What happened
Shares of beverage company Celsius Holdings (CELH -7.81%) skyrocketed to an all-time high on Wednesday after the company reported financial results for the first quarter of 2023. As of 10:15 a.m, Celsius stock is up an impressive 18%.
So what
In Q1, Celsius generated revenue of $260 million, up an astounding 95% year over year. The company signed a distribution deal with PepsiCo in late 2022 that's leading to a robust increase in points of distribution. But management says it was also able to increase the number of products it had in existing points of distribution. Both factors contributed to the strong top-line growth.
Turning to profitability, Celsius' gross margin jumped to 43.8% compared to 40.4% in the same quarter of 2022. However, it should be noted that this is a slight decrease from its gross margin of 44.4% in the fourth quarter of 2022.
On the bottom line, Celsius had net income of $34.4 million, up from just $6.7 million in the prior-year period. It's worth pointing out that it's never before had this much net income during an entire year let alone in a single quarter.
It seems its partnership with Pepsi is taking the Celsius brand to the next level. And higher sales are unlocking stronger profitability. And that's why the stock hit an all-time high today.
Now what
Celsius' management isn't in the habit of giving forward guidance. But the trends certainly appear to be in the brand's favor. Consider that revenue in North America was up 101% year over year in Q1 and accounted for nearly 96% of total revenue. To me, this points to a still-large international opportunity that Pepsi can help Celsius capture.
With a market capitalization now of about $10 billion, Celsius certainly isn't a cheap stock. But considering its growth and ongoing opportunity, I believe it can still be a market-beating investment for investors willing to buy and hold for the long term.
