Vita Coco Earnings: Strong Q2 Sales Drive Guidance Boost Despite Margin Pressures
- Hardik Shah
- Jul 30
- 4 min read
TLDR
Revenue Strength: Net sales up 17% YoY to $169M, led by 25% growth in Vita Coco Coconut Water.
Margin Trends: Gross margin declined to 36% (from 41%) due to higher freight, tariffs, and costs.
Forward Outlook: Raised full-year sales guidance to $565–$580M; expects continued branded growth despite private label softness and tariff uncertainty.
Business Overview
The Vita Coco Company (NASDAQ: COCO) is a better-for-you beverage platform best known for its leading coconut water brand, Vita Coco. The company also owns Ever & Ever (sustainable packaged water) and PWR LIFT (protein water). Vita Coco products are sold across retail, e-commerce, and foodservice channels, with a growing presence in the U.S., U.K., and Europe. Its namesake brand remains the #1 coconut water brand in the U.S., with growing international traction.
Vita Coco Earnings Q2'25 (vs. Q2'24)
Net Sales: $168.8M (+17%), driven by 25% growth in Vita Coco Coconut Water and a successful U.S. rollout of Vita Coco Treats.
Gross Profit: $61.3M (up $2.5M YoY), with gross margin compressing to 36% (from 41%) due to increased freight costs, product costs, and tariffs.
Net Income: $22.9M, up from $19.1M; diluted EPS at $0.38 vs. $0.32.
Adjusted EBITDA: $29.2M (down from $32.2M), impacted by higher SG&A costs.
SG&A: Increased to $36.1M (+$7M YoY), due to marketing, staffing, bad debt reserves, and temporary dual rent expenses.
Segment Performance:
Americas:
Vita Coco Coconut Water: $120.5M (+22%)
Private Label: $14.7M (–37%)
International:
Vita Coco Coconut Water: $19.9M (+43%)
Private Label: $6.2M (+29%)
Key Drivers:
Increased volume and better retail execution.
Tariffs and ocean freight pressures weighed on profitability.
Retail scan data strong, with category and household penetration expanding.
“The coconut water category continues to be one of the fastest growing categories in the beverage aisle... we are well positioned for continued growth and I am excited for the balance of 2025 and beyond.” — Michael Kirban, Co-Founder & Executive Chairman
Forward Guidance
Revised 2025 Outlook:
Net Sales: Raised to $565M–$580M (from prior view), driven by high-teens growth in Coconut Water and incremental Treats rollout.
Gross Margin: Maintained at ~36%, with H2 impacted by Q3 tariff lag and spot freight rates; Q4 expected to improve sequentially.
Adjusted EBITDA: Reaffirmed at $86M–$92M.
Risks & Opportunities:
Risks:
Tariff volatility (baseline 10% included, but up to 19–20% for key sources like the Philippines remains unpriced).
Freight rate variability.
Competitive pricing and elasticity.
Opportunities:
Category growth and household penetration expansion.
International acceleration (notably in the U.K. and Germany).
Growing retail distribution (e.g., potential Walmart reset in Q4).
“With our diversified supply chain... we believe that we can navigate any additional tariff impacts.” — Martin Roper, CEO
Operational Performance
Inventory: Significantly improved YoY, enabling better execution and promotional planning.
Cost Controls: Pricing actions enacted to offset inflation and tariffs, but cost headwinds persist.
Supply Chain: Diversified sourcing (Philippines, Brazil, Thailand, etc.) helps mitigate geopolitical and tariff risks.
Segment Snapshot:
Coconut Water: Core engine, growing in volume and usage occasions.
Treats: New coconut milk-based beverages off to a strong start.
Private Label: Strategic but declining; new wins expected to benefit 2026.
Market Insights
Category Dynamics: Coconut water is still underpenetrated vs. juice and sports drinks. Management believes the U.S. market can double in size.
Retail Landscape: C-store distribution expanding. Treats rollout still ramping.
Pricing Trends: Mid-year U.S. price increase (~7%) enacted; initial elasticity impact minimal.
Consumer Behavior & Sentiment
Household penetration and consumption per household are rising.
Growth strongest among young, urban, multicultural consumers, but also expanding into middle-America convenience channels.
No material signs of trade-down or value pressure among key cohorts, including Hispanic consumers.
Strategic Initiatives
Innovation: National launch of Vita Coco Treats (coconut milk-based) creates new usage occasions and diversifies revenue streams.
International Expansion: Stepping up brand investments in the U.K., Germany, and Europe.
Category Leadership: Company aims to double U.S. coconut water consumption over time.
“We’re excited about the initial performance of Vita Coco Treats... which creates new usage occasions that could offer us yet another path for long-term growth.” — Michael Kirban, Executive Chairman
Capital Allocation
Buybacks: $10.1M repurchased YTD; $42.1M remains under expanded $65M authorization.
Cash & Debt: $167M in cash; zero debt.
The Bottom Line
Vita Coco delivered another strong quarter, with double-digit revenue growth driven by core brand momentum and new product innovation. While gross margin headwinds persist, the company’s top-line strength and disciplined investments support a bullish outlook. Tariff uncertainty remains a risk, but management’s diversified sourcing and pricing levers offer room to maneuver.
Investor Watchpoints:
Implementation of additional tariffs beyond 10% and their timing.
Q3 margin pressures due to freight and delayed pricing offset.
Walmart reset and broader Treats distribution trajectory.
Freight rate trends and Q4 gross margin recovery.
With strong category fundamentals and clear execution, COCO remains well-positioned for long-term growth.
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