Oatly Group NASDAQ: OTLY raised its full-year revenue outlook after reporting stronger second-quarter sales growth, citing gains from product innovation, expanded distribution and rising demand across key markets. Management said the company remains on track to deliver adjusted EBITDA toward the low end of its previously issued range despite cost pressure tied to the conflict in the Middle East and continued spending behind growth initiatives.
For the second quarter of 2026, the oat-based beverage company reported net revenue growth of 15.2%, or 12.7% on a constant currency basis. Volume increased 11.2%, while price mix contributed 1.5%, Chief Financial Officer Marie-José David said. Foreign exchange provided a 2.5% tailwind.
Gross margin rose to 33.9%, up 140 basis points from the year-earlier period. David said the improvement reflected fixed-cost absorption, supply chain efficiencies, productivity gains and favorable product and channel mix, partially offset by inflation. Adjusted EBITDA was positive $0.4 million, improving by $4 million from the prior-year quarter.
Chief Executive Officer Jean-Christophe Flatin said the quarter capped “a very successful first half” and showed progress in building a more profitable growth model. He said volume growth and positive mix supported revenue momentum, while innovation continued to reinforce Oatly’s positioning as a broader beverage company.
Company Raises Revenue Outlook
Oatly now expects constant currency revenue growth of 8% to 10% for 2026, up from its prior outlook of 3% to 5%. David said the revised forecast implies a deceleration in year-over-year growth in the second half because of tougher comparisons.
On a reported basis, assuming recent foreign exchange rates remain unchanged, the company expects currency to add approximately 200 to 250 basis points to net sales, compared with its prior expectation for a 100 to 200 basis point benefit.
Oatly maintained its adjusted EBITDA outlook, saying it expects to deliver toward the low end of its existing $25 million to $35 million range. Management said the outlook includes the expected impact of higher costs related to the Middle East conflict, which remains consistent with the company’s April forecast.
Flatin said the company is absorbing cost pressure, mainly in logistics and areas such as packaging, while continuing to invest in growth. He said the conflict-related cost impact expected in the second half is broadly in line with what the company experienced in the second quarter.
Europe and International Lead Growth
Europe and International remained Oatly’s strongest region in the quarter, with constant currency revenue growth of 18%. Global President and Chief Operating Officer Daniel Ordoñez said the performance was driven by “very strong volume growth” and came on top of 9.4% volume growth in the prior-year quarter.
Ordoñez said Oatly is gaining share across markets as oat milk outgrows other plant-based milks. He highlighted both established markets and newer expansion markets, saying newer markets within Europe and International grew 82% year over year in the quarter.
Management credited the company’s “beverage playbook,” which focuses on new occasions, flavors and formats, with broadening the brand’s appeal beyond traditional plant-based milk consumers. Ordoñez said the company is seeing particular traction with younger consumers and pointed to flavored barista products, matcha offerings and cold foam as examples of innovation expanding usage occasions.
The company also highlighted brand-building events, including the “After Taste” event in New York, which Ordoñez said drew 250 food and beverage industry participants and generated more than 70 million media impressions. He also cited local activations in Mexico City and Amsterdam as examples of Oatly’s effort to build cultural relevance.
North America Shows Further Improvement
In North America, second-quarter constant currency revenue grew 5.9%, with volume up nearly 2%. David noted that this was the company’s second consecutive quarter of positive volume growth in North America after declines throughout 2025.
Ordoñez said the region’s performance exceeded the milk alternative category, which remains challenged by tight household financial conditions and what he described as saturation in protein-fortified products. He said Oatly reached near-record market shares in both oat milk and plant-based beverages in measured retail channels.
The company also said it has made progress reducing its reliance on a previously large food service customer. Ordoñez said the year-over-year sales headwind tied to that customer had “substantially ended” by the close of the second quarter, and that Oatly has diversified its out-of-home customer base.
On a like-for-like basis, Oatly’s go-forward food service portfolio grew 18% in the quarter, Ordoñez said. He added that the out-of-home channel now represents about one quarter of North America revenue.
During the question-and-answer portion of the call, Ordoñez said Oatly’s growth is being driven by both existing and new consumers, customers and markets. He said the company is gaining shelf share and improving velocities in North America, while also seeing new retail uptake outside traditional category reset periods.
China Review Remains Ongoing
Greater China constant currency revenue increased 5.6% in the second quarter, supported by retail growth that more than offset competition and weak macro conditions in the out-of-home channel. The segment reported negative adjusted EBITDA of $1.5 million.
Flatin said Oatly’s strategic review of China remains ongoing and is expected to be completed before the end of the year. He said the company is evaluating a range of options, including a potential carve-out, with the goal of accelerating growth and maximizing the value of the business.
Cash Flow Improves, But Full-Year Outflow Still Expected
Oatly reported free cash flow of negative $0.6 million in the second quarter, an improvement of $4.6 million from the prior-year period. David said the improvement reflected adjusted EBITDA growth, lower capital expenditures and benefits from working capital.
David reaffirmed that Oatly’s business plan remains fully funded and said the company remains focused on reaching positive free cash flow. However, she said Oatly does not expect positive free cash flow for full-year 2026 because of second-half seasonal factors, including higher inventories to support volume growth and capital expenditures.
The company left its full-year capital expenditure guidance unchanged at $20 million to $30 million.
About Oatly Group (NASDAQ:OTLY)
Oatly Group is a Sweden-based food and beverage company specializing in the development, production and sale of oat-derived dairy alternatives. The company’s product lineup includes oat-based drinks, ice cream, yogurts, spreads and cooking creams, all marketed under the Oatly brand name. By leveraging proprietary processing technology, Oatly extracts the nutritional benefits of oats—such as soluble fiber and plant protein—while delivering taste and texture profiles that closely mimic traditional dairy products.
Founded in 1994 as a spin-off from research at Lund University, Oatly initially focused on exploiting the health and functional benefits of oat beta-glucans.
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