Q3 2025 Zevia PBC Earnings Call
Greetings and welcome to the <unk> PBC Q3, 2025 earnings call at this time, all participants are in a listen only mode.
Operator: Greetings, and welcome to the Zevia PBC Q3 2025 Earnings Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Anne McGuinness, Investor Relations. Thank you. You may begin.
A brief question and answer session will follow the formal presentation should anyone require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host and Guinness Investor Relations. Thank you you may begin.
Thank you and welcome with UBS third quarter 2025 earnings Conference call on today's call are President and Chief Executive Officer, and Gary <unk>, Chief Financial Officer, and principal accounting officer.
Anne McGuinness: Thank you, welcome to Zevia's Q3 2025 Earnings Conference Call. On today's call are Amy Taylor, President and Chief Executive Officer, and Girish Satya, Chief Financial Officer and Principal Accounting Officer. By now, everyone should have access to the company's Q3 2025 earnings press release and investor presentation made available this afternoon. This information is available on the investor relations section of Zevia's website at investors.zevia.com. Before we begin, please note that all financial information presented on today's call is unaudited. Certain comments made on this call include forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
I know everyone's pick up access to the company's third quarter 2025 earnings press release and Investor presentation made available this afternoon.
This information is available on the Investor Relations section of Bbs website at investors that GBS dotcom.
Before we begin please note that all financial information presented on today's call is unaudited certain comments made on this call include forward looking statements, which are subject to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995. These forward looking statements are based on management's current expectations and beliefs.
Anne McGuinness: These forward-looking statements are based on management's current expectations and beliefs concerning future events and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. During the call, we will use some non-GAAP financial measures as we describe business performance. The SEC filings, as well as the earnings press release, presentation slides that accompany today's comments, and reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are also available on our website at investors.zevia.com. Now, I'd like to turn the call over to Amy Taylor.
Concerning future events and are subject to a number of risks and uncertainties that could cause.
Cause actual results to differ materially from those described in these forward looking statements.
Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward looking statements made today.
During the call we will use some non-GAAP financial measures as we describe business performance.
SEC filings as well as the earnings press release presentation slides that accompany today's comments and reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are also available on our website at investors <unk> Dot com and now I'd like to turn the call over to Amy Taylor.
Amy Taylor: Good afternoon, everyone. Thank you for joining our Q3 2025 earnings conference call. Our Q3 results reflect strong progress and provide clear signs that our strategy is taking effect. Our initiatives are positioning us for durable growth and profitability over time. Our Q3 results exceeded our expectations with net sales growth of 12% to $40.8 million and adjusted EBITDA loss of $1.7 million. Based on our better than expected performance and the continued progress across our strategic growth pillars, we are raising our full year net sales and adjusted EBITDA guidance, which Girish will speak to shortly. I'll share the progress we've made across our three strategic growth pillars of high impact brand marketing, accelerated product innovation, and expanded distribution.
Good afternoon, everyone and thank you for joining our third quarter 2025 earnings conference call.
Third quarter results reflect strong progress and provide clear signs that our strategy is taking effect our initiatives are positioning us for durable growth and profitability over time, our third quarter results exceeded our expectations with net sales growth of 12% to $48 million and adjusted EBIT loss of $1 7 million.
Based on our better than expected performance and the continued progress across our strategic growth pillars. We are raising our full year net sales and adjusted EBITDA guidance, which girish will speak to shortly.
I'll share the progress we've made across our three strategic growth pillars of high impact brand marketing accelerated product innovation and expanded distribution.
Beginning with marketing our brand building initiatives are resonating with consumers and gaining traction against our key priority of expanding our user base.
Amy Taylor: Beginning with marketing, our brand building initiatives are resonating with consumers and gaining traction against our key priority of expanding our user base. Strong Q3 results reflect, in part, the success of our summer campaign, the launch of Strawberry Lemon Burst and the playful summer break sweepstakes, which were activated on social and received favorable editorial media coverage, extending reach and driving engagement. Zevia has a great story to tell as the consumer moves away from the artificial and seeks better for you products from brands that they trust. We are Soda Made Better, and our new brand messaging, design, and tone of voice are resonating across media channels and in store. Based on proprietary survey data, while early, brand consideration and purchase intent have made double-digit gains this year, and social media engagement rates continue to build to levels well above channel benchmarks.
<unk> third quarter results reflect in part the success of our summer campaign, the launch of Strawberry Lemon burst in the playful summer break sweepstakes, which were activated on social and received favorable editorial media coverage extending reach and driving engagement.
Maybe it has a great story to tell as the consumer moves away from the artificial and seeks better for you products from brands that they trust. We are soda made better and our new brand messaging design and tone of voice are resonating across media channels and in store.
Based on proprietary survey data, while early brand consideration and purchase intent and may double digit gains this year and social media engagement rates continue to build the levels well above channel benchmarks as.
Amy Taylor: As the broad cultural conversation continues to focus on health and ingredients, major food and beverage companies scramble to remove artificial ingredients and colors. Zevia has and will continue to be ahead of this movement with a clean label, clear soda with natural flavors and sweeteners, and is telling its story through cross-channel brand campaigns and high reach influencer activations. Our humorous, engaging campaign supporting Amazon exclusive Peaches and Cream is a great example, giving the flavor a hot start and the brand a strong halo via virality on Instagram and TikTok. In addition, Zevia's competitions featuring UGC or user-generated content have been fruitful in driving awareness and trial, especially when activated with a focus on specific customers, ranging from Albertsons, Kroger, and Walmart to Costco.
