Earnings call transcript: Jones Soda’s Q2 2025 sees net income turnaround

Jones Soda Co reported its Q2 2025 financial results, showcasing a significant turnaround with a net income of $2.6 million, equivalent to $0.02 per share, compared to a net loss of $1.6 million in the previous year. Despite a decline in revenue to $4.9 million from $6.7 million, the company highlighted strategic initiatives and product innovations that are expected to drive future growth. The stock showed a slight decline, closing at $0.1869, down 0.16% from the previous trading session. With a market capitalization of $22 million, the stock has fallen nearly 58% over the past year. According to InvestingPro analysis, the company’s current trading price aligns with its Fair Value, suggesting balanced valuation.

Key Takeaways

• Jones Soda reported a net income of $2.6 million, reversing a previous net loss.
• Revenue decreased by 26.9% year-over-year to $4.9 million.
• The company launched several new products, including Jones Zero Cola and Nuka Quantum.
• Operating expenses were reduced by 37%, and the company divested its cannabis business.
• Jones Soda aims to expand its market presence in modern soda and adult beverage segments.

Company Performance

Jones Soda’s performance in Q2 2025 was marked by a notable recovery in net income, reflecting strategic cost reductions and successful product launches. Although revenue declined, the company managed to improve its adjusted EBITDA by 48%, indicating effective operational adjustments. The launch of new products, such as zero-sugar sodas, aligns with current health-conscious consumer trends, positioning the company for future growth. InvestingPro data reveals concerning metrics, including an EBITDA of -$9.38 million in the last twelve months and a weak overall financial health score. Subscribers can access 7 additional ProTips and comprehensive analysis in the Pro Research Report.

Financial Highlights

• Revenue: $4.9 million, down from $6.7 million year-over-year
• Net Income: $2.6 million, compared to a net loss of $1.6 million in the previous year
• Gross Profit Margin: 33.3%, slightly down from 34.3%
• Adjusted EBITDA: Improved to -$571,000, a 48% improvement

Outlook & Guidance

Jones Soda is optimistic about its prospects for the latter half of 2025, expecting revenue growth in Q3 and Q4. The company is focused on expanding its distribution channels and launching new products, including HD9 Zero products and Spike Jones alcohol variants. These initiatives are part of a broader strategy to enhance its market position in both the modern soda and adult beverage categories.

Executive Commentary

CEO Scott Harvey emphasized the company’s growth trajectory, stating, "The Jones brand is not just gaining traction, it’s building a movement." CFO Brian reiterated the focus on cost efficiency, saying, "We remain committed to eliminating unnecessary operational expenses." These comments highlight the company’s strategic focus on growth and operational discipline.

Risks and Challenges

• Continued revenue decline: The company must address the factors contributing to its revenue drop.
• Market competition: Intense competition in the beverage industry could impact market share.
• Economic conditions: Macroeconomic pressures may affect consumer spending and demand for premium beverages.
• Supply chain disruptions: Potential disruptions could impact product availability and costs.
• Regulatory changes: Changes in regulations, especially in the adult beverage segment, could pose challenges.

Jones Soda’s Q2 2025 results reflect a company in transition, with a focus on innovation and cost management. While challenges remain, the company’s strategic initiatives and market positioning provide a foundation for potential future growth.

Full transcript - Jones Soda Co (JSDA) Q2 2025:

Sherry, Conference Call Moderator, Jones Soda: Good morning everyone and thank you for participating in today’s conference call to discuss Jones Soda Financial Results for the Second Quarter ended 06/30/2025. Before we begin, let me remind everybody of the company’s Safe Harbor disclaimer. Certain portions of our comments today will concern future expectations, plans, prospects of the company that will constitute forward looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Forward looking statements include all statements containing verbs such as aims, anticipates, estimates, expects, believes, intends, plans, predicts, will, may, continue, projects, or targets, and negatives of these words and similar words or expressions. Forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated by forward looking statements.

