CELH 10-K & 10-Q changes, risk factors and insider trading

In addition to the other information contained in this Report, including in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidatedConsolidated financialFinancial statementsStatements and related notes thereto, you should carefully consider the following risks. The occurrence of any of the events discussed below could significantly and adversely affect our business, prospects, financial condition, results of operations, financial condition,operations and cash flows.

We rely on distributors to distribute our products in the DSD sales channel and in international markets. If we are unable to maintain good relationships with our existing distributors, our business will suffer.

We distribute CELSIUS® products in the DSD sales channel by entering intothrough agreements with direct-to-store deliveryestablished distributors havingthat establishedprovide sales, marketingmarketing, and distribution organizations.infrastructure. DuringSince August 20222022, we enteredhave intomaintained an exclusive distribution agreement with Pepsi for certain partsterritories ofin the U.S., andwhich we extended this relationship duringin 2023 and 2024 to certaininclude parts of Canada. DuringIn 2024,August 2025, we enteredfurther intoexpanded our partnership with Pepsi through the A&R Distribution Agreements, under which Pepsi serves as the primary distributor for our portfolio, including Alani Nu and Rockstar, in the U.S. and Canada. Internationally, we maintain exclusive distribution agreements with Suntorythe and its affiliated entities ("Suntory Group"). Theseto agreementsdistribute includeCELSIUS® products, including Lucozade Ribena Suntory Limited for the United Kingdom of Great Britain and Northern Ireland, theKingdom, Channel Islands, the Isle of Man,Man and the Republic of Ireland; Frucor Suntory Australia Pty Limited and Frucor Suntory New Zealand Limited for Australia and New Zealand, respectively; and Orangina Schweppes France and Schweppes Suntory Benelux SA for France, Monaco, Belgium, Luxembourg,Luxembourg and the Netherlands. We are substantially reliant on each of these multiyear distribution arrangements and their respective counterparties forto the distribution ofsupport our productsgrowth in the applicablerespective territories. WeMany anticipate that we will extendof these or establish additional distributor arrangements as we continue to expand our operations. These significant distributors are, and certain of our additional distributors may also be, affiliated with and manufacture or distribute othercompeting beverage products.products, Inand many cases, such products compete directly with our products. Thetheir sales and distributionmarketing efforts of our distributorspriorities are importantcritical forto our success. If CELSIUS®our provesdistributors do not promote our products effectively or prioritize our portfolio relative to becompeting less attractive to our distributorsbrands, or if we fail to attract new or replacementtransition distributors,to or ournew distributors do not market and promote our products with greater or similar focus in preference to the products of our competitors, then we may not have any meaningful recourse or be able to replace such distributors inon a timely manner, which could have a material adverse effect onbasis, our business, financial condition, results of operations,operations and cash flows.flows could be materially adversely affected.

In 2024,2025, sales to Pepsi constituted 54.7%43.2% of our total net revenue, and receivables from Pepsi represented 62.2%46.2% of our total receivables as of December 31, 2024.2025. Pepsi is our primary distribution supplierdistributor for our products in the U.S. and the exclusive distributor of our products in select territories in Canada. As awe result,continue to streamline and optimize our distribution strategy, we have reducedexpect our distributorreliance diversificationon Pepsi to remain significant and may increase over time. Accordingly, we are dependent on Pepsi's domestic and Canadian distribution platforms.distribution. Given the significant concentration of our supply chain with Pepsi, Pepsi can affectinfluence our strategic decision making as we seek to expand and grow our product lines, and any significant disagreement or a termination of our arrangements with Pepsi could prevent us from distributing our products and would have a material adverse effect on our business, financial condition, results of operations,operations and cash flows.

We have experiencedgrown rapid growthrapidly in therecent pastyears and we expect our expansion to continue as we enter moreadditional international markets internationally.and potentially pursue additional strategic expansion opportunities in the U.S. During the year ended December 31, 2024,2025, we grew to 1,0731,497 employees, and we expect to further expand our hiring and marketing efforts; however, we can provide no assurance that our business or revenue will continue to grow,grow and any growth may place significant demands on management and our operational infrastructure. As we continue to grow, we must manage such growth effectively by successfully integrating, developing and motivating a large number of new employees, including those employed by companies we acquire, while maintaining the beneficial aspects of our company culture. If we do not manage the growth of our business and operations effectively, the quality of our products and efficiency of our operations could suffer and we may not be able to execute on our business plan, which could harm our brand,brands and have a material adverse effect on our business, financial condition, results of operations,operations and cash flows. Accordingly, we cannot guarantee that we will achieve our planned growth, or that we will continue to sustain such growth or performance.

