CELH — Q2 2026 Financial Report Analysis

Revenue up 11% on acquisitions while the CELSIUS brand shrank 12%, and an $81M distributor payout cut GAAP profit in half

Celsius Holdings' second quarter of 2026 (three months to June 30) was the first quarter where Alani Nu, bought on April 1, 2025, is in both this year's and last year's numbers. That makes it the first clean view of how the original business is doing. Revenue rose 10.6% to $817.9 million, but Rockstar Energy, acquired from PepsiCo in August 2025, supplied $66.5 million of that. Without Rockstar, revenue grew about 1.6%. The flagship CELSIUS brand's revenue fell 11.7%. Net income fell 45% to $55.3 million and diluted EPS fell to $0.14 from $0.33. Most of that drop is an $80.9 million fee paid to end contracts with former Alani Nu distributors so PepsiCo could take over their territories. PepsiCo paid the company back for that fee in cash.

At a glance

• CELSIUS brand revenue: $387.0M, down 11.7%. Q1 2026 brand revenue was up about 6% (by our calculation from the half-year and Q2 figures), so this is a sharp turn. The original brand is now smaller than Alani Nu plus Rockstar combined.
• Adjusted EPS: $0.36, down 23% from $0.47. This figure strips out the termination fee and acquisition costs, and it still fell. Profitability weakened even after the one-offs are removed.
• PepsiCo: 60.2% of revenue, up from 33.3%. Celsius is now mostly a supplier to a single distributor, which is also a large preferred shareholder.

The numbers

Sources: Q2 2026 Form 10-Q and the August 6, 2026 earnings release. Market share is from Circana tracked-channel data cited by the company for the 13 weeks ended June 28, 2026. The company did not give a year-ago share for the portfolio.

What drove each brand

CELSIUS (down 11.7%). The 10-Q lists five causes: "increased trade and promotional investment as a percentage of revenue, shipment timing related to inventory rebalancing, softness in the club channel and a planned moderation in innovation activity, as well as SKU optimization." Trade investment is money paid to retailers and distributors for discounts, displays and shelf placement, and it is subtracted from reported revenue. SKU optimization means cutting the number of flavors and pack sizes on shelves. The club-channel weakness shows up in the customer table. Costco fell to 8.7% of total revenue from 11.7%.

The gap between shipments and shopper purchases matters here. Retail sales of CELSIUS in tracked U.S. stores fell only 2%, while the company's own brand revenue fell 11.7%. When revenue falls faster than store sales, distributors are usually selling down their stock rather than reordering, and the company has said so ("shipment timing related to inventory rebalancing"). Heavier promotional spending also reduces revenue per can. Some of the gap should close once distributor stock stabilizes, but the 2% decline in store sales is not driven by timing. The company says it cut points of distribution (a point of distribution is one product sitting in one store) by about 7%. The remaining items sold better, with sales per point of distribution up about 16% from Q1. It also notes that the shelf space it expects to gain in return is "being realized over a longer period," because much of it is cooler space that retailers have to install.

Alani Nu (up 21.0%). Store sales grew 55.7%, faster than reported revenue. Two effects pull in opposite directions. First, "increased orders from our largest customer as the brand transitioned into the PepsiCo distribution system" added a one-time restocking boost as PepsiCo filled its warehouses and routes. Second, selling through PepsiCo's direct-store-delivery (DSD) network, where the distributor's trucks stock store shelves directly, "results in higher trade investments and billbacks that reduce reported net revenue." The company also discontinued non-energy-drink Alani products. Alani Nu's dollar share of U.S. energy drinks is now 8.7%, close to CELSIUS's 9.5%.

Rockstar ($66.5M). Revenue was about flat from Q1 ($133.1M for the half year). Store sales fell 13% and dollar share is 1.9%. So far Rockstar adds revenue at a lower growth rate and has not turned around.

International (up 9.8% to $27.2M) grew across the Nordics and newer markets (UK, Ireland, France, Iberia, Australia/New Zealand, Benelux). It is still only 3.3% of revenue. Growth slowed from the 32% pace for the half year.

What the headline numbers hide

The termination charge is large on the income statement and roughly cash-neutral. In May, Celsius signed the "Channel Transition Amendment" and moved more Alani Nu territories to PepsiCo. It expensed $80.9 million of termination fees to former distributors in the quarter. PepsiCo reimbursed $81.1 million, and Celsius had received all of it by June 30. The accounting is lopsided, though. The fee was expensed immediately, while the reimbursement was recorded as deferred revenue that will be recognized over roughly 16 years, about $5 million a year. GAAP profit took the full hit in Q2 even though cash did not. That one item accounts for $0.21 of the $0.22 gap between GAAP and adjusted EPS.

