What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-18 compared with 2025-02-26 · 119 added, 117 removed, 290 unchanged (45% of the section changed)

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Our branded portfolio is led by our Vita Coco brand, which is the leader in the coconut water category in the U.S., and also includes coconut oil, juice, and milk offerings.

Our other brands include Ever & Ever , a sustainably packaged water, and PWR LIFT , a protein-infused fitness drink.

We also previously offered Runa , a plant-based energy drink inspired by the guayusa plant native to Ecuador, which we ceased selling in December 2023.

We supply private label products to key retailers in both the coconut water and coconut oil categories.

Additionally, we generate revenue from bulk product sales to beverage and food companies.

We source our coconut water from a diversified global network of 17 factories across seven countries supported by thousands of coconut farmers.

As we do not own any of these factories, our supply chain is a fixed asset-lite model designed to better react to changes in the market or consumer preferences.

We also work with co-packers across four countries to support local packaging and repacking of our products and to better service our customers’ needs.

Vita Coco is available in over 35 countries, with our primary markets in North America, the U.K., and Germany.

Our portfolio also includes PWR LIFT , a protein-infused fitness drink.

We also previously offered Runa , a plant-based energy drink inspired by the guayusa plant native to Ecuador, which we ceased selling in December 2023 and impaired all remaining assets in September 2025.

Additionally, we supply Private Label products to key retailers in both the coconut water and coconut oil categories and generate revenue from bulk product sales to beverage and food companies.

We source our coconut water from a diversified global network of approximately 16 factories across six countries supported by thousands of coconut farmers.

As we do not own any of these factories, our supply chain is a fixed asset-lite

model designed to better react to changes in the market or consumer preferences.

We also work with co-packers to support local packaging and repacking of our products and to better service our customers’ needs.

Vita Coco is available in over 35 countries, with our primary markets in North America, the United Kingdom, and Germany.

Our primary markets for Private Label are North America and Europe.

Our products are distributed primarily through club, food, drug, mass, convenience, e-commerce, and foodservice channels.

Our products are distributed primarily through club, food, drug, mass, convenience, e-commerce, and food service channels.

Our products are also available in a variety of on-premise locations such as corporate offices, fitness clubs, airports, and educational institutions.

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Inflation rates and foreign exchange rate movements varies by country and relevant period, and can impact our expenses significantly.

We experienced significant inflation and instability on transportation costs over the past three years, which affected our costs and margins significantly.

Although we saw these transportation costs return to near pre-pandemic levels in the middle of 2023, in 2024, we saw significant cost increases and supply constraints caused by recent geopolitical disruption.

We expect instability in pricing to continue caused by recent geopolitical disruption of shipping lanes due to ocean carriers avoiding the Gulf of Aden and Red Sea regions due primarily to concerns that Houthi forces, based in Yemen, may attack freighters.

We experienced spot cost increases for ocean freight routes from Asia, and then more significant cost increases when carriers began to route away from the Suez Canal.

As a result, beginning in the late spring of 2024 and for most of the summer, we were challenged to secure the ocean container capacity that we needed.

In early October 2024, the east coast ports of the U.S.

experienced a labor strike that temporarily shut those ports, resulting in some delays even after the ports reopened.

While a deal has been announced to enter into a new labor agreement, and no port disruption is expected, it is unclear if a final agreement has been ratified, so some disruption risk remains.

When disruptions like port strikes are anticipated, the ocean freight carriers may issue notices of impending surcharges to be applied if the disruption occurs, which creates uncertainty as to our actual expected costs.

The changes in shipping container prices and service levels and cost increases in shipping and port congestion related costs have materially impacted our financial results in recent years.

Throughout 2025, we faced evolving tariff pressures, beginning with the implementation of a 10% baseline U.S.

tariff and country specific rates.

This was followed by reciprocal tariffs announced in August 2025 of approximately 20% for Asian countries from which we source, and incremental tariffs that raised the effective rate to 50% for Brazil.

Imports from Mexico and Canada remained exempt under the United States-Mexico-Canada Agreement ("USMCA").

