Earnings Call Transcript - CELH Q1 2025

Operator, Operator

Good morning, ladies and gentlemen, and welcome to the Celsius Holdings' First Quarter 2025 Earnings Conference Call. At this time, all lines are in listen-mode only. Following the presentation and the prepared remarks, we will be conducting a question-and-answer session. Thank you. I'd now like to hand the call over to Paul Wiseman, Investor Relations. Please go ahead.

Paul Wiseman, Investor Relations

Good morning and thank you for joining Celsius Holdings' first quarter 2025 earnings webcast. With me today are John Fieldly, Chairman and CEO; Jarrod Langhans, Chief Financial Officer; and Toby David, Chief of Staff. We'll take questions following the prepared remarks. Our first quarter earnings press release was issued this morning with all materials available on our website ir.celsiusholdingsinc.com and on the SEC site, sec.gov. An audio replay of this webcast will also be accessible later today. Today's discussion includes forward-looking statements based on current expectations and information. These statements involve risks and uncertainties, many beyond the company's control. Celsius Holdings disclaims any duty to update forward-looking statements except as required by law. Please review our Safe Harbor statements and risk factors in today's press release and in our most recent filings with the SEC, which contain additional information and a description of the risks that may result in actual results differing materially from those contemplated by our forward-looking statements. We'll present results on both a GAAP and non-GAAP basis. Non-GAAP measures like adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share and their GAAP reconciliations are detailed in our Q1 earnings release. And non-GAAP financial measures should not be used as a substitute for our results reported in accordance with GAAP. With that, I'll turn it over to John.