Our demand generation strategies through social media and the use of third-parties, including celebrities, social media influencers, and othersothers, as well as the expanding use of AI tools and AI-generated content, may expose us to risk of negative publicity, litigation, and/or regulatory enforcement action, which could impact our future profitability.

We rely on marketing through social media and by social media influencers and celebrity spokespersons that represent theour Celsius brandbrands to generate demand for our products. The promotion of our brand,brands, products,products and services through social mediamedia, andincluding by social media influencers and celebritiescelebrities, is subject to FTC regulations and guidance,guidance including,that forrequire example,clear adisclosure requirement to discloseof any compensatory arrangements between us and influencerssuch endorsers in any reviews ortheir public statements byor such influencersreviews about the Company or our products. These social media influencers and celebrities, with whom we maintain relationships, could engage in activities or behaviors or use their platforms to communicate directly with our customers in a manner that violates applicable requirements or reflects poorly on our brand and that behavior may be attributed to us or otherwise adversely affect us. In addition, influencersInfluencers and celebrities who are associated with us may engage in behavior that is unrelated to us but that causes damage to our brand because of these associations or may make claims against us whether or not based on facts. In addition, false information about our products and our ingredients has been and, in the future, may be distributed through social media. Due to the inherent nature of social media and the manner and speed with which such messages are spread, we may not be aware of or able to have such messages removed before they have done significant harm to our business, if at all. Any such activities or behaviors of the social media influencers or celebrities we engage, litigation with such third-parties, or our failure to adhere to regulatory requirements could have a material adverse effect on our business, financial condition, results of operations, and cash flows, and on our reputation.

Consolidation of retailers, wholesalers and distributors in the industry may result in downward pressure on sales prices,prices and the changing landscape of the retail market, including the growth of e-commerce, could adversely affect our results of operations.

Our industry is being affected by consolidation in retail channels, particularly in North America and Europe. Consolidation can cause significant downward pricing pressure and can impose additional costs on us. Retailers may seek lower prices from us, may demand increased marketing or promotional expenditures in support of their businesses,businesses and may be more likely to use their distribution networks to introduce and develop private-label brands, any of which could negatively affect our profitability. As a result of increased consolidation of ownership and purchasing power in the retail industry, large retailers with increased purchasing power may reduce the prices which they are willing to pay for our products and may also adversely impact our ability to compete in many markets. Additionally, our smaller customers' ability to compete with large retailers may be adversely impacted, resulting in their inability to pay for our products, which, in turn, would reduce our sales. Any inability to successfully manage the potential impact of these commercial changes could have a material adverse effect on our business, financial condition, results of operations,operations and cash flows.

Our industry is also being affected by the growth in sales through e-commerce retailers, e-commerce websites, mobile commerce applications and subscription services, which may result in a shift away from physical retail operations to digital channels. We may not be able to develop and maintain successful relationships with existing and new e-commerce retailers without suffering a deterioration of our relationships with key customers operating physical retail channels. If we are unable to successfully adapt to the rapidly changing retail landscape, including the growth in digital commerce, our share of sales, volume growth,growth and overall financial results could be negatively affected. In addition, our success depends in part on our ability to maintain good relationships with key retail customers. The loss of one or more of our key retail customers could have a material adverse effect on our business, financial condition, results of operations,operations and cash flows.