The broad cultural conversation continues to focus on health and ingredients major food and beverage companies scramble to remove artificial ingredients and colors zubia as and we will continue to be ahead of this movement with a clean label clear soda with natural flavors and sweeteners and is telling its story to cross channel brand.
And high reach Influencer Activations.
Our humor us engaging campaign supporting Amazon exclusive peaches and cream is a great example, given the flavor I'll start and the brand a strong halo via virility on Instagram and Tic Toc in addition.
Competitions, featuring UGC or user generated content have been fruitful and driving awareness and trial, especially when activated with a focus on specific customers ranging from Albertsons, Kroger and Wal Mart to Costco.
Amy Taylor: On the ground, we continue in-market activations at events like Gaming's 100 Thieves Block Party in July, Diplo's Run Club across August, September, and October, and periodic joint efforts with well-aligned partners such as Life Time Fitness at running, cycling, and mountain biking events. These events are equal parts brand building and sampling opportunities focused on winning new users, which remains our top priority. Turning to innovation, the performance of our recent product launches offer strong proof points that our portfolio evolution is driving brand momentum. New flavor profiles and a more sugar-like taste experience, along with delicious-looking new packaging and dynamic marketing, continue to support velocity and drive trial. Our portfolio evolution this year is working. Exciting new flavors launched nationwide received strong consumer acceptance and retailer exclusive or limited time offer flavors brought brand heat.
On the ground, we continue in market activation at events like gaming is 100 D Block Party of July Deploys run club across August September and October and periodic joint efforts with well aligned partners such as lifetime fitness at running cycling and mountain biking events. These events are equal parts brand building and sampling opportunities.
Focus on winning new users, which remains our top priority.
Turning to innovation the performance of our recent product launches offer strong proof points that our portfolio evolution is driving brand momentum new flavor profiles and a more sugar like taste experience, along with delicious looking new packaging and dynamic marketing.
To support velocity and drive trial.
Our portfolio evolution. This year is working exciting new flavors launched nationwide received strong consumer acceptance and retailer exclusive or limited time offer flavors brought brand heat.
The debut of Strawberry Lemon burst nationwide orange cream sickle in the natural channel and fruity variety pack initially at Walmart demonstrates that we are on point and flavor trends.
Amy Taylor: The debut of Strawberry Lemon Burst nationwide, Orange Creamsicle in the Naturals channel, and Fruity Variety Pack initially at Walmart demonstrate that we are on point in flavor trends. Each are showing promising results and have been drivers of increased Zevia space at retail and of accelerating velocities. Peaches & Cream and Salted Caramel provided new news this quarter as exclusives or limited time offers respectively, and Strawberries & Cream is doing the same in selected retailers here in Q4. Each is off to a good start and will inform the portfolio evolution for 2026 and beyond. Peaches & Cream has been the fastest-selling new Zevia item ever on Amazon, while Strawberries & Cream was immediately a top three velocity driver at Kroger. Our Fruity Variety Pack has quickly become the number one Zevia SKU at Walmart.
Each are showing promising results and have been drivers of increased Cvs space at retail and are accelerating velocities.
Teachers, and cream and salted caramel provided new news this quarter as exclusives or limited time offers respectively and strawberries and cream is doing the same in selected retailers here in Q4 <unk> is off to a good start and we will inform the portfolio evolution for 2026 and beyond.
This is <unk> cream has been the fastest selling new <unk> item ever on Amazon, while strawberries and cream was immediately a top three velocity driver at Kroger.
Our fruity variety pack has quickly become the number one CBS SKU at Walmart, we remain the only better for you brand offer a multi packs and variety packs at accessible price points.
Amy Taylor: We remain the only better-for-you brand offering multi-packs and variety packs at accessible price points. Finally, we're very pleased with the positive response to our refreshed packaging. Featuring Soda Made Better, our strong brand block will highlight zero sugar, no artificial colors, and no artificial sweeteners. Our proprietary research indicates a meaningful increase in purchase intent versus the prior design and versus competition. We are on track to roll new packaging out to legacy flavors as well in early 2026, in parallel with the introduction of a new, more sugar-like taste experience across legacy and new flavors alike. Moving on to distribution, a key component of our strategic growth plan. We both regained and opened new points of distribution over the past nine months. We attribute this expansion to strong product innovation as well as brand momentum delivered by marketing.
And finally, we're very pleased with the positive response to our refreshed packaging fees.
Featuring soda made better our strong brand block will highlight zero sugar no artificial colors and no artificial sweeteners are proprietary research indicates a meaningful increase in purchase intent versus the prior design and versus competition.
We are on track to roll new packaging out to legacy flavors as well in early 2026 in parallel with the introduction of the new more sugar like taste experience across legacy and new flavors are alike.
Moving on to distribution at key component of our strategic growth plan.
We both regained and opened new points of distribution over the past nine months, we attribute this expansion to strong product innovation as well as brand momentum delivered by market.
Our national Walmart distribution continues to drive new to brand consumers.
Amy Taylor: Our national Walmart distribution continues to drive new to brand consumers. We're also pleased to share that following a successful pilot at the start of this year, we'll be expanding into more than half of Walmart's Canadian stores going forward. Distribution gains at grocery were also a key driver of our growth year to date, with innovation in flavor and in packs supporting increased space gains. In the club channel, increasing sales velocity drove additional regional rotations, reflecting in part the impact of our new packaging. The positive reception has exceeded our expectations. Then in convenience, we're seeing some encouraging early indicators, even as the rollout in the channel for brand and for category remains in the early stages of development. Performance is tracking in line with broader natural soda category trends, providing a good selling story as we continue to thoughtfully expand our regional footprint in 2026.
