Shares of Celsius Holdings Inc. advanced sharply in Thursday's trading session, buoyed by the company's latest quarterly financial results. The energy drink maker's stock closed at $54.25, marking a gain of 7.2% for the day. Earlier, the stock had surged as much as 17% before paring some of those intraday gains.
Earnings Performance and Financial Metrics
The company reported fourth-quarter revenue of $721.6 million, representing a staggering 117% increase compared to the same period last year. On an adjusted basis, diluted earnings per share came in at $0.26, up from $0.14 in the prior-year quarter. These adjusted figures exclude certain items management considers non-core to ongoing operations.
However, profitability faced pressure during the period. Gross margin contracted to 47.4%, down from 50.2% in the year-ago quarter. Management attributed the compression to costs associated with business integration, tariff impacts, and dilution related to the Rockstar Energy portfolio. The leadership team anticipates margins will recover to the low-50 percent range once integration activities are completed, which is projected for the first half of 2026.
Capital Allocation and Strategic Moves
Celsius demonstrated a strong balance sheet position by repaying $197.8 million in debt during the quarter. Additionally, the company executed a share repurchase program, buying back $39.8 million worth of its own stock. Chief Executive Officer John Fieldly characterized 2025 as "a defining year" for the business, highlighting the transformative nature of recent strategic initiatives.
The quarter illustrated the volatility that can accompany major business transitions. Revenue for the core Celsius brand declined approximately 8%, a result the company attributed to timing discrepancies in shipments, distributor depletions, and promotional activities. Management emphasized this did not reflect underlying consumer demand, pointing instead to a 13% increase in U.S. tracked retail sales over the 13-week period ending December 28.
Distribution Network Evolution
A significant shift in the company's distribution strategy remains a key focus for analysts and investors. Celsius recorded a $327.5 million obligation connected to the termination of certain distributor agreements, a move that is reshaping its route to market. Meanwhile, the distribution reach for the Alani Nu brand within PepsiCo's network achieved 94.2% All Commodity Volume (ACV) by early February, a metric that measures product shelf penetration in retail stores.
The stock's positive performance on Thursday stood in contrast to a broader market decline, where major U.S. indexes fell. Pressure on technology shares, particularly semiconductor stocks following Nvidia's earnings report, weighed on the Nasdaq Composite.
Analyst Perspective and Competitive Landscape
Some market observers believe excessive attention on near-term challenges may obscure longer-term growth trends in the energy drink sector. UBS analyst Peter Grom, who maintains a Buy rating on Celsius with a $70 price target, told Barron's that the company's portfolio continues to gain market share.
The competitive backdrop remains intense. Monster Beverage Corporation, a primary rival, is scheduled to report its quarterly results after the market close. Analysts are keenly focused on Monster's pricing power and its ability to offset rising aluminum costs. RBC Capital Markets projected a strong January sales increase between 16% and 19% for Monster, a data point viewed as a sector indicator as Celsius and other brands maintain competitive pressure.
Looking ahead, the pace of margin recovery at Celsius presents a critical test. The central question is whether profitability rebounds swiftly after integration tasks conclude, or if a challenging promotional environment prolongs the pressure. With the stock retreating from its session highs late in the day, investors appear to be scrutinizing execution capabilities more closely than the top-line results.
Attention now turns to whether cleaner shipment patterns and more stable margins can be sustained through the first half of 2026. The market will also digest Monster Beverage's upcoming report for signals on broader energy drink demand and pricing dynamics within the category.
