Is Celsius redemption here?
Inventory issues are over and Alani Nu acquisition is going spectacularly!
While 2024 was a tough year for Celsius, 2025 is shaping up to be a redemption year.
Many investors and analysts were skeptical of the Alani Nu acquisition, but as I said in my last Celsius article, I believe it was the right decision, and this quarter demonstrated that.
Celsius released a stellar Q2 2025 earnings report, sending the stock up 23%!
The Alani Nu retail sales grew an incredible 129% Y/Y and 39% Q/Q.
I have never seen an acquisition so quickly prove the thesis behind it.
Meanwhile, Celsius brand sales grew by 9% Y/Y, ending the downtrend.
Now the combined Celsius portfolio holds a strong 17.3% US energy drink market share!
Growing faster than most competitors, Celsius seems positioned to go back to gaining market share.
Is Celsius set to go back to its all-time highs?
Let’s explore.
1. Pepsi Inventory Issues
2. Alani Nu
3. International
4. Q2 2025 Results
5. Valuation
6. Conclusion
1. Pepsi Inventory Issues
On 1. In August of 2022, Pepsi invested $550M in Celsius and became its exclusive distribution partner in the USA and Canada. (Read my analysis of the partnership in my Deep Dive)
Pepsi channel quarterly revenue grew by 348% from Q4 2024 to Q3 2023, and Pepsi’s share of overall Celsius revenue grew from 31.2% to 64.6%.
The deal was working perfectly, until it wasn’t!
Celsius recognizes revenue not at the final point of sale but when it ships to Pepsi.
This is called a sell-in recognition. Per accounting rules, companies must recognize revenue upon “transfer of control” to the customer. In this instance, per Celsius’s contractual agreement with Pepsi, Pepsi as the distributor “gains control” upon delivery from Celsius and thus is considered the final customer.
It seems that both Celsius and Pepsi significantly overestimated the demand for the beverage. This caused sales to grow in Q3 and Q4 of 2023 at an unsustainable rate of over 200% Y/Y.
As Pepsi struggled to sell all of its Celsius inventory, they significantly reduced purchases of new products. This caused Pepsi’s channel sales growth to slow down to 15% in Q2 2024. Things got worse in Q3 when Pepsi sales fell 50%.
However, we are finally seeing a reversal in this trend!
In Q2 2025, Pepsi channel sales grew 15% Y/Y, posting a positive growth for the first time in 4 quarters.
The bear narrative was that Celsius’s Pepsi inventory issues are not temporary headwinds, but rather structural issues that indicate slowing demand for Celsius products and intensifying competition. The management of the company disagreed and remained bullish on the future growth potential.
This quarter is the first step in proving that his confidence was warranted. For Celsius to be fully vindicated, this growth must be sustained.
Please note, this doesn’t include any Alani Nu sales as Pepsi doesn’t handle the distribution for this newly acquired brand. Alani Nu has its own distribution strategy that hasn’t been changed by Celsius as of now.
2. Alani Nu
Celsius paid $1.8B to acquire Alani Nu, with $500M paid in stock. This means that Celsius diluted its shareholders by around 8.7%. This is a significant dilution that demands great returns to be generated from the acquired asset.
For a full analysis of the deal structure and rationale, I recommend you read my February Celsius report.
So far, it seems that Alani Nu is on a path to generate extremely strong returns for the company!
In Q2 2025, Alani Nu grew revenues by an incredibly strong 106% Y/Y to $301.2M!
This means that in Q2 2025, Alani Nu’s revenues were about 70% of Celius. I think this acquisition was not only smart, but it seems that in just a few years, analysts will look back at it as a bargain.
Giving up 8.7% of your equity, some cash, and debt seems like a great deal if, already in the first quarter post-acquisition, it generates 70% of your previous business.
Celsius didn’t report Alani Nu’s profitability separately, but if they retained the 2024 net income margin of 10.6%, Alani earned Celsius $31.9M in net income.
Alani Nu now holds a 6.3% energy drink market share in the US, an increase from 3.2% Y/Y!
