Vita Coco (COCO) Q2 EPS Beats by 5%

Key Points

• Vita Coco’s GAAP revenue and earnings per share exceeded analyst expectations for Q2 2025, driven mainly by growth in branded coconut water.

• Gross margin (GAAP) narrowed significantly in Q2 2025, driven by increased freight costs, production expenses, and tariffs.

• The company lifted full-year sales guidance but forecasted flat gross margins of 35% to 37% for FY2025 amid persistent cost pressures.

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Vita Coco (NASDAQ:COCO), a leading producer of coconut water and plant-based beverages, reported results for Q2 2025 on July 30, 2025. The company announced GAAP revenue and earnings per share that both topped analyst estimates, boosted by robust branded coconut water sales and new product rollouts. Net sales (GAAP) reached $168.8 million versus the $161.3 million consensus, and Diluted earnings per share (GAAP) were $0.38, compared to the $0.36 estimate. Despite these gains, gross margin (GAAP) shrank markedly and Non-GAAP adjusted EBITDA dropped from the prior-year quarter, as the company grappled with higher costs. Overall, the period revealed strong topline momentum but heightened pressure on profitability, prompting management to increase its revenue outlook for fiscal 2025 while signaling caution about future margins and costs.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Inside Vita Coco’s Business and Recent Areas of Focus

Vita Coco specializes in coconut water and other plant-based beverages, operating mainly in the Americas and internationally across key markets. As a leading brand, it captured more than 40% market share in the U.S. coconut water category for the 52 weeks ended December 29, 2024 and a commanding 82% in the U.K. Beyond its flagship coconut water, its portfolio includes coconut milk, protein-infused drinks, and innovation-driven products.

The company centers its strategy on several pillars: brand leadership in coconut water, an asset-light and flexible supply chain that enables rapid adaptation, and commitment to sustainability. Innovation also plays a key role, as seen in its expanded offerings like Vita Coco Treats (a coconut milk-based beverage), multipacks, and new organic options. These areas, alongside disciplined marketing and supply chain resilience, underlie its recent commercial push and shape ongoing success factors.

Quarter Highlights: Sales Growth, Margin Pressures, and Key Developments

During Q2 2025, Vita Coco saw its total net sales (GAAP) grow 17% year-over-year. The Americas segment led this expansion, with net sales reaching $141.961 million, up from $124.502 million (GAAP). This sales growth was fueled by a 25% increase in branded coconut water net sales and continued progress from the national rollout of Vita Coco Treats in the United States. The "Other" category in the Americas, which includes products like Treats, more than doubled revenue, rising from $2.9 million to $6.8 million year-over-year (GAAP). International net sales also climbed, ending at $26.8 million.

Case equivalent (CE) volume, a measure of units sold, delivered notable increases across both geographies. In the Americas, branded coconut water volumes rose 22%, while international branded coconut water volumes were up 22.9%. However, private label products in the Americas saw a sharp decline of 34.0% in CE volume. Although overall "Other" category volumes surged 202% globally for the first six months of 2025, private label softness partially offset some of this momentum.

Vita Coco’s gross margin (GAAP) narrowed sharply to 36.3% from 40.8% the previous year, reflecting rising ocean freight costs, higher finished goods expenses, and the new 10% import tariff implemented in April 2025. Expansion in manufacturing capacity also contributed to increased costs per unit. Management reported that while gross profit rose modestly, these gains were more than offset by $7 million in higher sales, general, and administrative (SG&A) expenses, mainly from stepped-up marketing and personnel investment. Non-GAAP Adjusted EBITDA was $29.2 million compared to $32.2 million in the prior-year quarter.

The company ended the quarter with a strong cash and inventory position and no debt. Cash and equivalents totaled $167 million at June 30, 2025, and inventory stood at $84 million. Accounts receivable climbed to $103 million at June 30, 2025, in line with higher sales volume. Year-to-date through Q2 2025, the company repurchased $10.1 million of stock, and $42.1 million remains authorized for buybacks at June 30, 2025.

Product Family Spotlight and Performance Drivers

Branded Vita Coco Coconut Water continued to anchor growth, capturing increased shelf presence and driving household penetration in the functional beverage segment. Multipacks and organic varieties also contributed to this momentum. Product innovation remained central: Vita Coco Treats, a coconut milk-based beverage targeting new household occasions, began its U.S. rollout and helped boost volume and revenue in the “Other” product category by 212.7% in the Americas (GAAP). Management also underscored potential in underdeveloped channels like foodservice, citing successful pilots in hotels and cafes.

Key to Vita Coco’s operational flexibility is its asset-light, global supply chain, which sources coconut water from several countries and relies on third-party co-packers for packaging. This model is considered a strategic advantage, offering flexibility to handle disruptions and manage tariff changes by adjusting sourcing. The company continued to invest in new production lines and supplier partnerships, helping ensure supply keeps pace with demand growth and category expansion.

Sustainability and social responsibility remained a focus. As a Certified B Corporation and public benefit corporation, the company continued initiatives that support coconut-farming communities and sustainable sourcing, with these values highlighted in investor communications. While the release did not include new program launches this quarter, the ongoing commitment to environmental and social goals is a differentiator in a crowded functional beverage market.

Competitive pressures from global beverage giants remain a consistent theme. Vita Coco reported a shift in shelf space winnings, moving more often from adjacent beverage categories than direct rivals. Private label products, which previously formed a larger share of sales, continued to contract, underlining a broader trend toward branded product emphasis and value-added innovation.

Looking Ahead: Guidance and Factors to Watch

Vita Coco raised its FY2025 net sales guidance to $565–$580 million, reflecting high-teens percentage growth for branded coconut water and continued expansion for Treats, as projected for FY2025. Management expects gross margin (guidance) to hold at approximately 36% for FY2025, with some improvement possible in the second half of the year if ocean freight costs fall and planned price increases take hold, according to management commentary. Non-GAAP adjusted EBITDA is forecast at $86–$92 million for FY2025, reflecting robust sales and ongoing margin pressure from input costs and tariffs. Marketing and administrative (SG&A) expenses are now expected to climb by a low- to mid-single-digit percentage for FY2025, reflecting stepped-up commercial activity.

Persistent risks remain a watchpoint for future periods. Cost inflation, import tariffs, and continued investment in capacity and marketing may hold margins below historical levels in future quarters. Tariffs now sit at a 10% baseline in FY2025, but possible increases could lift the effective rate above 20%, depending on related policy changes. Management noted that while its diversified sourcing and cash position offer some resilience, both ocean freight volatility and the softness in private label sales will require continued monitoring. The focus for the rest of the year is on maintaining strong promotional support, driving product innovation, expanding distribution, and pursuing international expansion, all while keeping a close watch on profit margins and cost controls.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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