Celsius Holdings, Inc. (CELH) has emerged as a prominent player in the dynamic functional beverage industry, captivating health-conscious consumers with its innovative and clinically-proven product lineup. With a steadfast focus on delivering superior taste and nutritional benefits, Celsius has carved out a distinctive niche, positioning itself as a disruptive force reshaping the energy drink landscape.

Business Overview From Humble Beginnings to Nationwide Prominence

Celsius Holdings was incorporated in the State of Nevada on April 26, 2005, with a mission to provide consumers with a healthier, more functional alternative to traditional energy drinks. The company's flagship product, CELSIUS, was introduced to the market that same year, ushering in a new era of premium, science-backed beverages marketed as a lifestyle and energy drink formulated to power active lifestyles.

Over the past two decades, Celsius has experienced remarkable growth, transforming from a small, regional player to a nationwide brand with a rapidly expanding international footprint. The company's unwavering commitment to innovation, formulation expertise, and strategic partnerships has been the driving force behind its success.

Celsius products are currently offered in major retail segments across the U.S., including conventional grocery, natural food stores, convenience stores, fitness centers, mass market retailers, vitamin specialty stores and e-commerce platforms. This widespread availability has contributed significantly to the company's growth and market penetration.

In 2022, Celsius entered into multiple agreements with PepsiCo Inc., including a long-term distribution agreement that resulted in Pepsi becoming the primary distribution supplier for Celsius products in the U.S. In connection with these agreements, Celsius issued and sold approximately 1.5 million shares of its Series A Convertible Preferred Stock to Pepsi for $550 million. This partnership capitalized on Pepsi's robust distribution channels to expand Celsius' reach into key market segments.

Despite its overall success, Celsius has faced some operational challenges. In 2021, the company received formal and informal requests from the SEC Division of Enforcement for information in connection with a non-public, fact-finding inquiry. In 2023, several derivative actions were filed, alleging false and misleading statements or omissions made between 2021 and 2022 which are alleged to have artificially inflated the company's stock price and caused Celsius to restate its previously issued financial statements. Despite these challenges, Celsius has continued to grow and expand its business both domestically and internationally.

In 2024, Celsius reported record annual revenue of $1.36 billion, representing a 3% year-over-year increase. This impressive performance was underpinned by a 22% surge in retail sales, demonstrating the strong and growing consumer demand for the company's premium functional beverage offerings.

Diversifying the Portfolio Celsius Essentials and Celsius Hydration

Celsius's product portfolio extends beyond its flagship CELSIUS line, with the introduction of two additional product lines in recent years – Celsius Essentials and Celsius Hydration.

The Celsius Essentials line, launched in 2023, features 16-ounce cans infused with performance-enhancing amino acids, catering to the needs of health-conscious consumers seeking a more functional energy boost. This expansion has enabled Celsius to capture a broader segment of the energy drink market, further solidifying its position as a leading brand in the better-for-you functional beverage category.

Furthermore, in 2025, Celsius unveiled its Celsius Hydration line – a range of zero-sugar hydration powders infused with electrolytes in a variety of fruit-forward flavors. This innovative offering taps into the growing consumer demand for functional hydration solutions, positioning Celsius to capitalize on yet another fast-growing market segment.

Cementing Partnerships and Global Expansion

Celsius's success has been bolstered by strategic partnerships that have amplified its distribution reach and brand visibility. In 2022, the company entered into a long-term distribution agreement with PepsiCo, making Pepsi the primary distributor of Celsius products in the United States. This partnership has been instrumental in driving the brand's nationwide expansion, with Celsius now available in over 241,000 retail outlets across the country.

Internationally, Celsius has also made significant strides, leveraging partnerships to expand its footprint in key global markets. In 2024, the company established a hub in Dublin, Ireland, to oversee its international operations, including manufacturing, raw material sourcing, and distribution. Celsius has since forged agreements with entities within the Suntory Group to facilitate its entry into the United Kingdom, Ireland, Australia, New Zealand, and France, further solidifying its position as a global leader in functional beverages.

Financial Performance

Celsius's financial performance has been robust, with the company reporting strong revenue growth and healthy profitability. In the fiscal year 2024, the company generated $1.36 billion in revenue, up 3% from the previous year. Gross profit for the year increased by 7% to $680.2 million, with the gross profit margin expanding to 50.2%.

The company's performance was particularly strong in North America, which accounted for $1.28 billion or 94% of total revenue, representing a 1.4% increase year-over-year. Europe saw significant growth, with revenue increasing by 41.1% to $61.7 million, while the Asia-Pacific region and other international markets contributed $5.66 million and $7.38 million, respectively.

