Net Sales: $38 million, a decrease of 2% compared to the first quarter of last year. Gross Margin: 50.1%, an increase of 440 basis points from 45.7% in the first quarter of last year. Adjusted EBITDA: Improved by $2.2 million to a loss of $3.3 million. Net Loss: $6.4 million, an improvement of $0.8 million from last year. Selling and Marketing Expenses: $15.3 million or 40.3% of net sales. General and Administrative Expenses: $7 million or 18.4% of net sales. Restructuring Expenses: $2.1 million, primarily employee-related severance costs. Cash and Cash Equivalents: Approximately $28 million. Full Year Net Sales Guidance: $158 million to $163 million. Full Year Adjusted EBITDA Loss Guidance: $8 million to $11 million. Second Quarter Net Sales Guidance: $40.5 million to $42.5 million. Second Quarter Adjusted EBITDA Loss Guidance: $2.2 million to $2.9 million.

Warning! GuruFocus has detected 5 Warning Signs with ZVIA.

Release Date: May 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Zevia PBC (NYSE:ZVIA) delivered net sales at the high end of their guidance range and exceeded adjusted EBITDA expectations. The company achieved a record gross margin of over 50%, reflecting lower product costs and improved inventory management. Zevia PBC (NYSE:ZVIA) expanded distribution through existing and new retail partners, including Walmart and Walgreens, enhancing on-shelf visibility. The company launched successful marketing campaigns, such as the 'Get The Fake Outta Here' campaign, which delivered 2.4 billion earned impressions. Product innovation efforts have been well-received, with new flavors like Strawberry Lemon Burst and Orange Creamsicle performing strongly in taste tests.

Negative Points

Net sales decreased by 2% compared to the first quarter of the previous year, primarily due to increased promotional activity. The company reported a net loss of $6.4 million, although this was an improvement from the previous year's net loss. Zevia PBC (NYSE:ZVIA) faces a 200 basis point headwind from tariffs, primarily affecting aluminum costs. Despite improvements, the company still reported an adjusted EBITDA loss of $3.3 million. The macroeconomic environment remains uncertain, with potential impacts on consumer sentiment and spending.

Q & A Highlights

Q: Can you elaborate on the drivers behind your guidance for top-line growth and EBITDA acceleration in the second half of the year? A: Amy Taylor, President and CEO, explained that the company feels confident about their progress, highlighting strong execution across productivity initiatives, brand awareness investments, and product innovation. The expansion in distribution, particularly with Walmart and Albertsons, and the DSD strategy are expected to drive growth. Despite macroeconomic uncertainties, they believe their strategic initiatives will yield positive results in the latter half of the year.

Story Continues

Q: How is Zevia performing at Walmart, and what are your expectations for the brand there? A: Amy Taylor noted that Zevia's performance at Walmart has been encouraging, with the variety pack being the top-selling SKU. The partnership with Walmart is strategic, allowing for agility and innovation. Zevia is part of a limited number of brands in Walmart's modern soda set, and they are optimistic about continuing to innovate and grow within this space.

Q: Are the 50% gross margins sustainable, and how will you manage tariff headwinds? A: Girish Satya, CFO, stated that gross margins in the upper 40s are sustainable, despite a 200 basis point headwind from tariffs. The company plans to offset this through product portfolio adaptations, pricing strategies, and sourcing changes. They expect to manage these impacts effectively by Q3 and Q4.

Q: Can you provide more details on your convenience store strategy and the role of DSD? A: Amy Taylor explained that Zevia is focusing on single-serve cans in convenience stores, leveraging their DSD network in the Northwest and Southwest. This strategy allows them to test pricing and merchandising approaches, with the potential for branded coolers as volumes and space requirements justify.

Q: How are you measuring the effectiveness of your marketing efforts, and have you seen any changes recently? A: Amy Taylor emphasized that brand building is a priority, with long-term success measured by user base growth. In the short term, they use consumer sentiment surveys and closed-loop attribution models to gauge marketing effectiveness. They are investing in both brand awareness and velocity drivers to support growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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