Zevia raises 2025 sales guidance to $162M–$164M amid expanded distribution and strong product innovation

Earnings Call Insights: Zevia PBC (ZVIA) Q3 2025

MANAGEMENT VIEW

* Amy Taylor, CEO, reported that "our third quarter results reflect strong progress and provide clear signs that our strategy is taking effect." Taylor highlighted net sales growth of 12% to $40.8 million and an adjusted EBITDA loss of $1.7 million, stating "our third quarter results exceeded our expectations." The company raised its full year net sales and adjusted EBITDA guidance, citing "better-than-expected performance and the continued progress across our strategic growth pillars."
* Taylor emphasized the impact of high-impact brand marketing, accelerated product innovation, and expanded distribution. She noted successful launches such as Strawberry Lemon Burst, the Amazon-exclusive Peaches & Cream, and a fruity variety pack at Walmart, stating these products "demonstrate that we are on point in flavor trends."
* Taylor pointed to expanded distribution, including Walmart in Canada, and highlighted that the company achieved "just over 400 stores in total" in the country.
* Girish Satya, CFO, stated, "our third quarter results reflect strong execution of our strategic plan with both revenue and adjusted EBITDA exceeding expectations." Satya also explained, "the work we have done has created a solid foundation for sustained growth and profitability."

OUTLOOK

* Zevia raised its full year 2025 net sales guidance to the range of $162 million to $164 million, up from previous guidance of $158 million to $163 million. Adjusted EBITDA loss guidance was also updated to a range of $5 million to $5.5 million, compared to prior guidance of $7 million to $9 million.
* For the fourth quarter, the company expects net sales of between $39 million to $41 million and adjusted EBITDA loss between $0.25 million and $0.75 million.
* Satya commented, "our 2025 adjusted EBITDA outlook represents a $9 million improvement versus prior year despite tariffs, ongoing marketing investments and a packaging refresh."

FINANCIAL RESULTS

* Net sales in the third quarter increased 12% to $40.8 million, primarily due to expanded distribution at Walmart and incremental regional rotations at the club channel.
* Gross margin was 45.6%, a decline from 49.1% in the third quarter of last year, driven by $0.8 million in inventory obsolescence from the packaging refresh and the full realization of aluminum tariffs.
* Selling and marketing expenses were $12.7 million or 31% of net sales, with marketing expense rising to $4.9 million or 12.1% due to increased brand marketing investment.
* General and administrative expenses were $7.7 million or 18.8% of net sales, primarily from higher accrued variable compensation expense.
* Net loss for the quarter was $2.8 million, unchanged from the prior year. Adjusted EBITDA loss was $1.7 million, compared to an adjusted EBITDA loss of $1.5 million in the prior year period.
* The company ended the quarter with approximately $26 million in cash and cash equivalents and an undrawn revolving credit line of $20 million.

Q&A

* James Salera, Stephens Inc.: Asked about Walmart Canada expansion and its impact on guidance. Taylor explained the expansion is "a good indicator of the health of the brand in Canada and opportunity to follow," but "not the major driver of lift in growth."
* Salera asked about the new packaging rollout. Taylor responded the rest of the portfolio will reflect the new packaging in "early 2026, so mid-Q1 or late Q1 2026, and then we'll do a rolling rollout."
* Sarang Vora, Telsey Advisory Group LLC: Asked about household penetration and new customers. Taylor stated, "we are now back over that 5% points of household penetration," noting that "part of what's driving our gains in household penetration, though, is increased distribution."
* Vora inquired about the energy drinks business. Taylor indicated, "right now, our focus is really on soda," but saw "tremendous opportunity ahead in energy" for the future.
* Andrew Strelzik, BMO Capital Markets: Asked about brand-level awareness statistics. Taylor shared "double-digit increases not only in purchase intent, but also consideration," and said, "we still have a way to go to grow brand awareness."
* Strelzik also asked about seasonality and Q4 guidance. Satya explained, "largely what you're seeing is a reflection of the distribution gains that we've made throughout the year as well as some incremental regional rotations in the club channel."
* Eric Serotta, Morgan Stanley: Asked about shelf space expectations for next year. Taylor said, "this year, we surpassed our historical peak distribution levels at retail," and the focus will be "driving velocity," but still sees "opportunity for new distribution."
* Serotta asked about EBITDA profitability in 2026. Satya responded, "we continue to point towards being positive adjusted EBITDA in 2026," with "incremental savings along with scale and some pricing opportunities" supporting the shift.

SENTIMENT ANALYSIS

* Analysts expressed curiosity about growth drivers, marketing effectiveness, and expansion strategies, with a generally positive yet probing tone. Questions focused on specifics behind guidance raises, execution on new packaging, and broader distribution.
* Management maintained an optimistic and confident tone, frequently referencing strong execution, foundation building, and "evidence that we are growing market relevance." Satya's language highlighted achievements and ongoing investment, while Taylor emphasized momentum and opportunities ahead.
* Compared to the previous quarter, analysts remained positive but focused more on the sustainability of growth and the transition from innovation to profitability. Management's tone shifted slightly more assertive, reinforcing confidence in guidance raises and strategic execution.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for full year net sales and adjusted EBITDA was raised in Q3, compared to Q2's maintained outlook.
* Strategic focus shifted further toward scaling successful innovation and expanding distribution, with more explicit plans for packaging refresh and new flavors.
* Analysts in Q3 targeted questions on the operational impact of distribution and packaging, while in Q2, there was more interest in the balance between profitability and marketing reinvestment.
* Key metrics such as gross margin declined in Q3 due to inventory obsolescence and tariffs, while Q2 saw margin improvement from cost savings.
* Management's confidence was more pronounced in Q3, with repeated references to exceeding expectations and the effectiveness of growth pillars.

RISKS AND CONCERNS

* Management cited a 350 basis point gross margin decline from inventory obsolescence related to packaging refresh and aluminum tariffs.
* Satya noted, "the 350 basis points impact from inventory losses associated with the packaging redesign was largely captured in the third quarter."
* Analysts raised concerns regarding the sustainability of distribution gains, the timing of packaging rollouts, and the impact of tariffs on profitability.
* Management identified ongoing marketing investment and further exposure to aluminum tariffs as continuing risks.

FINAL TAKEAWAY

Zevia highlighted strong execution across marketing, product innovation, and distribution, leading to a significant sales guidance raise for 2025 and improved profitability outlook. Management pointed to record-setting new product launches, expanded retail presence, and positive consumer engagement as the foundation for continued growth. Risks remain around gross margin pressures from packaging and tariffs, but the company's strategic pillars and operational momentum are guiding it towards sustainable profitability and further market penetration in the better-for-you beverage category.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/zvia/earnings/transcripts]

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