Jones Soda Q3 2026 Earnings Call Transcript

Jones Soda (OTC:JSDA) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Jones Soda Co. reported a 204% increase in revenue to $13.7 million for Q3 2026, marking the strongest quarter in its history, with gross margins expanding to 34% and net income of $471,000.

The company reaffirmed its 2026 revenue outlook of over $45 million, reflecting more than 80% growth, and a positive adjusted EBITDA for the year.

Strategic initiatives include expanding the core business, launching innovative products, enhancing direct-to-consumer (D2C) sales with a redesigned website, and growing the Zero Sugar lineup.

The Fallout-branded products significantly contributed to sales growth, and the company plans to continue leveraging brand partnerships to expand distribution and consumer reach.

Jones Soda is focusing on three growth pillars: Beverage, Consumer Lifestyle, and Functional Health and Nutrition, with the latter being developed under the Jones Labs division.

Operating expenses increased due to higher selling and marketing costs, but as a percentage of revenue, total OPEX declined from 60% to 32% year-over-year.

The company plans to relaunch its D2C platform in January 2027 and is targeting an uplist to NYSE or Nasdaq in Q1 2027.

Jones Soda is discontinuing certain product lines, such as Spike Jones, due to poor market performance, emphasizing the need for strategic focus and efficient resource allocation.

Full Transcript

OPERATOR

Our comments today will concern future expectations, plans, and prospects of the Company that constitute forward-looking statements for 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 the forward-looking statements. Factors that could affect our actual results include, among others, those that are discussed under the heading Risk Factors in our most recent filed reports with the SEC, including our annual report on Form 10-K, our quarterly reports on Form 10-Q, and our current reports on Form 8-K. In addition, this call includes discussions of certain non-GAAP financial measures, including adjusted EBITDA. The 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 telephone replay will be available after the call through November 24, 2026, and 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 Jones Soda CEO Scott Harvey.

Scott Harvey (President and CEO)

Thank you, Sachi. Good morning, everyone. Thank you for joining us for our third quarter 2026 earnings call. Last quarter we told you we expected the third quarter to be the strongest in the company’s history and we delivered. Revenue increased 204% to a record 13.7 million. Gross margin expanded to 34% and we were profitable on both a GAAP and non-GAAP basis with net income from continuing operations of 471,000 and adjusted EBITDA of 869,000, a 1.77 million improvement over the third quarter last year.

Based on these results, we are affirming our full year 2026 outlook for revenue of more than 45 million, representing growth of more than 80%, and a positive adjusted EBITDA for the year. Put that into context: revenue was 17.8 million in 2024 and 25.3 million in 2025. When Brian and I arrived at the company in 2025, our focus was on stabilizing the business. We’ve implemented disciplined processes that help us evaluate and prioritize. We only pursue opportunities when the economics make sense while continuing to strengthen our balance sheet. 2026 has been about accelerating growth, expanding our core business, and launching innovative products, leveraging partnerships, and broadening our distribution.

The third quarter shows that work. The first strength was in our club channel, led by our Fallout-branded products. Demand for these products helped drive significant growth in the quarter, reflecting the strength of the partnerships and our ability to execute larger retail programs. As previously discussed, approximately 2 million in shipments originally planned for the second quarter were recognized in the third quarter. The second was our direct-to-consumer.

When we first arrived, it was generating approximately $100,000 in annual revenue. Last year annual revenue was approximately 1 million and this year we expect it to reach approximately 5 million. Our Fallout Rocket Bottles are a great example of the potential of our D2C channel. These numbered collectibles, priced at $50 each, have generated strong consumer demand. Our initial release sold out within a week and when we spoke at the LD Micro Conference in October, our Orange release had already surpassed 11,000 bottles sold.

We’re also investing in a redesigned website to enhance the shopping experience, introduce subscription offerings, and deepen our understanding of our consumers. These initiatives position us to build stronger customer relationships and further scale the D2C business. The question we hear most often is: what happens when Fallout falls out? It’s a fair question, so let me answer it directly. First, we still have two years left on our agreement with Bethesda and we will continue to do additional rotations. Second, Fallout has opened doors with retailers that would not have been possible a year ago. This month alone we are launching in more than 250 H‑E‑B stores in Texas with eight facings. This represents a significant retail milestone for our business and an important opportunity to increase the brand’s visibility and reach more consumers.