We're also pleased to share that following a successful pilot at the start of this year, we'll be expanding into more than half of walmart's Canadian stores going forward.
Distribution gains at grocery were also a key driver of our growth year to date with innovation and flavor and in packs supporting increased space gains in the club channel increasing sales velocity drove additional regional rotations, reflecting in part the impact of part of your packaging the positive reception has exceeded our expectations.
And then in convenience, we're seeing some encouraging early indicators, even as the rollout in the channel for brand and for category remains in the early stages of development performance is tracking in line with broader national soda category trends, providing a good selling story as we continue to thoughtfully expand our regional footprint in 2026.
In closing with our strategy firmly in place and with strong execution, we are reshaping the business and paving the way to capitalize on the changing consumer landscape and category tailwind.
Amy Taylor: In closing, with our strategy firmly in place and with strong execution, we are reshaping the business and paving the way to capitalize on a changing consumer landscape and category tailwinds. We see evidence that we are growing market relevance and are on track to thoughtfully scale the business quarter by quarter and year over year. With that, I'll turn the call over to Girish.
We see evidence that we are growing market relevance and are on track to thoughtfully scaled the business quarter by quarter and year over year, and so with that I'll turn the call over to Girish.
Thank you Amy good afternoon, everyone and thanks for joining our call today.
Girish Satya: Thank you, Amy. Good afternoon, everyone, Thanks for joining our call today. Our Q3 results reflect strong execution of our strategic plan with both revenue and adjusted EBITDA exceeding expectations. Over the past 18 months, the savings from our productivity initiatives have enabled us to invest meaningfully while strengthening Zevia's market position within the better-for-you soda category. Importantly, the work we have done has created a solid foundation for sustained growth and profitability. In light of our strong Q3 performance, we are raising our full year 2025 net sales and adjusted EBITDA guidance, which I'll address shortly. Turning to our results. Net sales in the Q3 increased 12% to $40.8 million. The increase versus the prior year was primarily due to expanded distribution at Walmart and incremental regional rotations at the club channel.
Our third quarter results reflect strong execution of our strategic plan with both revenue and adjusted EBITDA exceeding expectations.
Over the past 18 months savings from our productivity initiatives have enabled us to invest meaningfully while strengthening <unk> market position within the better for you soda category.
Importantly, the work we have done is created a solid foundation for sustained growth and profitability.
In light of our strong third quarter performance, we are raising our full year 2025, net sales and adjusted EBITDA guidance, which I'll address shortly.
Turning to our results net sales in the third quarter increased 12% to $40 8 million.
Increase versus the prior year was primarily due to expanded distribution at Walmart and incremental regional rotation that the club channel.
Gross margin reached 45, 6%, a 350 basis point decline from 49, 1% in the third quarter of last year, reflecting the $8 million of inventory obsolescence associated with the packaging refresh and the full realization of aluminum tariff, which we discussed previously as.
Girish Satya: Gross margin reached 45.6% at 350 basis point decline from 49.1% in Q3 of last year, reflecting the $0.8 million in inventory obsolescence associated with the packaging refresh and the full realization of aluminum tariffs, which we discussed previously. As we mentioned earlier, we invested in a package redesign that brought to life our new flavor profile and better communicated the benefits of the Zevia value proposition. Selling and marketing expenses were $12.7 million or 31% of net sales in Q3 of 2025 compared to $12 million or 33% of net sales in Q3 of 2024.
As we mentioned earlier, we invested in a package redesign that Brian.
To life, our new flavor profile and better communicate the benefits of the <unk> value proposition.
Selling and marketing expenses were $12 7 million or 31% of net sales in the third quarter of 2025 compared to $12 million or 33% of net sales in the third quarter of 2024.
Breaking it down selling expense was $7 7 million or 18, 9% of net sales in the third quarter of 2025 compared to $8 5 million or 23, 3% of net sales in the third quarter of 2020 for the improvement was largely a result of lower warehousing and freight transfer costs as we continued to benefit from our productivity initiatives.
Girish Satya: Breaking it down, selling expense was $7.7 million or 18.9% of net sales in Q3 2025 compared to $8.5 million or 23.3% of net sales in Q3 2024. The improvement was largely a result of lower warehousing and freight transfer costs as we continue to benefit from our productivity initiative. Marketing expense was $4.9 million, or 12.1%, compared to $3.5 million, or 9.7% of net sales in Q3 2024. The increase was primarily due to increased investments in brand marketing.
Good.
Marketing expense was $4 9 million or 12, 1% compared to $3 5 million or nine 7% of net sales in the third quarter of 2024.
The increase was primarily due to increased investments in brand marketing.
General and administrative expenses were $7 7 million or 18, 8% of net sales in the third quarter of 2025.
Girish Satya: General and administrative expenses were $7.7 million or 18.8% of net sales in Q3 2025, compared to $7.4 million or 20.3% of net sales in Q3 2024. The increase was primarily driven by higher accrued variable compensation expense. As a result of the aforementioned factors, net loss was $2.8 million, unchanged from the prior year. adjusted EBITDA loss was $1.7 million compared to an adjusted EBITDA loss of $1.5 million in the prior year period. The decrease was due to costs associated with inventory losses related to the packaging refresh and higher brand marketing spend, partially offset by strong sales growth and operating efficiencies.