John Fieldly, Chairman and CEO

Good morning, everyone, and thank you for joining us today. Celsius navigated a dynamic operating environment in the first quarter while continuing to invest in our core brand, product innovation and operational scale. We saw business fundamentals strengthen through the quarter and are encouraged by the positive momentum heading into Q2. While the Alani Nu acquisition has now closed, continued gains in retail shelf space and strong international growth across both legacy and new markets, we are confident in our strategy and believe that we are well positioned to lead the modern energy category. Energy drinks are evolving, no longer just an impulse purchase. Functional modern energy is becoming part of consumers' daily routines, lifestyles and pantry staples. Celsius is uniquely positioned to lead this evolution with a portfolio of leading brands built around fitness, functionality and better-for-you energy. As previously announced, we successfully closed the acquisition of Alani Nu on April 1st, adding a second $1 billion brand to Celsius Holdings' growing functional beverage platform. Together, we are well positioned to lead the modern energy revolution with great product innovation, an excellent network of distributors and retail partners and the team to pull everything together. Celsius continues to pursue operational excellence to support this commitment; we appointed Eric Hanson, our first President and Chief Operating Officer in March. Eric brings nearly three decades of food and beverage leadership experience, including senior roles at PepsiCo. We believe that his experience will help us drive operational excellence, scale and unlock greater efficiencies in our partnership with Pepsi, our largest customer and North American distribution partner. Our big beverage facility now fully integrated provides us greater manufacturing flexibility, faster innovation cycles, and it can accommodate a second production line in the future within its current footprint as demand scales for Celsius products and portfolio. For the first quarter of 2025, revenue totaled $329.3 million, a 7% decline compared to the prior year quarter, reflecting three primary factors: slowed velocity in the first quarter, the timing and structure of our US distributor incentive program and increased retail promotional programs. It's also important to remember that we were lapping a very strong first quarter in 2024 when we began nationwide distribution of Celsius Essentials and had elevated dedicated retail promotion takeovers providing strong tailwinds. Adjusted EBITDA for the first quarter of 2025 was $69.7 million with a margin of 21.2%. Gross margin expanded 110 basis points to 52.3%, supported by sourcing efficiencies for raw and packaging materials. International revenue grew 41% to $22.8 million, demonstrating strong organic growth in our legacy markets as well as our newer expansion markets, including the UK, Ireland, France, Australia, and New Zealand. As previously noted, we have a grounded approach to global expansion, but we are pleased to see the progress that has been made thus far and would look for this component of our business to pick up in the future years as we expand further within new markets and add additional markets. In the US track channels, Celsius held a 10.9% dollar share for the 13 weeks ending March 30th, 2025, according to Circana. We've held steady in category share despite a challenging consumer environment, increased competition, and strong pricing action by other category players. Alani Nu retail sales increased 88% year-over-year, reaching a 5.3% share, up 221 basis points. Just last month, Alani Nu surpassed $1 billion in trailing 52-week retail sales. This extraordinary achievement reflects the strength of the brand's connection with consumers and the accelerating momentum in the better-for-you functional beverage space. Combined, the Celsius Holdings portfolio captured a 16.2% dollar share in the quarter ending March 30th, an 81 basis point increase year-over-year. Together, Celsius and Alani Nu accounted for approximately 20% of total energy drink category dollar growth in the first quarter of 2025, following a strong 50% contribution to total category growth in 2024. We are focused on strengthening our core Celsius brand, accelerating sales, increasing velocity, and growing our in-store presence with consumer-centric innovation and a new exciting marketing campaign that will begin this summer. As we look forward to the second and third quarters of this year, we expect to continue gaining incremental space at retail, helping to drive greater consumer awareness and flavor availability, including recent innovation like Celsius Playa Vibe, Retro Vibe and Mango Lemonade. According to Circana, our average items selling per store within the Celsius brand family increased by 4.1 items and MULO+ with convenience during the first quarter, with even greater gains in the food and chain convenience channels, underscoring the continued expansion of our in-store presence. This year's gains are particularly meaningful because they lap the strongest shelf reset cycle in our company history, which were reported during our Q1 2024 earnings call. Dollar sales for sugar-free energy drinks surpassed full sugar varieties for the first time in 2024. And the incredible momentum of these better-for-you functional beverages drove 86% of category growth in Q1 2025. Celsius and Alani energy drinks and powders are 100% sugar-free and we are leaders in this growing segment. Our LIVE FIT identity, health focus, aspirational, daily functionality deeply resonates with today's consumer. We believe that female consumers represent a large and underserved segment of the energy category, and Celsius is uniquely positioned here with a greater gender-balanced consumer base. The addition of Alani Nu, a brand beloved by women, strengthens this advantage even further. Innovation continues to fuel our overall growth. In Q1 2025, we launched a new core Vibe and Essentials flavors and we expanded our multi-pack offerings, which now represent approximately 28% and 55% of our retail sales mix and MULO+ Convenience and MULO+, further bolstering our place within the pantry and confirming that Celsius modern energy is going mainstream. Our launch of Celsius Hydration, a new line of zero-sugar, zero-caffeine electrolyte powder sticks, extends our brand into the fast-growing $1.4 billion hydration powder category. Foodservice continues to be a strategic growth channel for Celsius. In Q1 2025, we expanded into more than 1,800 Home Depot locations, increasing brand presence and everyday on-the-go consumption moments. We also recently began rolling out Celsius in 18,000 subway locations nationwide, a significant win that enhances both distribution and visibility during meal occasions. These new points of availability reflect their growing role in functional daily energy. Foodservice now represents approximately 13.4% of North America sales through PepsiCo, and we see compelling runway ahead as we deepen our presence across work, retail, and restaurant locations. Our marketing initiatives continue to drive awareness and trial. Highlights in Q1 include our NIL March Madness Campaign with 136 athlete partnerships, the launch of Jayden Daniels as the first ambassador for Celsius Hydration, and a targeted activation with MLB star Juan Soto to promote Playa Vibe at Walmart. We are increasing our marketing investments behind our core Celsius brand and our LIVE FIT identity. These investments will support our strategy of reaching more people in more places more often. Beginning this summer, you will see bold story-driven campaigns showing how Celsius helps people LIVE FIT, achieve their goals, and align with wellness-driven lifestyles. Overall, we are pleased with the improvements in business fundamentals we saw exiting the first quarter and the momentum we are building into the spring and summer seasons. We believe Celsius Holdings is uniquely positioned to lead the modern energy category with a portfolio of brands that addresses the growing consumer demand for functional, better-for-you beverages across energy, hydration, and wellness occasions. With innovation, operational leverage, international expansion, and strong retail partnerships, we are confident in our ability to drive sustained growth and value creation in 2025 and beyond. Thank you. I'll now turn the call over to Jarrod to review our financial results in more detail.