Third, we are building beyond any single franchise. We introduced our Zero Sugar lineup in club stores in Western Canada, creating an opportunity to win back consumers who had previously moved away from products due to the sugar content. Fallout has been an important catalyst for our business. Our strategy has never been about building Jones around a single partnership. It’s about using these opportunities to expand distribution, attract new consumers, and create lasting growth across the broader portfolio.

We celebrated our 30th anniversary with a limited-edition Crayola collaboration and we brought Fallout’s nuclear flavors to life with our exclusive Vault Dweller variety pack ahead of Fallout Day. We expect to have more to share on new partnerships by the end of this year or early next year. We can move faster and be more creative than the big guys and that is giving us a real niche. Further out, we’re building Jones around three growth cores: Beverage, Consumer Lifestyle, and Functional Health and Nutrition. We’ve established Jones Labs as our dedicated growth division for Functional Health and Nutrition. Through this division, we are developing a pipeline of new products designed to expand our addressable market and introduce us to new consumer categories. We’re targeting the first quarter of 2027 to begin testing several of these innovations with the goal of building a differentiated business that can contribute to long-term growth.

With that, I’ll turn the call over to Brian to review our third quarter financial results.

Brian Meadows (Chief Financial Officer)

Thank you, Scott, and good morning, everyone. Looking at the numbers for the third quarter, revenue increased by approximately 9.2 million, or 204%, to a record 13.7 million for the quarter, compared to 4.5 million last year. The increase was driven primarily by higher volume sales of our Fallout-branded products through our club retail channels, together with approximately 2 million in shipments that shifted from the second quarter to the third quarter, as we discussed in our previous call.

Gross profit increased by approximately 3.4 million to 4.7 million from 1.3 million in the prior-year quarter. More importantly, gross margin improved to 34.4% compared to 28.9% a year ago and 27.5% in the second quarter. This is an improvement of approximately 550 basis points year over year and 690 basis points sequentially. On our second quarter call, I spent time explaining the impact of higher freight costs and steps our operations team was taking to address them. As you may recall, we completed an RFP on our main freight lanes and obtained meaningful rate reductions. We’re pleased that those efforts, together with our operating scale and sales mix, contributed to the improvement in margins in the third quarter. This was achieved notwithstanding the wind-down of our higher-margin hemp-derived beverage business, or HD9.

We will continue to pursue opportunities to improve our cost of goods, including freight, packaging, co-man costs, cans, and bottles. We recognize that freight rates, product mix, and the timing of shipments will continue to influence quarterly margins. Turning to operating expenses, total operating expenses were approximately 4.3 million compared to 2.7 million in the third quarter of 2025. The 1.6 million increase was primarily attributable to higher selling and marketing costs, including broker fees and royalties associated with our significantly higher Fallout sales. Selling and marketing expense was approximately 2.3 million versus 1 million last year. Importantly, selling and marketing expense declined as a percentage of revenue to 17% of revenue versus 22.5% for the prior year.

General and administrative expenses were approximately 2 million compared to 1.7 million last year. Total OPEX as a percentage of revenue declined to approximately 32%, compared with approximately 60% in the prior-year quarter. These numbers demonstrate the operating leverage we’ve been working to build into Jones Soda. For the third quarter, we reported operating income of approximately $400,000, an improvement of approximately 1.8 million compared with an operating loss of 1.4 million a year ago. Net income from continuing operations was 471,000, or approximately $0.00 per share, compared to a net loss from continuing operations of approximately 1.4 million, or $0.01 per share, in the third quarter of 2025. Adjusted EBITDA from continuing operations, a non-GAAP financial measure that we use to supplement our assessment of operating performance, was a positive 869,000 for the quarter compared with a loss of 897,000 in the prior-year period.

That represents a year-over-year improvement of approximately 1.8 million. We view this as an important milestone. The business generated strong revenue growth while improving both gross margins and underlying operating profitability. Adjusted EBITDA is not a substitute for our GAAP results or cash flow, and the reconciliation is included in our earnings release. Looking at the nine months ended September 30, 2026, revenue was $36.3 million compared to $13.6 million in the prior period, an increase of approximately 167%. Gross profit increased to $11.4 million from $4.3 million. Gross margin for the nine-month period was approximately 31% compared to approximately 32% last year. Operating income improved by approximately $3.3 million to $228,000 compared with a loss of $3.1 million in the first nine months of 2025.

