10-K: Zevia Narrows Losses, Boosts Sales Amid Productivity Drive

Zevia PBC reported a significant reduction in net loss for 2025, driven by increased net sales and benefits from its multi-year Productivity Initiative, despite ongoing macroeconomic challenges and tariff impacts.

Summary

• Net sales increased by 4.0% to $161.3 million in 2025, up from $155.0 million in 2024.
• Gross profit rose by 7.6% to $77.4 million in 2025, compared to $71.9 million in 2024, with gross margin improving to 48.0% from 46.4%.
• Net loss significantly narrowed to $11.2 million in 2025, a substantial improvement from $23.8 million in 2024.
• Loss from operations improved to $11.8 million in 2025 from $23.7 million in 2024.
• Adjusted EBITDA improved to a loss of $4.7 million in 2025, compared to a loss of $15.2 million in 2024.
• Equivalized cases sold increased by 5.0% to 12.7 million in 2025, up from 12.1 million in 2024.
• The multi-year Productivity Initiative, which began in Q2 2024, incurred $2.2 million in restructuring costs in 2025 and is expected to yield $20.0 million in annualized benefits through 2026.
• Cash and cash equivalents stood at $25.4 million as of December 31, 2025, down from $30.7 million in 2024.
• The Tea product line will be discontinued in 2026.
• Tariffs on steel and aluminum imports (25% from March-June 2025, 50% from June 2025) increased cost of goods sold and are expected to continue impacting results.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing positively due to significant improvements in net loss, operating loss, and Adjusted EBITDA, coupled with revenue growth and successful cost-saving initiatives. While challenges like tariffs and customer concentration persist, the company's strategic investments in brand and efficiency are yielding tangible results, indicating a strong trajectory towards profitability.

Positives

• Net sales increased by 4.0% to $161.3 million in 2025, indicating continued revenue growth.
• Gross profit improved by 7.6% to $77.4 million, and gross margin expanded by 1.6 percentage points to 48.0% in 2025, reflecting better cost management and pricing.
• Net loss significantly reduced by over 50% to $11.2 million in 2025, demonstrating progress towards profitability.
• Operating loss improved substantially from $23.7 million in 2024 to $11.8 million in 2025.
• Adjusted EBITDA showed a strong improvement, reducing the loss from $15.2 million in 2024 to $4.7 million in 2025.
• Equivalized cases sold increased by 5.0% to 12.7 million, indicating higher product volume and market penetration.
• The Productivity Initiative is delivering expected annualized benefits of approximately $20.0 million, contributing to cost reductions in COGS and operating expenses.
• Marketing expenses increased by 14.2% to $19.5 million, indicating strategic investment in brand awareness and customer conversion.
• Selling expenses decreased by 17.9% to $32.9 million, primarily due to the Productivity Initiative and lower inventory levels, demonstrating efficiency gains.
• The company maintains a Secured Revolving Line of Credit of $20 million with no outstanding balance as of December 31, 2025, providing financial flexibility.

Negatives

• The company continues to report a net loss of $11.2 million in 2025, extending its history of losses since inception.
• Cash and cash equivalents decreased by $5.3 million to $25.4 million in 2025.
• Operating activities used $4.7 million in cash in 2025, an increase from $1.0 million used in 2024.
• Tariffs on steel and aluminum imports (25% from March to June 2025, 50% starting in June 2025) have increased cost of goods sold and are expected to continue to do so.
• The Tea product line will be discontinued in 2026, indicating a reduction in product portfolio.
• Customer concentration remains high, with the largest customer representing 14% of net sales and the top ten customers accounting for 75% of net sales in 2025, posing a risk if any major customer is lost.
• Supplier concentration is also high, with three vendors accounting for approximately 100% of total raw material and finished goods purchases in 2025, creating supply chain risk.
• The company faces a lawsuit alleging misleading product labels, with an uncertain outcome and potential significant defense expenses.

