10-Q: Celsius Holdings Q3 2025: Acquisitions Drive Revenue Growth

Celsius Holdings reports significant revenue growth in Q3 2025, driven by the strategic acquisitions of Alani Nu and Rockstar, despite a net loss due to distributor termination fees.

Summary

• Revenue for the three months ended September 30, 2025, increased by 172.9% to $725.1 million, up from $265.7 million in the prior-year period.
• North American revenue grew by 184.1% in Q3 2025, primarily due to the Alani Nu acquisition, which contributed approximately $332.0 million.
• Gross profit for Q3 2025 increased by 204.6% to $372.3 million, with the gross profit margin improving to 51.3% from 46.0% in Q3 2024.
• The company reported a net loss attributable to common stockholders of $70.7 million ($0.27 per share) for Q3 2025, compared to a net loss of $0.6 million ($0.00 per share) in Q3 2024.
• The net loss was primarily driven by $246.7 million in distributor termination fees incurred in connection with transitioning Alani Nu distribution to Pepsi.
• Selling, general and administrative expenses increased by 64.0% to $205.6 million in Q3 2025, largely due to increased marketing, sales personnel, and acquisition/integration costs.
• The Alani Nu acquisition was completed on April 1, 2025, for a total consideration including $1,275.0 million in cash, 22,451,224 shares of common stock, and up to $25.0 million in contingent cash consideration.
• The Rockstar acquisition from Pepsi was completed on August 28, 2025, involving the issuance of Series B Preferred Stock and amendment of Series A Preferred Stock terms.
• A new Credit Agreement was entered into on April 1, 2025, providing a $900.0 million term loan facility (fully drawn) and a $100.0 million revolving credit facility (undrawn).
• Subsequent to the quarter, on October 2, 2025, the company refinanced its $900.0 million term loan with a new $700.0 million term loan and $198.8 million cash on hand, reducing interest rates by 0.75%.

Sentiment

Score: 5

Explanation: While the company achieved exceptional revenue growth driven by strategic acquisitions and an expanded partnership with PepsiCo, the significant net loss in Q3 2025 due to substantial one-time distributor termination fees and increased interest expense presents a mixed financial picture. The long-term strategic positioning is strong, but short-term profitability was negatively impacted.

Positives

• Achieved significant revenue growth of 172.9% in Q3 2025 to $725.1 million and 75.3% for the nine months ended September 30, 2025, reaching $1,793.6 million.
• North American revenue demonstrated strong growth, increasing by 184.1% in Q3 2025, driven by strategic acquisitions and organic performance of the Celsius brand.
• Gross profit margin improved to 51.3% in Q3 2025 from 46.0% in Q3 2024, and to 51.6% for the nine months ended September 30, 2025, from 50.2% in 2024, primarily due to lower net portfolio promotional spend, favorable mix, and scale benefits.
• The Alani Nu acquisition successfully contributed approximately $332.0 million in Q3 2025 revenue and $633.2 million for the period from acquisition to September 30, 2025, with outperformance relative to financial projections.
• Expanded strategic partnership with PepsiCo, including the acquisition of the Rockstar brand and an enhanced distribution agreement (Captaincy) for Celsius, Alani Nu, and Rockstar products in the U.S. and Canada.
• International markets continued to expand during the quarter, driven by recent market launches and sustained investment in distribution, marketing, and strategic partnerships.
• Refinanced the $900.0 million term loan facility on October 2, 2025, reducing applicable interest rates by 0.75% and utilizing $198.8 million cash on hand for partial repayment.
• Cash flows provided by operating activities increased significantly by $291.7 million to $478.9 million for the nine months ended September 30, 2025, reflecting strong operational performance and timing of payments.