We directly manufacture a portion of our products but outsource the majority of manufacturing to co-packers. Within North America, we have established a network model that leverages co-packers and warehousing across various geographical areas. This model also includes alternative warehousing and co-packing arrangements to mitigate risks and reduce our reliance on any single geographical area. These co-packers may not be ableunable to fulfillmeet our demand as it arises, or they may fail to meetcomply with our product specifications, could begin to charge rates that make using their services cost inefficientinefficient, or may simply not be ableunable or willingunwilling to provide their services to us on a timely basis or at all. In addition, we may enter into manufacturing or supply agreements that include minimum order quantity requirements, and if we fail to meet such requirements, we could be subject to contractual penalties, increased costs, or potential disputes or litigation. There could also be food safety concerns or other regulatory compliance issues with our co-packers, which could require them to (temporarily or permanently) cease manufacturing product and/or necessitate destruction of product that they have already manufactured. In the event of any disruption or delay in production of product by our co-packers, whether caused by a rift in our relationship or the inability of our co-packers to manufacture our products as required, we would need to secure the services of alternative co-packers. We may be unable to procure alternative packing facilities at commercially reasonable rates or within a reasonably short time period, and any such transition could be costly. Although, as discussed below, we acquired one of our co-packers on November 1, 2024, such acquisition presents additional risks and does not mitigate the risks presented by our continued use of co-packers, any of which risks could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

Alani NuNu, Rockstar or other acquired businesses may have liabilities that are not known to us.

Alani NuNu, Rockstar or other acquired businesses may have liabilities that weare failed,not known to us. We may fail to identify, or werebe unable,unable to discoverdiscover, incertain liabilities during the course of performing our due diligence investigations. We cannot assure you that the indemnification rights available to us under the acquisition agreementagreements in respect of the acquisition offor Alani Nu or Rockstar, or the representation and warranty insurance procured by us in connection with suchthose agreementagreements, will be sufficient in amount, scope or duration to fully offset the possiblepotential liabilities associated with Alanithe Nu’s businessbusinesses or propertyproperties thatacquired. Following the acquisitions, we will assume upon consummation of our acquisition of Alani Nu. We may learn additional information about Alani Nu that materially adversely affects us, such as unknown or contingent liabilitiesliabilities, andincluding liabilitiesthose related to compliance with applicable laws.laws, tax matters, employment obligations or product claims. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our customers, including distributors, grocery chains, convenience chains, drug stores, nutrition stores, mass merchants, club warehouses and other customers, may decide for any reason or no reason at all to discontinue carrying all or any of our products, which could cause our business to suffer. Such decisions are outside of our control and may be made based upon any number of reasons, including cost, changing consumer tastes and preferences and the availability of competing products. Such a loss of customers could have a material adverse effect on our business, financial condition, results of operations,operations and cash flows.

The principal raw materials used in producing our products are flavors and ingredient blends as well as aluminum cans, the prices of which are subject to fluctuation. We are uncertain whether the prices of any of the foregoing or any other raw materials or ingredients we utilize will rise in the future and whether we will be able to pass any of such increases on to our customers. We do not use hedging agreements or alternative instruments to manage the risks associated with securing sufficient ingredients or other raw materials. In addition, some of these raw materials, such as our sleek 12 ounce can,materials are available only from a limited number of suppliers. In the past, our industry has experienced shortages of aluminum cans. Periodic and often unpredictable industry-wide shortages of raw materials, including aluminum cans, could disrupt or delay the production of certain products and adversely affect our financial performance. As alternative sources of supply may not be available, any interruption in the supply of such raw materials could have a material adverse effect on our business, financial condition, results of operations,operations and cash flows.

We must continually maintain, protectprotect, orand upgrade our information technologyinformation-technology systems, including protecting us fromagainst internal and external cyber-security threats.threats, data breaches and emerging AI-driven attacks. Any such breach or system failure could result in significant business disruption, reputational harm and regulatory exposure.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidatedConsolidated financialFinancial statementsStatements and the accompanying notes included elsewhere in this Report. This Report contains forward-looking statements within the meaning of the PSLRAPSLRA, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, about our expectations, beliefs, plans and intentions regarding our product development efforts, business, financial condition, results of operations, strategies and prospects. Readers can identify forward-looking statements by the fact that these statements do not relate to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied through forward-looking statements. Please refer to Item 1A. Risk Factors for a detailed discussion of these uncertainties and risks. Forward-looking statements reflect our views as of the date they are made. Except as required by law, we are not obligated to revise or publicly release any updates to these forward-looking statements. This includes not updating the statements to reflect events or circumstances occurring after they were made, or to address any differences between anticipated and actual results. We intend for all forward-looking statements to be subject to the safe harbor provisions of PSLRA.

