• Net Sales: $39.5 million in Q4 2024, an increase of 4.4% compared to Q4 2023.
• Gross Margin: 49.2%, an increase of 850 basis points from 40.7% in Q4 2023.
• Net Loss: $6.8 million, an improvement from a net loss of $9.2 million in Q4 2023.
• Adjusted EBITDA: Negative $3.9 million, improved by $3 million compared to Q4 2023.
• Cash and Cash Equivalents: $30.7 million at the end of Q4 2024.
• Full Year Net Sales: $155.1 million, a decrease of 6.8% from 2023.
• Full Year Gross Margin: 46.4%, up from 44.9% in 2023.
• Full Year Net Loss: $23.8 million, improved from a net loss of $28.3 million in 2023.
• Store Expansion: Increased presence from 800 to over 4,300 Walmart locations.
• 2025 Net Sales Guidance: Estimated between $158 million to $163 million.
• 2025 Adjusted EBITDA Guidance: Expected between $8 million to $11 million.

• Warning! GuruFocus has detected 3 Warning Sign with ZVIA.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Zevia PBC (NYSE:ZVIA) returned to top-line growth in Q4 2024 with a sales increase of over 4%, driven by increased volumes and expanded distribution.
• The company achieved a record high gross margin of 49.2%, an increase of 850 basis points from the previous year, benefiting from productivity initiatives.
• Zevia PBC (NYSE:ZVIA) expanded its presence from 800 to more than 4,300 Walmart locations, significantly increasing household penetration and trial opportunities.
• The company is investing in marketing to drive awareness and trial, with a focus on amplifying its brand and differentiating on taste and ingredients.
• Zevia PBC (NYSE:ZVIA) has a robust product innovation pipeline for 2025, including new flavors and variety pack offerings to drive trial and expand the consumer base.

Negative Points

• Despite the return to growth, Zevia PBC (NYSE:ZVIA) reported a net loss of $6.8 million in Q4 2024, though this was an improvement from the previous year.
• The company faces challenges from increased competition in the 'Better for You' soda category, which could impact market share and growth.
• Zevia PBC (NYSE:ZVIA) experienced a decline in full-year 2024 net sales by 6.8%, driven by lost distribution in select channels and increased promotional spend.
• The company anticipates a challenging Q1 2025 due to the impact of lost distribution from a mass customer and the discontinuation of certain product lines.
• Zevia PBC (NYSE:ZVIA) is increasing marketing investments, which could pressure margins if not balanced with sales growth and cost management.

Q & A Highlights

Q: Can you discuss the engagement and repeat rates of new customers at Walmart, especially with the increased competition in the category? A: Amy Taylor, President and CEO, highlighted the expansion from 800 to 4,300 Walmart locations, which significantly boosts household penetration, particularly in the Southeast. The variety pack is the fastest-selling SKU, driving trial and leading to purchases of higher-margin straight flavor packs. This expansion helps increase awareness, trial, and household penetration, which are top priorities for Zevia.

Q: How do you plan to balance driving excitement around expanded distribution with maintaining gross margin gains? A: Girish Satya, CFO, explained that gross margin gains are partly due to increased promotional spend. Zevia aims to maintain gross margins in the high 40s while investing in promotions to drive trial and business growth. The focus is on ensuring the correct depth, breadth, and frequency of promotions.

Q: What is the expected cadence of sales growth for 2025, given the implied decline in Q1 and growth for the full year? A: Girish Satya noted that Q1 is challenging due to the impact of lost distribution from a mass customer and the discontinuation of certain lines. However, distribution gains secured for the full year are expected to drive growth. Marketing spend in Q1 is higher due to production expenses, which will benefit later quarters.

Q: Can you share observations from the DSD model in the Pacific Northwest and Arizona? A: Amy Taylor stated that the DSD model has enabled outsized growth in grocery by addressing out-of-stocks and increasing in-store visibility. It also allows for singles merchandising, critical for trial. Zevia plans to expand the DSD model to the Southwest, capturing learnings and expanding strategically.

Q: How do you view the role of marketing in 2025, and what are the plans for increased marketing spend? A: Amy Taylor emphasized the importance of marketing, noting the success of recent campaigns with positive social sentiment. Zevia plans to increase marketing spend to low double digits as a percentage of sales, funded through productivity initiatives. The focus is on awareness, with plans for new campaigns and strategic investments in key accounts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.