Zevia PBC Q3 FY2025 earnings call

Marketing

• Brand-building initiatives are resonating with consumers, with summer campaign, launch of Strawberry Lemon Burst, and sweepstakes driving engagement. Brand consideration and purchase intent have made double-digit gains, and social media engagement rates are high.
• New brand messaging, design, and tone of voice are resonating across channels, and in-market activations at events like 100 Thieves Block Party and Diplo's Run Club are helping win new users.

Innovation

• Recent product launches show portfolio evolution is driving momentum. New flavors like Strawberry Lemon Burst, Orange Creamsicle, and variety packs are well-received. Refreshed packaging has increased purchase intent versus prior design and competition.

Distribution

• Regained and opened new distribution points. Walmart distribution in Canada is expanding, with expansion into over half of Walmart's Canadian stores. Grocery distribution gains and club channel regional rotations have contributed to growth.

In the third quarter, net sales increased 12% to $40.8 million. Gross margin was 45.6%, a 350 basis point decline from the prior year. Selling and marketing expenses were $12.7 million (31% of net sales), general and administrative expenses were $7.7 million (18.8% of net sales). Net loss was $2.8 million, and adjusted EBITDA loss was $1.7 million.

Full Year 2025

• Raised full year net sales guidance to $162 million to $164 million from prior $158 million to $163 million.
• Adjusted EBITDA loss guidance for full year lowered to $5 million to $5.5 million from prior $7 million to $9 million.

Fourth Quarter 2025

• Expected net sales to be between $39 million to $41 million.
• Adjusted EBITDA loss expected to be between $0.25 million and $0.75 million.

• Risks related to market trends changing which could impact consumer demand for better-for-you products.
• Cost fluctuations such as aluminum tariffs affecting margins.
• Inventory obsolescence associated with packaging refresh.

Q: Jim Salera asked about expanding distribution with Walmart in Canada and sizing the uplift.

A: Amy Taylor said it's a good indicator of brand health in Canada, initial pilot was less than 100 stores, now in over half of Canada's Walmart stores, not the major driver of growth but a positive sign.

Q: Sarang Vora asked about household penetration and energy drinks.

A: Amy Taylor said household penetration improved, drivers include new consumers and distribution, energy drinks have opportunity but focus is on soda now.

Q: Andrew Strelzik asked about seasonality and shelf space.

A: Girish Satya said Q4 comping Walmart load from last year, distribution gains and club rotations driving Q4, Amy Taylor talked about Walmart shelf space and future distribution opportunities.

Q: Eric Serotta asked about shelf space expectations and profitability for 2026.

A: Amy Taylor talked about Walmart shelf space performance, Girish Satya said aiming for positive adjusted EBITDA in 2026 with productivity savings and scale.