Monster Beverage Q3 Earnings Call Highlights

Key Points

• Third-quarter net sales rose 16.7% to $2.56 billion, led by 28.1% growth in international sales. Operating income increased 6.4% and diluted EPS rose to $0.29.
• Gross margin fell to 54.7% from 55.7% as higher costs and faster growth in lower-margin international markets weighed on results. Management expects international mix to remain a margin headwind, while pursuing efficiencies and price increases.
• Monster raised U.S. prices effective Nov. 1 and plans a phased product rollout in 2027. It repurchased 2.3 million shares for about $100 million in Q3, with roughly $800 million remaining under authorized buyback programs.

Monster Beverage NASDAQ: MNST reported a 16.7% increase in third-quarter net sales as international growth outpaced its domestic business, while higher costs and a shift in geographic sales mix weighed on gross margin.

Net sales rose to $2.56 billion from $2.20 billion a year earlier. Sales to customers outside the United States increased 28.1% to $1.20 billion, accounting for about 47% of the total, up from approximately 43% in the prior-year quarter.

“We had solid sales growth across all of our geographic regions, especially outside the United States in the quarter,” Vice Chairman and CEO Hilton Schlosberg said on the earnings call. He added that the company gained market share in many countries.

Sales Growth Outpaces Profit Gains

Sales in the Monster Energy drink segment rose 17.1% to $2.37 billion, while strategic brand sales increased 19.8% to $156.4 million. Alcohol brand sales fell 13.6% to $28.5 million.

Operating income increased 6.4% to $718.7 million, and diluted earnings per share rose to $0.29 from $0.27. Adjusted diluted earnings per share were $0.30, compared with $0.28 a year earlier.

Gross profit margin declined to 54.7% from 55.7%. Schlosberg said higher aluminum can and freight costs contributed to the decline, but geographic sales mix was a significant factor as lower-margin international markets grew faster. Pricing actions largely offset higher aluminum and other input costs from a gross margin percentage perspective, he said.

Schlosberg said aluminum and tariff effects were modest during the quarter, but the company expects a continued modest sequential increase in aluminum costs through at least the first quarter of 2027. Monster does not believe current tariffs will materially affect its operating results, he said, while noting that the tariff environment remains complicated and dynamic.

Asked about the margin outlook, Schlosberg declined to provide guidance. He said growing international sales would continue to weigh on the companywide gross margin percentage, although Monster is pursuing efficiencies and price increases. Zero-sugar products also carry higher margins than full-sugar products, he said.

International Markets Lead Growth

Third-quarter sales in Europe, the Middle East and Africa rose 24.9% in dollars, while Latin America and the Caribbean grew 48.8%. Asia-Pacific sales increased 12.3%, and U.S. and Canadian sales rose 9.5%.

Brazilian sales increased 70% in dollars, while China sales grew 43.8%. In India, sales rose 67.2% in dollars, despite the impact of regulatory orders issued in June and July directing industry members to stop using the description “energy drinks” on caffeinated beverages.

Schlosberg said Monster challenged the orders in the High Court of Delhi, which granted interim relief in October permitting sales of existing energy drink-labeled stock and use of existing can and bottle inventory. The matter remains pending, but the decision allowed Monster to resume production and distribution in accordance with the court’s order, he said.

In EMEA, CEO Guy Carling said the company’s partnership with Coca-Cola bottlers is helping expand product availability, retailer assortments and branded cooler placements. Carling also pointed to foodservice as an opportunity, saying 31% of European consumers drink energy beverages with food on an ongoing basis.

Pricing and Product Plans

Monster implemented U.S. pricing adjustments effective Nov. 1 through price increases and/or reductions in promotional allowances, depending on the package and channel. Schlosberg said the company anticipates a minimal effect on volumes. It also raised prices in certain EMEA markets during the third quarter and proposed increases in other markets in the fourth quarter.

The company plans a phased rollout of new products in 2027, including Monster Ultra Aloha POG and REIGN Dirty Soda in January, followed by offerings across the Juice Monster, Rehab and Bang brands in February. Monster Protein is scheduled to launch in chocolate and vanilla flavors in March.

Schlosberg said the company may have introduced too many products in 2026 and intends to phase innovation more effectively next year. “We regard 2027 innovation as quality over quantity,” he said.

Monster estimated that October sales, including alcohol brands, rose 11.1% before currency adjustments from a year earlier. October had one fewer selling day than the prior-year month, and Schlosberg cautioned that a single month’s sales should not be regarded as indicative of a full quarter or future period.

The company repurchased 2.3 million shares for approximately $100 million during the third quarter. About $800 million remained available under previously authorized repurchase programs as of Nov. 4.

The call was the last for Rob Gehring, CEO of the Americas, who is leaving for a role at The Coca-Cola Company. Gehring said Monster sees an “immense opportunity” to expand sales through foodservice and other out-of-home occasions.

About Monster Beverage (NASDAQ:MNST)

Monster Beverage Corporation is a global beverage company focused primarily on the development, marketing, sale and distribution of energy drinks. Its portfolio includes the flagship Monster Energy brand, along with products marketed under brands such as NOS, Full Throttle, Reign, Burn and Mother. The company offers a range of energy drinks in different flavors and formulations, including products positioned for performance, fitness and everyday consumption.

The company traces its origins to Hansen Natural Corporation, which was founded in 1935 and changed its name to Monster Beverage Corporation in 2012 as the Monster Energy brand became increasingly central to its business.

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