Jarrod Langhans, Chief Financial Officer

Thank you, John, and good morning, everyone. First quarter revenue totaled $329.3 million compared to $355.7 million in the prior year period, representing a 7% decline. As John noted, revenue performance reflects soft Q1 velocity, the timing and structure of our main distribution partner incentive program, timing and breadth of our retail promotional allowances weighted later in the quarter, and lapping the nationwide launch of Celsius Essentials in Q1 2024. Gross profit totaled $172.4 million compared to $182.2 million in the prior year period. The year-over-year gross margin expansion of 110 basis points to 52.3% was supported by sourcing efficiencies for raw and packaged materials. We are pleased with the continued expansion in gross margin even as we invest in growth and support our innovation. Selling, general, and administrative expenses totaled $120.3 million compared to $99 million in the prior year. The increase reflects transaction-related expenses for the Alani Nu acquisition, along with continued investment in global sales, marketing, and organizational infrastructure. Non-GAAP adjusted EBITDA was $69.7 million for the quarter, representing a 21.2% margin compared to $88 million and 24.7% margin in Q1 2024, driven by the organizational investments. Net income attributable to common shareholders was $34.4 million or $0.15 per diluted share. Non-GAAP adjusted diluted EPS was $0.18 compared to $0.27 in the prior year period. As of March 31st, 2025, our balance sheet remains strong with $977 million in cash and no outstanding debt. It is important to note that these figures reflect our cash position prior to the close of the Alani Nu acquisition. In connection with the closing on April 1st, we utilized a mixture of $900 million in debt, approximately $400 million in cash with the remainder in stock to acquire Alani Nu, which will be reflected in the Q2 financial statements. We remain confident in our liquidity position and our ability to support future growth initiatives. Innovation continues to support growth and momentum across our retail channels. Recent innovation, including the Essentials line and multipacks, are contributing meaningfully to retail sales, and Celsius Hydration, launched late in January, is gaining early traction as we expand into the high growth hydration powder segment. We believe that our distribution gains across the portfolio, positive spring shelf resets, and expanded field sales and merchandising execution continue to position us well for the important summer selling season. Looking ahead, our focus remains on improving velocity, expanding household penetration, growing share across functional beverage occasions, and delivering operational efficiency through scale. We remain confident in our strategy and our ability to remain resilient through the uncertain economic times, thanks to our robust supply chain operations as well as mitigation strategies, which we are pursuing to best position us for long-term advantage. Before I turn it back over to the operator for questions, I want to mention that we are planning a public call this quarter to discuss modeling and general financial considerations for Alani Nu. Details will be communicated in advance. As a part of this call, we will put together pro forma reviews of our combined business and provide further insight around the purchase accounting impacts of the acquisition, such as inventory step-up and how that will impact Q2 as we sell through the inventory on hand at April 1st on the acquisition date as well as valuations around intangibles and fixed assets which will result in increased depreciation and amortization. With that, I'll turn the call back to the operator to open the line for questions. Thank you.

Operator, Operator

We are now opening the floor for a question-and-answer session. Your first question comes from the line of Kaumil Gajrawala of Jefferies. Your line is now open.