Factors that could affect our actual results include, among others, those that are discussed under the heading of the Risk Factors in our most recently filed reports with the SEC, including our annual report on Form 10 ks, our quarterly reports on Form 10 Q, and our current reports on Form eight ks. In addition, this call includes discussions of certain non GAAP financial measures, including adjusted EBITDA. Most directly comparable GAAP measures and reconciliations for non GAAP measures are available in the earnings release and other documents posted on the company’s website under Investor Relations. A telco replay will be available after the call through 08/29/2025. A webcast replay of today’s webinar will also be available for one year via the link provided in today’s press release as well as on the company’s website.

Now I would like to turn the call over to Joan Soda’s CEO, Scott Harvey. Please go ahead,

Scott Harvey, CEO, Jones Soda: Thank you, Sherry. Good morning, everyone, and thank you for joining the second quarter twenty twenty five’s earnings call. In the 2025, we built upon the strong foundation established in the first quarter. With disciplined cost management, operational rigor, we continue to reduce expenses, streamline processes and reinforce our operational focus. We’re advancing a resilient and sustainable supply chain through top tier manufacturing partners and a disciplined continuity plan designed to ensure uninterrupted on time delivery.

While an HD-nine THC supply issue temporarily impacted Q2 sales, that matter has been fully resolved. Looking forward, we will continue to hold our partners to the highest standards, upgrading or replacing manufacturers when performance expectations are not met. With demand and pipeline orders strong, we remain well positioned for a solid second half of the year. These efforts have allowed us to direct resources toward the highest impact areas of the business, ensuring that every dollar invested supports sustainable growth and shareholder value. Through our focus on operational excellence, innovation and targeted growth initiatives, we have positioned the company for stronger performance in the quarters ahead.

Most significantly during the second quarter we completed the divestiture of the cannabis business generating $3,000,000 in proceeds. This strategic exit marks a deliberate step in sharpening our focus on our core beverage operations, while fully removing expenses tied specifically to the cannabis segment. To be clear, this transaction did not include our HD-nine THC category. We remain highly confident in the long term potential of HD9 THC and see it as a key contributor to the future growth and innovation of the Jones brand. Brian will discuss more regarding the sale in a couple of minutes.

Looking ahead, we remain focused on driving top line growth. This starts with deepening our relationships across our expanding distribution networks. Strengthening these partnerships has been a key priority this quarter and will continue to be a major focus moving forward, will enable our growth in distribution. Although full impact of these efforts is yet to materialize, we are already seeing encouraging momentum with the continued expansion of our presence across distribution channels. In the second quarter, we signed 50 new distributors and expanded our presence into an additional eight twenty nine convenience channels.

Also our innovation is beginning to pay off with strong traction and growth in our core zero sodas and sustained interest in our HD9 THC zero sugar products. This momentum shows we are effectively reading the market and adapting to consumer needs. And the remainder of the year we expect growth driven by core soda HD90 THC including the launch of HD90, Spike Jones, 100 calorie Spike Jones and modern soda format along with expansion into direct to consumer, club, food service and convenience store channels. As we continue to receive strong validation from both customers and suppliers, we are confident about what lies ahead in the remainder of 2025. We have a well positioned product portfolio that resonates in market, streamline operations with unnecessary costs removed, and a talented experienced team ready to execute.

With these pieces in place, we are poised to accelerate our momentum and take the business to the next level. With that, I’d like to pass this over to Brian for him to speak to the Q2 financial results. Brian? Thank you, Scott, and good morning, everyone. Net revenue in the second quarter was $4,900,000 compared to $6,700,000 in the year ago period.

The decrease in revenue was primarily driven by the one time pipeline fill we had in the 2024 in Canada and The U. S. As well as the loss of a discount market customer. The Beverage segment once again saw growth from its hemp derived HD9 products during the 2025 as such products generated $800,000 in revenues during the 2025 compared to $600,000 in the 2024. 2024 sales were skewed to the first half of the year with the large pipeline fills.

