8-K: Zevia Q2 Net Sales Up 10.1%, Exceeds Guidance

Zevia PBC reported strong second quarter 2025 results, with net sales increasing 10.1% and Adjusted EBITDA turning positive, exceeding prior guidance.

Summary

• Net sales grew 10.1% to $44.5 million in the second quarter of 2025, up from $40.4 million in Q2 2024.
• Volume growth was 14.3%, primarily driven by expanded distribution at Walmart and a drug channel customer, alongside higher price realization.
• Gross profit margin improved by 6.8 percentage points to 48.7% in Q2 2025, compared to 41.9% in Q2 2024, due to lower product costs and improved inventory management.
• Net loss significantly improved to $0.7 million in Q2 2025, a $6.3 million improvement from a $7.0 million net loss in Q2 2024.
• Loss per share for Class A Common stockholders was $0.01, an improvement of $0.09 year over year.
• Adjusted EBITDA turned positive at $0.2 million in Q2 2025, a $4.6 million improvement from an Adjusted EBITDA loss of $4.4 million in Q2 2024.
• Selling and marketing expenses decreased to 30.0% of net sales from 33.7% in the prior year, with selling expenses down 7.1% due to freight and warehousing savings from the Productivity Initiative.
• Marketing expenses increased 9.6% to $4.7 million, funded by savings in direct selling expenses to drive brand awareness.
• General and administrative expenses increased by $0.4 million, primarily due to higher compensation from accrued bonuses and increased use of outside services, partially offset by lower headcount.
• Equity-based compensation decreased by $0.4 million to $1.0 million due to accelerated expense recognition on certain IPO equity awards.
• Restructuring expenses were less than $0.1 million, a significant reduction from $0.9 million in Q2 2024.
• As of June 30, 2025, the company had $26.3 million in cash and cash equivalents and no outstanding debt, with an unused $20 million credit line.

Sentiment

Score: 7

Explanation: The sentiment is positive due to strong financial performance exceeding guidance, significant improvements in net loss and Adjusted EBITDA, and successful strategic execution including distribution expansion and cost savings. However, the company still projects a full-year Adjusted EBITDA loss and acknowledges an uncertain macro environment, tempering the overall sentiment.

Positives

• Net sales increased by 10.1% to $44.5 million, exceeding expectations.
• Achieved positive Adjusted EBITDA of $0.2 million, a significant improvement of $4.6 million year over year and exceeding guidance.
• Gross profit margin improved substantially by 6.8 percentage points to 48.7%, driven by lower product costs and better inventory management.
• Net loss significantly narrowed to $0.7 million, an improvement of $6.3 million compared to the prior year.
• Volume growth of 14.3% indicates strong consumer demand and successful distribution expansion, particularly at Walmart and a key drug channel customer.
• Reduced selling expenses by 7.1% due to the Productivity Initiative, demonstrating effective cost management.
• Maintained a strong balance sheet with $26.3 million in cash and no outstanding debt, plus an unused $20 million credit line.

Negatives

• Despite significant improvement, the company still reported a net loss of $0.7 million for the quarter.
• The full-year 2025 Adjusted EBITDA outlook remains a loss, projected between $7 million and $9 million.
• The third quarter 2025 net sales outlook of $38.0 million to $40.0 million is lower than the second quarter's net sales of $44.5 million.
• The Q3 2025 Adjusted EBITDA loss outlook includes a $500 thousand charge related to a package redesign, impacting short-term profitability.
• The company anticipates higher costs associated with tariffs, which it expects to mitigate with additional cost efficiencies, but this remains a potential headwind.

