Celsius 2Q ‘25 update
Celsius holdings (ticker: CELH) had a solid quarter. Revenues grew by 84% to $739m in Q2. Gross margin remained remarkably stable at 51.5% and adjusted EBITDA rose 109% to $210m yoy. The numbers were well received by the market as the share price was up~20% at the open. We wrote earlier this year a deep dive on the company:
Alani Nu contributed for ~$301m to the overall revenue number, resulting in a growth of 9% for the Celsius brand (from $402.0 in 2Q24 to $438.1m in 2Q25). It is unclear by how much Alani Nu grew, but I expect a growth of at least 100% yoy based on ‘24 full year numbers on Alani Nu provided earlier in May.
Including Alani Nu, Celsius Holdings reached a market share of 17.3% in Q2 (from ~11% last year). The energy market as a whole has grown over 15% yoy according to management.
Internationally, Celsius managed to grow by 27% yoy and has now a run rate of close to $100m. Celsius recently expanded further in Europe and the plan is to focus on these specific countries for the time being:
I'm really excited about the international opportunity. As we've seen, we've started to see, we're building out really the teams and the organization. We have a variety of additional team members that will be coming on here in the back half of the year to really further set us up for additional focus and execution and really building these brands, these new markets like the UK, Ireland, New Zealand, Australia, and Benelux. We're working very closely with Suntory in a lot of these markets.
You're seeing more females come into the category in international markets, and health and wellness is just as strong. We think we're well-positioned. As we look for new markets, we're really focused on our existing markets right now. For the back half of 2025, we're just getting started. Lots of opportunities, but we really got to keep the teams focused at this point. It's timing and sequencing, but the opportunity presents itself for 2026 and beyond for sure. (John Fieldly, CEO)
Overall, I am very pleased with the numbers. Celsius delivered both on top and bottom line beyond expectations. I expected flattish growth for Celsius and about $250m in revenues for Alani Nu resulting in revenues of about ~$650m. So it is very satisfying to see that Celsius themselves managed to get back to growth as well, notwithstanding the massive growth Alani underwent.
Alani Nu is integrating well within Celsius as the gross margin in '24 for Alani Nu on a stand alone basis was about 42%. So the 51.5% gross margin for Celsius (on consolidated level) gives me comfort about execution and management know-how to use its scale to integrate Alani Nu successfully, although it is early days.
Management shed some light on it during the call why gross margins increased beyond expectations:
It was a great quarter. I think we're pacing well ahead of, obviously, what we modeled in, and you can see very strong margins coming through. In terms of how those break down for Q2, let's start with Alani. For Alani, John did mention the LTOs. Those tend to be, from a COGS perspective and an overall perspective, higher margin products. So when those things take off, they do provide a benefit to the margin. (Jarrod Langhans, CFO)
Celsius excluding Alani Nu had a gross margin of more than 54% as they continued to leverage from the vertical integration initiatives started in Nov ‘24 with the acquisition of co-packer Big Beverages. To put things in perspective, larger competitor Monster Beverage had a gross margin of 54.6% in ‘24. The expectation is that Celsius will get to ~52% in ‘25 when you read between the lines:
It's hard to peg it with the tariffs kind of changing weekly as well as the LME and aluminium changing on a weekly basis. Clearly, we're up above the model that we showed and above the 50% that I kind of flagged for Celsius last quarter. Where we'll land between kind of that 50% to 54% number, I think we're comfortable saying we're going to be low 50s% as things are today, if nothing changes. But with that said, it's up to us to do better and to drive those cost initiatives to be above that expectation. (Jarrod Langhans, CFO).
If you look back at the quarterly numbers of Celsius from ‘23 onwards, you can see in everything that this is a company that has been dealing with explosive growth and trying to balance profitability with growth. There is a lot of noise in the numbers but the most important metric I focus now on, is the gross margin. Even with the acquisition of Alani Nu, the gross margin has been growing steadily.
Expectations & valuation
Since we bought a stake in Celsius earlier this year, the share price has more than doubled. A lot has happened in between and after today’s number we can have a proper look at the valuation.
I expect now that Celsius should be able to reach at least $2.5bn in revenues for ‘25, which equates to a growth of 30% yoy on pro-forma ‘24 numbers. In ‘26 I expect about $3bn in revenues (+20% yoy), which is basically the Q2 ‘25 numbers extrapolated. After that, I expect revenues growth to slow down towards +10% in ‘29. If we assume an exit multiple of 25x, I get to an IRR of roughly ~12%. See the table below for a better indication.
Conclusion
A lot to like about today’s numbers and it is encouraging to see that Alani is being integrated well within Celsius. But then again, it is just one quarter and we have to see how the upcoming quarters and years will be. I have no visibility in how long the runway is for Alani Nu. Potentially, they follow the same path as Celsius did and able to reach double digit market share as well. Management of Celsius definitely has the skills and expertise to build a brand to the next stage.
Disclaimer
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