This was drawn down over the balance of 2024 where we saw lower average quarterly net sales in the 2024. We expect to see increasing net revenues in both the 2025 compared to Q1 and Q2. Key programs that will contribute to expected growth include a cooler rollout program focused on AT9 product sales, new material customers in club and grocery stores for core soda and modern soda. We also have some key fallout series releases occurring in the 2025, building on the previous success we saw in 2024 and the 2025. Gross profit as a percentage of revenue was 33.3% compared to 34.3% in the prior year period.

Despite the decrease in revenue, the company was able to maintain similar gross profit margins due to the cost reduction efforts made throughout our first six months. Our team sent out in the second quarter RFIs for our freight lanes to further optimize freight. And we have been able to and we have been further rationalizing our warehousing to reduce those costs as well. Another key to driving down COGS is product cost. As we build volume in our newer products, we see a good opportunity to reduce our product costs and improve gross margins.

Total operating expenses decreased 37% to 2,400,000 in the 2025 compared to $3,800,000 in the year ago period. The decrease was driven by our continued efforts to reduce selling, marketing and general admin expenses. We continue to look for additional opportunities to reduce G and A. However, we do expect to be spending additional marketing dollars to support our brands in the marketplace in the third and fourth quarters to drive trial and awareness, most notably for Pop! Chunks.

Net income in the quarter was $2,600,000 or $02 a share compared to a net loss of $1,600,000 or $02 loss per share. The increase in net income was primarily driven by the gain on the sale of our cannabis business as well as the continued reduction in operating costs over the quarter. Adjusted EBITDA improved to negative $571,000 compared to a loss of $1,100,000 in the previous period or a 48% improvement. On a year to date basis, our adjusted EBITDA is negative $1,200,000 compared to negative 2,100,000 or 44% to proven over last year. I do want to take a moment to address the divestiture of our cannabis business.

The sale of the business for $3,000,000 plus an ongoing annual license fee in perpetuity was an important strategic decision enabling us to fully focus on our core operations by removing ongoing challenges associated with cannabis, including legal complexities, geographic limitations and supply chain issues. With our current product portfolio, we are well now well positioned to leverage a streamlined operating model with reduced variable costs as we execute our sales growth initiatives. While we remain committed to eliminating unnecessary operational expenses and unlocking supply chain efficiencies, we have the right financial levers and operational foundation in place to successfully scale the brand and the business and capitalize on market opportunities. Lastly, before handing the call back to Scott, I wanted to touch briefly on our balance sheet. As of 06/30/2025, the company had approximately $700,000 in cash.

We continue to invest in inventory during this quarter and we have ample capacity under our credit line to finance additional needs in the second half of the year. In addition, we secured improved terms for products such as HD9 during the quarter. Overall, am encouraged by the operational and financial improvements we continue to make throughout the second quarter and focused on continued improvements as well as the expected sales growth in the two quarters ahead. Scott, back to you. Thank you, Brian.

The future of Jones remains in driving growth across our key focus areas of core soda, modern soda and adult beverages. Staying focused on these segments while driving innovation within them will keep us on a clear path to expanding market share, improving profitability and delivering on long term shareholder value. Within core soda, we continue to expand and grow our distribution partners like McLean, Core Mark, UNFI, KeHE in addition to the network of 35 plus distributors in U. S. And the Canadian markets.

Building on this momentum, we’re evolving to preferences in the core soda category with the introduction of our zero sugar and mini craft lines. We experienced strong growth in our core products and expect this momentum to continue in the coming quarters. Jones Soda launched Jones Zero Cola in March across 10,000 plus national and regional grocery stores and recently introduced an additional zero calorie flavored Jones Zero Root Beer, which is now available across The US. As consumers increasingly prefer healthy alternatives without sacrificing great taste, we see a significant runway for expansion in these categories for Jones. Jones continues to deliver excitement to our strategic partners.

