Celsius Holdings' shares experienced a decline after Q3.

Celsius Holdings, Inc. (NASDAQ:CELH) shares fell by 11.5% after announcing third-quarter results. The company reported results that exceeded analyst expectations but showed concerning trends in its core CELSIUS brand.

In the third quarter, Celsius reported adjusted earnings of $0.42 per share, surpassing analyst expectations of $0.28. Revenue was recorded at $725.1 million, exceeding the $715.7 million forecast and reflecting a 173% year-over-year increase from $265.7 million. However, it was noted that this growth was largely driven by recent acquisitions.

The company's total portfolio increased retail sales by 31% year-over-year; however, individual brand performances varied significantly. The core CELSIUS brand saw only a 13% year-over-year increase in retail sales, while the Alani Nu brand, acquired in April, experienced a 114% increase. Conversely, the Rockstar Energy brand, purchased in August, saw a 9% decline. The market share of the CELSIUS brand in the U.S. Rapid Consumption Energy category dropped 0.5 percentage points to 11.2% compared to last year.

John Fieldly, Chairman and CEO, stated, "The third quarter marks a significant step in the transformation of Celsius Holdings in a year full of growth catalysts." He added, "We strengthened our long-term partnership with PepsiCo, and CELSIUS, Alani Nu, and Rockstar Energy brands have been unified under a single energy portfolio."

The company's gross margin increased from 46.0% in the same quarter last year to 51.3%, attributed to lower promotional expenses, a favorable product mix, and economies of scale. International revenue rose 24% to $23.1 million.

Celsius recorded $246.7 million in distributor termination costs related to the significant transfer of Alani Nu's distribution to the PepsiCo system; however, PepsiCo committed to financing these fees, providing a net cash position.

While focusing on operational excellence and long-term growth, the company appointed Rishi Daing as Chief Marketing Officer.