At the end of the third quarter of 2025, we estimated our weighted average tariff rate was 23% based on third quarter sourcing, and continued our attempts to mitigate.

On November 14, 2025, the White House announced relief from the reciprocal tariffs for certain agricultural products, which included the tariff codes applicable to coconut water products, which are the bulk of our portfolio, and on November 21, 2025, a waiver on the incremental tariffs on coconut water from Brazil was announced.

These November announcements significantly reduced the tariff burden on our importation of our coconut water products post November 21, 2025, although miscellaneous tariffs remain.

The various tariff rates resulted in $16 million of tariffs paid in 2025.

We also experienced significant inflation and instability on transportation costs over the past four years, which affected our costs and margins significantly.

Although we saw these transportation costs return to near pre-pandemic levels in the middle of 2023, in 2024, we saw significant cost increases and supply constraints caused by geopolitical disruption.

We experienced instability in pricing and increased transit times, due to ocean carriers avoiding the Gulf of Aden and Red Sea regions due primarily to concerns that Houthi forces, based in Yemen, may attack freighters.

Beginning in the late spring of 2024 and for most of that summer, we were challenged to secure the ocean container capacity that we needed.

During 2025, we saw periodic cost surges on ocean freight costs that were unexpected, although generally through the year saw a decline in rates ending the year closer to pre-pandemic levels.

The changes in shipping container prices and service levels and cost increases in shipping and port congestion related costs have materially impacted our financial results in recent years and may do so in the future.

Due to the price sensitivity of our products, we may not be able to pass such increases on to our customers without impacting our volume, revenue, margins, and operating results and we have no certainty when these pressures may lessen.

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Coconut water accounted for 96% of our revenue for the year ended December 31, 2025 and we believe that sales of coconut water will continue to be a significant portion of our business in the foreseeable future.

The coconut water category has been growing steadily in recent years and our Vita Coco brand has successfully retained over 40% market share in the U.S.

The coconut water

category has been growing steadily in recent years and our Vita Coco brand has successfully retained over 40% market share in the U.S.

and over 80% market share in the U.K.

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In order to meet this consumer demand for our products, we also are subject to the risk of overly relying upon our largest customers for both our branded and Private Label business.

For example, in 2023, we started the discontinuation of the private label coconut water and coconut oil supply relationship with one of our significant customers as the terms required to retain the business were contrary to our long term margin targets.

While we continued the supply relationship for a significant portion of their private label coconut water needs in 2024 at the customer's request, we are expecting the loss of

further regions that we serviced for this customer during 2024.

One of our significant customers discontinued the Private Label coconut oil supply relationship in early 2024, and we also experienced an impact in Private Label coconut water net sales in 2025 with this customer due to the loss of some regions that we previously serviced for this customer.

However, this customer has requested to restart supply in early 2026 for one of those lost regions.

We will continue to service their needs if we are asked and it aligns with our long-term margin targets.

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Our innovation efforts focus on developing and marketing product extensions, improving upon the quality and taste profiles of existing products, and introducing new products or brands to meet evolving consumer needs.

For example, in 2024 we introduced Vita Coco Treats, a refreshingly sweet, flavorful coconutmilk-based drink for consumers looking for an indulgent treat.

In 2025, we intend to expand distribution of Vita Coco Treats to select retailers nationwide.

For example, in 2024 we introduced Vita Coco Treats, a refreshingly sweet, flavorful coconut milk-based drink for consumers looking for an indulgent treat.

In 2025, we expanded distribution of Vita Coco Treats to retailers nationwide.

We maintain in-house research and development capabilities as well as strong third-party relationships with flavor development houses, and we monitor the latest advancements to support continued innovation and learning.

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Our DSD network is an important asset in executing physical retail programs and ensuring product availability and visibility in the U.S.

In 2024, we offered more multi-packs in coconut water in U.S.

In 2025, we continued to prioritize multi-packs in coconut water in U.S.

retail to increase consumption with core consumers, and increased distribution of our other product offerings.

