On Friday evening a press release was issued by Celsius Holdings announcing third quarter results. The Friday evening PR was followed by a Monday morning filing of the full Quarterly Report. Because of the timing of the filings - before Tuesday's scheduled conference call - I am inclined to believe that investors will hear about a significant distribution deal that will offset the third quarter numbers that came in below the expectations of many investors.
The $1.3 million of reported revenue was 208% higher than the revenue generated in the third quarter of 2008 and was 12% higher when compared to quarter two of this year. The net loss increased to $2.7 million over the $1.8 million reported for the same time period last year, due mainly to the significant increase in advertising expenses.
The $1.3, while still a demonstration of growth, came in below my own expectations; I had previously stated that I thought $2 million would have been a great quarter, but with a full month of television advertising in the books, I realistically believed that the bottom end of my revenue projection would fall into the $1.5 million range.
However, with a boom in distributorship underway - being supported by a national ad campaign - it's still way too early to become skeptical of the company's ability to grow.
It's become clear, according to recent comments by the CEO of Celsius Holdings Steve Haley, that distribution will be in full effect by March of next year, and it is at that time that the company needs to be on the full upswing in terms of revenue growth - in my opinion. It's crunch time now for Celsius Holdings, because the expenses of the advertising campaign are increasing, and if Celsius is going to gain a strong foothold in the market, now is the time that it is going to happen.
As the leader of the functional beverage market, while holding the claim as the world's first calorie burning beverage, and being supported by numerous clinical studies that demonstrate the benefits of drinking Celsius in conjunction with an exercise routine - I'm confident that the product will gain the desired market foothold.
I wouldn't be surprised to see the stock dip a bit after the news of the third quarter results, because many investors expected higher, but I'll be using that as a buyin opportunity if the drop is significant enough. However, I believe we'll see additional news that may either lead to support of the current stock price or even spark a mini run.
I'll continue to stand by my own estimations that the first half of 2010 should be a stellar one for Celsius Holdings and shareholders of the company. The shareholders who are patient will be well rewarded, in my opinion.
While my expectations are positive, I also acknowledge that with costs up and advertising exposure in full swing, it's crunch time for the company and the product. If the significant growth that many have predicted is going to occur, it'll be the next few quarters that we start seeing that boom in growth.
For now, I'm expecting additional distribution news to continue hitting the wires.
Disclosure: VFC is long CSUH.