For the nine-month period, we reported a net loss from continuing operations of approximately $64,000 compared with net income of $132,000 in the prior period. It’s important to remember that last year’s results included a one-time $3.7 million gain on the disposition of our cannabis business. Adjusted EBITDA for the first nine months of 2026 was a positive 1.12 million compared with a loss of 2.65 million a year ago, an improvement of approximately 3.8 million.

I believe these comparisons better illustrate the progress we are making in our core continuing operations. Another way to look at the business is through operating leverage. As we increase volume and improve gross margin, a larger portion of incremental gross profit can flow through to operating income and adjusted EBITDA. Of course, sales mix, commissions, royalties, and customer shipment schedules will affect any individual quarter, but the improvement we are reporting in the third quarter demonstrates the value of the cost discipline and the commercial execution we have been focused on over the past 18 months.

Turning to the balance sheet and cash management, we ended September with approximately 4.4 million in cash, compared with 3.6 million at 12‑31‑25 and 2.4 million as of June 30. We completed two private placements during 2026 that strengthened our cash resources, and our revolving credit facility remains an important tool to support larger customer programs. The outstanding balance of our revolving credit facility and loans as of September 30th was 3.5 million.

Accounts receivable increased approximately 5.6 million from 3.6 million at year-end, including approximately 2 million related to our club business. The quality of our receivables aging remains strong. In the U.S., approximately 99% of receivables were current or within 30 days at the end of the third quarter, compared with 97% at the end of the second quarter. In Canada, the corresponding measure remained close to 100%. Our team continues to focus on timely collections as revenue scales.

Inventory increased to approximately 6.5 million from 2.7 million at the end of 2025. This increase is largely connected to the substantially greater volume of business and inventory built to service our club, retail, and direct-to-consumer programs. As of 9‑30‑26, inventory included approximately 2 million in club finished goods, 1.4 million of club core soda finished goods, and a half million dollars of our Rocket Bottle raw materials. We continue to monitor these investments carefully because revenue growth alone does not create cash until we turn inventory into sales and collect the related receivables.

I also want to highlight some of the work underway to improve our financial systems and controls. We’re implementing purchasing workflow automation with ERP-based requisitions, approval levels, and improved audit trails. We’re also testing standard costing functionality, which is intended to give us more timely inventory information and better analysis of purchase price and material usage variances. These are practical steps to improve efficiency, visibility, and controls as Jones becomes a significantly larger business.

System work remains in progress and we will continue to implement it carefully. Finally, turning to our full-year guidance, we are reaffirming our expectations for fiscal 2026 revenue in excess of $45 million, representing growth of more than 80% over 2025, and positive adjusted EBITDA for the full year. We are encouraged by the third quarter results while remaining disciplined about our costs, balance sheet, and working capital as we finish the year.

With that, I will turn the call back over to you, Scott.

Scott Harvey (President and CEO)

Thanks, Brian. As we look ahead, I want to leave you with a few thoughts about the progress we’ve made and, more importantly, where we’re taking Jones Soda. When Brian and I joined Jones in 2025, our first priority was to stabilize the business. We needed to strengthen the financial foundation, establish greater discipline, and put processes and leadership in place to support substantial growth. In 2026, our focus shifted to accelerating that growth.

We expanded distribution, strengthened our core beverage business, introduced new products, and demonstrated the value of our branded collaboration strategy. Just as importantly, we’ve continued improving the financial performance of the company. The results we’re reporting reflect that progress. While we still have a lot of work ahead of us, we’re building a fundamentally stronger business than the one we started with. As we move towards 2027, our focus is shifting to the next phase: scaling the business through three distinct, complementary growth pillars. The first is our core beverage. Jones Soda remains the foundation of our company. We see continued opportunities to expand distribution, strengthen our retail relationships, and build on the brand loyalty that has defined Jones for more than three decades. The introduction of Zero Sugar gives us an avenue to reach consumers whose preferences are changing while staying true to the bold flavors and the creativity that makes Jones unique.