The Management's Discussion and Analysis section aims to help the reader understand the Company's financial status and operational performance, guiding readers through our current business landscape and operational environment. Our analysis includes our results of operations and financial condition for the years ended December 31, 20242025 and 20232024 and year-over-year comparisons between 20242025 and 2023.2024. For a detailed discussion of our results of operations and financial condition for the year ended December 31, 20232024 and year-over-year comparisons between 20232024 and 2022,2023, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K, as amended,10-K for the year ended December 31, 2023.2024.

Celsius is a functional energy drink company operating in the United States and internationally. This product is available in two convenient forms: ready-to-drink and an on-the-go portable powder form.powder. Additionally, we offer our CelsiusCELSIUS EssentialsESSENTIALS™ line, featuring 16-ounce cans enriched with aminos. In 2025, we introduced CELSIUS® Hydration, a line of non-caffeinated, zero-sugar hydration powderspowders, featuring electrolytes in a variety of fruit-forward flavors. Our product range is widely available across the U.S. and in select territories in Canada in various retail outlets, including grocery stores, natural product stores, convenience stores, fitness centers, mass retailers, vitamin specialty stores,stores and through online e-commerce platforms. Moreover, our products are offered in select markets in Europe, the Middle East and the Asia-Pacific region as we continuehave continued to expand our global presence.

We engage in various aspects of developing, manufacturing, processing, marketing, selling,selling and distributing Celsius, CelsiusAlani Essentials,Nu and CelsiusRockstar On-The-Go Powder, with products available to customers and consumers across the U.S. and in select territories in Canada, Europe, the Middle East, and Asia-Pacific.products. Our operational model strategically relies primarily on co-packers for the manufacture and supply of our products, leveraging their specialized expertise and scalable production capabilities. Additionally, we utilize our in-house manufacturing facility to complement our strategic use of co-packers. This approach allows us to maintain flexibility in responding to market demands and to focus our resources on innovation, marketing,marketing and expanding our distribution channels. We continuallycontinuously assess and work to optimize our supply chain to ensure quality, consistency and timely delivery to our customers.

Energy Drink Market Trends - The energy drink industry iscontinues experiencingto significant growth,expand, driven by increasingsustained consumer demand for functional beverages that offer benefits beyond those offered by the larger carbonated soft drink market such as various health benefits, energy boosts, or other fitness-related advantages. While industry growth slowedhas duringmoderated over the yearpast ended December 31, 2024,year, the overallcategory industry has continued to expand,remains supported by alonger-term shifttrends towardsuch as increasing consumer focus on healthier lifestyles, greater interest in lower-calorie and reduced-sugar options, and a preference for products formulated with more natural ingredients,ingredients. These trends have contributed to the continued evolution and increasedresilience lower-calorieof options.the energy drink category.

Technological Advancements and Digital Trends - The integration of technologytechnology, including AI, in marketing and sales strategies is becoming increasingly important to our business. Leveraging digital marketing channels, e-commerce platforms, AI enabled tools and data analytics are essential for reaching and understanding modern consumers. Adapting to these technological trends is vital for staying competitive and meeting evolving consumer expectations.

Key Drivers of our Financial Success and Market Presence - Much of our financial success is dependent on our ability to market and connect with a diverse consumer base, including wellness-focused consumers, fitness enthusiasts and consumers looking for more functionality in their beverage consumption. We believe that our strategic marketing initiatives, aimed at different demographics and lifestyle segments, contribute to revenue growth and market share expansion. We continually adapt our marketing mix to align with changing consumer preferences, leveraging digital and social media channels for broader reach and engagement. Furthermore, we have designed our focus on product innovation is designed to meet the evolving demands of health-conscious consumers, while maintaining appeal to a general consumer base seeking quality and convenience, thereby enhancing our competitive position and financial performance. Our approach is to create a brand experience that is both inclusive and appealing to a wide range of consumers, fostering loyalty and driving sustainable growth. We believe that our multifaceted approach is crucial for driving enduring revenue growth and maintaining a strong market presence in the energy drink industry.

Our management has identified certain material opportunities, challenges and risks inapplicable theto energyour drink industry and the Company.business.