In pure dollar terms, Alani Nu was the second fastest growing energy drink brand in the US, only behind Red Bull.
Red Bull grew retail energy drink sales in the US by $357M, compared to the $244.5M of Alani Nu. Monster, the second largest energy drink brand, grew retail sales by $190M.
While, as a portfolio, Celsius brands grew a healthy $266M, individually, the Celsius brand still struggles to achieve growth, growing retail sales by a mere $21.6M.
3. International
International sales continue to grow significantly slower than I and other Celsius investors would hope for.
Q2 2025 international sales grew only 27% Y/Y to $24.8M!
International expansion is a key bull thesis of Celsius, and so far, the company continues to fail to deliver on it!
27% growth is way too slow considering the tiny scale Celsius operates on internationally. Investors would like to see the growth to accelerate into to 50s, 60s, and even 100s of percent, $24.8M a quarter is nothing.
Furthermore, the trend seems to be going the wrong way, as international growth slowed down from 40% in Q1 2025 and 30% in Q2 2024.
In fact, this was the worst quarter internationally in 9 quarters!
This is despite Celsius signing many new distribution agreements covering the UK, Ireland, France, Australia, New Zealand, and the Netherlands.
During the earnings call, there was just 1 question from analysts about the possibility of expanding further internationally in the back half of the year.
“As we've seen, we started to see -- we've been building out really the teams and the organization. We have a variety of additional team members that will be coming on here in the back half of the year to really further set us up for additional focus and execution and really building these brands in these new markets” John Fieldy, Celsius CEO.
I didn’t like this comment, it seemed like an excuse. Also, it was rather vague and said that they are still hiring the right people who will manage the international business, but didn’t give any examples of positions or markets where they are hiring.
Well, they have had many years to do that, why haven’t they hired all the executives they need already?
Also, I made a quick check on Celsius LinkedIn, it seems they have listed 56 job vacancies, and after looking through all of them, I didn’t see any hiring activity outside the US and Canada, and no jobs for International Business Development or anything of that sort that would indicate they are hiring someone to grow the international business. It could be that I missed it, or Celsius might be using other methods to hire internationally.
This quarter made it clear that international expansion is happening much more slowly than many investors would have liked!
It seems that integrating Alani Nu and invigorating growth in Celsius’ flagship brand is a bigger priority for the company.
The CEO said that he sees the same health, wellness, low sugar, and women-targeted energy trends internationally. It could be that these trends are a few years behind the US, or maybe not happening at all, or maybe Celsius’ execution internationally is simply sub-par.
It’s too early to tell, but the CEO said that “the opportunity presents itself for '26 and beyond for sure.”
4. Q2 2025 Results
This was the first quarter in which Alani Nu’s results were fully consolidated with Celsius.
Overall, the group delivered strong Q2 2025 results, beating analyst expectations across the board.
Income Statement and FCF
Revenue grew 83.9% Y/Y to $739M, beating analyst expectations of $654M!
This is a huge 13% beat on analyst expectation, largely driven by an incredibly strong performance of the Alani Nu brand, which grew 106% Y/Y.
If we exclude Alani Nu, Celsius brand revenues were $438M, up 9% Y/Y!
This is a welcome return to growth, as we can see in the graph above, this was the first positive revenue growth quarter in 4 quarters.
Meanwhile, the gross profit margin fell slightly from 52% to 51.5% Y/Y, largely because Alani Nu has lower gross margins.
Operating profit grew 51.7% Y/Y to $143M, smashing analyst estimates of $105M!
This is a beat by 36.2%, an extremely strong result, despite the drag from Alani Nu consolidation.
Notice that operating income grew significantly slower than revenues, because margins at Alani Nu are lower. Previously, the management has said that Alani Nu is a few years behind Celius in the margin development.
Furthermore, this quarter Celsius incurred one-time legal and advisory expenses related to the acquisition of Alani Nu of $29.9M and a one-time inventory adjustment of $21.7M.
