Celsius Q1’24 Earnings

Celsius announced earnings that were received less than optimal as the company initially sold off about 18%. This however wasn’t the most worrying sign as the same thing happened last quarter, although to a lesser extent (8% top of mind) only for the stock to open at $63.91 and close at $81.62, a 27% intraday rally. As I’m doing my first writing of this, the stock is returning from -8% to -4.5% so I’m curious what today will bring, but for now, let’s just dive straight into the earnings.

Although the Celsius Website may look a bit funny, their earnings are not, what a growth monster this company is. Year-over-year revenue growth of 37%, gross profit growth of 60%, and EPS growth of 108%. They managed to grow like this even with a 20 million impact from their main distributor lowering days on-hand inventory.

When the company presents its financial highlights, it shows a graph that is clearly made with the most basic Excel skills, although somewhat hilarious, maybe they can start to up their game on that front a bit.

The company has increased its gross profit margin to 51%, from 44% last year. Mainly due to lowered freight and material costs, and sales on Amazon grew by 30%, to approximately 28 million, as case volume grew by 186% year over year.

The balance sheet looks extremely healthy, as they grew stockholders’ equity by about 28%. This was not by some funny accounting tricks such as increasing inventories or having large accounts receivables, it’s real growth and that’s extremely bullish.

The income statements show nothing unexpected, simply big increases year-over-year.

Remember how I said the stock trading back up after being down 18%? With 15 minutes to go until the market opens the stock is only down about 2%.

I see these earnings as very positive, however, analysts expected higher revenues at 390.37 million dollars, as Celsius came in at “only” $355.71 million. Even without the $20 million impact from the inventory declines Celsius wouldn’t have made it to this number. The miss on expectations is quite big at almost 9%, however, EPS expectations were beaten by a larger extent as expectations were for $0.20, and the company came in with $0.27, a 37% beat.

This company is growing extremely fast raising questions about sustainability, not only because of having to grow larger numbers, but also due to the market it operates in. Investors might fear the product being a trend that can go out of favor or stall in taking market share due to high competition within the industry. The stock is also very richly valued at an almost 100PE and 70F/PE.
Not coming in with enormous beats will have consequences, even as Celsius seems to shrug it off pretty well. The stock is now down about 2%, coming from an initial -18% reaction.