Kaumil Gajrawala, Analyst

Good morning, everyone. I've noticed that energy drinks as a category are gaining traction while many other consumer packaged goods seem to be declining. I'm interested in whether you have explored this trend and can share any insights on what might be driving it.

John Fieldly, Chairman and CEO

Good morning. The first quarter was very strong for the energy category. Even comparing it to last year, we continue to see it driving both volume and revenue. The energy category has shown resilience in dollar sales and volume over the past several years. While we faced some challenges in the third and fourth quarters, the first quarter was particularly robust. We are beginning to see growth rates improve, and the trends in health and wellness, along with the innovation we witnessed in the quarter from a range of competitors, have generated a lot of interest among consumers, contributing to these positive results.

Kaumil Gajrawala, Analyst

Okay. Got it. And then you mentioned many times in your prepared remarks on this focus on velocity. What specifically are you doing to increase those figures?

John Fieldly, Chairman and CEO

Well, when you look at the first quarter, we got off to a slow start and we have more of a balanced approach this year. We took some key learnings last year. We're cycling a lot of innovation in the first quarter. If you look at our Q1 2024, we did have the largest distribution gains as well as innovation launching and great support and promo activity as well with some of those lead launches. So we're cycling that and we were a little bit softer in the back half of the year in 2024. And so this year, changing some of those strategies and key learnings, putting us into a more balanced approach. And then we're really leaning in. We're building programs around LIVE FIT. We've been doing a lot of research around the DNA of the brand and how we can resonate and bring more consumers into the category and really be a driver and continue to be a driver in the growing segment of sugar-free.

Kaumil Gajrawala, Analyst

Got it. Thank you.

John Fieldly, Chairman and CEO

Thank you.

Operator, Operator

Thank you. Again, kindly limit your questions to one question only. Your next question comes from the line of Peter Grom of UBS. Your line is now open.

Peter Grom, Analyst

Thank you, operator. Good morning, everyone. I would like to get some insights into the sales performance for the first quarter. John, in your release, you mentioned a retail sales growth of 2%. However, can you address the high-single-digit decline in North America? You referred to some promotional allowances and challenging comparisons with Essentials, but it seems there might be another factor we need to consider to explain the decline in North America. Could you clarify that or quantify those impacts? Essentially, I'm trying to understand if there's a way to isolate the underlying shipment or depletion trends for the quarter after removing all the noise. Thank you.

John Fieldly, Chairman and CEO

Yes, Peter. As we mentioned, we initially faced a slow start to the quarter due to heightened competition. However, we began to see improvements as we moved out of Q1, which makes us optimistic as we progress into Q2. When we compare our product launches from last year at key retailers to this year, we see a substantial difference. This year, there’s a more balanced strategy involving promotional activities rather than a focus on a singular brand. This shift has affected us. Additionally, we are also seeing some changes due to the incentives we provided to our distribution partners. Regarding inventory levels, I’ll hand it over to Jarrod to share insights on our supply chain and what we’re observing there.

Jarrod Langhans, Chief Financial Officer

Yes. So, I mean at the 10,000 foot view or the simple view, if you look at the scanner data, we were kind of at minus 4% and then we ended from our books and records at minus 7%. You've got a couple of points in there from the promos and incentives. And then you've got a little bit of timing, not on the DSD, but more non-DSD where we saw a little bit of pipe filling in the back half of the year versus having the programs run in Q1. So, within some of those categories, you saw good growth at Scanner, but we did have a little bit of load in Q4. And then there was some noise at the very end of the quarter. When it comes to depletions with our primary distribution network from across the COBOs and FOBOs, that optimization appears to be in good shape and didn't cause much noise in this quarter from what we can see.

Peter Grom, Analyst

Got it. Thanks so much. I'll pass it on.

John Fieldly, Chairman and CEO

Thank you.

Operator, Operator

Your next question comes from the line of Kevin Grundy of BNP Paribas. Your line is now open.

