Celsius(CELH)2024-08-06 14:38Financial Data and Key Metrics - Total revenue for Q2 2024 increased 23% YoY to $402 million, with H1 2024 revenue up 29% to $757.7 million [6] - International revenue grew 30% in Q2 to $19.6 million [6] - Gross profit increased 32% to $209 million, with gross profit margins improving to 52% from 49% YoY [20] - Non-GAAP adjusted EBITDA rose 29% to $100 million, and net income increased 55% to $80 million [23] - The company ended Q2 with $903 million in cash on hand [25] Business Line Performance - Club sales increased 30% YoY to $88 million in Q2 [13] - Amazon sales grew 41% YoY to $39.9 million [14] - Celsius' share in the energy drink category on Amazon reached 22.1% during Prime Day [14] - The company launched three new flavors in Q2: Sparkling Watermelon Lemonade, Sparkling Kiwi Strawberry, and Sparkling Cherry Cola [13] Market Performance - Celsius' share in the MULO+ convenience channel was 12.04% for the four weeks ending July 14, 2024 [10] - The company's share in the sugar-free energy drink subset is second largest, driving 47% of category growth [5][8] - International expansion in Canada, UK, and Ireland is exceeding expectations, with plans for Australia, New Zealand, and France later in 2024 [15] Strategy and Industry Competition - Celsius is focusing on sugar-free energy drinks, which now represent approximately half of the energy drink category [7] - The company is investing in marketing, promotional programs, and innovation to counter macroeconomic pressures and competition [9][12] - Partnerships with PepsiCo remain strong, with incentive programs expected to fully ramp in H2 2024 [10] Management Commentary on Environment and Outlook - Management acknowledged macroeconomic headwinds and category slowdown but remains confident in long-term growth [5][8] - The company expects to continue facing competitive and macroeconomic challenges but has programs in place for H2 2024 and 2025 [9][12] Other Important Information - The company's field marketing team grew by 50% in the past year, supporting its drill-deep marketing strategy [11] - Celsius' share in the MULOC channel was 11% for the four weeks ending July 14, 2024, up 1.4% YoY but down 0.5% QoQ [10] Q&A Session Summary Question: Change in control agreements - The company standardized executive team agreements to align with industry standards regarding change in control [26][27] Question: Market share stabilization - Management noted share loss due to competition and consumer challenges but remains confident in growth strategies [28][29] Question: Growth vs. market share - Despite growing 10x the category rate, share fluctuations are influenced by competitors like Red Bull [33][34] Question: Pricing strategy - Celsius is monitoring consumer behavior and plans to maintain a premium position while being cautious about pricing [39][40] Question: Channel dynamics - Amazon and club channels are performing well, with consumers shifting purchasing patterns [42][43] Question: Shipments vs. consumption - Inventory adjustments by PepsiCo impacted Q2 revenue by $20-25 million, with potential for similar impacts in H2 [45][46] Question: Velocity trends - Velocity declines are attributed to timing and sequencing of shelf resets and promotional activities [48][49] Question: Category slowdown - The energy drink category is experiencing softness due to macroeconomic pressures and consumer behavior shifts [54][55] Question: New product performance - New flavors are contributing to growth, with a focus on portfolio expansion rather than individual flavor performance [56][57] Question: Future shelf space and innovation - Celsius is confident in gaining incremental shelf space for 2025 innovations, with strong retailer relationships [62][63]