The second is consumer lifestyle. Our partnerships with Fallout, Crayola, and Folds of Honor demonstrate we’re extending Jones beyond traditional beverage occasions and connecting with consumers through entertainment, culture, and recognizable brands. We’re continuing to develop a pipeline of new partnerships and licensing opportunities across multiple consumer categories. While we’re not ready to announce those initiatives today, we believe this approach can create repeatable growth opportunities by introducing Jones to new audiences and expanding how consumers engage with our brand.

Our focus is on building partnerships that leverage the strength of the Jones brand, introduce us to new consumers, and create opportunities for incremental revenue without requiring significant investment or additional infrastructure. An important part of this pillar is our direct-to-consumer business. We’ve made significant progress growing this channel, and we’re continuing to invest in the systems, customer experience, and capabilities needed to support the next phase of growth. We’re targeting January 2027 for the relaunch of our direct-to-consumer platform, with a focus on improving the shopping experience, increasing customer retention and repeat business, and creating a more scalable and efficient digital business.

These capabilities will also support future brands within our portfolio, allowing us to leverage common infrastructure while maintaining distinct brand identities and consumer experiences. We believe this investment will strengthen our ability to engage with consumers, improve the economics of the channel, and create another meaningful opportunity for long-term growth. Our third pillar is functional health and nutrition. We’ve established Jones Labs as our dedicated division to develop and grow this part of our business. Through Jones Labs, we’ll pursue new product innovation and opportunities in functional health and nutrition, expanding our reach beyond traditional craft sodas into categories where we see significant long-term growth potential. We see a significant opportunity to apply our brand-building experience, product development capabilities, and entrepreneurial approach to a category where consumers are increasingly looking for products that deliver more than great taste.

We’re already advancing a pipeline of new functional health and nutrition innovations, with initial product testing expected to begin in the first quarter of 2027. These initiatives are designed to address evolving consumer needs, reach new audiences, and create additional opportunities for long-term growth. What excites us about Jones Labs is the opportunity to build a differentiated business in a category where we see significant long-term potential.

We’re approaching this category with the same creativity that has always defined Jones, combined with a disciplined approach to testing, investment, and commercialization. Our goal is clear: establish Jones Labs as a meaningful contributor to our future growth and profitability. What makes these three pillars particularly compelling is that they share a common operating foundation. Rather than building three separate businesses with three separate cost structures, our strategy is to leverage the infrastructure, relationships, and capabilities we’ve established across Jones to support growth while maintaining discipline around cost and capital investments. This approach allows us to pursue multiple opportunities for growth without adding costs at the same rate.

Just as importantly, it requires us to make deliberate decisions about where we invest our resources and where we believe we can generate the strongest returns. We’ve demonstrated that we’re willing to make those difficult decisions when the facts change or when the investment isn’t delivering the returns we expect. Our decision to exit HD9 and Modern Soda reflects that commitment. We’re focused on allocating resources to opportunities where we believe we can generate substantial growth and long-term shareholder value.

When we look at where Jones was at the beginning of 2025 and where we stand today, the progress is meaningful. We’ve moved from stabilizing the business to accelerating growth, and we are now establishing platforms we believe can support the next stage of development. We’re certainly not declaring victory. We know there’s more work to do, but we have a clearer strategy, a stronger operating foundation, and multiple opportunities to create value as we move into 2027 and beyond.

As we pursue those opportunities, we remain laser-focused on cost control, financial discipline, and generating stronger cash flow. We’re not pursuing growth for the sake of growth. Every investment needs to support our objective of building a stronger, more profitable company and creating long-term shareholder value. To our shareholders, thank you for your continued confidence and support. We recognize the responsibility that comes with your investment, and we’re committed to earning that trust through continued execution. Finally, I want to recognize the Jones Village. The past year has required us to move faster, think differently, and make some difficult decisions. Through it all, our team has continued to step up, embrace change, and deliver results. What excites me most isn’t just what we’ve accomplished, but what the team is capable of building together.

I’m proud to be part of the Village and even more excited about where we are headed. With that, we’ll wrap up this call by addressing some of the questions submitted live by the shareholders through our webcast chat.