This summer we rolled out a custom Jones soda pack inspired by the bold vibrant colors of Crayola’s iconic color palette featuring our most loved core flavors. Their action was incredible, we sold out within hours. Now fueled by that demand, pre orders are live and shipments will be rolling out shortly perfectly timed to capture the back to school buzz and drive incremental sales. We also partnered with Bethesda and the iconic Fallout franchise to launch Nuka Quantum, followed by Nuka Grape, available now and later this fall will expand the lineup with Sunset Sarsaparilla timed perfectly for the release of Fallout two. Both Nuka Quantum and Nuka Grape have already exceeded our expectations at both retail and D2C outlets.

Kroger has been a key customer and partner stocking the Jones Fallout SKUs nationally. Looking forward to Q4, in coordination with Bethesda and the Fallout franchise, we have an exciting first of kind limited time only product D2C launch that we believe will further and strengthen our creative portfolio and generate strong consumer buzz and demand. Shifting to modern soda, we’re seeing strong momentum in this segment driven by two flagship products, Pop Jones and Fiesta Jones. Pop Jones is available in five classic flavors, each with just 30 calories, four grams of sugar and added fiber plus immune support, all in a convenient 12 ounce sweet can. Distribution continues to expand with placement in key national and regional chains including Safeway, Albertsons, Fred Meyer’s, Market Basket, Hy Vee and a major Midwest chain slated to launch in Q3.

Fiesta Jones is a line crafted specifically for convenience stores featuring Latin inspired flavors like watermelon strawberry, mango passion fruit, coconut lime and guava berry, all in portable resealable aluminum bottles that continue to expand in our convenience channel. Circle K has been a leading retail partner in The U. S. And Canada and McLean and Core Mark have been key distribution partners with this effort. Turning to our third key focus area adult beverages, this includes our HD-nine THC products under the Mary Jones line as well as our alcoholic offering Spike Jones.

Our HD nine THC business continues to gain traction delivering 800,000.0 in revenue. Since introducing Mary Jones HD nine THC line, which includes Jones core flavors, shooters and gummies, We’ve signed 25 plus distributor partners, including four new partners in q four q two twenty twenty five, allowing us to expand in the new states with strong initial sales, including our newest distributor Allied Beverage Group of New Jersey. In Q3, we’re excited to launch the HD-nine ZEROs in which new slimline cans which will deliver the same great taste with no compromise on flavor. In addition, we will buy 50 Jones branded coolers across the retail landscape, which will drive brand awareness, trial and increased product demand. Lastly, with Spike Jones, our alcohol infused beverage brand is available in both 12 ounce and 19.2 ounce slimline cans with such flavors as strawberry lime, berry lemonade, grape and orange and cream.

We will be expanding our spiked offering in Q4 with 100 calorie flavors providing greater consumer appeal and accessible base. After a successful test market in the Northwest with Northwest Beverage, Odom, Craigsstein, Walton, Point Blank, and Delta Summit, and Bonkins. We have recently secured a production partner in Michigan and have already had contracts for distribution with Griffin, Rave, Imperial, and Superior Beverage. We also have 15 more distributors in the Midwest and the Eastern U. We anticipate signing and shipping product to in Q3.

Overall, we’re building strong momentum with a streamlined operating model and a well positioned product portfolio that resonates in the market. Our recent strategic decisions including the divestiture of the cannabis business has removed distractions and unnecessary costs allowing us to focus on scalable growth. With the right product portfolio and strengthen relationships with our distribution partners, the future is bright for Jones. Turning to the investor engagement, we will be attending the Gateway Conference next month in San Francisco. This underscores our commitment to driving value for our shareholders and rebuilding investor confidence.

With the momentum we have built through streamlined P and L and expected growth in the remainder of the year, it’s a perfect opportunity for us to share our story. Before we move on to Q and A, I want to extend my heartfelt thanks to our incredible team, our strategic partners and our loyal customers. The momentum we’re seeing today is no accident. It’s the product of hard work, creativity and commitment across every corner of this company. The Jones brand is not just gaining traction, it’s building a movement.