Negatives

• Reported a net loss attributable to common stockholders of $70.7 million ($0.27 per share) for Q3 2025, a significant deterioration from a net loss of $0.6 million ($0.00 per share) in Q3 2024.
• Incurred substantial distributor termination fees of $246.7 million for Q3 2025, related to the transition of Alani Nu distribution to Pepsi, which significantly impacted profitability.
• Net income attributable to common stockholders for the nine months ended September 30, 2025, decreased to $54.7 million ($0.22 per share) from $131.0 million ($0.56 per share) in the prior-year period.
• Selling, general and administrative expenses increased by $80.2 million (64.0%) in Q3 2025, partly due to $15.3 million in acquisition and integration-related costs and $12.5 million attributable to Alani Nu administrative expenses.
• Total other expense for Q3 2025 was $8.0 million, an unfavorable change of $19.4 million from other income in Q3 2024, primarily driven by $18.2 million of interest expense on new debt.
• Cash flows used in investing activities increased by $1,257.7 million to $1,278.7 million for the nine months ended September 30, 2025, primarily due to the cash consideration paid for the Alani Nu acquisition.
• The company is involved in several ongoing legal proceedings, including securities class actions and derivative actions, for which it is currently unable to reasonably estimate a range of losses.
• A jury verdict of $82.6 million in compensatory damages was rendered against the company in the Strong Arm Productions lawsuit, though the amount was vacated and a retrial on damages ordered; the company has accrued a liability of $57.8 million, but the ultimate amount could be materially different.

Risks

• Ability to accurately estimate the termination fees payable to former distributors in connection with the Amended and Restated U.S. Distribution Agreement.
• Ability to successfully execute responsibilities under the Captaincy with Pepsi.
• Potential for brand dilution or cannibalization within Celsius's brand portfolio.
• Increased ownership stake and additional board representation by Pepsi may allow it to exert greater influence over strategic and governance decisions.
• Ability to successfully integrate Alani Nu, Rockstar, or other businesses that may be acquired.
• Failure to achieve the benefits expected to be realized as a result of the Alani Nu Acquisition, Rockstar Acquisition, or other businesses that may be acquired.
• Potential negative impact that could be realized as a result of the Alani Nu Acquisition, Rockstar Acquisition, or other businesses that may be acquired.
• Liabilities of Alani Nu, Rockstar, or other businesses that may be acquired that are not known.
• Ability to maintain a strong relationship with Pepsi or any other distributors.
• Impact of the consolidation of retailers, wholesalers, and distributors in the industry.
• Reliance on key distributor partnerships.
• Ability to maintain strong relationships with co-packers to manufacture products.
• Ability to maintain strong relationships with customers.
• Failure to accurately estimate demand for products.
• Impact of increases in cost or shortages of raw materials or increases in costs of co-packing.
• Ability to successfully achieve the benefits of the acquisition of Big Beverages, a co-packer.
• Ability to successfully estimate and/or generate demand through the use of third-parties, including celebrities, social media influencers, and others, may expose the company to risk of negative publicity, litigation, and/or regulatory enforcement action.
• Impact of additional labeling or warning requirements or limitations on the marketing or sale of products.
• Ability to successfully expand outside of the U.S. and the impact of U.S. and international laws, including export and import controls and other risk exposure.
• Ability to successfully complete or manage strategic transactions, successfully integrate and manage acquired businesses, brands or bottling operations, or successfully realize a significant portion of the anticipated benefits of joint ventures or strategic relationships.
• Ability to protect brand, trademarks, proprietary rights, and other intellectual property.
• Impact of internal and external cyber-security threats and breaches.
• Ability to comply with data privacy and personal data protection laws.
• Ability to effectively manage future growth.
• Impact of global or regional catastrophic events on operations and ability to grow.
• Impact of any actions by the U.S. Food and Drug Administration regarding the manufacture, composition/ingredients, packaging, marketing/labeling, storage, transportation, and/or distribution of products.
• Impact of any actions by the Federal Trade Commission on advertising.
• Ability to effectively compete in the functional beverage product industry and the strength of such industry.
• Impact of changes in consumer product and shopping preferences.
• Impact of changes in government regulation and ability to comply with existing regulation concerning energy drinks.
• Compliance with California's climate disclosure laws may subject the company to increased regulatory scrutiny, potential penalties and legal risks, which could adversely affect operations, financial condition and reputation.
• Fluctuations in market interest rates may cause future cash flows to vary, affecting borrowing costs and the fair value of debt obligations.

Future Outlook

The company expects to substantially settle any remaining Alani Nu termination-related obligations during the fourth quarter of 2025. It will continue to monitor pending legislation and implementation of the Pillar Two tax framework, but does not anticipate a material impact on its consolidated results. The company believes that cash available from operations, combined with its $100.0 million Revolving Credit Facility, will be sufficient to cover working capital needs and capital expenditures for the next twelve months and beyond. Alani Nu and Rockstar will be included in the assessment of internal controls over financial reporting and disclosure controls and procedures no later than the first anniversary of their respective acquisition dates.