Profit still fell after the one-offs are removed. Adjusted EBITDA fell 12% to $184.2 million, and its margin fell from 28.4% to 22.5%. Adjusted EBITDA is earnings before interest, tax, depreciation and amortization, excluding stock compensation and one-off items. If the termination fee is added back, operating income is about $156.1 million, a 19.1% margin, roughly level with 19.3% a year ago. But last year's quarter carried $21.7 million of acquisition inventory step-up and $29.9 million of deal costs that did not repeat. On a like-for-like basis, underlying margins went backwards. The 10-Q attributes the gross-margin drop to "higher promotional and incentive activity as a percentage of revenue and channel mix," with aluminum and fuel inflation offsetting supply-chain savings.

Preferred shareholders now take a third of the profit. PepsiCo holds Series A preferred stock and, since the Rockstar deal, Series B preferred stock. Those shares received $14.1 million of dividends (versus $6.9 million) plus $4.7 million of allocated income. As a result, only $36.4 million of the $55.3 million net income reached common shareholders, 66% compared with 86% a year ago. This drag will continue as long as the preferred stock is outstanding, and it is one reason EPS fell further than net income.

Buybacks, tax and interest helped a little. Celsius bought back about 3.3 million shares for $101.4 million in the quarter, at an average of $30.55, and $124.4 million in the half. Basic weighted shares fell only about 1.2% (254.8M vs 257.8M), so the EPS benefit was small. The tax rate fell to 20.5% from 22.9%, and interest expense fell $6.5 million after a late-2025 refinancing. All three helped, but they were small next to the operating decline.

Cash flow looks better than earnings, but timing explains part of it. Operating cash flow for the half year was $296.3 million against $165.4 million of net income. That was achieved despite paying out $255.3 million to settle termination accruals. Much of that payout was funded by $141.1 million of restricted cash and a $64.2 million receivable, both from PepsiCo. Two items in the cash flow are timing rather than earnings power. The accrued promotional allowance (trade spending owed to customers but not yet paid) rose $145.1 million, to $453.0 million from $307.9 million in six months. That is cash Celsius will have to pay out later, and the size of the increase is consistent with rising promotional intensity. Accounts payable added another $63.2 million. Capital spending was $25.0 million.

Inventory is building. Net inventory rose to $390.6 million from $337.7 million at year-end, up 16% in six months. Celsius's own revenue rose only about 1.6% excluding Rockstar, while distributors were destocking CELSIUS. The 10-Q says the build supports "anticipated demand, including for limited-time offerings." That is plausible for Alani's seasonal flavors, but it is worth watching for write-downs if demand disappoints. The inventory obsolescence charge was lower this half ($5.9 million versus $15.3 million).

Other items. Accrued legal costs for the Strong Arm Productions litigation reached $85.0 million, up from $59.5 million at year-end, after a $24.6 million Q1 charge. President and COO Eric Hanson left on August 10, four days after the results. The balance sheet is not a concern. The term loan is $694.8 million against $631.2 million of cash, and it was repriced 0.25 percentage points lower in July.

Takeaway: Celsius's growth is now coming from Alani Nu and from PepsiCo's distribution network, not from the CELSIUS brand. CELSIUS store sales are down 2% and its revenue is down 12%, and adjusted profit fell even though total revenue grew. The Q2 numbers turn on whether PepsiCo's reach can make up for heavier promotional spending without the margin dropping further.

Outlook

The release gave no numeric revenue or earnings guidance. Management's forward statements are qualitative:

• Gross margin: Q2's roughly 48% was "in line with management expectations," level with Q1. The company expects freight, raw-material and pricing projects to support margin "over the remainder of the year," but said the benefits "are being partially offset by rising commodity costs," mainly aluminum. Celsius does not hedge commodities, according to the 10-Q's market-risk section. A recovery toward last year's 51.5% looks unlikely in the near term.
• CELSIUS brand: The goal is to "return brand CELSIUS to sustainable growth" through more productive assortment and the delayed shelf-space gains. Some of the 11.7% revenue drop is distributor destocking that should not recur, so Q3 brand revenue should land closer to the -2% store-sales trend. If it does not, the brand's problem is consumer demand, not timing.
• Alani Nu: The extra PepsiCo restocking orders in Q2 will not repeat at the same scale once the territory transfer is complete. Q3 Alani revenue growth will show how much of the 21% was underlying demand.

Our read: profit has stopped tracking revenue. Total revenue grows on acquisitions and Alani, while margin goes to promotions and to PepsiCo's preferred dividends. Watch three numbers in Q3. First, CELSIUS brand revenue against its store sales. Second, whether the accrued promotional allowance keeps climbing. Third, gross margin against the ~48% floor management has held for two quarters. Q3 results are expected in early November, about 90 days after the August 6 release (an estimate, not a company-confirmed date).