Celsius Holdings, Inc. (CELH) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. Celsius Holdings, Inc. operates as a single reporting segment with a multi-brand portfolio comprising CELSIUS, Alani Nu (acquired April 2025), and Rockstar (acquired August 2025). The company maintains a strategic partnership with PepsiCo, which serves as the primary distributor for all three brands in the U.S. and Canada under the "Captaincy" and Amended and Restated (A&R) Distribution Agreements.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $782.6 million | $329.3 million |
| Gross Profit | $378.1 million | $172.4 million |
| Gross Margin | 48.3% | 52.3% |
| Operating Income | $139.0 million | $52.0 million |
| Net Income | $110.1 million | $44.4 million |
| Net Income Attributable to Common Stockholders | $85.1 million | $34.4 million |
| Diluted EPS | $0.33 | $0.15 |
| Cash and Cash Equivalents | $549.2 million | $977.3 million |
| Long-Term Debt (Net) | $668.9 million | N/A (No debt in Q1 2025) |
| Operating Cash Flow | $73.7 million | $103.4 million |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 137.7% year-over-year, driven primarily by the inclusion of Alani Nu ($368.1 million contribution) and Rockstar ($66.6 million contribution).
- Margin Compression: Gross margin decreased 400 basis points to 48.3%, attributed to increased promotional activity, higher aluminum costs, freight disruptions, and tariffs.
- Expense Increases: SG&A expenses rose 95.0% to $234.6 million due to the expansion to a three-brand portfolio, increased marketing, and $25.5 million in legal charges related to the Strong Arm Productions litigation.
- Debt Financing: The company incurred $696.5 million in term loan debt in 2025 to fund acquisitions, resulting in $11.8 million of interest expense in Q1 2026 compared to none in the prior year.
- Share Repurchases: The company repurchased approximately 0.7 million shares of common stock for $24.1 million during the quarter.
Guidance, Outlook, and Risks
- Legal Contingencies: A significant liability of $85.0 million has been accrued for the Strong Arm Productions litigation, with a potential outcome range of $60.4 million to $105.0 million. The company intends to appeal a recent $101.1 million judgment.
- Preferred Stock Obligations: The company holds Series A and Series B Convertible Preferred Stock (mezzanine equity) held by PepsiCo. Quarterly dividends totaled $14.0 million in Q1 2026.
- Macroeconomic Factors: Management notes risks related to tariffs, aluminum costs, and geopolitical instability in the Middle East, though direct revenue impact from the Middle East is immaterial.
- Integration: The company is actively integrating Alani Nu and Rockstar into its internal controls and distribution networks.
Investor Verification Checklist
- Verify the status and potential final cost of the Strong Arm Productions litigation, including the appeal process and the $85.0 million accrual.
- Monitor the gross margin trajectory as the company scales three brands, specifically regarding aluminum costs and promotional spend efficiency.
- Review the cash flow impact of the $224.1 million settlement of accrued distributor termination fees and the utilization of the $275.0 million reimbursement from Pepsi.
- Assess the debt service requirements on the $696.5 million term loan and the impact of variable interest rates on future earnings.
- Confirm the conversion terms and potential dilution associated with the Series A and Series B Preferred Stock held by PepsiCo.