Compared to $7 $4 million or 23% of net sales in the third quarter of 2024.
The increase was primarily driven by higher accrued variable compensation expense.
As a result of the aforementioned factors net loss was $2 8 million unchanged from the prior year.
Adjusted EBITDA loss was $1 7 million compared to an adjusted EBITDA loss of $1 5 million in the prior year period.
The decrease was due to costs associated with inventory losses related to the packaging refresh and higher brand marketing spend partially offset by strong sales growth and operating efficiencies.
Yeah.
Girish Satya: Turning to our balance sheet, we ended the quarter with approximately $26 million in cash and cash equivalents and have an undrawn revolving credit line of $20 million. Now turning to our outlook. Based on our strong Q3 results, we are raising our full-year net sales guidance to the range of $162 to 164 million versus prior guidance of $158 to 163 million. We now expect our adjusted EBITDA loss for the full year to range from $5 to 5.5 million versus prior guidance of $7 to 9 million. Our 2025 adjusted EBITDA outlook represents a $9 million improvement versus prior year despite tariffs, ongoing marketing investments, and a packaging refresh.
Turning to our balance sheet, we ended the quarter with approximately $26 million in cash and cash equivalents and have an undrawn revolving credit line of $20 million.
Now turning to our outlook.
Based on our strong third quarter results, we are raising our full year net sales guidance to the range of $162 million to $164 million versus prior guidance of $158 million to $163 million. We now expect our adjusted EBITDA loss for the full year to range from 5 million to $5 5 million versus prior guidance of seven to 9 million.
Yes.
Our 2025, adjusted EBITDA outlook represents a $9 million improvement versus prior year, despite tariffs ongoing marketing investments and a packaging refresh.
Turning to the fourth quarter, we expect net sales of between $39 million to $41 million and adjusted EBITDA loss to be between two 5 million and $75 million.
Girish Satya: Turning to Q4, we expect net sales of between $39 to 41 million and adjusted EBITDA loss to be between $0.25 to 0.75 million. As a reminder, the 350 basis points impact from inventory losses associated with the packaging redesign was largely captured in Q3. In closing, our Q3 results reflect the traction we are gaining towards building a solid foundation from which to deliver sustainable growth and profitability. These efforts not only reinforce our operational momentum but also lay a strong foundation for sustained profitability as we move forward. I will now turn it over to the operator to begin Q&A. Operator.
As a reminder, the 350 basis points impact from inventory losses associated with the packaging redesigns largely captured in the third quarter.
In closing our third quarter results reflect the traction we are gaining towards building, a solid foundation from which to deliver sustainable growth and profitability.
These efforts not only reinforce our operational momentum, but also lay a strong foundation for sustained profitability as we move forward.
I will now turn it over to the operator to begin Q&A operator.
Thank you.
Operator: The first question is from Jim Salera from Stephens Inc. Please go ahead.
We'll now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.
For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
The first question is from Jim Solera from Stephens, Inc. Please go ahead.
Okay.
Jim Salera: Hey, Nick, Amy Taylor, Girish. Good afternoon. Thanks for taking our question.
Good afternoon, Thanks for taking my question.
Girish Satya: Thank you.
Girish Satya: I wanted to start off with obviously the positive news around expanding distribution with Walmart in Canada. Could you just maybe help size that up for us? Is that the primary contributor of the raised sales outlook, or should we expect that to be more of kind of a 2026 event? If you could just kind of size up how many stores that would be and any other color you could provide on how we should think about that uplift.
I wanted to start off with obviously the <unk>.
News around expanding distribution with Wal Mart in Canada can you just maybe help size that up for us as that.
Primarily contributor of the raise sales outlook or should we expect that to be more kind of a 2006 event.
If you could just kind of size of how many stores that would be in any other color you can provide on how we should think about that uplift.
Sure Jim Yeah, we are excited about expanding with Walmart in Canada, just because of the indicator of future opportunity for continued distribution expansion in Canada. Overall, it's also just a good reflection of the velocity is coming out of the customer and the initial pilot. So it was fairly small out of.
Amy Taylor: Sure, Jim. Yeah, we are excited about expanding with Walmart in Canada just because of the indicator of future opportunity for continued distribution expansion in Canada overall. It's also just a good, I think, reflection of the velocities coming out of the customer in the initial pilot. It was fairly small out of the gate. We were in less than 100 stores, and we're now in just over half of Canada's Walmart stores, which is just over 400 stores in total. To answer your question directly, that is not the major driver of lift and growth. There are many other things driving growth through the quarter, but it is a good indicator of the health of the brand in Canada and opportunity to follow.
The gains we were less than 100 stores and we're now and just over half of our candidates all Walmart stores, which is just over 400 shorten total so to answer your question directly that is not the major driver of lifted growth. There are many other things driving growth through the quarter, but it is a good indicator of the health of the brand in Canada and <unk>.
Opportunity to follow.
Great and then I was looking through the deck you guys put out really like the new packaging.
Jim Salera: Great. Then I was looking through the deck you guys put out. Really like the new packaging. Can you just give us some color around how distributed is that and maybe what type of timing we should think about between switching over from the old packaging to the new packaging until we kind of see that across all your distribution points in the US?
Give us some color around how you.
Could you give us maybe what.
Type of timing, we should think about between switching over from the old package into the new packaging until we kind of see that across all of the all your distribution points in the U S.
