Celsius drops 18% as core brand revenue slides 12% in Q2

Celsius Holdings reported Q2 adjusted earnings of 36 cents a share, missing the 42-cent consensus, as core CELSIUS brand revenue fell 11.7%.

"The CEO has lost credibility with the investment community," Russ Savage, founder of Rockstar Energy and a 4.7% Celsius shareholder, said in a CNBC interview, calling for the removal of the chief executive and other top managers.

Revenue rose 10.6% year over year to $817.9 million, short of the $883 million consensus, while net income more than halved to $55.29 million. Alani Nu contributed $364.4 million, up about 21%, and Rockstar added $66.5 million, offsetting the flagship brand's decline. Gross margin fell 340 basis points to 48.1%, and adjusted EBITDA dropped 12% to $184.2 million.

Shares closed down 18% at $23.77 on Aug. 6, then rebounded about 12% the next day after Savage disclosed his stake. The core brand's swing from a 6% gain in Q1 to a 12% decline in Q2 prompted Levi & Korsinsky to open a securities investigation on Aug. 10.

The split portfolio is the central tension. Alani Nu's tracked-channel retail sales advanced 55.7% and its U.S. ready-to-drink energy share reached 8.7%, while the CELSIUS brand's retail sales fell 2% and its share slipped to 9.5% from 9.9% in Q1. Combined portfolio retail sales rose 31%, holding about 20.1% of the U.S. ready-to-drink energy category, a benchmark that includes Monster Beverage and PepsiCo-distributed brands.

Management tied the core weakness to SKU rationalization, delayed shelf installations, limited innovation, higher trade spending, softness in the club channel and distributor inventory rebalancing. Dollars per point of distribution rose about 16% from Q1 despite roughly 7% fewer distribution points, an early sign of productivity gains. Fizz-Free tracked-channel dollar sales rose more than 20% sequentially.

Savage, who sold Rockstar to PepsiCo in 2020 for $3.85 billion, began building his Celsius position in March when the stock traded in the low $30s. He has advised the company for over a year on cost cuts and marketing shifts, he said, but his suggestions were largely dismissed. The stock is down 42% year to date.

The earnings recovery could lag revenue growth even if portfolio sales stay healthy. Management expects Q3 gross margin to remain in the high 40s at current diesel and aluminum levels, and expects the CELSIUS brand to return to growth exiting 2026 with additional 16-ounce innovation planned for early 2027. The company completed $166.42 million of buybacks under its 2025 program, including $100.4 million in Q2. Investors will watch whether Savage's push for leadership change and the pending investigation alter that timeline.

This article is for informational purposes only and does not constitute investment advice.