Zevia PBC (ZVIA) Q3 2024 earnings summary

Executive summary

• Net sales for Q3 2024 were $36.4 million, down 15.6% year-over-year, mainly due to lost distribution in club and mass channels and strategic category exits.

• Gross profit margin reached a record 49.1%, up 3.7 percentage points year-over-year, driven by lower inventory write-downs and improved unit economics.

• Net loss improved to $2.8 million from $11.3 million year-over-year; Adjusted EBITDA loss narrowed to $1.5 million from $9.1 million, reflecting strong execution of the Productivity Initiative.

• Distribution expanded to over 4,300 Walmart stores post-quarter, up from 800 previously, and new product innovations such as Salted Caramel flavor drove brand engagement.

• Productivity Initiative expected to deliver $15 million in annualized cost savings, with most savings reinvested in growth and marketing.

Financial highlights

• Q3 2024 net sales: $36.4 million, down 15.6% year-over-year; gross profit: $17.9 million; gross margin: 49.1%.

• Net loss: $2.8 million in Q3 2024, improved from $11.3 million in Q3 2023.

• Adjusted EBITDA loss: $1.5 million in Q3 2024, improved from $9.1 million in Q3 2023.

• Cash and cash equivalents: $32.7 million as of September 30, 2024, with no outstanding debt and a $20 million unused credit line.

• Selling and marketing expenses were $12 million (32.9% of sales), down from $20.5 million (47.5%) last year.

Outlook and guidance

• Q4 2024 net sales expected between $38 million and $40 million, with adjusted EBITDA loss expected between $1.8 million and $2.2 million.

• Full-year 2024 net sales outlook: $154 million-$156 million; adjusted EBITDA loss of ~$13 million.

• Gross margins expected to remain in the mid to upper 40s in coming quarters.

• Productivity Initiative benefits to be more fully realized over the next 3-5 quarters, with completion targeted by end of Q1 2025.

• Targeting positive adjusted EBITDA in 2026, with modest growth expected in 2025.