And we are poised to turn this energy into lasting growth in category leadership. With that, we’re going to finish the call by addressing some of the question we received from our shareholders via email recently. I’ll pass the call back to Brian and we’ll start out with the first question. Thanks Scott. First question is what is the company’s approach to operating today’s virtual virality driven marketing landscape?

Is the company’s leveraging AI to produce low cost, catchy advertisements that gain significant views with minimal effort? Yeah. Great question. So, you know, we’re currently deploying, you know, the social media strategy around an upcoming launch. We’re we’re going to actually use brand influencers, which is different than just using influencers.

So brand influencers are are specifically around the brand that we’re actually launching into, and and they’re known within that category. As well as that we’re also using a digital marketing targeted around the store to drive awareness of that product placement in the retailer. And I’m a firm believer is that we need to advertise within the four walls of the stores that we’re in, But we really need to expand that out to the four blocks and four miles around there to make sure people understand when we go into a new segment that where we are, we’re in that store, and be able to communicate that out. The other piece, the AI proposition, think is really an interesting path. We’ve been exploring this option with a few select partners, and we’re actually gonna be going into test.

I think the economics for this really makes sense, and they can drive really vast awareness. And the creation of material is really speedy. So I’m really interested in that results after we launch that test. Thanks, Scott. The second question is, has Joe’s landed any new accounts in the past three months?

Yeah, we have. So we have new retailers and continue to expand. The ads have been a combination of distributors, retailers, and a new club opportunity that we’re going be rolling out at the end of this month. So we’re super excited about, again, that momentum that we’re starting to see within the brands. Next question is, how has sell through been at current retailers?

Please provide specific metrics. Yeah, so when you look at Jones Corso single bodies bottles that sold the majority of the Jones overall sales in The US, it’s about 3.23 per SKU per store per week, which is equal to about 1.98 units. Jones single bottle sales reported in multiunit was about $7,600,000 in total. So this is third in the entire craft soda category, only behind like Doritos and Coke, specifically Coke that’s imported from Mexico. When we look at Pop Jones, Pop Jones is selling at a rate of about $2.9 per SKU per store per week.

This ranks Pop Jones about number 11 among the modern soda category. We’re pleased with the initial ranking, and really all of our marketing and promotional efforts are going to be kicking in here in September, after which we anticipate Pop Jones moving into the top five brands in the category. And we’re going to be doing exactly what I just spoke about in the previous question about, you know, focused targeted marketing, geo fencing around stores and really bringing the brand to life, to drive awareness within those categories. You know, Mary Jones, it’s a little bit of a different situation since, you know, syndicated data for Mary Jones is not really available because the category is really sold at this time through independent liquor store operators. We do have confirmation from one of the top retailers in the countries, which is top 10 liquors out of Minnesota Mary Jones HD nine soda ranks within the top 30 of the category.

We anticipate moving into the top 10% with the launch of our zeros in Q3, along with our shooters and gummies, as well as we begin to expand that network you know, for across the country as well. Scott, the next question is, can you provide an update on the product roadmap and priorities? Sure. Yeah, our priorities remained the same and our roadmap remains the same, right? It’s really about, you know, staying narrow and going deep within those three defined categories that we spoke of earlier, which is our core, our modern and our adult and really continue to drive innovation within each of those categories.

We need to stay focused, we need to be able to drive forward and I believe distractions outside of those will lose focus on the channels that we really believe are the go forward path for us. Scott, next question. I think you’ve touched on already. Are there plans to offer the full Jones Soda and HC9 lineup and zero sugar variations? Yeah, again, question.

We currently have those products available in zero with our and plan based upon the velocities expand across all the flavors. And in regards to the Zero, as we just said, we’re rolling out this quarter. And I believe that those really will address the health conscious individuals for that option, but also give them an option within the category that they’re looking to expand into. Next question, Scott, is what is the difference between HD-nine THC and cannabis THC infused? Yeah so you know it really starts out is that you know they’re split into two different things and here’s a couple of reasons why.

