The plant-based meat alternative is still confronting the drag of the global pandemic on foodservice sales, while also going up against some tough comparables from last year when revenue soared 141%, though management says there may be a light at the end of the tunnel.
Revenue rose 11% in the first quarter to $108.2 million, missing analyst expectations of $113.8 million, but adjusted losses widened to $26.2 million, or $0.42 per share, or more than double the $0.19 per share Wall Street had forecast.
Reality diverged from expectations because COVID-19 continues to impact its foodservice business, where revenue tumbled 26% year over year to $16.7 million in the U.S., and plunged 44% internationally to $10.4 million. The segment now accounts for 25% of total revenue, down from 42% a year ago.
It was largely able to make up for that by continuing to expand into the retail market both here and abroad, and segment revenue jumped 28% and 189%, respectively, as its plant-based meat alternatives gained greater acceptance globally.
No longer frozen out
Yet Beyond Meat sees a "slow thaw" occurring in the foodservice sector in the U.S. and in certain international markets, which is allowing it to begin offering guidance again. It's still a tentative step, and it's only applicable to net revenue, which management sees rising between $135 million and $150 million in the second quarter.
At the midpoint, that's almost 26% higher than last year, and is helped by the new brand partnerships it's entered into, though new competition could eat into those projections for next quarter and beyond.
Tyson Foods (TSN 0.52%) announced last week it was launching its own line of plant-based burgers. While the protein processor has been dipping its toe into the plant-based market for some time now, a meatless patty is a direct challenge to Beyond Meat.
It's also not the only large, well-financed, multinational corporation entering the plant-based alternatives market. So even if Beyond Meat is able to continue expanding into new retail locations, consumers may very well be confronted by a number of meatless options when they go shopping. It could blunt the expansion that it hopes changes its trajectory.
Throwing investors a bone
Plant-based protein sales surged 148% last year, according to Tyson, which could be a case of an expanding pie giving more players a seat at the table. Everyone just might be able to prosper, Beyond Meat included, as the niche becomes more mainstream in the U.S. and internationally.
The company maintains it is "highly focused" on investing in and building out its production infrastructure in the U.S., the EU, and China. It's also developing new products to meet the challenge of a wider consumer palate for plant-based alternatives as well as the entry of so many competitors into the marketplace.
Yet those all come with significant costs attached, and were in large part responsible for Beyond Meat missing top- and bottom-line expectations this quarter.
Put through a meat grinder
Still, it's a mark of forward thinking by management that it's not allowing what are ultimately transient market conditions brought on by the pandemic to interfere with its growth plans. It's how well consumers react to the flood of options that will determine Beyond Meat's future.
The stock has lost almost half its value from the peak it reached earlier this year, and will likely fall further after the current earnings report, which has to be a disappointment to many. Beyond Meat just hasn't shown yet that it can do more than really nibble around the edges of its potential.