Brand Reputation and Consumer Trust Risks - Our success relies on maintaining a strong brand reputation and consumer trust. In the fast-paced consumer packaged goods industry, public perception can shift rapidly due to various factors, including product quality issues, negative publicity, social media trends,trends and changing consumer preferences. A tarnished brand image, whether through real or perceived issues, can result in decreased customer loyalty, reduced sales,sales and ultimately, a negative impact on our financial performance.

To mitigate these risks, we arehave committed to maintaining high standards in product quality, engaging in responsible marketing practices,practices and actively managing public relations. We continuously monitor consumer feedback continuously and respond swiftly to any concerns. Our management team is equipped to handle potential public relations challenges proactively to safeguard our brand image. However, despite these efforts, there is always a risk of unforeseen events that could harm our brand reputation.

Our business operations and financial healthresults are significantly influenced by our strategic partnership with Pepsi, which plays a criticalcentral role not only in the distribution and commercialization of our products butand also in generating a substantial portion of our sales and accounts receivable. While this partnership has been instrumental in expanding our market reach and accelerating revenue growth, it also presents concentration risk. For more information, seeSee Note 2. Basis of Presentation and Summary of Significant Accounting Policies to our consolidatedConsolidated financialFinancial statements.Statements included elsewhere in this Report.

The substantial portion of our sales attributed to Pepsi underscores our reliance on their distribution network. Any disruption in Pepsi's operations, shifts in their strategic focus, reduction in service levels or support for our products,products or changes in the terms of our partnership could directly impact our sales performance and revenue streams. This dependencyreliance also extends to our accounts receivable, a significant portion of which is derived from Pepsi. Delays or defaults in these receivables could adversely affect our cash flow and financial planning. Although there is concentration risk with Pepsi as our partner, Pepsi is a premierlarge, well-capitalized public company operating across both consumer goods as well as beverages and hasbeverage a strong balance sheet,markets, thereby insulating us frommitigating some of the potential exposures that wouldmay existbe withmore apronounced smaller,when relying on smaller or less established partner.partners. However, fluctuations in Pepsi's inventory management strategies, such as adjustments to quantities held on hand,inventories, have had and may continue to have the potential to reduce order volumes and materially impact our sales.

The energy drink industry is characterized by intense competition, involving a diverse array of competitors with varying market strategies and product offerings. This includes well-established companies with strong brand recognition, as well as emerging entitiescompetitors that may introduce innovative approaches or specialized products. The entry of new or strengthening competitors who employ aggressive pricing strategies,strategies can significantly impact our market share and profitability. Additionally, continuing shifts in consumer preferences towards healthier alternatives or different beverage categories could intensify competition.competition as new entrants expand into our categories.

To address these challenges, we constantlycontinuously innovate our product line, leveraging consumer insights through various channels, including customer feedback and social media trends, to ensure an understanding of our market and refine our marketing strategies. We also monitor the competitive landscape to anticipate and react to changes in competitor strategies, as the dynamic nature of our market means that we must constantly adapt to maintain our competitive edge. Changes in the competitive landscape could materially impact our results of operations and market position.

Part of our strategic growth plan includes expanding into new geographic markets. This is key to increasing our worldwide market share and driving revenue growth. However, it also introduces inherent risks that could adversely impact our business operations and financial health. Successfully entering and thriving in new markets is contingent upon our understanding and adaptation to local consumer preferences, which may vary significantly from those in our current markets. A failure to accurately gauge these preferences could result in reduced product acceptance and lower sales in these regions.

Moreover, each new marketmarket, including internationally, presents unique regulatory challenges. Navigating varying regulatory landscapes and ensuring compliance is crucial. Non-compliance or changes in regulatory frameworks could lead to legal ramifications, increased operational costs,costs and potential delays in market entry.

Furthermore, as we ventureexpand into new territories, we encounter competition not only from well-established local brands but also from other global entities. This heightened competition can affect our market positioning, influence our pricing strategies,strategies and ultimately impact our profitability in these new markets.