Management Comments

• Our operational model strategically relies primarily on co-packers for the manufacture and supply of our products, leveraging their specialized expertise and scalable production capabilities. Additionally, we utilize our in-house manufacturing facility to complement our strategic use of co-packers.
• This approach allows us to maintain flexibility in responding to market demands and to focus our resources on innovation, marketing, and expanding our distribution channels.
• We continuously assess and work to optimize our supply chain to ensure quality, consistency and timely delivery to our customers.
• The Company believes that the claims asserted in the foregoing putative securities class actions and derivative actions are without merit and that the likelihood of loss is remote.
• The Company will vigorously defend itself and its current and former executive officers and directors.
• The Company believes Eniva's claims are without merit and the likelihood of loss is remote.
• The Company intends to continue to vigorously challenge the judgment through the appeal processes.

Industry Context

Operating in the dynamic functional energy drink market, Celsius Holdings has strategically expanded its brand portfolio through the acquisitions of Alani Nu (wellness-focused energy and nutritional products) and Rockstar (classic energy drink). This diversification positions the company to cater to a broader consumer base seeking functional performance and healthier options. The enhanced partnership with PepsiCo significantly strengthens Celsius's distribution capabilities, leveraging Pepsi's extensive network to prioritize its products. The industry continues to navigate macroeconomic uncertainties, inflationary pressures, and evolving global trade policies, which can impact supply chains and consumer demand. Additionally, the company, like others in the sector, is subject to regulatory oversight from bodies like the FDA and FTC regarding product claims and advertising, and new tax legislation such as Pillar Two.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• SEC Inquiry: Concluded on January 17, 2025, with the company paying a $3.0 million civil penalty for alleged reporting, books and records, internal accounting controls, and disclosure controls and procedures violations.
• Derivative Actions Related to 2022 Restatement: Globally settled on December 2, 2024, with a $1.0 million fee and expense award paid to plaintiffs' counsel on April 2, 2025. All related actions were dismissed by May 20, 2025.
• Securities Litigation Concerning the PepsiCo Inc. Distribution Agreement: Two putative securities class actions were consolidated on March 3, 2025. An amended complaint was filed on April 25, 2025, and the company's motion to dismiss was fully briefed on September 5, 2025, and remains pending.
• Derivative Actions (PepsiCo Distribution Agreement): Multiple derivative actions (Dobler, Stoyanoff, Sunny, Murphy, Flannery) were filed between December 2024 and March 2025, consolidated, and stayed pending a decision on the motion to dismiss in the Securities Class Action.
• California Consumer Class Action: Filed January 22, 2025, alleging misleading promotions. The plaintiff's complaint was dismissed with leave to amend on August 18, 2025. A motion to dismiss the amended complaint was filed on October 15, 2025, and is pending.
• Strong Arm Productions Lawsuit: A jury verdict of $82.6 million in compensatory damages was rendered against the company on January 18, 2023. The Fourth District Court of Appeal vacated the amount and directed a retrial on damages on December 11, 2024. The company has accrued a liability of $57.8 million, but the ultimate amount could be materially different.
• Eniva Trademark Litigation Concerning Vibe-Formative Marks: The company filed a declaratory judgment action on March 20, 2025. Eniva filed counterclaims on April 10, 2025, alleging trademark infringement and seeking injunctive relief, damages, and cancellation of trademarks.

