ZVIA — Zevia PBC

Zevia PBC Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Net Sales: Increased by 21.2% to $46.1 million, driven by expanded distribution and higher volume in mass and e-commerce channels.
• Adjusted EBITDA: Approximately $0.9 million, a significant improvement from an adjusted EBITDA loss of $3.3 million in Q1 2025.
• Gross Margin: 48.4%, down 170 basis points from 50.1% in Q1 2025, attributed to higher aluminum costs and a greater mix of club sales.
• Selling and Marketing Expenses: $14.5 million (31.5% of net sales), down from $15.3 million (40.3% of net sales) in Q1 2025, reflecting improved efficiency.
• General and Administrative Expenses: Increased to $9.1 million (19.7% of net sales), including $2.3 million in litigation expenses.
• Cash Position: Ended the quarter with $26.6 million in cash and an undrawn $20 million revolving credit line.

2. Strategic Updates and Business Highlights

• Marketing Initiatives: Launched two major campaigns, "ZTOX" and "Real Soda for Real Humans," which significantly boosted brand awareness and engagement, including a partnership with Cardi B.
• Product Innovation: New fruit flavors (Orange Creamsicle, Fruit Punch, Peaches and Cream) launched with positive initial velocities, and new packaging is expected to enhance visibility and consumer appeal.
• Distribution Gains: Successful national rotation at Costco and expansion into Canadian Walmart stores, with strong performance in existing grocery channels.
• E-commerce Growth: Continued strong performance, particularly with smaller packs and subscription services.

3. Forward Guidance and Outlook

• Full-Year Net Sales Guidance: Raised to $170 million - $175 million, reflecting 7% growth at the midpoint, despite the planned discontinuation of the tea line impacting growth by 1-1.5 points.
• Adjusted EBITDA Outlook: Expected to be between negative $2 million and negative $4 million, factoring in $11 million in incremental costs primarily from fuel and aluminum price increases.
• Q2 2026 Guidance: Anticipated net sales of $43 million - $45 million and an adjusted EBITDA loss of $0.5 million to $1 million.

4. Bad News, Challenges, or Points of Concern

• Cost Pressures: Significant headwinds from rising fuel and aluminum costs, with an expected $11 million impact on profitability.
• Gross Margin Pressure: Anticipated to remain under pressure in the second half of the year, with potential declines due to ongoing cost increases.
• Macro Economic Uncertainty: Concerns about the K-shaped economy affecting consumer spending, particularly among value-conscious consumers.

5. Notable Q&A Insights

• Cardi B Partnership: Expected to enhance brand reach and engagement, with a planned summer advertising campaign to maximize impact.
• Pricing Strategy: No significant price increases planned for the second half of the year; focus on balancing consumer value with profitability.
• Distribution Strategy: Future club rotations are anticipated, with ongoing discussions about permanent distribution based on performance.
• Cost Management: Efforts to offset rising costs through operational efficiencies, with potential for $3 million to $5 million in additional savings expected to materialize in late 2026 or early 2027.

Overall, Zevia PBC reported a strong start to 2026 with significant sales growth and improved EBITDA, but faces challenges from rising costs and macroeconomic uncertainties. The company remains focused on strategic marketing and product innovation to drive future growth.