EBITDA loss in the prior year, marking the second consecutive positive adjusted EBITDA quarter.
  • Ended Q1 2026 with $4.4 million in cash and cash equivalents, up from $3.6 million at year-end 2025.

• Strategic & Distribution Highlights

  • The branded partnership and collaboration platform, led by the Fallout Vault-Tec pack launch in North American club channels, significantly outperformed demand expectations. Management validated this as a repeatable, scalable growth platform rather than a one-time promotional event, with additional collaborations including Crayola and Folds of Honor expanding reach across demographics and channels.
  • Subsequent to quarter-end, core Jones Soda 4-packs launched in 650 additional high-volume U.S. Walmart locations, and Jones Soda expanded to 700 additional Circle K locations across Canada, bringing total Circle K distribution to 1,750 locations nationally.
  • Pop Jones continues to expand retail presence and consumer awareness, with management focusing on optimizing in-store activation, improving sales velocities and account productivity in the competitive better-for-you beverage category.

• Operational Improvements

  • 2025 operational changes (centralized logistics, enhanced forecasting, disciplined inventory management) supported higher sales volumes while maintaining operational efficiency and driving improved operating leverage.
  • Instituted weekly purchase order reviews, monthly slow-moving inventory checks, and mandatory P&L reviews for all new products and promotions to enforce margin and pricing discipline. Management is working with major suppliers to secure lower per-unit costs based on higher 2026 volumes, expecting gross margin improvements later in the year, and has identified warehouse cost reductions to take effect in Q2 2026.

• Capital Structure Update

  • A $2.5 million private placement priced at $0.33 per share (a premium to the current market price) has received full firm commitments, with oversubscribed interest; both the CEO and CFO are participating. The offering is expected to close by the end of May 2026, and proceeds will support financial flexibility, the planned exchange uplisting in Q2 2026, and strategic growth initiatives. Combined with an expanded $10 million credit facility, the company is well-positioned to fund 2026 growth.

1. Core Jones Soda (SOTA) Business: Revenue from core and partnership/collaboration offerings drove the vast majority of Q1 2026 total revenue, contributing approximately $12.2 million of the $12.4 million total Q1 2026 revenue, equal to ~98.4% of total revenue. This represents a massive increase from $3.3 million in the year-ago quarter, up ~270% year-over-year. 2. Pop Jones (Modern Functional Soda): Demand for better-for-you functional beverages remains strong, though full segment revenue was not broken out separately in the call. 3. HC9 (Adult Beverage, hemp-derived): HC9 Q1 2026 revenue declined to $0.2 million from $0.9 million in Q1 2025, accounting for approximately 1.6% of total Q1 2026 revenue. This segment has historically carried higher gross margins than other Jones Soda segments.

• Management reconfirms full-year 2026 revenue growth will exceed 60% compared to 2025 full-year revenue.
• Management notes there is measurable upside to the 60% growth target from unannounced organic product innovations and potential new branded partnerships that could launch in 2026.
• Quarterly performance in 2026 may fluctuate based on the timing of customer orders and promotional activity.

• Regulatory uncertainty for hemp-derived HC9 adult beverage products: New regulations taking effect in November 2026 prohibit sale of HC9 products containing more than 1 milligram of THC, leading to an expected decline in HC9 revenue, and the category is expected to remain challenged in the near term. Full-year 2026 guidance does not include material revenue expectations from HC9.
• Freight expense headwinds: Higher oil prices are expected to lead to increased freight surcharges in the second half of 2026.
• The modern better-for-you beverage category (where Pop Jones competes) remains highly competitive, requiring continued strategic optimization of retail activation to drive acceptable performance.
• All forward-looking guidance is subject to substantial uncertainty, as actual results may be impacted by a range of factors outside of the company's control.

Q: Will 2026 Crayola collaboration products be available in retail stores, or only online? / A: 2025's Crayola offering was online-only, but the 2026 Crayola collaboration products will be available both through retail channels and online. No additional details on launch timing or specific retail footprint were shared.

Q: What is the current development and launch timeline for the Jones Zero product line? / A: Jones Zero is viewed as a major new growth catalyst for Jones Soda, expected to win back lapsed consumers. Jones Zero will launch in retail channels this summer, with distribution commitments already secured for the initial rollout.

Q: Can you share details on the new Fallout variety pack spotted at Costco Canada, including its distribution footprint? / A: The new Fallout variety pack (featuring Nuka Victory, Nuka Cherry, and Nuka Orange flavors) is already launching in Canadian club channels, with early sell-through very strong. The variety pack will roll out to additional locations across Canada and launch in U.S. retail channels within the next several weeks, as part of the company's rotating club channel program secured after the strong performance of the original Vault-Tec collaboration packs.