If we exclude these 2 expenses, operating income would be $51.6M higher, increasing the operating margin from 19.3% currently to 26.3%. These expenses will not happen again, so this means that Celsius already has quite a healthy operating margin, despite the lower margin profile of Alani Nu.
Looking at net results, Celsius posted a net income of $86M, an increase of 28% Y/Y, while EPS was $0.33, an increase of 18% Y/Y!
Celsius beat the EPS estimate of $0.24 by 37.5%, again demonstrating that analysts significantly underestimated how quickly the situation is improving.
Please note that the EPS growth of 18% was below the 28% net income growth, because of dilution. As mentioned in the Alani Nu section, Celsius issued 8.7% of new shares to pay for the deal, which means that previous shareholders have rights to 92.3% of the profits of the combined company.
Going on to FCF, it fell 72.8% Y/Y to $35.5M, significantly beating the analyst expectation of a loss of $128M!
Essentially, analysts were expecting that Celsius would see significant capital outflows, but that didn’t materialize.
Balance Sheet
Cash position decreased 41.9% Y/Y to $615M, entirely because of the acquisition of Alani Nu. This was expected as Celsius paid a significant sum of around $900M in cash in addition to the dilution.
To fund this acquisition, Celsius also raised $863M of long-term debt!
Previously, Celsius had $0 in debt, so this was a significant addition to the liabilities section of the balance sheet. However, this amount of debt is more than manageable, as the Celsius debt ratio is still relatively modest, 23%, while Net Debt/EBITDA is 1.6, and EBIT/interest expense is 7.9. Meaning that Celsius could pay off all its Net Debt in just 1.6 years of pre-tax earnings.
As interest rates are expected to come down, whilst earnings are expected to increase, it will only get easier for Celsius to pay off this debt.
However, very interestingly, goodwill now sits at $802M, up from just $72M in Q1 2025!
According to accounting rules, when a company purchases another company, it must record the difference between the purchase price and the net asset value of the acquired business as goodwill.
Goodwill increased by $730M in Q2 2025, meaning that the net asset value of Alani Nu was $730M lower than the purchase price of $1.9B. This means that Celsius paid 62% above the net asset value of Alani Nu.
While at first glance, it might seem a significant premium, but as we saw in this quarter, the growth of the company more than justifies it.
5. Valuation
After jumping 135.7% in the past 6 months, Celsius has a market cap of $13.4B.
Currently, it trades for a FWD P/E of 56 and a 2027 P/E of 29. A bit high, but I expect that after a quarter such as this, we will see meaningful estimate upgrades from analysts.
In my previous Celsius article, I made a detailed valuation model, today, I will just update it with the current stock price. If you want a full explanation, I recommend you read it.
On February 21, 2025, when I published the report, Celsius traded for $34.5 a share, and I saw a 113.6% upside by 2030!
Here is what I said back in February.
Since then, the stock is up 50.6%, as Celsius brand sales returned to growth, whilst Alani Nu demonstrated incredible strength.
With the current share price, this model sees a 41.7% upside by 2030!
That is not spectacular, but the integration of Alani Nu is going much better than expected, so it could be that my estimates end up conservative.
I am not changing them yet, as this was just the first quarter of integration, I am waiting for more evidence before I update my assumptions. I need to see if such performance is sustainable, or maybe it was just a singularly incredible quarter.
6. Conclusion
In conclusion, Celsius is on a path towards redemption.
The Pepsi inventory issues seem to be over, as Pepsi channel sales grew 15%, whilst overall Celsius brand revenues grew 9%!
While international growth is much weaker than I would have liked, Celsius has said that they are hiring people who will be responsible for driving the international business. The deal with Suntory is still early, and we need to see how the sales trends in Europe develop.
What is very encouraging is the incredibly strong performance of Alani Nu!
106% Y/Y growth is quite insane, with Alani Nu being the second fastest growing energy brand in dollar terms. If this execution continues, in just a few years’ time, the $1.8B acquisition could seem like a bargain.
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