Company Reports

Celsius is poised to grow in the energy drink category in North America, as a long-term partnership agreement with PepsiCo (through 2041 although potentialy longer) align the two parties' interests for long-term growth. In addition, the acquisition of Alani Nu has unlocked opportunities to tap demand from female consumers. That said, we remain skeptical that Celsius has successfully built a durable competitive position underpinned by brand intangibles or cost advantages, given intense competition from resource-rich incumbents with strong brands, such as Monster and Red Bull, and the propensity of smaller entrants to deliver innovation.

Celsius' second-quarter sales rose 11% to $818 million, of which $364 million came from Alani and $67 million from Rockstar; the Celsius brand (55% of sales) declined 12%. Adjusted EBITDA margin contracted nearly 6 percentage points to 22.5% from input cost inflation and lower Celsius sales.

Celsius is poised to grow in the energy drink category in North America, as recent partnership agreements with PepsiCo further align the two parties' interests for long-term growth. In addition, the acquisition of Alani Nu has unlocked opportunities to tap demand from female consumers. That said, we remain skeptical that Celsius has successfully built a durable competitive position underpinned by brand intangibles or cost advantages, given intense competition from resource-rich incumbents with strong brands, such as Monster and Red Bull, and the propensity of smaller entrants to deliver innovation.

Celsius' first-quarter sales rose 138% to $783 million, of which $368 million came from Alani (acquired April 2025) and $67 million from Rockstar (August 2025); the Celsius brand (44% of sales) posted 6% organic growth. Top-line gains led to a 380-basis-point jump in adjusted EBITDA margin to 25%.

Celsius is poised to grow in the energy drink category in North America, as recent partnership agreements with PepsiCo further align the interests of the two parties for long-term growth. In addition, the acquisition of Alani Nu has unlocked opportunities to tap demand from female consumers. That said, we remain skeptical that Celsius has successfully built a durable competitive position underpinned by brand intangibles or cost advantages, given intense competition from resource-rich incumbents with strong brands, such as Monster and Red Bull, and smaller entrants’ propensity to deliver innovation.

Celsius is poised to grow in the energy drink category in North America, as recent partnership agreements with PepsiCo further align the interests of the two parties for long-term growth in the category. In addition, the acquisition of Alani Nu has unlocked opportunities to tap demand from female consumers. That said, we remain skeptical that Celsius has successfully built a durable competitive position underpinned by brand intangibles or cost advantages, given intense competition from resource-rich incumbents with strong brands, such as Monster and Red Bull, and smaller entrants’ propensity to deliver innovation.

Celsius' fourth-quarter sales rose 117% to $722 million largely driven by a $370 million contribution from the Alani acquisition closed in April, but organic sales fell 8% at the larger Celsius brand (58% of sales). Top-line strength led to a 113% rise in adjusted EBITDA to $134 million.

Celsius posted a 173% sales growth to $725 million in the third quarter, led by a $332 million contribution from newly acquired Alani Nu. Adjusted EBITDA grew to $206 million from $4.4 million from the year-ago quarter.

Celsius is poised to grow in the energy drink category in North America, as recent partnership agreements with PepsiCo further align the interests of the two parties for long-term growth in the category. In addition, the acquisition of Alani Nu has unlocked opportunities to tap demand from female consumers. That said, we remain skeptical that Celsius benefits from a durable competitive position underpinned by brand intangibles or cost advantages, given intense competition from resource-rich incumbents with strong brands, such as Monster and Red Bull, and smaller entrants’ propensity to deliver innovation.

On Aug. 29, Celsius agreed to move distribution for Alani Nu onto PepsiCo's network and acquire Rockstar Energy in the US and Canada from the latter. PepsiCo received $585 million in preferred convertible shares in Celsius, bringing its ownership stake to 11.0% from 8.5%.

Celsius Holdings posted 84% sales growth to $739 million in the second quarter, led by a $301 million contribution from newly acquired Alani Nu and a 9% rise in the Celsius brand. Adjusted EBITDA rose 109%, with margin widening 340 basis points to 28.4%.

Celsius has amassed impressive volume share gains in the North American functional and reduced sugar energy drink category in recent years, totaling $1.3 billion in sales in 2024 from just $75 million in 2019. Propelling the momentum, we think that Celsius’ better-for-you portfolio and active-lifestyle branding caters to consumers' penchant for more-healthful alternatives, while a 2022 distribution agreement with wide-moat PepsiCo has bolstered its channel reach and ability to secure shelf space. Its acquisition of Alani Nu, a women-focused energy drink and health brand, expands its better-for-you platform. That said, we remain skeptical that Celsius benefits from any durable competitive advantage based on brand intangibles or cost advantages, given intense competition from resource-rich incumbents with strong brands, such as Monster and Red Bull, and smaller entrants’ propensity to deliver innovation.