Risks

• Ability to mitigate the impact of tariffs.
• Ability to develop and maintain the brand, successfully execute rebranding strategy, and compete effectively.
• Ability to maintain supply chain service levels and potential disruptions to the supply chain or product demand.
• Changes in the retail landscape or in sales to any key customer.
• Changes in consumer preferences and/or behaviors.
• Pricing factors.
• Ability to manage changes in the workforce.
• Future cyber incidents and other disruptions to information systems.
• Failure to comply with personal data protection and privacy laws.
• Impact of inflation on sales growth and cost structure, including increased commodity, packaging, transportation, freight, warehouse, labor, and other input costs.
• Adverse global macroeconomic conditions, including relatively high interest rates, instability in financial institutions, and a recessionary environment.
• Reliance on contract manufacturers and service providers.
• Competitive and governmental factors outside of the company's control.
• Changes in trade policies or tariffs.
• Geopolitical events or conflicts, including military conflicts in Ukraine and the Middle East, and trade tensions between the U.S. and China.
• Public health emergencies.
• Ability to maintain listing on the New York Stock Exchange.
• Failure to adequately protect intellectual property rights or infringement on intellectual property rights of others.
• Potential liabilities and costs from litigation, claims, legal or regulatory proceedings, inquiries, or investigations.

Future Outlook

The company continues to expect full-year 2025 net sales to be in the range of $158 million to $163 million. The Adjusted EBITDA loss for 2025 is now expected to be between $7 million and $9 million, reflecting ongoing benefits from cost-savings initiatives and planned reinvestment in marketing and promotional activities, while also accounting for higher tariff costs. For the third quarter of 2025, net sales are projected to be between $38.0 million and $40.0 million, with an Adjusted EBITDA loss of $3.4 million to $3.9 million, which includes a $500 thousand charge for a package redesign.

Management Comments

• Amy Taylor, President and CEO, stated, "We are pleased with our performance in the second quarter with net sales and adjusted EBITDA exceeding our expectations."
• Amy Taylor also highlighted, "We are proud of the work we have done over the last year to advance our strategic growth pillars to sharpen the Zevia brand, strengthen our foundation and accelerate our growth."
• Amy Taylor noted, "Our distinctive marketing is driving engagement, product innovation is resonating with new and existing customers, and we are building distribution beyond historical peak levels with strong sell-through across channels."
• Girish Satya, CFO, commented, "We continue to execute our strategic initiatives and feel good about the momentum in our business."
• Girish Satya added, "That said, we are operating in an uncertain macro environment and remain prudent in our net sales outlook. As we look ahead, we remain committed to reinforcing the foundation that we believe will drive long-term value creation."

Industry Context

Zevia PBC operates in the growing health and wellness beverage sector, specifically targeting consumers seeking zero sugar, zero calorie, and clean-label options. This aligns with broader industry trends of declining sugary drink consumption and increasing demand for natural, plant-based alternatives. As a Certified B Corporation, Zevia also appeals to the rising consumer preference for socially and environmentally responsible brands, differentiating itself in a competitive market.

Stakeholder Impact

• Shareholders: Positive impact due to improved financial performance, reduced losses, and exceeding guidance, potentially leading to increased investor confidence.
• Customers: Benefit from expanded distribution and product innovation, enhancing accessibility and choice.
• Employees: Impacted by headcount reductions in general and administrative functions as part of right-sizing efforts, but also benefit from accrued bonuses.
• Suppliers/Partners: Increased volume growth and distribution expansion suggest stronger demand for their services and products.

Next Steps

• Host a conference call on August 6, 2025, at 4:30 p.m. Eastern Time to discuss results.
• Continue to execute strategic initiatives to drive long-term value creation.
• Lay the groundwork for future growth and sustained profitability.

Key Dates

Recommendation

While Zevia PBC demonstrated strong operational improvements, exceeding Q2 guidance with positive Adjusted EBITDA and significant reduction in net loss, the company still projects a full-year Adjusted EBITDA loss and operates in an uncertain macro environment. The positive momentum and strategic execution are encouraging, but a seasoned investor would likely prefer to see sustained profitability and clearer path to positive full-year Adjusted EBITDA before a 'buy' recommendation. The current performance suggests a 'hold' as the company navigates its path to consistent profitability amidst ongoing investments and external challenges.

Keywords

Zevia, ZVIA, zero sugar, clean label, beverages, natural sweeteners, B Corporation, soft drinks, healthy drinks, consumer goods, plant-based