Sure. So we're excited about the new packaging to where we did see as I said in the prepared remarks, we did some initial proprietary research that indicated a significant increase in purchase intent.
Amy Taylor: Sure. We're excited about the new packaging too. We did some, as I said in the prepared remarks, we did some initial proprietary research that indicated a significant increase in purchase intent with the new packaging relative to our previous packaging and relative to competition. We believe that that is because of the insights-based changes that we made to the messaging, which very clearly state Zevia's value proposition. You know, talking zero sugar, zero fake colors, zero fake sweeteners and looking delicious, carrying the line "Soda Made Better." We're really bullish on the packaging. We do have some early indicators of how it supports the business, both from the standpoint of driving trial to new-to-brand users and driving velocity.
With the new packaging relative to our previous packaging and relative to competition and we believe that that is because of the insights based changes that we made to the messaging, which is very clearly state <unk> value proposition.
Physician Theyre talking zero sugar your favorite colors, your fixed sweeteners and looking delicious carrying the line so to make better. So we're really bullish on the packaging. We do have some early indicators of how it supports the business both from the standpoint of driving trial to new to brand users and driving velocity and that's because one of our.
Girish Satya: That's because one of our Q4 limited time offer flavors in Strawberries & Cream is already in the market in the new package. The rest of the portfolio will reflect the new packaging in early 2026, so mid Q1 or late Q1 2026, then we'll do a rolling rollout from there. Not a hard cut over, but a rolling launch of the new packaging from there into Q2.
Q4 limited time offer flavors in strawberries and cream as already in the market and the new package.
Rest of the portfolio will reflect the new packaging in early 2026. So mid Q1 late Q1 2026, and then we will do.
Rolling rollout from there.
Hard cutover, but a rolling launch of the new packaging from there into the second quarter.
Okay. Good.
Jim Salera: Okay, great. I appreciate the comments. I'll hop back in the queue.
I appreciate the color I'll hop back in queue.
Amy Taylor: Thanks, Jim.
Thanks, Jim.
The next question is from surround vora from Telsey Advisory Group. Please go ahead.
Operator: The next question is from Sarang Vora from Telsey Advisory Group. Please go ahead.
Sarang Vora: Great. Congratulations on a great quarter and good to see the healthy momentum in the business. You know, my question is about, you know, when you look at the underlying metrics of the drive growth, which is increase in household penetration, $ per household, increase in frequency, can you remind us who are some of the new customers that are coming to the brand that, you know, you were, you weren't there before? Just from a broader standpoint, like, you know, how is the penetration for better for you products in general and versus your, like, you know, little north of 5%? How, how big is the runway for you to catch up, from a household penetration standpoint, just so that we can size the total addressable market as you keep moving on this path of expansion?
Congratulations on a great quarter and good to see the healthy momentum in the business.
My question is about the you know when you look at the underlying metrics.
Our growth, which is increasing household penetration per household increase in frequency.
Can you remind us what are some of the new customers that are coming to the brand.
But our embedded before and just from a broader standpoint like how is the penetration for better for you products in general and what is this yard like little north of 5%. So how big is the runway for you to catch up.
From from household penetration standpoint, just so that we can size the total addressable market as you keep moving on this path of expansion.
Yeah. Thanks, that's a very good way to frame the opportunity in sort of the runway ahead. So we're really pleased to see movement in household penetration over the last 12 months. This last read being improved over the prior and we are now back over that 5 million household 5% points of household penetration.
Amy Taylor: Thanks, Sarang. That's a very good way to frame the opportunity and sort of the runway ahead. We're really pleased to see movement in household penetration over the last 12 months. This last read being improved over the prior, we are now back over that 5 million household points 5 percentage points of household penetration, excuse me. The major drivers of that are new consumers coming to the brand. Yes, in part through marketing, so we're winning new consumers. It continues to be oftentimes a slightly higher income millennial, often with kids in the household, bringing Zevia soda home as a trusted brand stocked in the fridge for all use occasions and all family members, right? It continues to be relevant across generations, but our sweet spot is the millennial and oftentimes the millennial household with children.
And so they are the major drivers of that are.
Our new consumers coming to the brand yet in part through marketing or winning new consumers. It continues to be oftentimes a slightly higher income millennial often with kids in the household bringing devious or out of home as a trusted brand stocked in the fridge for all usage occasions, and all family members right. So it continues to be relevant across <unk>.
Generations, but our sweet spot is the millennial and oftentimes a millennial households, with children part of what's driving our gains in household penetration, though has increased distributions. So we get support there from the Walmart expansion, where especially with the introduction of new flavors, we're seeing very high percentage of new to brand users.
Amy Taylor: Part of what's driving our gains in household penetration though is increased distribution. We get support there from the Walmart expansion, where, especially with the introduction of new flavors, we're seeing very high percentage of new to brand users buying Zevia for the first time at Walmart. There are other examples of that, expanded same store sales in other major grocery outlets, you know, expansion into the drug channel, et cetera. All of those are supporting household penetration growth. To help you to size this, you know, we see the category right now operating around 20 percent points of household penetration. There's a lot of ground to be gained for Zevia. As we talk about very frequently, we see all of these category tailwinds as a net positive to Zevia.
Buying buying do you get for the first time at Walmart and there are other examples of that expanded same store sales and other major grocery outlet expansion into the drug channel et cetera. All of those are supported household penetration growth, but to help you to size that we see the category right now operating around 20 points percentage points of household penetration.
