Zevia Pbc Earnings Call Signals Turn toward Profitability

Zevia Pbc Class A ((ZVIA)) has held its Q4 earnings call. Read on for the main highlights of the call.

Zevia Pbc Class A’s latest earnings call struck a cautiously optimistic tone as management highlighted a return to top-line growth in 2025, sharply improved profitability metrics and expanding retail presence. While headwinds from aluminum tariffs, product rationalization and club-channel margin pressure remain, management’s confident 2026 outlook suggested a clearer path toward breakeven and long-term profitability.

Return to Growth and Improved Full-Year Financials

Zevia posted a 4% increase in 2025 net sales to $161.3 million, signaling a return to growth after a tougher prior year and validating the brand’s repositioning. Profitability improved markedly, with net loss narrowing to $11.1 million from $23.8 million and adjusted EBITDA loss shrinking to $4.7 million from $15.2 million, underscoring better cost control and operating discipline.

Quarterly Profitability Progress

The fourth quarter showed tangible progress toward break-even as adjusted EBITDA was roughly flat at around $50,000, a major step from prior losses. Q4 net loss improved to $1.3 million from $6.8 million a year earlier, reinforcing the view that operational efficiency gains are beginning to flow through the income statement.

Gross Margin Expansion for the Year

Full-year gross margin expanded to 48.0% in 2025 from 46.4% in 2024, a gain of about 160 basis points that reflects better product costing and more disciplined inventory management. This margin uplift, achieved despite a promotional environment, gives Zevia more room to reinvest in marketing while still moving closer to sustained profitability.

Distribution and Retail Wins

The company’s distribution footprint strengthened as Zevia secured nationwide presence at Walmart, anchoring the retailer’s modern soda set and boosting mainstream visibility. A national Costco front-of-store rotation, deeper shelf space and an eye-level vertical brand block at Albertsons, plus broader Canadian Walmart coverage, position the brand for incremental volume growth across North America.

Product Innovation and Top-Selling SKUs

Product innovation is resonating with consumers, with Orange Creamsicle emerging as the number one six-pack at Sprouts following launch and a new fruity variety pack becoming a top SKU at Walmart. Management expects these new flavors and improved taste profiles to fuel trial and repeat purchases into 2026 as the innovation pipeline broadens Zevia’s appeal.

Marketing and Brand Momentum

Zevia ramped up marketing with influencer programs, event sampling and out-of-home campaigns, generating strong early editorial and social traction that supports brand momentum. Looking ahead, the company plans to lift marketing spend to roughly 12–13% of revenue in 2026 to back its packaging rollout and reach more mass-market consumers.

Solid Liquidity and Cost Savings

The balance sheet remains a relative bright spot with $25.4 million in cash and an undrawn $20 million revolver, giving Zevia flexibility to fund growth and absorb volatility. Productivity initiatives are on track, with the final $5 million tranche of savings slated to hit the income statement by the end of Q2 2026, providing additional cost relief against external pressures.

Q4 Revenue Decline and Timing Shifts

Despite full-year progress, Q4 2025 net sales fell 4% to $37.9 million as Zevia lapped last year’s expanded Walmart sell-in and shifted certain Costco rotations from Q4 into Q1. These timing factors depressed reported Q4 results but are expected to support a stronger volume cadence into early 2026 as club programs roll through the year.

Quarterly Gross Margin Pressure

Fourth-quarter gross margin slipped to 47.7% from 49.2% a year earlier, a 150-basis-point decline that contrasts with the full-year expansion. Management pointed to channel mix from re-entering the club channel and higher aluminum and tariff costs as key drivers, partially offsetting underlying savings and reduced promotional intensity.

Tariff-Driven Aluminum Cost Headwind

A significant new headwind is an estimated $5 million in incremental aluminum tariffs beginning in Q2 2026, which Zevia has already embedded into its guidance. While price increases and productivity savings are intended to offset part of this blow, the company acknowledged it will pressure margins and requires continued cost and pricing discipline.

Product Line Discontinuation Impact

Zevia plans to discontinue its tea line in 2026, a move aimed at sharpening focus on core beverages but one that will trim reported growth by about 1.0–1.5 percentage points. Investors will need to monitor whether strength in soda and new innovations can more than compensate for this deliberate pullback in a smaller, less strategic category.

Adjusted EBITDA and Profitability Still Negative

Despite sizeable improvement, the business remained unprofitable in 2025 with adjusted EBITDA at negative $4.7 million, highlighting that the turnaround is still in progress. Management also expects an adjusted EBITDA loss of $1.6–$1.9 million in Q1 2026, reflecting weighted marketing investments and club mix before savings and pricing actions fully materialize.

Rising G&A and Variable Compensation

General and administrative expenses rose in Q4 to $7.3 million, or 19.3% of net sales, versus $6.8 million and 17.3% in the prior-year quarter, largely due to higher variable compensation accruals. While this signals improved performance against internal targets, it also weighs on operating leverage and underscores the need for further scale and cost discipline.

Margin Dilution from Club and Costco Programs

The national Costco front-of-store program is delivering valuable exposure and trial in new regions but is dilutive to gross margin in the near term, with particular impact expected in Q1. Management framed this as a strategic trade-off, accepting lower unit economics at club in exchange for household penetration gains that can later be monetized in higher-margin channels.

Exposure to Retail Cadence and Reset Timing

Zevia’s revenue and margin cadence remains heavily tied to retail reset schedules, spring shelf sets and rotation timing at major partners, which adds execution risk to 2026 targets. Several key resets are still ahead, making the timing of sell-in and promotional support an important swing factor for quarterly performance even as the full-year outlook remains constructive.

Forward-Looking Guidance and Outlook

For 2026, management guided net sales to $169–$173 million, implying around 6% growth at the midpoint despite the tea exit and with volumes skewed toward Q1 and Q3. The company expects full-year adjusted EBITDA between a $1.0 million loss and a $0.5 million profit, with margins improving from the mid-40% range in Q1 to the high-40% range in Q2 as price increases, productivity savings and marketing investments balance against higher aluminum costs.

Zevia’s earnings call painted a picture of a business moving steadily toward profitability, backed by improving margins, broader distribution and strong product innovation. Investors will need to weigh near-term pressure from tariffs, club mix and category pruning against the company’s strengthened balance sheet and credible guidance that suggests breakeven is now within reach over the coming year.