Kevin Grundy, Analyst

Hey, good morning, everyone. John, I was hoping you could comment on pricing in the category. I think there's been a good amount of enthusiasm around the pricing that Monster has led on 75% of the portfolio. I think there's an expectation of price on the balance of it, but it seems like kind of a mixed picture where Red Bull really hasn't followed in the past that's led to some trepidation among investors, whether they will or not? Can you just comment broadly on pricing in the category, maybe and what your plan is for the balance of the year, both from a pricing and promotion perspective, that would be appreciated. Thank you very much.

John Fieldly, Chairman and CEO

Yes, Kevin. We see opportunities for additional pricing, but we also want to be cautious and monitor consumer behavior closely. We've observed some consumers shifting from individual purchases to larger multipacks and seeking promotions. As we navigate the upcoming months and quarters, we will be careful about our promotional activities, staying aware of changes in consumer purchasing habits. We did implement a price increase in Q4 of last year, which is currently being reflected. If we identify additional opportunities to leverage this, we will do so, as it provides us with more flexibility in our promotional efforts amid the uncertainty we feel about consumer behavior and the channels we operate in.

Kevin Grundy, Analyst

Thanks, guys. I'll pass it on.

Operator, Operator

Your next question comes from the line of Jon Andersen of William Blair. Your line is now open.

Jon Andersen, Analyst

Hey, good morning. Thanks for the question. I was wondering if you could put a little bit more color around the shelf space expansion you expect this spring? Obviously, you had a terrific kind of shelf reset last year. And could you talk a little bit about trying to dimensionalize it, both for the core brand Celsius, but also your expectations for kind of Alani Nu and how you may kind of activate the consumer around those gains this spring relative to kind of last year. Thank you.

John Fieldly, Chairman and CEO

Yes, Jon. Great question. Right now, we do have, as mentioned in the prepared remarks, we have some great innovation that we'll be rolling out and that is our Playa Vibe, Retro Vibe, and Mango Lemonade for summer. So we expect that to gain additional placements. It’s really also the secondary placements and display activities that have been key for us. So, as an example, getting additional checkout coolers has been some really big wins that have been flowing through in some retailers, large national retailers, which we're really excited about. So making sure we have closer availability, closer to that checkout, so we can take advantage of those purchase occasions. That was really promising this year, the amount of cold placement we gained at checkout. So, as that continues to fill out, that will provide additional velocity improvements as well, having that availability. Looking at Alani, we're really excited about Alani. I think there's a lot of opportunities there, especially working closely with our key accounts team. And as we position and really get ready for buyer meetings in 2026, key account meetings, it's going to be really exciting, especially the momentum that they've had entering summer and going to be exiting summer. They just broke $1 billion in retail sales, which is just an amazing achievement. It's a great brand that's resonating with an extremely loyal female consumer base and we're extremely optimistic about the distribution gains we'll be able to gain with the Alani portfolio.

Jon Andersen, Analyst

Thank you.

Operator, Operator

Your next question comes from the line of Andrea Teixeira of JPMorgan. Your line is now open.

Andrea Teixeira, Analyst

Thank you, operator, and good morning, everyone. So, John, I understand the new on-premise and other channels like home centers, but conversely, you had a steep decline at Costco. Did you lose distribution there or is there any destocking that you'd highlight? And I understand your base period was also down. And then a clarification for Jared on how much sales were down in North America if you exclude the change in allowances year-over-year. I understand that you've been telling us that these allowances would increase. So then if we can do like an apples-to-apples or underlying growth, that would be super helpful. And if I can layer that as well on the destocking impacts that you might see related and trying to calculate the destocking vis-a-vis your sell-out?

John Fieldly, Chairman and CEO

Okay. Excellent. Allowances, destocking, and Costco.

