Jones Soda Co. Q2 FY2026 earnings call

Strategic Growth Priorities

• Core craft soda remains the foundational business of Jones Soda, with a focus on improving execution, expanding distribution, and driving sustainable, profitable growth
• Branded collaborations are a key strategic growth lever to reach new consumers, open new retail doors, and create incremental revenue, with a track record of successful limited-edition launches
• Disciplined capital allocation: Resources are prioritized for high-opportunity growth areas that deliver clear returns, with reduced investment in underperforming segments

Collaboration Updates

• A new multi-year collaboration with Wrap Snacks was announced after the quarter ended, with an initial launch of three custom craft sodas supported by artist collaborations, retail activations, and cross-brand marketing; revenue contribution is expected to begin in 2027, with management viewing the partnership as a long-term opportunity to expand into new consumer lifestyle segments
• The Crayola limited-edition collection was relaunched for the 2026 back-to-school season with a new Fruit Punch flavor
• The second limited-edition launch of Fallout Nuka-Cola Quantum rocket bottles saw strong consumer demand and rapid sell-out, with additional launches planned for the second half of 2026; the partnership with Fallout extends through 2028

Product and Channel Expansion

• The Zero Sugar Craft Soda lineup was launched at Western Canadian club stores, expanding the company's better-for-you product offerings; consumer acceptance has been strong, and aggressive expansion of Zero Sugar distribution across the U.S. and Canada is a top near-term priority
• Core products are already performing well at Walmart, with sell-through velocities exceeding management expectations; discussions for further in-store expansion are ongoing
• Direct-to-consumer (D2C) is being prioritized as a long-term growth channel: website improvements focused on user experience are launching in the coming weeks, and the company transitioned to a new third-party logistics (3PL) fulfillment provider to resolve historic e-commerce fulfillment issues

Operational Improvements

• The operations team completed a freight RFP that secured 10-36% lower freight rates on key U.S. lanes, with savings already taking effect starting in June 2026
• Improved productivity: 2026 full-year projected revenue per employee is $1.3 million, an 87% increase from 2024 levels, even with moderate headcount growth
• Significant working capital improvements: Accounts receivable days outstanding decreased from 78.4 days in Q2 2025 to 29.4 days in Q2 2026; inventory turnover improved from 2.8 turns to 6.8 turns; days payable outstanding was reduced from 122 days to the target of ~60 days
• Uplisting to a major exchange (NASDAQ or NYSE) remains a long-term strategic priority, with an updated S-1 recently filed with the SEC

1. Core Craft Beverages (including Zero Sugar and collaboration products): Reported Q2 2026 revenue of 10.7 million USD, representing a 133% year-over-year increase from the prior year Q2's 4.0 million USD. This segment contributed 99% of total Q2 2026 revenue, driven by higher sales volume across club retail, traditional retail, and direct-to-consumer channels.
2. Adult Beverages (HD9/THC segment): Q2 2026 revenue declined significantly to 0.1 million USD from 0.9 million USD in the prior year Q2. This segment contributed just 1% of total Q2 2026 revenue, with industry-wide sales declining due to upcoming regulatory changes that take effect in November 2026.
3. Overall Company: Total Q2 2026 revenue reached 10.8 million USD, a 108% year-over-year increase from 4.9 million USD in Q2 2025. Total gross profit increased 72% year-over-year to 2.8 million USD, with gross margin of 27.5% (down from 33.3% in Q2 2025). Adjusted EBITDA for Q2 2026 was a loss of 312,000 USD, a $427,000 improvement from the adjusted EBITDA loss of $739,000 in Q2 2025. For the first half of 2026, total revenue was $22.6 million (148% year-over-year growth), and adjusted EBITDA was positive $0.2 million, compared to a $1.7 million loss in the first half of 2025.

• Full year 2026 revenue growth guidance was revised upward from the prior expectation of 60% year-over-year growth to at least 80% year-over-year growth
• Full year 2026 adjusted EBITDA guidance was introduced, with management expecting to deliver positive adjusted EBITDA for the full year
• Gross margin for the second half of 2026 is expected to return to the 30% range, assuming West Texas Intermediate oil prices remain around $80 per barrel
• Q3 2026 revenue is expected to exceed $12 million, making it one of the strongest quarters in the company's history, as the $2 million in shipments that were delayed from Q2 shipped in July
• Management is actively building 2027 growth plans that will leverage existing successful collaborations and add new opportunities like the Wrap Snacks partnership

• Upcoming regulatory changes taking effect in November 2026 will prohibit the sale of HD9 adult beverage products containing more than 1 milligram of THC, which has driven a sharp industry-wide decline in HD9 sales that has impacted Jones Soda's adult beverage segment
• Gross margin is vulnerable to changes in global oil prices, which drive freight costs; if oil prices rise significantly above current levels (~$80 per barrel WTI), expected gross margin improvements for the second half of 2026 may not materialize
• Uplisting to a major exchange is subject to SEC and exchange review processes, and the timing of completion cannot be guaranteed
• Transitioning to a new 3PL fulfillment provider for e-commerce carries short-term execution risk, and historically e-commerce fulfillment has been a pain point for the company
• Two underperforming segments (Modern Soda and adult beverages) have not developed at the pace management anticipated, requiring reallocation of capital and strategic resources

Q: Will the Fallout collaboration line expand into big box retailers like Walmart and Target, and how will the new Wrap Snacks collaboration differ in distribution? / A: Management does not expect to bring full-packaged Fallout products into mass big box retail due to existing pricing and customer commitments, and Fallout will remain focused on the limited-edition club and D2C model that has driven sell-out demand. The Wrap Snacks collaboration is expected to open new distribution doors in convenience stores, inner-city bodegas, and second-tier grocery channels where Jones Soda currently has limited presence.

Q: What is the launch timeline and expected revenue contribution of the Wrap Snacks collaboration in 2027? / A: Packaging and design work is already complete, and management expects the product to launch in either the first or second quarter of 2027. If executed well, management believes Wrap Snacks can be a meaningful revenue contributor, add a second large collaboration platform alongside Fallout to diversify growth, and attract new consumers to the Jones Soda brand.

Q: How has Jones Zero Sugar performed at Costco Canada, and when will it see broad U.S. distribution? / A: Initial consumer and retailer response to Zero Sugar at Costco Canada has been extremely strong, with fast initial sell-through and reorders already placed. Management views Zero Sugar as a high-priority growth opportunity to win back lapsed Jones Soda fans who prefer lower-sugar products, and the sales team is actively pursuing broad U.S. distribution as quickly as possible.

Q: When will the uplisting to a major exchange be completed, and how much capital is required? / A: Uplisting requires between $10 million and $15 million in capital raising, and the updated S-1 registration statement was recently filed with the SEC. Management is targeting to complete the process in the second half of 2026, but cannot guarantee the exact timing due to required SEC and exchange reviews.

Q: Has Jones resolved its historic e-commerce fulfillment issues? / A: The company recently transitioned to a new 3PL fulfillment provider that management has higher confidence in, which already handled the recent Fallout rocket bottle launch. While 3PL transitions always carry short-term obstacles, management has on-site teams overseeing major launches to meet service requirements, and early performance from the new provider has been positive.