Brian Meadows (Chief Financial Officer)

Yeah, I’ll start with the first question: when will you reintroduce PB&J soda? Yeah, so interesting. I mean, the great news is that there are new developments with some of our old fan favorites in the works. And I think as you follow along with us over the next, you know, 30, 60 days into the beginning of January, we’re going to come out with some additional announcements about new partnerships that we’re working on, which I think will answer that question, as well as give you some insights as to things that we have been working on since the second quarter to build those partnerships, which we said are critical for the growth going forward.

Next question is, as revenue continues to grow, what kind of EBITDA margins do you think are realistic for ’27? How much more profitable can the business become as it scales? There’s another question about what are our expectations for revenues in ’27? So I’ll just comment. Generally, we aren’t putting out an outlook for ’27 today. We will, at a future point, once we get the board to agree, put out updated guidance for ’27. I think this year we did put it out early in ’26, so I think you could realistically expect something early in ’27 where we can announce our outlook plans.

So stay tuned. But obviously Scott and I are excited about what ’27 is going to bring. There’s also a number of questions about the uplist plans, so I’ll also address that in this answer here, generally asking are we on track for the uplist in ’27 and what’s left to get it done? I think, as everybody might be aware, we did file an updated S-1 earlier this year. Our plan is to update that S-1 in the next several weeks, get that filed with the SEC before the end of this year for a possible uplisting in 1Q27. We are targeting either NYSE or Nasdaq.

So we do feel we’re very much on track with that and we want to obviously update the S-1 with these results. Scott, there was another question about we’ve been hearing about the new website for a while. When is it scheduled to be launched?

Scott Harvey (President and CEO)

Yeah. So I addressed a bit of it in the announcement that we just talked about, but we are on track to launch in January. It’s taken some time and again, it’s about improving the experience as well as the conversion rates. And as you all know, looking at our website, it needed some improvement, needed some work. So we’ve been working on it starting at the beginning of the quarter and it’s taking some time to get it to where we want. But I think when we relaunch, it will be a much better experience for consumers coming in as well as making sure that we’re carrying them all the way through to the checkout.

So we’re benchmarking against metrics where we knew we weren’t being successful on there, and we’re building that into part of the rebuild of the website. But we are on track to launch it in January of 2027. Next question is about what is the plan of rolling out our zero sodas? Yeah. So zero sodas, again, part of the deployment into H-E-B will have zeros. We’re seeing zeros pop up on more store shelves as we expand our distribution. And as we start to report and make announcements upcoming, you’ll see more and more of those on different opportunities that are in front of us as we begin to lock down developments and distribution for 2027. But I still think it’s a key part of our strategy we’re developing.

Anytime we develop a product now, whether it’s a new flavor or new innovation, we do it in tandem: the core full sugar as well as the zero. So anytime that any product’s developed, it will always have two sides to it, the full sugar and the zero. Because, again, I’ve always believed and still believe it is a cornerstone for us to continue to engage lapsed users of Jones and new users. And as we’ve been out in a couple of these investor meetings that Brian and I have attended, when we talk about that, people are excited about it, that we’re going back and looking at it, and they’ve been fans of Jones for years, and they get excited that now I’ve got to go out and find the zeros because now I can come back and enjoy those unique flavors of what Jones has been able to produce over the years. So you will start to see more and more of those coming out, and more of our customers that we talk to are showing greater interest in bringing those products in.

Brian Meadows (Chief Financial Officer)

Next one is, where do you think gross margins can realistically get as the business grows? Are certain products or sales channels significantly more profitable than others? I’ll take that one. We’re very happy with the rebound in margins from second quarter to third quarter. First off, the impact of oil price second quarter, that was not fun. But 34% was a real achievement for us. What can affect that? As we build our direct-to-consumer business, which is a strategic pillar that Scott is very much driving within the business, that is significantly higher gross margins than, say, our club business or our retailer business.

So as that becomes a more meaningful part of the quarterly numbers, that is going to drag the overall average upwards. On top of that, we are continually looking at our COGS, all levers, as we build volume, and club’s been great for that, driving volume. We’re able to knock down core component costs, whether it’s packaging, bottling, co-man, pretty much across the board. We have leverage with our suppliers. So that’s going to also impact positively our margins.

