CELH

Celsius Holdings, Inc. (CELH) - Q2 2026 10-Q Summary

Business Context and Reporting Period

This report covers the quarterly period ended June 30, 2026. Celsius Holdings, Inc. operates as a single reportable segment with a multi-brand portfolio comprising CELSIUS, Alani Nu (acquired April 2025), and Rockstar (acquired August 2025). The company maintains a strategic distribution 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 (Six Months Ended June 30, 2026)

Material Changes vs. Prior Period

• Revenue Growth: Revenue increased 49.8% year-over-year (YoY) to $1.6 billion, driven by the inclusion of a full six months of Alani Nu and Rockstar operations. Alani Nu revenue grew 143.2% YoY, while Rockstar contributed $133.1 million (no prior year comparison).
• Celsius Brand Decline: Revenue from the core Celsius brand decreased 4.2% YoY to $735.0 million, attributed to increased promotional investment, inventory rebalancing, and SKU optimization.
• Margin Compression: Gross margin decreased to 48.2% from 51.8% in the prior year, primarily due to higher promotional and incentive activity as a percentage of revenue.
• Distributor Termination Fees: The company recorded $85.3 million in distributor termination fees related to the transition of Alani Nu distribution rights to Pepsi. This was a non-recurring expense with no comparable amount in the prior year.
• Net Income: Net income attributable to common stockholders increased slightly to $121.4 million from $119.9 million, despite the termination fees, due to significant revenue growth from acquired brands.

Guidance, Outlook, and Risks

Management Commentary: Management highlighted successful integration of Alani Nu and Rockstar, expanding the portfolio to serve distinct consumer segments. The company continues to invest in marketing and distribution to support long-term growth. A subsequent event on July 15, 2026, involved a refinancing of the Term Loan Facility to reduce interest rates by 0.25%.

Risks and Contingencies:

• Legal Proceedings: The company faces ongoing litigation, including a securities class action regarding the Pepsi distribution agreement (currently stayed pending dismissal motions) and the Strong Arm Productions case. An $85.0 million liability has been accrued for the Strong Arm judgment.
• Regulatory: The company is subject to a civil investigative demand from the Texas Attorney General regarding product representations.
• Preferred Stock: The company holds Series A and Series B Convertible Preferred Stock issued to Pepsi, requiring quarterly dividends and carrying conversion/redemption rights that impact net income available to common shareholders.

Investor Verification Checklist

• Termination Fee Utilization: Verify the status of the $275.0 million and $81.1 million reimbursements received from Pepsi for distributor termination fees and confirm they were fully utilized as stated.
• Strong Arm Litigation: Monitor the appeal status of the $101.1 million judgment in the Strong Arm Productions case and the adequacy of the $85.0 million accrued liability.
• Celsius Brand Trends: Assess whether the decline in Celsius brand revenue is a temporary result of SKU optimization or a structural shift in market share.
• Debt Refinancing: Confirm the accounting treatment (modification vs. extinguishment) of the July 2026 Term Loan refinancing and its impact on future interest expense.
• Pepsi Relationship: Review the terms of the "Captaincy" and A&R Distribution Agreements for any potential risks related to concentration of distribution (Pepsi accounts for ~60% of revenue).