LONDON - Shares of Celsius Holdings Inc. (NASDAQ:CELH) fell sharply, down 15%, after the company reported first-quarter earnings that surpassed analyst expectations for adjusted EPS but fell significantly short on revenue. The energy drink maker reported an adjusted EPS of $0.27, beating the consensus estimate of $0.20. However, revenue for the quarter was $355.7 million, which was below the analyst estimate of $390.97 million.
Celsius' first-quarter revenue represented a 37% increase compared to the same quarter last year but was not enough to meet market expectations. The revenue shortfall is attributed to a large inventory adjustment by the company's biggest customer, which impacted sales by approximately $20 million. In contrast, the previous year's first quarter benefited from a $25 million inventory buildup by the same distributor.
Despite the revenue miss, the company's gross profit saw a significant increase of 60% to $182.2 million with a gross margin of 51%, up from 44% in the prior-year quarter.
The company's CEO, John Fieldly, highlighted the record first-quarter performance, with Celsius contributing 47% to the quarterly YoY growth in the energy drink category. Fieldly attributed this success to product innovation and retailer resets, which he believes will continue to drive growth. CFO Jarrod Langhans noted the company's balanced approach to expansion and the benefits from reduced raw material pricing and freight costs.
Celsius also reported a strong increase in its share of the energy drink market, now holding 11.5% of the U.S. MULOC, and significant growth in the club channel and on Amazon (NASDAQ:AMZN). The company is also making strides in international markets, with sales in Canada exceeding expectations and expansion plans into Australia, France, Ireland, New Zealand, and the United Kingdom.
Despite the positive aspects of the report, the market reacted negatively to the revenue miss, indicating investor concern over the company's ability to meet sales targets. The stock's 15% decline following the earnings release suggests a significant level of disappointment among investors, possibly heightened by the substantial growth expectations set by the company's strong market share gains and international expansion efforts.
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