Arcadia Biosciences (RKDA -4.86%), a consumer wellness beverage company known for the Zola coconut water brand, released its second quarter results on August 14, 2025. The company reported GAAP revenue of $1.455 million, which was below the $1.60 million analyst estimate (GAAP), and a loss per share of ($3.26) (GAAP), sharply missing the expected (-$0.79 GAAP EPS). The bottom line was heavily impacted by a $4.5 million credit loss related to a note receivable from Above Food Ingredients. While Arcadia's core business showed volume and gross margin improvements, the quarter as a whole was overshadowed by this major non-operating charge and continued transition activity.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | ($3.26) | ($0.79) | $0.78 | (518.0%) |
| Revenue (GAAP) | N/A | $1.60 million | $1.31 million | N/A |
| Loss from Continuing Operations | ($0.50 million) | $1.98 million | N/A | |
| Net (Loss) Income Attributable to Common Stockholders | ($4.46 million) | $1.06 million | (520.8%) |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Strategic Focus
Arcadia Biosciences, once focused on agritech and crop development, is now concentrated on consumer wellness products, with Zola coconut water as its flagship brand. Zola is a ready-to-drink coconut water available in original and flavored varieties and aims to serve the growing segment of consumers seeking health-focused beverages. The company previously earned revenue from crop improvements, patent licensing, and agricultural technology, but has exited these segments to reduce liabilities and sharpen its brand direction.
This transition has largely been completed in the past year, leaving coconut water as its sole product line. The focus on Zola has helped Arcadia drive growth through expanded distribution, new product flavors, and operational cost controls. The key success factors now include maintaining top-line growth in the beverage category, achieved through volume expansion, and keeping production costs in check to support gross margin consistency.
Quarter in Review: Operations, Financials, and One-Time Events
All revenues were generated by Zola coconut water. reflecting Arcadia's completed pivot to consumer products. Zola sales grew 24% year over year, fueled mainly by increased unit volume and expanded retail distribution. Management highlighted that recent new customer wins and distribution agreements represent about half the company's current store footprint. Growth in Zola was entirely from higher sales volume, as prices remained stable.
Gross margins remained robust, with company commentary emphasizing that gross margins (GAAP) have remained above 30% for ten consecutive quarters. While gross margin rate declined from 43% in Q1 2025, the company managed to hold margins as its product mix shifted more fully to Zola. Selling, general, and administrative expenses dropped by $560,000 compared to Q2 2024, reflecting the completion of Arcadia's exit from agtech, the removal of employee-related costs, and a focus on overhead reduction. However, total operating expenses rose substantially, which is mostly due to the absence of a prior-year $4 million gain on a patent sale rather than an increase in recurring costs.
The most significant development was a $4.5 million credit loss on the note receivable from Above Food Ingredients. This charge arose after the company determined it would not fully recover cash or stock promised from the sale of the GoodWheat asset. The company received 2.7 million shares of Above Food Ingredients as partial repayment of the $6 million note receivable related to the sale of GoodWheat assets, but further asset recovery is now uncertain. This non-operating loss drove the bottom-line swing to a net loss attributable to common stockholders of $4.5 million (GAAP). For context, last year's Q2 benefited from one-time gains and contained legacy product sales that are no longer part of the business.
Outside core operations, Arcadia finalized the exit from its legacy agricultural tech businesses, eliminating an additional $1 million in contingent liabilities, for a total of $2 million year to date. Such liabilities were tied to patents and intellectual property transactions. These steps are designed to clear the balance sheet for the planned merger with Roosevelt Resources, which is ongoing but not finalized.
Looking Ahead
Management did not provide explicit forward guidance for revenue or earnings for the remaining quarters of fiscal 2025. Company leaders did voice confidence in continued sales growth and gross margin stability for Zola coconut water. The pending combination with Roosevelt Resources remains the major strategic focus, though its timing and impact are still unclear.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
