Summary

• Celsius Holdings, Inc. announced Q4 2024 earnings, revealing a 4% sales decline but a significant 30% stock surge post-earnings presentation.

• Besides sales pressure in the US, CELH's international sales grew 37% in 2024, driven by expansion into new markets like the UK and Australia.

• The $1.65 billion Alani Nu acquisition is expected to boost revenue by $595 million, expand market share, and generate $50 million in annual cost synergies.

• CELH's 2025 outlook focuses on international expansion, product innovation, and retail growth, aiming for $2 billion+ in revenue and improved gross margins.

supermimicry

Introduction

Celsius Holdings, Inc. announced its Q4 2024 earnings report today after the close. In the after-hour trading session, the stock first sold off quite substantially, down 9%. This was after The Wall Street Journal spread the story that CELH was buying its rival “Alani Nu” for $1.8 billion. Shortly after this, CELH presented earnings and made public that they were indeed buying Alani Nu. The stock is currently up by 30%, just a few minutes after the earnings release.

I will give you a brief look over the earnings and my opinion on them.

Q4 2024 earnings report

Solid 2024 growth, even though the last quarter saw increased pressure due to declining sales in North America.

Financial highlights of the fourth quarter:

CELH reported $332.2 million in sales, which are down 4% compared to the same quarter in the previous year. This is mainly due to North American sales being down 6% YOY. With $311.9 million, the North American region represents the major source of revenue. Contrary to this is CELH's international business, which increased by 39% YOY to $20.3 million. This was done via the expansion into the UK, Ireland, France, Australia, and New Zealand.

Thanks to lower freight and material costs, the gross margin improved by 240 basis points to 50.2%. Contrary to this, net income decreased by a whopping -138% to -$18.9 million. According to CELH, this stems from high legal expenses, restructuring costs, and co-packing obligations.

• Revenue: $332.2 million (-4%)

• Gross Margin: 50.2% (+240 basis points)

• Net Income: -$18.9 million (-138%)

• SG&A Expenses: $185.2 million (+73%)

• Diluted EPS: -$0.11 (previous year: $0.17).

CELH summary of financials (CELH investor relations)

Full-Year 2024: Moderate Growth Despite Challenges

Even though the fourth quarter dragged sales growth down, CELH managed to achieve 3% revenue growth, reaching $1.36 billion for the full year. International sales were the main driver with a 37% increase for 2024. However, net income declined by 36% to $145.1 million, and diluted EPS fell 42% to $0.45. According to the management, investments in vertical integration, new market expansion, and strategic initiatives impacted short-term profitability but will drive long-term growth.

Key Figures (2024 vs. 2023):

• Revenue: $1.36 billion (+3%)

• International Revenue: $74.7 million (+37%)

• Gross Margin: 50.2% (+220 basis points)

• Net Income: $145.1 million (-36%)

• Diluted EPS: $0.45 (-42%)

• Adjusted EBITDA: $255.7 million (-13%).

Market Performance

While Celsius’ U.S. retail sales grew by 22% for the year, the company experienced a slight decline in market share in Q4 (-0.5% to 10.9%). Nevertheless, for the full year, Celsius' market share increased by 1.6% to 11.8%.

CEO John Fieldly highlighted the company’s strong brand momentum and long-term potential:

”Our record $1.36 billion revenue underscores the strength of our brand. With the Alani Nu acquisition and continued expansion, we are well-positioned for sustained growth.”

CFO Jarrod Langhans added:

”Our financial strategy enables us to balance sustainable growth with profitable expansion. Investments in vertical integration and international markets provide long-term competitive advantages.”

Celsius Holdings: 2025 Outlook – Growth, Expansion & Strategic Moves

According to management, Celsius Holdings is ready for strong growth despite short-term challenges. Focus areas for 2025 are international expansion, product innovation, retail growth, and the Alani Nu acquisition.

Because the outlook and strategies are quite extensive, I split them in different segments to give you a better overview.

