Beverage company Zevia (NYSE:ZVIA) met Wall Street’s revenue expectations in Q4 CY2024, with sales up 4.4% year on year to $39.46 million. On the other hand, next quarter’s revenue guidance of $37 million was less impressive, coming in 10.1% below analysts’ estimates. Its GAAP loss of $0.09 per share was 15.4% below analysts’ consensus estimates.

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“We are pleased to have ended the year on a strong note with a return to top line growth and significant progress towards achieving profitability. We elevated our brand identity, advanced our three strategic growth pillars and continued to lay a strong foundation for growth and profitability over the long term.” said Amy Taylor, President and Chief Executive Officer of Zevia.

Company Overview

With a primary focus on soda but also a presence in energy drinks and teas, Zevia (NYSE:ZVIA) is a better-for-you beverage company.

Beverages, Alcohol, and Tobacco

These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the rise of cannabis, craft beer, and vaping or the steady decline of soda and cigarettes. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.

Sales Growth

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.

With $155 million in revenue over the past 12 months, Zevia is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers.

As you can see below, Zevia grew its sales at a sluggish 3.9% compounded annual growth rate over the last three years, but to its credit, consumers bought more of its products.

This quarter, Zevia grew its revenue by 4.4% year on year, and its $39.46 million of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 4.6% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 6.8% over the next 12 months, an acceleration versus the last three years. This projection is above average for the sector and indicates its newer products will catalyze better top-line performance.

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Volume Growth

Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.

Zevia’s average quarterly volume growth was a robust 4.3% over the last two years. This is good because meaningful volume growth is hard to come by in the stable consumer staples sector.

In Zevia’s Q4 2024, sales volumes jumped 11.6% year on year. This result was an acceleration from its historical levels, certainly a positive signal.

Key Takeaways from Zevia’s Q4 Results

We struggled to find many positives in these results as its EPS missed analysts' expectations. Its full-year revenue and EBITDA guidance also fell short. Zooming out, we think this was a tough quarter. The stock traded down 9.5% to $2.94 immediately following the results.

Is Zevia an attractive investment opportunity right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.