So there's a lot of ground to be gained for anemia.
And as we talk about very frequently we see all of these category tailwind as a net positive to <unk>. So there's tremendous opportunity ahead as the world continues to move away from sugar and toward clean label products and we are the great tasting truly zero sugar and also affordable better for you products. So we.
Amy Taylor: There's tremendous opportunity ahead as the world continues to move away from sugar and toward clean label products. We are the great tasting, truly zero sugar, and also affordable better for you product. We see a lot of household penetration opportunities ahead.
See a lot of household penetration opportunities ahead.
That's awesome.
Sarang Vora: That's awesome. You know, I have a second question. You know, soda business is clearly gaining momentum as we see in all these numbers, but one thing we don't talk much about is the energy business, energy drinks business. You know, How should we think actually about energy drinks as you look at 2026 and 2027? Is there a thought to revive that category as well?
I have a second question.
Florida business is clearly gaining momentum as we see in all of these numbers, but one thing we don't talk much about is the energy business.
Energy drinks business in my mind.
My understanding that Mike how should we think actually about energy drinks as you look at <unk> six and <unk> seven is there a part to do buyback guide to get to you as well.
We agree there's really tremendous opportunity ahead in energy right now, we haven't really small energy drink business relative to the rest of the category is healthy and growing in the natural channel and in E Commerce, where people know the entrust <unk> brand and continue to stock energy drink options. In addition to the <unk>.
Amy Taylor: We agree there's really tremendous opportunity ahead in energy. Right now, we have a really small energy drink business relative to the rest of the category. It is healthy and growing in the natural channel and in e-commerce, where people know that and trust the Zevia brand and continue to stock energy drink options in addition to soda. Right now, our focus is really on soda. We just talked household penetration, right? It just outlines how much work there is still to do to realize our full opportunity in soda. Once I believe we are famous for being Soda Made Better, and under that kind of halo of brand trust, we think there's a significant opportunity to turn our attention to the energy drinks category, which is still growing and will be for a long time.
But right now our focus is really on soda, we just talk household penetration right and that just outlines how much work there is still to do to realize our full opportunity and soda. So once I believe we are famous for being so to make better and under that kind of Halo brand Trust, we think theres, a significant significant opportunity to turn off.
Our attention to the energy drink category, which is still growing and will be for a long time and we believe there is a consumer that wants a clean label energy drink and that our brand has permission to bring that to the market. So we'll continue to focus on the healthy growth that we see out of energy drinks in natural and in E Commerce and at the right time, we'll think about channel.
Amy Taylor: We believe there's a consumer that wants a clean label energy drink, and that our brand has permission to bring that to the market. We'll continue to focus on the healthy growth that we see out of energy drinks in natural and in e-commerce, and at the right time, we'll think about channel and thus marketing and consumer expansion on a strong foundation of a healthy soda business.
<unk>, thus marketing and consumer expansion on a strong foundation of a healthy set of business.
That's a good looking ahead.
Sarang Vora: That is great. Good luck ahead.
Thank you Tom.
Amy Taylor: Thank you, Sarang.
The next question is from Andrew <unk> from BMO capital markets. Please go ahead.
Operator: The next question is from Andrew Strelzik from BMO Capital Markets. Please go ahead.
Hey, good afternoon, thanks for taking my questions.
Andrew Strelzik: Hey, good afternoon. Thanks for taking the questions. With all the marketing that you've been doing and some of the momentum that you cited from that, the brand block, et cetera, do you have any kind of awareness stats, brand level awareness statistics, or anything like that that you can share to support beyond what you've talked about from a purchase intent perspective?
With all the marketing that you've been doing and some of the momentum that you cited from that.
<unk> et cetera, do you have any kind of awareness that's brand level awareness statistics or anything like that that you can share to support beyond what you talked about it from a purchase perspective.
Amy Taylor: You know, Andrew, we haven't reported on awareness levels, but what I can share that kind of doubles down on the prepared remarks was that with our proprietary research, we saw double-digit increases, not only in purchase intent, but also consideration. We still have a way to go to grow brand awareness and distribution, strong packaging design, and marketing are all parts of that equation. What I was really pleased to see this year is, again, double-digit growth in consideration. Now on that foundation, we know our messaging is working, right? Marketing and packaging is inviting trial, and then the product is satisfying the consumer, so we're getting strong repeat. That's a great formula or foundation upon which to now invest in expanding awareness.
Andrew we havent reported on awareness levels, but what I can share that kind of doubles down on the prepared remarks was that with our proprietary research we saw double digit increases not only in purchase intent, but also consideration. So we still have way to go to to grow brand awareness and distribution.
<unk> strong packaging design and marketing are all parts of that equation.
But what I was really pleased to see this year is again double digit growth in consideration. So now on that foundation. We know our messaging is working right marketing and packaging is inviting trial and then the product is satisfying the consumer so we're getting strong repeat that's a great formula upon where foundation upon which to now invest in expanding awareness. So we.
Amy Taylor: We've still got a ways to go. I think that's reflected in our small household penetration. Our number one objective is to expand that base, which is going to be a combination of awareness, trial, and then building on that strong consideration metric.
Still got a ways to go and I think that's reflected in our small household penetration and our number one objective is to expand that base, which is going to be a combination of awareness trial and then building on that strong consideration metric.
Okay. That's helpful.