Related Party Transactions

• Issued 390,000 shares of Series B Preferred Stock to PepsiCo for non-cash consideration totaling $585.0 million on August 28, 2025.
• Amended the terms of Series A Preferred Stock (held by PepsiCo) to align conversion and redemption dates with Series B Preferred Stock, resulting in a $27.9 million increase in fair value.
• Entered into an Amended and Restated U.S. Distribution Agreement with PepsiCo on August 28, 2025, designating PepsiCo as the primary distributor for Celsius, Alani Nu, and Rockstar products in the U.S. and Canada.
• Received $126.5 million in cash from PepsiCo as reimbursement for Alani Nu distributor termination fees, recorded as restricted cash.
• Expected to receive an additional $126.6 million in cash from PepsiCo for remaining distributor termination fees, recorded within prepaid expenses and other current assets.
• Recorded $253.0 million as deferred revenue under the Amended and Restated U.S. Distribution Agreement related to reimbursements for distributor termination fees.
• Deferred other costs related to the 2025 PepsiCo transaction were $35.4 million (current) and $560.6 million (non-current) as of September 30, 2025.
• Deferred other costs related to the 2022 PepsiCo transaction were $14.1 million (current) and $223.6 million (non-current) as of September 30, 2025.
• Deferred revenue related to the 2025 PepsiCo transaction was $15.0 million (current) and $236.8 million (non-current) as of September 30, 2025.
• Deferred revenue related to the 2022 PepsiCo transaction was $9.5 million (current) and $150.6 million (non-current) as of September 30, 2025.
• Revenue from PepsiCo accounted for 35.4% of total revenue for Q3 2025 (down from 47.0% in Q3 2024) and 38.5% for the nine months ended September 30, 2025 (down from 53.5% in 9M 2024).
• Accounts receivable from PepsiCo represented 37.4% of total accounts receivable as of September 30, 2025 (down from 62.2% as of December 31, 2024).
• Accounts payable due to PepsiCo was $2.3 million as of September 30, 2025.
• Accrued expenses due to PepsiCo was $0.3 million as of September 30, 2025.
• Accrued promotional allowance due to PepsiCo was $95.3 million as of September 30, 2025.
• Current deferred revenue due to PepsiCo was $24.5 million as of September 30, 2025.
• Non-current deferred revenue due to PepsiCo was $387.4 million as of September 30, 2025.

Stakeholder Impact

• Shareholders: Experienced significant revenue growth from strategic acquisitions, which could be positive long-term. However, the Q3 net loss and decreased nine-month net income, coupled with ongoing legal challenges, introduce short-term uncertainty and risk.
• Employees: The company expanded its workforce through continued investment in sales and marketing personnel, and the Rockstar acquisition included key personnel in advertising and marketing.
• Customers: Benefit from an expanded product portfolio (Celsius, Alani Nu, Rockstar) and enhanced distribution capabilities through the strategic partnership with PepsiCo.
• Distributors: The transition of Alani Nu distribution to PepsiCo resulted in significant termination fees for former distributors, while PepsiCo gained expanded distribution rights.
• Creditors: The company incurred new debt through a term loan facility and revolving credit facility, with a subsequent refinancing. Exposure to interest rate risk due to variable rates on debt.
• Regulatory Authorities: The company settled an SEC inquiry with a civil penalty and is monitoring new tax legislation. It faces potential scrutiny from the FDA and FTC regarding product claims and advertising.

Next Steps

• Substantially settle any remaining Alani Nu termination-related obligations during the fourth quarter of 2025.
• Continue to vigorously challenge the judgment in the Strong Arm Productions lawsuit through appeal processes, including the Florida Supreme Court.
• Monitor pending legislation and implementation of the Organization for Economic Co-operation and Development's Pillar Two tax framework.
• Include Alani Nu and Rockstar in the assessment of internal controls over financial reporting and disclosure controls and procedures no later than the first anniversary of their respective acquisition dates.
• Await a decision on the motion to dismiss in the Securities Class Action, which was fully briefed on September 5, 2025.
• Await a decision on the motion to dismiss, or in the alternative, transfer, the amended complaint filed on October 15, 2025, in the California Consumer Class Action.
• Evaluate the appropriate accounting treatment for the October 2, 2025, debt refinancing under applicable U.S. GAAP.

Key Dates

Recommendation

The company demonstrates robust top-line growth driven by successful strategic acquisitions of Alani Nu and Rockstar, and an expanded, long-term partnership with PepsiCo, which are strong indicators for future market positioning. However, the significant one-time distributor termination fees led to a substantial net loss in Q3 2025, and the nine-month net income declined year-over-year. While the recent debt refinancing is a positive step to optimize capital structure, ongoing legal proceedings, particularly the retrial on damages for the Strong Arm Productions lawsuit, introduce considerable uncertainty regarding potential future liabilities. Given these mixed signals of strong strategic execution and growth potential alongside immediate profitability challenges and legal overhangs, a 'hold' recommendation is prudent. Investors should monitor the successful integration of acquired brands, the realization of anticipated synergies, and the resolution of legal matters before adjusting their position.

Keywords

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