Celsius suffered a 33% year-over-year drop in North America revenue during Q3, thanks in part to previously announced inventory cuts by distribution partner PepsiCo.
The Florida-based energy drink company reported a $123.9 million drop in revenue from Pepsi as a result of the supply optimization, slightly above estimates from analysts at Jefferies. In a statement, Celsius CEO and chairman John Fieldly acknowledged the move had an “outsized and adverse impact on our operating results” while voicing confidence that conditions have “largely stabilized.”
“We remain focused on our long-term growth strategy of expanding our consumer base, broadening our availability, and being the preferred beverage for more occasions,” he said.
Total revenue declined 31% from the same period last year, falling to $265.7 million. The company reported retail sales rose 7% in U.S. MULO Plus with Convenience, citing data from Circana. International sales increased 37% year-over-year, and Amazon sales jumped 21% with Celsius holding a 20% share on the site.
“Gross and operating margins in the third quarter fell short due to significantly reduced orders because our largest distributor implemented a sizable, successful and efficient supply chain optimization program in the quarter, but we managed our sales and marketing spend to minimize interruptions while still turning a profit in the quarter,” said Jarrod Langhans, Chief Financial Officer at Celsius. “
Langhans noted that the company’s “strong balance sheet” enabled its $75 million cash acquisition of long-time copacker Big Beverages and its 170,000 square foot manufacturing and warehouse facility in Charlotte, N.C.
Celsius passed the $1 billion sales mark this quarter as well, with year-to-date revenue up 5% from 2023.
The energy drink maker has been one of the biggest beverages of the decade thus far, surpassing $1 billion in full-year revenue in February and solidifying its position as the third best-selling brand in the energy category behind Monster and Red Bull. However its growth has decelerated over the past 12 months in the midst of a general slowdown in energy drink sales. In Q2 2024, revenue rose 23.4% to $402 million (compared to $325 million in the same period in 2023), down from 37% growth in Q1 2024 and a record 95% in Q4 2023.