So realistically, where can those go? We think upper 30s is a real realistic target. And where it goes beyond that, we’ll continue to see can we get it into the 40s. There was a question, Scott. Where do things stand with Spike Jones? What do you expect of that product line in ’27?

Scott Harvey (President and CEO)

Yeah, and those are. That’s another one of those decisions that we had had to make, that it’s not going to continue just due to velocities and consumer acceptance. And I think those are some of those decisions that, when we go through and we evaluate the business channels and the performance of the product lines, we’re just not going to throw money at it when the product’s not moving and/or we’re competing against larger entities where we don’t have the pockets to do so.

So that was a decision that we made to discontinue that product. So I don’t believe it’s out in the market any longer. But it is not something that we continue to pursue today. It doesn’t mean that it’s not something we will get back into as we look at the innovation and looking at how the product is formulated and what shape or form it should go in. It will still be something that we will look at. But to continue Spike Jones in the manner that it was, it wasn’t very effective for us at that time, at this time as well.

The question is, as Jones Soda grows and gets into more major retailers, have you seen increased interest from larger beverage companies in strategic partnerships or potentially acquiring the business? So, you know, strategic partnerships, and I think we’ll attach that to some of the Crayolas and the Fallouts. Absolutely. And like I said, we will be coming out with some news as soon as we’re prepared to do so. But phone calls from larger customers are happening, and it’s, for Brian and I and the team, super exciting to have these opportunities to get into some of these larger venues.

And as I said, we’ll have some more information coming out, you know, forthright, as we lock up those deals and execute those agreements with them. So what we’ve done has given us the ability and being recognized by other larger partnerships for us to go ahead and do some innovation with them. Larger beverage companies, not so much. We haven’t had people call and say, hey, look, we’d like to do some of these things from the larger beverage perspective.

But from companies that are looking for partnerships and to be able to help promote their products and do things like we did for Fallout, we’ve gotten quite a few phone calls of those, and we’re pursuing those because, as we’ve said, we have to continue to build that pipeline. We think that the partnership piece for us is super strategic. We think we do it really well. We can do it fast, we can get to market, and our teams are super creative. And I think if you’ve seen what we’ve outlaid with Fallout and some of the other ones, we’re really creative and we can create products that are compelling to consumers.

So we believe that is, again, part of the pillar of that consumer lifestyle, these brand and licensed branded products. So, again, more to come on that. We’ll be super excited to be able to share more as that continues on.

Brian Meadows (Chief Financial Officer)

I’ll just add to that. We’re extremely busy in many partnership opportunities. We’re evaluating many. We’re just trying to pick the best ones that are going to drive meaningful revenue and margin. So I guess we’re quite fortunate. How well Fallout went, that really reverberated across the industry and I noticed by a

Scott Harvey (President and CEO)

A lot of people, Scott, there are questions about Pop Jones. Any update on Pop Jones? It’s the same as the Spike Jones. So we’ve exited that because I think I addressed it on the last conference call. There are like five major players in there and about 15 ponies, and we were one of the ponies and we couldn’t keep up with the horses. So what we saw was diminished velocities, and we were getting drops from shelves just because of everybody competing for that space.

So that is another one of those categories where we actually exited that segment of the business. Okay, lastly, there’s a question about could we get some examples of what’s the function of examples in the functional health pipeline? Yeah, great question. So, you know, probably some of you, it will be the first time that you’re hearing about this. So as we started to talk about those three pillars, the core beverage, the consumer lifestyle, functional health and nutrition.

So when you think about functional health and nutrition and where the population stands today, we look at it as, hey, there’s almost one third of the U.S. population that today does or does not know that they’re either pre-diabetic, diabetic, or not — almost one third, which is a very significant number of citizens in North America that are either aware or unaware. So that opens up a market for different types of product. When you start thinking about that from a metabolic health or a GLP-1 support.

So we’re looking at products that do, you know, support either a metabolic health thing. It could be a GLP-1 support, not necessarily a med. But when you look at whether it’s a supplement or a drink that we can produce, that would help bolster those pieces, as well as the other things that we were looking at is performance. Nutrition is a very big thing today as well, and gut health and healthy aging. So there are products that we have in development that we will begin to test in Q1, and they’re not just things that we’ve created in the lab.

