Vita Coco Q2 2025 slides: 17% revenue growth continues as margins face pressure

Introduction & Market Context

Vita Coco Company Inc (NASDAQ:COCO) released its second quarter 2025 presentation on July 30, revealing continued strong revenue growth amid some margin pressure. The company’s stock was up 1.69% in premarket trading to $37.39, following a 1.37% decline in the previous session.

The presentation highlighted Vita Coco’s dominant position in the rapidly growing coconut water category, which is outpacing other beverage segments in the U.S. market. This performance builds on the company’s strong first quarter, when it beat analyst expectations with earnings per share of $0.31 versus a forecasted $0.20.

Quarterly Performance Highlights

Vita Coco reported impressive financial results for Q2 2025, maintaining the growth momentum seen in previous quarters. Net sales increased by 17.1% year-over-year to $169 million, while net income reached $23 million, translating to earnings per share of $0.38.

As shown in the following quarterly performance highlights:

The company maintained a strong balance sheet with $167 million in cash and zero debt. However, gross margin of 36.3% represented a 450 basis point improvement, while adjusted EBITDA of $29 million reflected a margin of 17.3%, down 504 basis points from the same period last year.

Year-to-date performance showed similar trends, with net sales growth of 17.1% to $300 million and net income of $42 million ($0.70 per share). The consistent revenue growth rate between Q1 and Q2 demonstrates Vita Coco’s ability to maintain sales momentum throughout the first half of 2025.

Detailed Financial Analysis

A deeper look at Vita Coco’s financial performance reveals both strengths and challenges. The company’s volume growth of 14% in Q2 2025 drove the 17% increase in net sales, indicating both volume expansion and modest price increases.

The quarterly financial trends show consistent improvement in key metrics:

Despite the strong top-line growth, Vita Coco faces margin pressure. The gross margin decline of 450 basis points compared to Q2 2024 reflects increased input costs and competitive pricing dynamics. Similarly, adjusted EBITDA margin contracted by 504 basis points to 17.3%.

The reconciliation from net income to adjusted EBITDA shows that while net income increased by 20% year-over-year to $22.9 million, adjusted EBITDA decreased by 9.3% to $29.2 million. This divergence is primarily due to changes in non-operating items and tax effects.

Competitive Industry Position

Vita Coco continues to dominate the coconut water category with a 44.5% market share in the U.S., maintaining its leadership position despite increasing competition. The company’s market share has remained relatively stable over recent years, hovering between 42.7% and 44.9% since 2022.

The coconut water category itself is experiencing robust growth, significantly outpacing other beverage segments:

With volume growth of 12.0% and dollar sales growth of 15.5% year-over-year, coconut water is growing faster than categories like sports drinks, enhanced water, and ready-to-drink coffee. This category expansion provides a strong tailwind for Vita Coco as the market leader.

The company’s retail performance has been particularly strong in recent months, with 13.1% growth in the last 13 weeks through June 29, 2025:

Strategic Initiatives

Vita Coco outlined four strategic growth pillars that form the foundation of its long-term expansion plans. These include expanding households and consumption occasions, innovating outside the core coconut water category, growing international markets (particularly the UK and Germany), and pursuing complementary acquisitions.

The company’s vision statement emphasizes its aim "to be the leading platform for brands in the functional beverage category," suggesting plans to expand beyond coconut water into other functional beverage segments. This aligns with its B Corporation certification and focus on health and wellness products.

Commercial initiatives focus on increasing distribution through multi-packs and innovation, with all-commodity volume (ACV) performance showing significant improvement in 2025 compared to 2024:

Forward-Looking Statements

Based on its strong first-half performance, Vita Coco raised its full-year guidance slightly compared to previous forecasts. The company now expects:

The updated guidance of $565-580 million in net sales represents an increase from the $555-570 million range provided after Q1 2025. This adjustment reflects management’s confidence in continued strong performance through the second half of the year.

The long-term growth algorithm remains unchanged, with expectations for mid-teens branded net sales growth and high-teens adjusted EBITDA margins. While current EBITDA margins are below this long-term target at 17.3%, the company appears confident in its ability to expand margins over time.

Vita Coco’s continued strong performance in Q2 2025 reinforces its position as the leader in the growing coconut water category. While margin pressures present challenges, the company’s robust revenue growth, strong cash position, and market leadership provide a solid foundation for future expansion. Investors will be watching closely to see if Vita Coco can maintain its sales momentum while addressing the margin compression seen in recent quarters.

Full presentation:

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