Risks

• Inability to compete effectively in the intensely competitive commercial beverage industry against larger corporations with greater financial resources.
• Failure to further develop, maintain, and promote the Zevia brand, especially given reliance on simple ingredients and continuous reformulation.
• Changes in the retail landscape or the loss of key retail customers, particularly with the largest customer representing 14% of net sales and top ten customers representing 75%.
• Adverse changes in consumer preferences, perception, and spending habits, especially regarding zero sugar, naturally sweetened products, or due to inflation.
• Product safety and quality concerns, including those related to the sweetening system, potentially leading to lawsuits, recalls, or regulatory actions.
• Fluctuations in net sales and earnings due to price concessions, promotional activities, and chargebacks.
• Loss of any registered trademark or other intellectual property, or claims of infringement.
• Continued history of losses and potential inability to achieve or maintain profitability.
• Failure to attract, hire, train, or retain qualified personnel, manage future growth effectively, or maintain company culture.
• Impact of adverse global macroeconomic conditions, including high interest rates, recession fears, inflationary pressures, and changes to foreign trade policies and geopolitical events.
• Climate change, adverse weather conditions, natural disasters, crop disease, and pests affecting raw material availability and cost.
• Difficulties and challenges associated with expansion into new markets, including understanding consumer preferences and increased competition.
• Inability to obtain raw materials on a timely basis or in sufficient quantities due to reliance on a limited number of third-party suppliers (three vendors for ~100% of raw materials/finished goods).
• Trade tensions between the U.S. and China, and changes in U.S. foreign trade policies, including tariffs on steel and aluminum imports.
• Substantial disruption within the supply chain or distribution channels, including at contract manufacturers, warehouses, and due to transportation issues.
• Extensive governmental regulation and enforcement, with potential non-compliance leading to fines, recalls, or other adverse actions.
• Changes in laws and regulations relating to beverage containers and packaging, as well as marketing and labeling.
• Dependence on distributions from Zevia LLC to pay taxes and other expenses, including substantial payments under the Tax Receivable Agreement (TRA).
• Failure to maintain compliance with NYSE listing standards, potentially leading to delisting.
• Increased derivative litigation risk and potential actions that do not maximize stockholder value due to status as a public benefit corporation.
• Inadequacy, failure, interruption, or security breaches of information technology systems and failure to comply with data privacy and information security laws and regulations.
• Impact of any future pandemics, epidemics, or other disease outbreaks on business, results of operations, and financial condition.
• Inability to secure additional financing on favorable terms, or at all, to meet future capital needs.
• Covenants in the credit facility could adversely impact operations, including a minimum fixed charge coverage ratio requirement.

Future Outlook

The company expects continued investment in brand awareness and promotional activity in 2026, partially funded by ongoing savings from the Productivity Initiative. It aims to balance reinvesting savings to drive revenue growth with plans for achieving profitability. The Tea product line will be discontinued in 2026. The company anticipates continued increases in cost of goods sold due to tariffs on steel and aluminum. Future capital requirements will depend on revenue growth, gross margin, and expenditure levels, with potential needs for additional equity or debt financing. The company will continue to monitor macroeconomic trends, global health emergencies, inflationary pressures, and trade policies.

Management Comments

• We have invested, and expect to continue to invest, in resources for the protection and safeguarding of our information technology systems.
• We believe that consumers increasingly select beverage products based on a variety of factors including taste, ingredients and fit with todays consumer preferences, which has benefited the Zevia brand and resulted in over 2.6 billion cans of Zevia sold to date.
• Our Soda sales constituted approximately 95% of our net sales in 2025 and remains our primary focus as we see significant opportunities for growth in this product line.
• We believe our Energy product line reflects a significant future growth opportunity to expand across multiple channels.
• We believe that by consistently offering great tasting products that are all zero calorie, zero sugar and naturally sweetened, with sustainable packaging under one brand, we can attract consumers to our new flavors and categories.
• We expect to continue to see an increase in our cost of goods sold going forward due to the implementation of import tax on steel and aluminum.
• We believe that our current facilities are suitable and adequate to meet our current needs and that additional or alternative space will be available on reasonable commercial terms.

Industry Context

StockSavvy.ai notes that Zevia PBC operates in a highly competitive commercial beverage industry, with major players like The Coca-Cola Company and PepsiCo, Inc. increasingly focusing on the 'better-for-you' segment. The company's emphasis on zero-sugar, naturally sweetened, and sustainably packaged products aligns with broader consumer trends towards health consciousness and environmental responsibility. However, the industry faces challenges from macroeconomic conditions, including inflation and tariffs, which impact supply chain costs and consumer spending. Zevia's strategy to reinvest productivity savings into brand marketing is a common approach to gain market share in this evolving landscape, but intense competition for shelf space remains a significant hurdle.