Jarrod Langhans, Chief Financial Officer

Let's go. When Peter was speaking, I mentioned that we were down roughly 4% in the scanner data, which is a couple of points better than our minus 7%. A few points contributing to that minus 7% were related to promotions and incentives. In terms of Costco, the scanner data showed an increase. We ran an MVM this quarter, and when we do that, we typically see a bit of a pipe fill the month prior, which contributed to some of the fluctuations in the system. If you examine our revenue as a percentage of sales and our ARR as a percentage of sales, there are also some nuances with Costco due to the timing of payments, which is more about working capital, so there are no issues there.

John Fieldly, Chairman and CEO

What was the?

Andrea Teixeira, Analyst

Not only at Costco, but in general, yes, sorry to interrupt, but just in general, the allowances total against because it's hard to calculate the allowances over a year. I mean, it's not disclosed, so we wanted to just add clarity on those.

Jarrod Langhans, Chief Financial Officer

For this quarter, we mentioned it was a couple of percentage points.

Andrea Teixeira, Analyst

Yes. On a sequential basis, I understand it would be helpful for us to know how the allowances will be structured. I believe this will be relevant for us over the next three quarters. Is that correct?

Jarrod Langhans, Chief Financial Officer

So I hear what you're saying. So if we look out over the remainder of the year, you probably got a couple of points of pressure in Q1 and Q2. And then it should flip in Q3 and Q4, where we'll benefit by a couple of points because we saw it go up a bit with some of the destocking last year. So for the first half of the year, you'll see a little bit of pressure from that. In the back half of the year, when we're looking at year-over-year, you'll see benefit.

Andrea Teixeira, Analyst

Right. And then on the couple of points of destocking, can you help us like kind of understand the phasing of it as well? Is that a similar impact?

Jarrod Langhans, Chief Financial Officer

So there wasn't destocking. So if you're looking year-over-year and we're talking just promos and incentives. We talked about a couple of points this quarter, a couple of points next quarter, flipping to positive couple of points in Q3 and Q4. If you're looking at destocking when we talked about depletions within our DSD network, we said that it was pretty stable this quarter and ended up pretty stable as we ended the prior year as well. There was some timing and sequencing of non-DSD around club in Q4 into Q1 and a little bit of noise at the very end of our quarter, but nothing else to call out from that perspective.

John Fieldly, Chairman and CEO

I want to emphasize that despite the allowances, we successfully reduced some of those allowances due to a robust gross profit figure for the quarter, which positively impacted both EPS and EBITDA.

Jarrod Langhans, Chief Financial Officer

Yes.

Operator, Operator

Your next question comes from the line of Michael Lavery of Piper Sandler. Your line is now open.

Michael Lavery, Analyst

Thanks. Good morning. Just one for me. I wanted to come back to gross margins. Even with some of the increased incentives and allowances, gross margins were very strong. You called out some better sourcing efficiencies. Any other color you can add or especially just help us understand how sustainable that might be? Should we have any watchouts looking a little further ahead from aluminum or just a little help on kind of what drove the lift and where it might go from here?

Jarrod Langhans, Chief Financial Officer

Yes. So in the near-term or the short-term, we're in great shape as you saw with the margin profile. As we have scaled and create our orbit model and utilized our organizational structure, we've been able to benefit from a gross profit perspective. The aluminum, knock on wood, right now is not something that we see being significantly impactful to us. Unfortunately, we don't know where things will go with the tariffs and how those things are going to come into play long-term. But in the short-term, looking out at Q2, we see still strong gross profit numbers. I think we kind of pegged 50% for the year. We're not going to move off of that at the moment. But really, as we look to the back-half of the year, it's kind of an unknown in terms of what's going to happen from an inflation perspective or a tariff perspective. As we look at Q2, we're in good shape. Our structure is set up well. Our scale has benefited us and the orbit model and infrastructure that our supply chain is set up is really coming through and it's set up as a long-term program to be sustainable.

Michael Lavery, Analyst

Okay. Great. Thanks so much.