The following table sets forth the amount of revenuesrevenue by geographical location for the years ended December 31, 2024 and December 31, 2023:

For the year ended December 31, 2024,2025, gross profit increased by $47.1$587.1 million or 7.4% to $680.2$1,267.3 millionmillion, an increase of 86.3%, from $633.1$680.2 million for the year ended December 31, 2023.2024. Gross profit marginsmargin increased to 50.4% for the year ended December 31, 2025 from 50.2% for the year ended December 31, 20242024. from 48.0% forFor the year ended December 31, 2023.2025, Grossgross profit margin improvementsreflected resulteda balanced mix of factors, including comparatively lower margin contributions from decreasesAlani in rawNu and package material unit cost and reduced outbound freight cost as a percentage of revenue partiallyRockstar, offset by increasedproduct promotionaland allowancespack mix, as awell percentageas ongoing improvements made to cost of revenuegoods from the reduction in disproportionate distributor sell-in.sold.

When used in this Quarterly Report, unless otherwise indicated, the terms the “Company,” “Celsius,” “we,” “us” and “our” refer to Celsius Holdings, Inc. and its consolidated subsidiaries. Definitions of key terms can be found in the Master Glossary. Unless otherwise noted, tabular dollars are presented in thousands, except per share amounts.

WithoutThese limitingforward-looking thestatements generalitycan ofbe theidentified preceding sentences, any time we use theby words such as “expects,” “intends,” “will,” “anticipates,” “believes,” “confident,” “continue,” “propose,” “seeks,” “could,” “may,” “should,” “estimates,” “forecasts,” “might,” “goals,” “objectives,” “targets,” “planned,” “projects,” and, in each case,and their negative or other variousvariations or comparable terminology,terminology. Through the use of such words and similar expressions, we intend to clearly express that the information deals with possible future events and is forward-looking in nature. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Particular uncertainties that could cause our actual results to be materially different thanfrom those expressed in our forward-looking statements include, without limitation:

•Our ability to successfully estimate demand and/or generate demand through the use of third-parties,third parties, including celebrities,celebrities and social media influencersinfluencers, and others, may expose us tothe risk of negative publicity, litigation and/or regulatory enforcement action arising from such relationships;

•Our ability to successfully expand outside of the U.S.U.S., execute management’s plans and objectives for future international operations and the impact of U.S. and international laws, including export and import controls and other risk exposure;

•Our ability to successfully complete or manage strategic transactions, successfully integrate and manage our acquired businesses, brands or bottling operations or successfully realize a significant portion of the anticipated benefits of our joint ventures or strategic relationshipstransactions;

•Our ability to protect our brand, trademarks, proprietary rights and our other intellectual property, and the impact of third parties attempting to create lower-cost products that attempt to replicate our product attributes;

Forward-looking statements and information involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied in or reasonably inferred from, such statements, including without limitation, the risks and uncertainties disclosed or referenced in Part I, Item 1A Risk Factors and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report. Therefore, caution should be taken not to place undue reliance on any such forward-looking statements. Much of the information in this Quarterly Report that looks toward future performance is based on various factors and important assumptions about future events that may or may not actually occur. As a result, our operations and financial results in the future could differ materially and substantially from those we have discussed in the forward-looking statements included in this Quarterly Report. We assume no obligation (and specifically disclaim any such obligation) to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

CELSIUS® is a functional energy brand offering products across a range of formats, including ready-to-drink, on-the-go powder and hydration, designed to support active and wellness-oriented lifestyles for consumers who are 18 years and older. Our productproducts range isare widely available acrossthroughout the U.S. and in select Canadian territories inacross Canadaa inbroad variousrange of retail outlets, including grocery stores, natural product stores, convenience stores, fitness centers, mass retailers, vitamin specialty stores and through e-commerce platforms. Moreover, our products are offered in select markets in Europe, the Middle East and the Asia-Pacific region as we have continued to expand our global presence.

Rockstar Energy further strengthens our total energy portfolio by adding both full-sugar and zero-sugar offerings that complement our existing brands. With established brand equity, Rockstar enhances our ability to serve core energy consumers who are 18 years and older. Together, our brands enable a portfolio-led approach to serving diverse consumer preferences across performance, lifestyle and traditional energy occasions.

Building on the long-term distribution arrangement that we originally established with Pepsi in August 2022, we entered into a series of transactions on the Closing Date of the Pepsi Transactions that expanded our strategic partnership. These included (i) the Rockstar Acquisition, (ii) the issuance of Series B Preferred Stock and amendment of the existing Series A Preferred Stock and (iii) the execution of the A&R Distribution Agreements, which designate Pepsi as the primary distributor of our Alani Nu and Rockstar products in the U.S. and Canada. Under the enhanced commercial arrangement, Pepsi has agreed to use its commercially reasonable efforts to sell and distribute our full portfolio of products in the U.S. in accordance with the Captaincy.

