Beverage company Zevia (NYSE: ZVIA) reported Q1 CY2025 results topping the market’s revenue expectations, but sales fell by 2% year on year to $38.02 million. The company expects the full year’s revenue to be around $160.5 million, close to analysts’ estimates. Its non-GAAP loss of $0.04 per share was 59.8% above analysts’ consensus estimates.

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StockStory’s Take

Zevia’s first quarter results were shaped by ongoing efforts to streamline operations and expand brand reach in a highly competitive beverage landscape. CEO Amy Taylor pointed to cost savings from the company’s productivity initiative as a key enabler, allowing increased marketing and innovation investment despite a year-over-year sales decline. Taylor explained, “Our productivity initiative continues to deliver cost savings that fuel investment into building our brand while moving us closer to profitability.” The quarter also featured a sharpened marketing approach—highlighted by a high-profile campaign with artist Jelly Roll—and distribution gains across major retailers like Walmart and Walgreens. While sales dipped, management emphasized improved gross margin and operational efficiencies as foundational to future growth.

Looking ahead, Zevia’s guidance for the remainder of the year is underpinned by expectations of continued progress along its strategic growth pillars—marketing, product innovation, and distribution. Taylor noted that increased brand awareness and new product launches are expected to drive performance in the second half of the year, with expanded visibility at major retailers and convenience channels. Management acknowledged that tariffs and an uncertain consumer environment present headwinds, but CFO Girish Satya stated, “We continue to find opportunities to streamline our operations and drive efficiencies in order to offset impending tariff costs.” The company expects stronger seasonal sales in upcoming quarters as new flavors and variety packs roll out, supported by ongoing cost control and targeted pricing strategies.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to operational cost savings, increased marketing investment, and new retail partnerships. They highlighted progress in brand awareness and product development as drivers of performance.

• Marketing campaign reach: Zevia’s new advertising campaign featuring artist Jelly Roll generated a record 2.4 billion earned impressions, aiming to broaden appeal and raise brand awareness with both paid and organic media across multiple channels.
• Product innovation pipeline: The company introduced new flavors—such as Strawberry Lemon Burst and Orange Creamsicle—along with reformulations for a more sugar-like taste, targeting consumer demand for better-for-you sodas. Early sales of new flavors, particularly Strawberry Lemon Burst, were described as encouraging.
• Retail distribution expansion: Zevia expanded its presence in Walmart to national coverage, launched additional placements in Albertsons, and secured new listings in nearly 8,000 Walgreens stores. The company also advanced its direct store delivery (DSD) strategy in regional convenience stores, with a focus on single-serve cans.
• Cost efficiencies drive investment: Productivity initiatives—including supply chain improvements and reduced selling expenses—enabled higher marketing spend and supported record gross margin of over 50%, despite increased promotional activity.
• Tariff and cost headwinds: Management noted that aluminum tariffs and related supply chain pressures represent a roughly 200 basis point headwind to gross margin but expressed confidence in offsetting these impacts through ongoing cost savings and price pack adjustments.

Drivers of Future Performance

Zevia’s outlook centers on leveraging distribution gains, product innovation, and marketing to offset cost headwinds and expand its consumer base.

• Seasonal sales momentum: Management expects higher sales volume in Q2 and Q3, aligning with historical seasonality and the impact of new product launches and expanded distribution in major retailers and convenience channels.
• Mitigating tariff impact: The company anticipates continued cost pressures from aluminum tariffs and transportation, but plans to counteract these with further productivity efforts, selective price pack architecture changes, and sourcing adjustments to sustain gross margins in the upper 40% range.
• Focus on brand building: Zevia plans to maintain elevated marketing investments to drive household penetration and trial, with ongoing measurement through brand health tracking and retailer-level attribution models. Management believes these efforts will gradually translate into broader consumer adoption and sales growth despite the challenging macro environment.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the effectiveness of new product launches and marketing campaigns in translating to sales growth; (2) Zevia’s execution on expanding distribution—especially in Walgreens, convenience, and DSD channels; and (3) the company’s ability to sustain gross margin improvements while navigating tariff and promotional pressures. Continued progress on household penetration and retailer sell-through rates will also be critical signposts for long-term growth.

Zevia currently trades at a forward price-to-sales ratio of 1.2×. In the wake of earnings, is it a buy or sell? The answer lies in our full research report (it’s free).

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