Selling, general, and administrative (SG&A) expenses for 2024 were $524.48 million, a 43.0% increase from 2023. This increase was primarily due to a $61.5 million increase in marketing investments, a $52.8 million increase in legal accruals, and a $35.5 million increase in employee costs to support the company's growth initiatives.

Net income for 2024 was $145.07 million, down from $226.80 million in 2023, resulting in basic earnings per share of $0.46 compared to $0.79 in the prior year. The decrease in net income was largely attributable to the higher SG&A expenses incurred during the year.

Despite facing some challenges in the second half of 2024, including the impact of promotional allowances and timing of orders from its largest distributor, Celsius maintained a strong cash position, ending the year with $890.2 million in cash and cash equivalents.

In the fourth quarter of 2024, Celsius reported revenue of $332.2 million, representing a 4.4% decline year-over-year. This decline was primarily attributed to the timing of distributor orders and increased promotional allowances. Net income for the quarter was -$18.88 million.

Liquidity

The company's balance sheet remains solid, with a current ratio of 3.59 and a quick ratio of 3.23, indicating ample liquidity to support its ongoing operations and future growth initiatives. The debt-to-equity ratio stands at a low 0.017, reflecting the company's conservative approach to leverage.

Operational Highlights and Strategic Initiatives

In November 2024, Celsius acquired Big Beverages Contract Manufacturing L.L.C., a co-packing partner, for $75.3 million. This acquisition provides Celsius with in-house manufacturing capabilities, including access to production and warehouse facilities, which is expected to improve supply chain control, innovation cycles, and production flexibility.

The company's all commodity volume (ACV) reached a new high of 98.7% in 2024, indicating strong market penetration. Celsius contributed 30% of all category growth in 2024, outpacing the overall energy drink market, which grew by 5%.

Navigating Challenges and Embracing Opportunities

Like any industry leader, Celsius has not been immune to the challenges posed by a dynamic and competitive landscape. In 2024, the company faced slower growth within the energy drink sector, as well as the impact of increased promotional activity and timing of orders from its largest distributor, Pepsi.

However, Celsius has demonstrated its resilience and adaptability, leveraging its innovative product pipeline, strategic partnerships, and operational efficiency to navigate these headwinds. The company's unwavering focus on product quality, brand positioning, and consumer-centric innovation has enabled it to maintain its competitive edge and capitalize on the growing consumer demand for better-for-you functional beverages.

Celsius's acquisition of Alani Nu in 2025 further strengthened its position as a leading player in the functional beverage space. The $1.8 billion deal, comprising a mix of cash and stock, added a complementary and rapidly growing female-focused brand to Celsius's portfolio, expanding its reach into new consumer segments and enhancing its long-term growth prospects. The acquisition is expected to be cash and EPS accretive in the first year, with $50 million in run-rate cost synergies to be achieved over two years post-close.

Outlook and Future Growth Strategies

Looking ahead to 2025, Celsius expects to continue driving long-term growth through several key initiatives:

1. Innovating zero sugar, functional lifestyle products to meet evolving consumer preferences.
2. Building a portfolio of premium, growing brands to capture a larger share of the functional beverage market.
3. Expanding globally to tap into new markets and consumer segments.
4. Gaining approximately 15-20% expansion in distribution within its retail sets.
5. Improving product placement within retailers to secure more cold placements and continue disrupting the path to purchase.
6. Leveraging the Alani Nu acquisition to achieve sizable distribution gains, especially in the convenience channel.

The combined Celsius and Alani Nu platform is expected to have pro forma sales of $2 billion in 2024, positioning the company for continued growth and market leadership in the functional beverage category.

Conclusion

As Celsius Holdings continues to build upon its impressive track record, the company is well-positioned to capitalize on the burgeoning functional beverage market. With a diverse product portfolio, strategic partnerships, and a relentless commitment to innovation, Celsius is poised to lead the charge in the energy drink revolution, catering to the evolving preferences of health-conscious consumers worldwide.

Despite the challenges faced in recent quarters, Celsius's strong financial position, operational agility, and visionary leadership instill confidence in the company's ability to navigate the dynamic industry landscape and deliver sustainable growth in the years to come. As Celsius Holdings continues to redefine the energy drink category, investors would be wise to closely monitor the company's progress and long-term potential.

With the global energy drink market expected to grow at a CAGR of 10% from 2024 to 2029, Celsius is well-positioned to capitalize on this trend and further solidify its position as a leader in the functional beverage industry. The company's focus on innovation, strategic partnerships, and global expansion, coupled with its strong financial foundation, bodes well for its future prospects in this rapidly evolving market.