So the AT9 THC is chemically identical to the marijuana derived delta-nine but is extracted and converted from hemp, which means it’s 0.03 THC per by dry weight for The US standard farm rules. What we do with the Delta, you know, the HD nine, it allows us to be able to cross state lines, we can have singular and less manufacturers so that we can go to multiple states. So that is you know the channel that we’re playing in today with HD-nine. The cannabis infused comes from again, still comes from marijuana, but it’s got a cannabis of greater than 0.3 THC per driveway, again, The US Farm Bill rules. It’s a little bit more stringent as we know, it’s always regulated under state cannabis laws and it’s really only sold in licensed dispensaries in these legal states and it cannot cross state lines.

When we were in the business, we had to establish manufacturing in each state and comply with each state’s specific rules to be able to launch that product. So again, when you look at the product in itself, the HD-nine just gives us much more flexibility to have less manufacturing across state lines. Again, we still have to comply with state regulations, but it does give us that ability to do it. Thank you Scott. Next question is the fizzy edibles and syrup, what camp do they fall into?

Yeah. Again, another great question. They both fall into that cannabis infused category. So really the takeaway, it’s the difference is all about the origin and the legality of the product. So our H E nine infused is, again, it’s legal.

In non cannabis states, it’s more flexibility. That’s the channel that we’re operating in again. And again, the cannabis THC infused is marijuana derived THC, and it’s regulated cannabis laws, and it’s only for dispensary only. So again, we remain committed to our HD9 products, which we really believe is a growth engine for us. That’s the reason why we’re still continuing to play within that category.

Thank you. The next question is, the company was supposed to have an introductory meeting talking to Walmart for possible store trials for Pop Jones. Any update on this front? Yeah. So there was a meeting last year with Walmart in which the team presented the original flavors.

The result of that meeting was Walmart decided to pass on that on that specific opportunity. So, the good news is is this upcoming Wednesday, August 20, the team and myself will be in Bentonville, Arkansas meeting again with the modern category buyer to present the original five flavors, again with six newly developed flavors. And the most important piece is that we now have in market data, which was not available at the time so that we can actually talk about how well the product is doing and how well its acceptance across the category. So super excited about the upcoming meeting to be able to get in front of that category. And again, the team is well prepared to be able to present.

Thank you, Scott. The next question it looks like it’s our last question is, the company still engaging in alcohol infused soda with Spike Jones hard craft soda? Where is the product currently with distribution? Yeah. So again Spike Jones says, you know, we have four flavors and it’s in two different sizes.

One’s a 12 ounce and one’s at a 19.2 ounce, and they both have 8.80.4% alcohol by volume. The 19.2 is available in two flavors, which is grape and orange cream, and the 12 ounce is available in orange and cream, grape, berry lemonade, and strawberry and lime. Distribution is currently in liquor stores and select sea store locations and most prominent in the Pacific Northwest, but will be expanding to the rest of the country due to significant distributed demand that we continue to see. Those are all the questions that we’re going to answer at this time. In closing, the past six months we’ve taken bold decisive steps to strengthen the Jones Soda Company and establish a foundation for sustainable profitable growth.

We have tackled critical challenges head on, streamlined our operations and cut unnecessary cost, partnered with top tier manufacturers and continue to assemble a high performing team committed to flawless execution. These actions position us for stronger results and meaningful long term value creation. While important work remains ahead, we’re moving forward with clarity, focus and discipline, and we deeply appreciate our shareholders’ continued confidence and support. We’d like to thank everyone for taking the time to listen today. I would further welcome questions and would be happy to take your one on calls early next week.

Please direct any inquiries to gsdagateway group, grp dot com, and I’d be happy to address accordingly. If I don’t speak to you soon, I look forward to addressing you all again when we report our third quarter results. Thanks again and have a great day. Sherry back to you.

Sherry, Conference Call Moderator, Jones Soda: Thank you. Ladies and gentlemen this concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation.

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