Alani Nu Acquisition: A Key Growth Driver

The $1.65 billion acquisition of Alani Nu is expected to:

• Expand market share with strong Gen Z and millennial appeal

• Contribute $595 million in additional revenue

• Generate $50 million in annual cost synergies

• Strengthen presence in functional lifestyle products.

Goal: $2 billion+ in revenue through brand integration.

International Expansion: Scaling Global Presence

• +37% international sales in 2024 – major focus area for 2025

• Leverage PepsiCo’s distribution network for faster global scaling

• Targeted growth regions: Asia-Pacific, Europe.

Market potential: Global energy drinks sector to grow 10% CAGR (2024-2029).

Product Innovation & Portfolio Expansion

Consumer demand for health-conscious and functional beverages is rising. Celsius plans to:

• Launch new product categories: hydration, protein-based drinks

• Introduce limited-edition flavors to increase consumer engagement

• Expand into new functional wellness segments.

Goal: Stay ahead of market trends and reinforce brand loyalty.

Margin Expansion & Profitability Improvements

Despite higher SG&A expenses, Celsius aims to:

• Optimize supply chains for lower material & freight costs

• Enhance economies of scale through expanded production

• Improve direct-to-consumer (DTC) sales for higher margins.

Target: Maintain 50%+ gross margin while investing in growth.

Retail & Distribution Growth in North America

• 37% increase in retail distribution points in 2024

• Strengthen partnerships with Walmart, Target, and major retailers

• Expand into fitness centers & health-focused outlets

• Boost marketing and brand visibility to regain sales momentum.

Objective: Regain U.S. sales growth despite the Q4 slowdown.

Financial Strategy & Liquidity Management

• $890 million in cash reserves ensures flexibility

• Low net leverage (~1.0x) even after Alani Nu deal

• Balanced capital allocation: Growth investments + debt reduction.

Plan: Maintain financial strength while pursuing aggressive expansion.

2025 Key Targets

• $2 billion+ total revenue

• 50 million in cost synergies from the Alani Nu integration

• Double-digit international sales growth

• Improved gross margin via operational efficiencies

• Expanded retail footprint & new product launches.

Previous financial performance

CELH’s recent quarterly numbers look nearly perfect. Revenue, EPS, and free cash flow have all grown substantially since 2022, and they managed to become comfortably profitable. The last quarter presents an exception, as you can see in the following chart:

CELH financial performance (koyfin.com)

As with everything in the market, there are always ups and downs; occasional bumps are normal. What matters is the long-term trend. And I would argue that the long-term trend looks good. In my opinion, the recent earnings have shown that the long-term growth path is secured.

Valuation

Currently, CELH is valued at 32x forward earnings, far below its three-year average and near its lowest historical valuation.

CELH valuation (koyfin.com)

For a company with CELH’s growth, market position, total addressable market (TAM), and excellent management, I believe this valuation is justified.

After the very positive earnings price reaction, the valuation will be higher. But this is the forward P/E, and I am sure analysts will raise their estimates, lowering the valuation again. In any case, it will still be way above its previous fwd P/E average.

Risks

The major risk I see is that inflation is further accelerating. For CELH this would create two major concerns:

• higher inflation data could force the FED to raise rates again, which would increase the cost of financing, which hits smaller growth companies the hardest.

• accelerating inflation means an even higher cost of living, which is already a problem for most people, especially in the US. CELH sells something that is not necessary and could and will be ditched by consumers if they have to choose between things they need and CELH's energy drinks.

CELH’s management has not addressed this, but I see it as a risk.

Conclusion

CELH is entering a pivotal phase in its growth journey. Short-term profitability challenges exist, but the company’s strong brand momentum, global expansion, and strategic acquisitions position it for accelerated growth in 2025 and beyond. CELH’s management has proven that they can steer the company toward growth and are among the top in the industry. While there are risks and short-term profitability challenges, I am sure that the current stock prices will be a steal compared to the prices you will have to pay soon. Therefore, I rate this stock as a buy.