Andrew Strelzik: Okay. That, that's helpful. My other question, if I remember correctly, just seasonally, you would normally see, you know, a bigger step down from Q3 to Q4 than the guidance suggests pretty marginal step down from what you did in Q3 from a revenue perspective to the midpoint of the guidance. I guess I'm curious, do you think you're seeing less seasonality in your business or should we read that maybe as a higher baseline from Q4 into next year? How, what's driving that? Or how should we interpret that kind of as we think about next year? Thanks.
My other question if I remember correctly, just seasonally you would normally see.
A bigger step down from <unk> to <unk>.
The guidance suggests pretty marginal step down from what you did in <unk> from a revenue perspective to the midpoint of the guidance and so I guess I'm curious do you think you're seeing less seasonality in your business or should we read that maybe has a higher baseline from <unk> into next year.
What's driving that or how should we interpret that kind of as we think about next year. Thanks.
Girish Satya: Yeah. Great. Thanks, Andrew. As a reminder, you know, we were comping the Walmart load from last year this Q4. You know, that was a substantial amount of revenue, which was gonna, you know, always be a challenging comp for the quarter. I think largely what you're seeing is reflection of the distribution gains that we've made throughout the year, as well as some incremental regional rotations on the club channel, which is really what's driving a lot of the positivity in Q4. I think it's a little bit of both, improved baseline as well as some incremental opportunistic club rotations.
Yes. Thanks.
Thanks, Andrew.
So as a reminder, we were pumping.
Walmart load from last year. This Q4, so that was a substantial.
The.
Amount of revenue, which was going to always be a challenging comp for the quarter I think largely what you're seeing is a reflection of the distribution gains that we've made throughout the year as well as some incrementals.
Rotations in the club channel, which is.
Really what's driving a lot of the positivity in Q4, and so I think it's a little bit of both.
Improved baseline as well as them.
Incremental opportunistic club rotations.
Okay, great. Thank you.
Andrew Strelzik: Okay, great. Thank you.
As a reminder to ask a question. Please press star one.
Operator: As a reminder, to ask a question, please press star one. The next question is from Eric Serota from Morgan Stanley. Please go ahead.
The next question is from Eric Serota from Morgan Stanley. Please go ahead.
Great.
Eric Serota: Great. Can you start by reflecting a bit in terms of shelf space expectations for next year? I guess, you know, with Walmart, we're just about a year in or almost exactly a year into the rollout of their modern soda set. What are you guys seeing in terms of what they're doing as the largest retailer, you know, or just like a mortar retailer as we look to next year and then, you know, sort of outside of Walmart, what are your expectations in terms of shelf space?
Start by reflecting a bit in terms of shelf space expectations for next year.
I guess.
With Walmart, where just about a year or almost exactly a year end.
Rollout of their modern soda set.
What are you guys seeing in terms of what they're doing is the largest retailer.
It works brick and mortar retailer as we look to next year and then.
Sort of outside of Walmart what are your expectations in terms of shelf space.
Sure, Let me start with Walmart and then I can go to the outlook as it relates to distributions. So Walmart is developing nicely bolstered by the introduction of a number of new items. Some of those are swap outs and some are purely incremental new items that is helping us in the back half of this year and going into next year. We are one of the primary brand and that varies.
Amy Taylor: Sure. Let me start with Walmart, then I can go to the outlook as it relates to distribution. Walmart is developing nicely, bolstered by the introduction of a number of new items. Some of those are swap outs, some are purely incremental new items. That is helping us in the back half of this year and going into next year. We are one of the primary brands in that very sort of influential modern soda set in Walmart, that continues to be the case. Strategically, Walmart works hard for us because as I mentioned before, it drives a lot of new-to-brand users. I think it's a great story to say, Hey, when we have ample brand blocks, strong visibility, right price, right flavor mix, it's working hard for the brand. That's a story that we can take elsewhere.
Influential modern so to set in Walmart and that continues to be the case strategically Walmart worked hard for us because as I mentioned before drives a lot of new to brand users and so I think it's a great story to say hey, when we have ample brand blocks strong visibility right price right flavor mix, it's working hard for the brand and that's a story that we can take elsewhere we've had.
Amy Taylor: We've had other expansions, as I've mentioned on prior calls, such as a step change in shelf presence at big retailers in grocery like Albertsons in 2025. Again, that has contributed to some of our growth in the back half of the year. When we look ahead, you know, this year we surpassed our historical peak distribution levels at retail. We're not relying on new distribution for growth looking ahead. We're really focused on driving velocity, that's why you hear us talk about the brand marketing and innovation priorities that we have. We do see opportunity for new distribution. In terms of new stores, that would be in club, it would be in mass, and it would be in the value and dollar channel, and then long-term in convenience and food service.
Other expansions as I've mentioned on prior calls such as a step change in shelf presence at big retailers and grocery like Albertsons in 2025, and again that has contributed to some of our growth in the back half of the year. So when we look ahead.
This year, we surpassed our historical peak distribution levels at retail and so we're not relying on new distribution for growth looking ahead.
We're really focused on driving velocity and that's why you hear us talk about the brand marketing and innovation priorities that we have but we do see opportunity for new distribution in terms of new stores that would be in club it would be in mass and it would be in the value and dollar channel and then long term in convenience and foodservice.
Amy Taylor: In existing stores, there is still more opportunity to expand same store distribution and to improve shelf. There are major operators in the grocery channel, for example, where we still have, let's say, a lesser presence on the bottom shelf and an opportunity to build up to eye level to gain space through innovation and to leverage all the strong data of 2025 to make those changes. We're bullish both on accelerating velocity as well as continuing to increase distribution next year, be it in same store or through new channel. Walmart should continue to perform for us next year. Costco offers opportunities for incremental rotations, and there are other green shoots in the club channel outside of Costco.