I mean, there is substantial documentation and actually some clinicals going on with products that we’re going to go out into the test market, which have proven very effective in the clinicals that have been done with this product that we are super excited about. And again, we’ll be starting testing at the beginning of the year. And that’s just one of them. But we have a couple other ones that we are actively looking at. But I believe that this actually helps shore up our business so that, again, we’re not just a core beverage or some partnerships or a club. We have another leg to our stool that helps support it. And again, if you look at the core and then you got the consumer and the functional health and nutrition, we’ve completed our three legs of the stool, and it could actually, as I said, operate independently, but under the same infrastructure. So we’re not having to build a business under a business under a business, but super excited about functional health and nutrition.

I think as you look at past and past history of consumers, where we started talking about whether it was gluten-free or whether it was Atkins — those are fads. And I firmly believe that when you start thinking about metabolic health, GLP-1 support, performance nutrition, gut health — it’s not a fad, it’s here to stay. And we hear more and more about it every day, whether it’s on the Internet or on commercials, that it’s becoming more and more a part of people’s daily life and habits.

I think that the products that we’re looking at will help support those. And it gives us an opportunity to continue to grow Jones under that Jones Labs division that we’re standing up.

Brian Meadows (Chief Financial Officer)

You don’t mind, Scott? I’ll add a few other things here. It’s been quite remarkable, the turnaround in the core business. You know, we’ve seen tremendous growth in the core craft soda part of our business. It’s really a declining market. You know, I think everybody, most of the other major craft soda brands, are in decline, whereas we’re having the opposite. You know, Scott’s focus on zeros is, I think, a stroke of genius because we’ve discovered so many former Jones Soda drinkers who just don’t want the sugar anymore.

Right. So this market moving into functional health, less sugar — Jones has to be there. We tried in Pop Jones, but we were too late. I think that is what Scott concluded — it became a me too. So now, with Scott’s strategy on functional health, we’re looking at how do we differentiate ourselves, become leaders, and capture meaningful market share. So we’ve got a very strong core business now. It’s going to grow further with zeros. And then the lifestyle and the functional health is going to really help drive the top line over the next few years.

Back to you, Scott.

Scott Harvey (President and CEO)

Yeah, and I would just say there’s one other question here. Flavors like cold and lentil are no longer available. Are these discontinued? How does this affect your restaurant business? You know, I think every business goes through SKU rationalization, and we’re doing some of that. You know, some flavors move better than others, but if we’re carrying flavors that don’t move, they’re inventory sitting on shelf and cash that we could be using someplace else in the business.

So we’re super critical about product velocities and, you know, it’s PMIX — product mix — what’s moving fast, what’s not. And again, we may discontinue products just simply because there’s no demand for it. So does that hamper the business? No, because of the new innovation that we have coming out and new flavors when we start to test in the marketplaces to what consumers are looking for. So I think it’s a constant evolution of going back and looking at what your product mix looks like, the items that you have, what’s making it, what’s not making it. And if we test something, it doesn’t automatically mean that it’s here forever. I always say it’s got to earn its right.

It’s got to earn its place on a shelf, and it earns its way through velocities and consumer demand. So we will go through and continue to be critical about what happens in our product lineups across all of the channels. If it’s moving, great. If it’s not, then we will make those decisions to discontinue and reshift distribution to some of the other flavors that we have out there. I think, Brian, I think that takes care of the questions that we have. So, Brian, we certainly like to thank everyone for taking the time today. It’s been an exciting quarter for us. We look forward to what — you know, we’re in the fourth quarter here, and we’re even more excited about what 2027 looks like us going forward. And we’ll be even more excited to announce some of the things that we have going on once we get them all locked down and be able to share with you.

And again, we’d like to thank everyone again for taking your time to listen to us today. Also like to thank you for the ongoing support of the brand. And we certainly welcome any further questions or taking any calls going forward. And if there is, please direct any of those inquiries to our investor relations team at team@haydenir.com, and it’s james@haydenir.com, and we’ll make sure that we get it addressed or set up that call. So certainly look forward to speaking to you all again when we report our fourth quarter and our full year results.

And follow us along because we will make some announcements as some of these things that we’ve got working on lock down and be able to share with you. So with that, we’ll conclude the call, and Sachi, I’ll turn it back to you.

OPERATOR

Thank you. Ladies and gentlemen, this concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

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