Celsius Holdings, Inc. (NASDAQ: CELH) shares slumped 11.5% in premarket trading Thursday, as investors focused on soft performance within its flagship CELSIUS brand despite headline results that surpassed Wall Street forecasts.
The energy and wellness beverage company posted adjusted earnings of $0.42 per share for the third quarter, well above the $0.28 consensus estimate. Revenue climbed to $725.1 million, topping expectations of $715.7 million and surging 173% year over year from $265.7 million. However, analysts noted that much of the increase was driven by recent acquisitions rather than organic brand momentum.
Across its portfolio, total retail sales rose 31% year over year, but results varied widely by brand. The core CELSIUS line grew 13%, Alani Nu—acquired in April—jumped 114%, while Rockstar Energy, purchased in August, declined 9%. The CELSIUS brand’s U.S. ready-to-drink (RTD) energy market share slipped 0.5 points to 11.2% from a year earlier.
“The third quarter marked another important step in Celsius Holdings’ transformation in a year full of growth catalysts,” said John Fieldly, Chairman and CEO. “We strengthened our long-term partnership with PepsiCo and united CELSIUS, Alani Nu, and Rockstar Energy under one total energy portfolio.”
Gross margin improved to 51.3% from 46.0% a year ago, benefiting from lower promotional costs, better product mix, and economies of scale. International revenue also expanded 24% to $23.1 million.
The company incurred $246.7 million in distributor termination charges tied to shifting Alani Nu’s distribution to the PepsiCo system, though PepsiCo agreed to cover these expenses, leaving Celsius in a net neutral cash position.
In line with its long-term strategy, Celsius announced several leadership changes, naming Rishi Daing as Chief Marketing Officer, as the company looks to strengthen its operational foundation and sustain future growth.