And then at existing stores, there is still more opportunity to expand same store distribution and to improve shelf. So there are major operators in the grocery channel for example, where we still have let's say a lesser presence on the bottom shelf and an opportunity to build up to high level to gain space through innovation.
To leverage all the strong data of 2025 to make those changes. So we're bullish both on accelerating velocity as well as continuing to increase distribution next year be it in same store or through new channel.
Walmart should continue to perform for US next year Costco offers opportunities for incremental rotations and there are other.
Green shoots in the club channel outside of Costco as I mentioned grocery offers opportunity and same store distribution as well as new items and set improvements and then the long long term.
Amy Taylor: As I mentioned, grocery offers opportunity in same store distribution as well as new items and set improvements, and then the long-term, sort of slow but steady and strategic need to drive singles through convenience. Hopefully that paints a picture a little bit about where we see our growth coming from, our bullishness on same store distribution increases, and then our greatest channel opportunities for next year.
Slow, but steady and strategic need to drive singles through convenient so hopefully that paints a picture a little bit about where we see our growth coming from.
Our bullishness on same store distribution increases and then our greatest channel opportunities for next year.
Great and then.
Eric Serota: Great. Then, one question in terms of profitability. You know, I realize you're not gonna give us 2026 guidance yet, but any color as to how you're thinking about achievability of EBITDA profitability next year, puts and takes, it seems like, well, certainly your top line is scaling. You're seeing some nice operating leverage there. You know, some of the costs with the new packaging shouldn't and inventory obsolescence shouldn't repeat. You know, things like aluminum and Midwest premium keep moving higher. Any color into how you're thinking about profitability for next year would be helpful.
One one question in terms of profitability.
Any.
Not going to give us 2026 guidance, yet, but any color as to how you're thinking about achieve ability of.
EBITDA profitability next year.
And takes it seems like well certain out of your top line is scaling you're seeing some nice operating leverage there.
Some of the the cost with the with the new packaging shouldn't.
And inventory obsolescence Shouldnt repeat, but then things like aluminum and Midwest premium Keith.
Keep moving higher so.
Yeah.
And any color on how you're thinking about profitability for next year would be helpful.
Girish Satya: Yeah, of course. I think we continue to point towards being positive adjusted EBITDA in 2026. As noted, we're going to bias towards investing in the business. You know, don't expect a ton of flow through because we do believe that right now is the time to sort of invest in customer acquisition. From a puts and takes standpoint, obviously, there's a huge headwind, which is aluminum tariffs, as you've articulated earlier, and we began to see that in Q3. As you also mentioned, you know, we will largely see 15 of the $20 million of our previously announced productivity initiative savings in this year, i.e., 2025. There's an incremental $5 million that we will begin to realize starting in sort of mid Q1 of 2026.
Yes of course.
So I think we continue to point towards being positive adjusted EBITDA in 2026 as noted we're going to bias towards investing in the business. So don't expect it a ton of flow through because we do believe that right now the time to sort of invest in customer acquisition.
From a puts and takes standpoint, obviously, there's a huge headwind which is aluminum tariffs as you've articulated.
Articulated earlier and we've begun we began to see that in Q3.
As you also mentioned, we will largely see 15 of the $20 million of our previously announced productivity initiative savings in this year I E. 2025, there is an incremental $5 million that we will begin to realize starting in sort of mid Q1 of 2026 and so as we.
Girish Satya: As we look towards flipping from, you know, negative adjusted EBITDA to positive, I think ultimately the incremental savings along with scale, and some pricing opportunities will allow us to flip that script into positive adjusted EBITDA while continuing to create opportunities for us to invest to grow the top line.
<unk>.
Look towards flipping from.
Negative adjusted EBITDA positive.
I think ultimately the incremental savings along with scale.
And some pricing opportunities will allow us to flip that script.
Into positive.
EBITDA, while continuing to create.
Opportunities for us to invest to grow the topline.
Great. Thanks, so much I'll pass it on.
Eric Serota: Great. Thanks so much. I'll pass it on.
Thanks, Eric.
Girish Satya: Thanks, Eric.
Okay.
Operator: There are no further questions at this time. I would like to turn the floor back over to Amy Taylor for closing comments.
No further questions at this time I would like to turn the floor back over to Amy Taylor for closing comments.
Alright, thanks, so much for joining us.
Amy Taylor: All right. Thanks so much for joining us. You know, I am pleased with the progress this quarter, and I am really proud of the team for the broader progress that we made across our three strategic growth pillars, so high impact remarketing, accelerated product innovation, and expanded distribution. Our soda portfolio is uniquely anchored by great taste, truly zero sugar, and accessible price points. The brand is starting to resonate with consumers, and all of this positions us well to capture the continued tailwinds in this better for you category. It's an exciting time to be at Zevia. Thanks again for your engagement, and we will see you next quarter.
Pleased with the progress this quarter and I'm really proud of the team for the broader progress that we've made across our three strategic growth pillars. So high impact marketing accelerated product innovation and expanded distribution. Our soda portfolio is uniquely anchored by great taste truly zero sugar and accessible price points. So the brand is starting to <unk>.
Resonate with consumers and all of this positions us well to capture the continued tailwind in this better for you category. It's an exciting time to be at media. So thanks again for your engagement and we will see you next quarter.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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