On July 4, 2025, the OBBBA was signed into law in the U.S. The legislation introduced a wide array of changes to the U.S. corporate tax system, including permanent extensions of certain provisions of the Tax Cuts and Jobs Act of 2017 and substantial modifications to the international tax regime applicable to U.S. multinational corporations. Significant provisions include the permanent restoration of 100% bonus depreciation for qualifying property, changes to the global intangible low-taxed income regime, now referred to as net CFC tested income, the treatment of foreign tax credits, and the foreign-derived intangible income deduction. We evaluated the applicable OBBBA provisions and incorporated their impact into our MarchJune 31,30, 2026 financial statements. The impact of the OBBBA provisions is not expected to have a material impact on our 2026 annual effective tax rate.

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025

European revenues forFor the three months ended MarchJune 31,30, 20262026, wererevenue was approximately $25.4$817.9 million, representing an increase of $6.7$78.6 million,million or 35.9%,10.6%, comparedfrom to the three months ended March 31, 2025. Asia-Pacific revenues generated approximately $7.0$739.3 million for the three months ended MarchJune 31,30, 2026,2025. with other international markets contributing an additional $3.0 millionRevenue in North America was approximately $790.7 million, representing 96.7% of total revenue for the samethree months ended June 30, 2026. International revenue was $27.2 million, an increase of 9.8% from the prior year period. Our international markets have continued to expand, driven by new market launches and continued investment in distribution, marketing and strategic partnerships to support long-term growth.

For the three months ended MarchJune 31,30, 2026, gross profit increased by $205.7$12.8 million to $378.1$393.7 million, an increase of 119.3%,3.4%, from $172.4$380.9 million for the three months ended MarchJune 31,30, 2025. Gross profit margin decreased to 48.3%48.1% for the three months ended MarchJune 31,30, 2026 from 52.3%51.5% for the three months ended MarchJune 31,30, 2025. The decrease in gross profit margin was primarily driven by increasedhigher promotional and incentive activity as a percentage of revenue and increasedchannel aluminummix. costs.This Freightdecrease costswas alsopartially contributedoffset by ongoing improvements from our integration of acquired businesses and the absence of inventory step-up expense in 2026 related to marginthe compression,Alani drivenNu by integration-related freight disruptions, increased freeze protection and tariffs.Acquisition.

For the three months ended MarchJune 31,30, 2026, we recorded $4.4$80.9 million of distributor termination fees related to the termination of certain former Alani Nu distributors,distributors primarily reflectingin adjustmentsconnection towith previouslythe accruedChannel amountsTransition based on information that was not available as of December 31, 2025.Amendment. There were no suchcomparable expenses forduring the three months ended MarchJune 31,30, 2025.

Total Other (Expense)Expense, Incomenet

The effective income tax rate for the three months ended MarchJune 31,30, 2026 was 19.9%20.5% compared to 27.2%22.9% in the comparable prior year period. The decrease in the effective tax rate was due primarily to foreignincreased income in tax creditjurisdictions utilizationwith lower tax rates than the U.S. and windfallpermanent taxdifferences benefitsrelated onto thestock vesting of restricted stock.compensation. The effective tax rate for the three months ended MarchJune 31,30, 2026 varied from the U.S. statutory rate due primarily to the geographicaljurisdictional mix of earnings and permanent tax differences related to stock compensation.

Net income attributable to common stockholders for the three months ended MarchJune 31,30, 2026 was $85.1$36.4 million, representing basic EPS of $0.33$0.14 based on a basic weighted average of 257.0254.8 million shares outstanding. In comparison, for the three months ended MarchJune 31,30, 2025, net income attributable to common stockholders was $34.4$85.7 million, representing basic EPS of $0.15$0.33 based on a weighted average of 235.2257.8 million shares outstanding. Diluted EPS was $0.33$0.14 and $0.15$0.33 for the three months ended MarchJune 31,30, 2026 and 2025, respectively.