Celsius posted a 7% sales decline in the first quarter of 2025 led by a 10% drop in the core US market. Adjusted EBITDA fell 21% and margins narrowed 350 basis points to 21.2%. The firm announced the Alani Nu deal closed on April 1.

We are maintaining our fair value estimates for the beverage firms we cover following the US tariff announcements April 2. While tariffs for an extended period will pressure sales and margins, we think it’s possible that they could be rescinded as they tend to be used as a negotiating tactic. We see investment opportunities in Brown-Forman and Constellation Brands, which trade at respective 36% and 34% discounts to our $52 and $274 fair value estimates.

Celsius has amassed impressive volume share gains in the North American functional and reduced sugar energy drink category in recent years, totaling $1.3 billion in sales in 2024 from just $75 million in 2019. Propelling the momentum, we surmise Celsius’ better-for-you portfolio and active-lifestyle branding caters to consumers' penchant for healthier alternatives, while a 2022 distribution agreement with wide-moat PepsiCo has bolstered its channel reach and ability to secure shelf space. Its acquisition of Alani Nu, a women-focused energy drink and health brand, expands its better-for-you platform. That said, we remain skeptical that Celsius benefits from any durable competitive advantage based on brand intangibles or cost advantages, given intense competition from resource-rich incumbents with strong brands, such as Monster and Red Bull, and smaller entrants’ propensity to deliver innovation.

No-moat Celsius reported disappointing fourth-quarter results, with $332 million in sales and $0.14 in adjusted EPS, falling well short of our $384 million and $0.31 estimates, respectively. We think the weak demand backdrop in the energy drink category, coupled with increased promotional and marketing spending, weighed on the earnings, though new flavors and wider distribution of its Essentials line may help improve trends in the coming quarters.

Celsius has amassed impressive volume share gains in the North American functional and reduced sugar energy drink category in recent years, surpassing $1.3 billion in sales in 2023 from just $75 million in 2019. Propelling the momentum, we surmise Celsius’ better-for-you product portfolio and active-lifestyle branding strategically caters to consumers' penchant for healthier alternatives, while a 2022 distribution agreement with wide-moat PepsiCo has bolstered its channel reach and ability to secure shelf space. That said, we remain skeptical that Celsius benefits from any durable competitive advantage based on brand intangibles or cost advantages, given intense competition from resource-rich incumbents with strong brands, such as Monster and Red Bull, and smaller entrants’ propensity to deliver innovation.

No-moat Celsius reported a 31% revenue decline in the third quarter, severely affected by supply chain optimizations by distributor wide-moat PepsiCo, as well as weak energy drink demand and intensified competition. The pressures compressed Celsius' gross margin by 440 basis points to 50.4%, though still ahead of our 48.4% full-year target thanks to lower-than-anticipated freight and materials costs. While Celsius' retail sales continue to outperform the category, and management reported stronger alignment between distributor sell-in and depletions, we believe the challenging macro environment may continue to suppress near-term sales growth if its distributor continues to exercise caution in taking inventory and demands increased promotional allowances at retail. We plan to cut our fiscal 2024 revenue growth forecast to the high single digits from 37% previously and our operating margin estimate to the high teens from 21% because of deleverage and increased advertising spending. Taken together, we plan to trim our $36 fair value estimate by a high-single-digit percentage, rendering shares as fairly valued after a mid-single-digit stock price decline on the report.

We anticipated that Celsius would face intense competition in its pursuit to carve out a niche in the fast-growing energy drink market dominated by incumbents, which underscores the firm’s no-moat rating. However, this pressure has become evident sooner than we expected amid softer demand due to a challenging macro environment and new sugar-free innovations by competitors. Taken together with planned inventory reduction by North American distributor wide-moat PepsiCo, revenue growth moderated to 23% in the second quarter and 29% year to date, lagging our 37% fiscal 2024 projection. However, in terms of profitability, the firm’s 23.4% operating margin in the second quarter outpaces our 20.8% full-year estimate. This is due to continued freight optimization efforts and lower material costs benefiting the gross profit line, coupled with general and administration leverage, but partially offset by higher selling and marketing expenses than we anticipated. Balancing these results, we don’t plan any material changes to our $36 fair value estimate and view shares as fairly valued, as the stock price now approaches our intrinsic valuation following a 55% fall from its peak in May.

Celsius has amassed impressive volume share gains in the North American functional and reduced sugar energy drink category in recent years, surpassing $1.3 billion in sales in 2023 from just $75 million in 2019. Propelling the momentum, we surmise Celsius’ better-for-you product portfolio and active-lifestyle branding strategically caters to consumers' penchant for healthier alternatives, while a 2022 distribution agreement with wide-moat PepsiCo has bolstered its channel reach and ability to secure shelf space. That said, we remain skeptical that Celsius benefits from any durable competitive advantage based on brand intangibles or cost advantages, given intense competition from resource-rich incumbents with strong brands, such as Monster and Red Bull, and smaller entrants’ propensity to deliver innovation.