Operator, Operator

Your next question comes from the line of Jim Salera of Stephens. Your line is now open.

Jim Salera, Analyst

Hey, guys. Good morning. Thanks for taking our question. I wanted to ask about, is there any formats or retailers where Alani Nu actually performs better than the core Celsius brand? And if so, how should we think about kind of utilizing the brands to maybe cross-pollinate each other and help get placement in retailers where one is stronger than the other?

John Fieldly, Chairman and CEO

Yes, Jim, we see great opportunities with both of our brands in the portfolio, and actually all three when considering Celsius Essentials. It has performed well and has many opportunities as we continue to scale it, alongside our core Celsius brand and specific Alani locations. We need to integrate Alani further into the system and focus on enhancing pricing and promotional activities. It's just entering convenience, and there are significant opportunities as we collaborate more with our Amazon teams and expand into restaurants and foodservice, colleges and universities, and initiatives with our distribution partners to grow our presence in on-premise locations. There are ample opportunities with both of these portfolios, which cater to different consumer segments. We've addressed prior concerns about cannibalization, and our data from Circana indicates it has been minimal, with about a 15% crossover. Some segments in these portfolios are performing better than leading brands in the category. This portfolio positions us strongly to drive growth in the category for years ahead, capitalizing on the trends in health and wellness, as well as the anticipated increase in female consumers entering the category compared to the past decade. We're really excited about our future outlook.

Jim Salera, Analyst

Can we get an update on branded cooler placements and maybe thinking through the comment you just made about limited cannibalization? Is there an opportunity to have co-branded or cross-branded coolers that have both Alani and Celsius that would obviously be very visible in-store and minimal on the cannibalization side?

John Fieldly, Chairman and CEO

Yes, you are currently seeing this in many grocery store locations. All energy products are stored in energy sets and coolers. Frequently, Celsius and Alani are positioned near each other, alongside Red Bull and Monster, which is typical in the industry. The placement of coolers is a significant focus for us. Increasing cooler placements is a major objective for our sales team, and we aim to replace dedicated coolers. As we expand our partnership with Alani, we will be considering co-branded coolers or dedicated coolers depending on the retailer's layout and space constraints. Many small format stores cannot accommodate multiple coolers, so we will work on developing a co-branded cooler. This initiative is in progress, and we will also seek out more space and opportunities for placing dedicated coolers, which remains our top priority.

Operator, Operator

Your next question comes from the line of Gerald Pascarelli of Needham & Company. Your line is now open.

Gerald Pascarelli, Analyst

Great. Thanks very much. Just a question on your core portfolio. So as we look ahead on a standalone basis, it seems like you have a lot of tailwinds on the horizon. You have the new innovation, 15% to 20% shelf reset wins, easier comps and new marketing campaign, et cetera. So, John, like taking all of those tailwinds, can you maybe just provide some color or talk about your level of conviction or confidence that we start to see core revenue trends improve from here? Any color there would be great. Thank you.

John Fieldly, Chairman and CEO

Yes, Gerald, I mean, you're spot on. The tailwinds look really favorable, especially after we get through really the next three to four to five weeks as that's kind of the peak revenue hurdles that you're seeing on a week-over-week basis or versus the prior year. Once we get into really June, you'll start to see some much easier comps that CELSIUS will be cycling and the improvement in velocity that we've been seeing also is giving us strong conviction as we continue to build upon the consumer health and wellness trends that are out there. The category has come back to really strong growth. We know we have both our brands and our portfolio have really strong brand positions that are aligned with consumers. Fundamentals are improving. Look at gross profit improvements, the acquisition of Big Beverage, the leverage of our infrastructure, as Jarrod talked about with the orbit model, driving efficiencies with both these brands coming together and leveraging the strength of a portfolio versus going singularly into the category. Now, we'll be able to do a variety of additional pricing and promotional strategies that we weren't able to do prior. And we're really excited on where we're headed. The core fundamentals of our core portfolio, CELSIUS, you're right, it does have a lot of tailwinds as we're entering summer in the back half of this year.

