Energy drink seller Celsius Holdings, Inc. (NASDAQ:CELH) has reported somewhat weak earnings in the first quarter, with declining top and bottom-line financials.
The beverage firm has been a pioneer in the field for 21 years but now will Q2 earnings send shares soaring.
Celsius Holdings’ Alani Nu Acquisition
CELH shares have gained by more than a whopping 1,200% over the past five years. This year, the share price is up by close to 40% in spite of the recent earnings report. However, the business also faces stiff competition in its sector.
The beverage market is extremely competitive, with big names like Celsius vying for a greater market share. One way to do this, as the industry leaders have figured out, is by acquiring smaller brands that grow their product offerings and market share.
For example, last year, popular beverage company Keurig Dr Pepper Inc. (NASDAQ:KDP) announced its acquisition of disruptive lifestyle sports nutrition business GHOST, with a 60% stake purchase and an expected remaining 40% acquisition in 2028.
Celsius also began this year with an important acquisition. It announced that it would acquire Alani Nutrition LLC, better known as Alani Nu, which operates as a female-focused brand that offers beverages and wellness products, which are also finding quite some traction among millennials and the Gen Z population. This cash and stock acquisition was worth a significant $1.80 billion.
This also puts Celsius Holdings in a better spot to address the growing demand for zero-sugar alternatives. Management expects significant top line scale through this move, which is set to be accretive to cash EPS in the first full year of ownership.
How Is Celsius Holdings Holding Up Financially?
Celsius Holdings last reported its first quarter results for fiscal 2025. Revenue fell 7% from the prior year’s period to $329.30 million. The leadership team cited a few factors for this decline, like a slowed velocity, timing and structure of its U.S. distributor incentive program, and an increase in retail promotional programs.
On the other hand, retail scanner data showed a 2% increase in dollar sales compared to the prior period.
There was also the factor that the Q1 of 2024 coincided with the start of the country-wide distribution of CELSIUS ESSENTIALS, which was also accompanied by a dedicated retail promotion. But by comparison the revenue for Q1 of 2025 looks subdued.
The decline in sales comes primarily from Celsius’ core North American market. On the continent, revenue fell by 10% year-over-year to $306.50 million. It has had a grounded approach towards international expansion, which is why its international revenue is not that high in comparison to what it generates in North America. However, this is the part of Celsius’ top line that is growing at a fast clip.
Celsius International Is Skyrocketing
Celsius reported that it is seeing solid growth in its legacy and newer markets, with countries like the U.K., Ireland, France, Australia, and New Zealand among them.
International sales increased by a solid 41% from its year-ago value to $22.80 million. Celsius saw sourcing efficiencies for its raw and packaging materials for the quarter, which led to a 110 basis point jump in its gross margin from 51.2% to 52.3%.
Alani Nu has already become accretive to the company’s portfolio. In the retail channels, Celsius reported seeing a solid demand for sugar-free, functional beverages in Q1, while Alani Nu’s retail sales grew 88% year over year. Overall, the company’s whole portfolio registered a 16.2% dollar share, which reflected an 81 basis point gain year-over-year.
Celsius’ bottom line keeps declining. In Q1, net income shrank by 43% year-over-year to $44.40 million, while on a per-share basis, it lowered by 44% to $0.15. After adjustments, net income per share came in at $0.18 for the quarter, down 33% year-over-year.
What Is Celsius Holdings Expecting?
After this subdued result, Celsius Holdings has set a clear focus on channels that show hefty growth prospects. For instance, in upcoming quarters, expect further focus on healthy options like sugar-free energy drinks, and thereafter, on channels like Alani Nu.
Retail share growth has also emerged as a prime focus for the company, alongside the foodservice channel. In the last reported quarter, the business made a splash in more than 1,800 Home Depot locations.
Celsius also started rolling out its offerings at 18,000 Subway locations. Foodservice now makes up approximately 13.4% of North America sales through its partnership with PepsiCo.
Basically, the company is trying to bank on the fact that enhanced visibility will translate into greater sales. Of course, this remains to be seen, especially in a competitive backdrop.
Celsius Stock Forecast
Among the 19 analysts covering the drinks maker, the consensus Celsius stock forecast is for the share price to rise to $42.94 per share.
With net income on the rise and sales popping this year the 29.1% upside price target is quite reasonable, especially given the strong return over the past 3 months signals an uptick in bullish momentum.
If there were flies in the ointment they would be price momentum and relative value given the 120x earnings.
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