Comparison to Industry Standards

• Zevia's focus on zero-sugar, naturally sweetened beverages positions it within a growing segment, contrasting with traditional soda giants like The Coca-Cola Company and PepsiCo, Inc., which are now actively acquiring or launching their own 'better-for-you' alternatives (e.g., PepsiCo's acquisition of Poppi, Coca-Cola's Simply Pop).
• The company's exclusive use of aluminum cans since its founding in 2007 for all beverage containers, avoiding plastic bottles, sets a high standard for sustainable packaging compared to many industry peers who still heavily rely on plastic.
• Zevia's estimated avoidance of over 103,000 metric tons of sugar and over one billion plastic bottles since 2011 demonstrates a tangible impact on health and environment, which is a strong differentiator in the consumer-packaged goods market.
• The company's implementation of cybersecurity systems and controls based on the U.S. National Institute of Standards and Technology Cybersecurity Framework (NIST CSF) indicates adherence to recognized industry best practices for information security, comparable to standards adopted by many larger enterprises.

Corporate Governance

Legal Proceedings

• The company is involved in various claims, proceedings, and litigation from time to time.
• A specific lawsuit is ongoing in the United States District Court in the Central District of California, where the plaintiff alleges that certain claims on the company's product labels are misleading. The company denies these allegations and intends to vigorously defend itself, but the outcome is uncertain and could involve significant defense expenses.

Related Party Transactions

• The company entered into a Tax Receivable Agreement (TRA) with continuing members of Zevia LLC and certain pre-IPO institutional investors (Direct Zevia Stockholders). This agreement requires payments of 85% of certain tax benefits realized by the company to these parties.
• Zevia LLC reimburses Zevia PBC for certain overhead, administrative, and other expenses, with the majority of such costs being retained by Zevia PBC.

Stakeholder Impact

• Shareholders: Potential for increased value due to reduced losses and revenue growth, but also risks from high customer/supplier concentration, tariffs, and potential dilution from future capital raises. Public benefit corporation status may lead to decisions not solely maximizing short-term shareholder value.
• Employees: Impacted by the Productivity Initiative which included a reduction in workforce, but also benefit from competitive compensation, equity-based compensation, and a comprehensive benefits package. The company emphasizes an inclusive and high-performance culture.
• Customers: Benefit from continued product innovation and marketing efforts, but face potential price increases due to tariffs. High customer concentration means significant reliance on a few key retailers.
• Suppliers: Three key vendors account for nearly all raw material and finished goods purchases, indicating strong relationships but also high dependence. Tariffs impact their costs and, consequently, the company's COGS.
• Consumers: Benefit from the company's mission to provide zero-sugar, naturally sweetened, and sustainably packaged beverages. The discontinuation of the Tea line may impact some consumers, while increased marketing aims to drive broader brand awareness.
• Regulatory Authorities: The company is subject to extensive federal, state, provincial, and local regulations regarding product safety, labeling, and marketing, and actively monitors changes in trade policies and data privacy laws.

Next Steps

• Continue to invest in brand awareness and customer conversions, partially funded by Productivity Initiative savings, in 2026.
• Balance reinvesting savings to drive revenue growth with plans for achieving profitability.
• Discontinue the Tea product line in 2026.
• Monitor and mitigate the impact of increased cost of goods sold due to tariffs on steel and aluminum.
• Evaluate opportunities for additional or alternative office space to support future use and expansion.
• File the definitive proxy statement for the 2026 Annual Meeting of Stockholders no later than 120 days after December 31, 2025.

Key Dates

Recommendation

Zevia PBC demonstrates significant progress in reducing its net loss and improving gross margins, driven by effective cost-saving initiatives and revenue growth. The company's strategic investments in brand and product innovation are positive. However, persistent net losses, a decrease in cash, high customer and supplier concentration, and the ongoing impact of tariffs present notable risks. The potential for future capital raises could also lead to dilution. Given the mixed financial performance and identified risks, a 'hold' recommendation is appropriate for investors to observe sustained profitability and successful navigation of macroeconomic and competitive pressures before considering further investment.

Keywords

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