Oatly revenue rises as Europe growth offsets North America weakness

Oatly Group AB reported Q2 revenue of $208.4 million, a 3.0% year-over-year increase, driven by strong performance in Europe & International which offset declines in North America and Greater China. While adjusted EBITDA improved to a $3.6 million loss and gross margin rose to 32.5%, net loss widened to $55.9 million primarily due to fair value losses on convertible notes. The company lowered its 2025 constant currency revenue growth outlook to flat to +1% (from +2% to +4%) and initiated a strategic review of its Greater China business, though it maintained its positive adjusted EBITDA guidance for 2025. Shares rose 1.12% in pre-market trading.

Analysis

Oatly Group's second-quarter results present a mixed operational picture, characterized by successful cost management but challenged top-line growth. While revenue grew a modest 3.0% year-over-year to $208.4 million, this was entirely driven by a strong 12.0% sales increase in its Europe & International segment. This strength was offset by significant headwinds in other key regions, with North America revenue declining 6.8% due to reduced sales to a major foodservice customer and Greater China revenue falling 6.4% amid macroeconomic softness. Operationally, the company demonstrated progress on profitability, improving its gross margin by 3.3 percentage points to 32.5% and narrowing its adjusted EBITDA loss to $3.6 million. However, the forward-looking guidance is a primary concern; Oatly lowered its 2025 revenue growth outlook to a range of flat to +1%, a substantial reduction from the previous +2% to +4% forecast. This signals a strategic pivot towards profitability over growth, reinforced by a cut in planned capital expenditures and the initiation of a strategic review for its China business, which could result in a carve-out.

Key Decisions for Investors

• Investors should re-evaluate Oatly as a cost-control and margin-improvement story rather than a high-growth one, focusing on the maintained positive adjusted EBITDA guidance of $5 million to $15 million as the key performance metric.
• Monitor developments from the strategic review of the Greater China business and any signs of recovery in North America, as these two regions represent the primary drags on revenue and key catalysts for a change in outlook.
• Given the significant reduction in revenue guidance, the current investment thesis carries increased risk, and it may be prudent to await evidence of a sustainable return to top-line growth before building a new position or increasing exposure.