Operator, Operator

Your next question comes from the line of Sean McGowan of ROTH Capital Partners. Your line is now open.

Sean McGowan, Analyst

Thank you. I was hoping you could talk a little bit about international. How is that market-by-market going relative to your expectations? It seemed like that was pretty strong in the quarter.

John Fieldly, Chairman and CEO

Yes. International, we've always been very cautious, cautiously optimistic. It's all about timing and sequencing and really following our strict strategic approach on entering new markets. The international expansion in these new markets has been well received, better than initially expected. Also, entering new markets, you need to be very cautious. It's difficult. It's highly competitive as we all know, but the acceptance has been well received. Australia, New Zealand, we launched with specific key retailers. The new consumers coming into the category, additional share from other players within the category was really great to see. So we're rolling out a variety of other retailers. International will be a growth area for us. There'll be additional markets and opportunities as we go through 2026 and '27 and beyond. Right now in 2025, we're focused on these core markets that we've launched last year in Q4 and continuing to roll that out and build upon and drive a loyal consumer base. Our goal is to drive daily consumption and the same health and wellness trends we're seeing in North America. These are global trends. And the world right now is one click away within our social media and influencers and a lot of the campaigns we're running. We're getting much broader reach as the world has gotten extremely small. So really excited about the future that we see on our international expansions and opportunities.

Sean McGowan, Analyst

Thank you very much, John.

Operator, Operator

Your next question comes from the line of Steve Powers of Deutsche Bank. Your line is now open.

Stephen Powers, Analyst

Hey, thanks very much. Good morning. Jarrod, I wanted to go back to the gross margin, gross profit, if I could, because I appreciate kind of the prudence and just the allowances for the unknown going forward in this environment. But I guess are there any kind of known headwinds that you would call out in terms of reasons for sequential moderation in the gross margin from where we saw in the Q1 land? I think the 50% number you called out for the year was a base business number and I'm sure we'll hear more on the Alani Nu modeling call later in the quarter. But any considerations there as we think about how that layers in from a gross profit perspective that would be helpful too. Thank you.

Jarrod Langhans, Chief Financial Officer

Yes, thank you for your clarification. You are correct that I was referring to the Celsius core business margin. We plan to have a call later this month or early June to discuss the impacts of incorporating Alani from a consolidation standpoint. There will be some fluctuations related to the inventory adjustment this quarter as we process the inventory already in place at the time of the acquisition. This mostly relates to purchase accounting rather than anything else. Regarding the core business, we are comfortable with our current position for the quarter. However, predicting Q3 and Q4 is more challenging due to ongoing activities, which could present opportunities for either improvement or added pressure. The current structure we have is solid, with a robust supply chain, but any changes from government actions could affect it. We will keep you informed on that front. As for Alani, as mentioned on the February 20 call, they are about 18 to 24 months behind us in terms of their profit and loss profile, excluding the inventory adjustment. Their structure would likely be in the mid-40s range or possibly on the lower end of that to align their gross profit with ours. We will delve into the specifics during the modeling call, where we will present pro forma projections for 2024 and beyond.

Operator, Operator

Thank you. I'd now like to hand the call back over to Chairman and CEO, John Fieldly. Please go ahead.

John Fieldly, Chairman and CEO

Thank you again for joining us today. We're proud of the continued progress we've made and energized by the opportunities ahead with strong brands, focused strategy, and growing global momentum. We believe Celsius Holdings is well positioned to lead the next phase of growth in the modern energy category. I also want to thank our employees and partners around the world for their dedication and commitment. Their efforts continue to power our success. We appreciate your continued support and look forward to updating you again next quarter. Grab a Celsius and Live Fit.

Operator, Operator

Thank you for attending today's call. You may now disconnect. Goodbye.