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Cost of Goods Sold

Cost of goods sold includes the costs of the products sold to customers, inbound and outbound shipping and handling costs, freight and duties, shipping and packaging supplies, and warehouse fulfillment costs.

Cost of goods sold includes the costs of the products sold to customers, inbound and outbound shipping and handling costs, freight and duties (including tariffs), shipping and packaging supplies, and warehouse fulfillment costs.

Gross Profit and Gross Margin

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• Americas —The Americas segment is comprised of our operations in the Americas region, primarily in the U.S.

• International —The International segment is comprised of our operations primarily in Europe, the Middle East, and the Asia Pacific regions.

• International —The International segment is comprised of our operations primarily in Europe, the Middle East, and the Asia Pacific regions, which includes our sourcing entity.

Each segment derives its revenues from the following product categories:

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Since there is no alternative use for these products and the Company has the right to payment for performance completed to date, the Company recognizes the revenue for the production of these Private Label products over time as the production for open purchase orders occurs, which may be prior to any shipment.

• Other— This product category consists of all other products, which included Runa (until we ceased selling it in December 2023) , and includes Ever & Ever and PWR LIFT product offerings, Vita Coco product extensions beyond coconut water, coconut milk products, and other revenue transactions (e.g., bulk product sales).

For these products, control is transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue.

• Other— This product category includes Vita Coco product extensions beyond coconut water, such as coconut milk products, including Vita Coco Treats;

Runa (until the Company ceased selling in December 2023);

Vita Coco coconut oil sold internationally;

and other revenue transactions (e.g., bulk product sales).

For these products, control is transferred upon customer receipt, at which point we recognize the transaction price for the product as revenue.

Results of Operations

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Other income (expense):

Unrealized gain (loss) on derivative instrument (8,176) (872) (7,304) n/m

Foreign currency gain (loss) (1,571) (251) (1,320) n/m

Interest income 6,715 2,581 4,134 160.2 %

Interest expense — (31) 31 n/m

Unrealized gain (loss) on derivative instrument 4,737 (8,176) 12,913 (157.9 %)

Foreign currency loss

(1,037) (1,571) 534 (34.0 %)

Interest income, net

6,548 6,715 (167) (2.5 %)

191 — 191 n/m

Total other income (expense)

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Total net sales $ 609,780 $ 516,013 $ 93,767 18.2 %

The increase in net sales was driven by higher coconut water CE volumes across both the Americas and International segments, including Vita Coco Coconut Water volume growth of 5.8% and improved Vita Coco Coconut Water pricing due to reduced retailer promotional activity, partially offset by the transition of private label oil business.

The increase in net sales was driven by higher coconut water CE volumes across both the Americas and International segments, including Vita Coco Coconut Water volume growth of 21.3% and increased Vita Coco Coconut Water pricing, partially offset by reduced Private Label water volume due to lost regions with key retailers.

Volume in Case Equivalent

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Americas Segment

Americas net sales increased by $12.1 million, or 2.8%, to $442.3 million for the year ended December 31, 2024, from $430.2 million for the year ended December 31, 2023, primarily driven by CE volume growth of 2.7% with additional benefit from branded pricing.

These increases were partially offset by a decline in private label volume due to the transition out of private label oil at a key customer, and supply constraints impacting private label coconut water.

Vita Coco Coconut Water net sales increased by $26.1 million, or 8.2%, to $343.3 million for the year ended December 31, 2024, from $317.2 million for the year ended December 31, 2023.

The increase was primarily driven by a combination of increased CE volume growth and benefits from pricing actions.

Private Label net sales decreased by $13.3 million, or 12.9%, to $89.9 million for the year ended December 31, 2024, from $103.2 million for the year ended December 31, 2023.

The decrease in sales was driven by net CE volume declines of 1.9%, as volume declines of private label coconut oil and the associated product price/mix impact more than offset growth of private label coconut water.

Net Sales for Other products decreased by $0.7 million, or 7.1%, to $9.2 million for the year ended December 31, 2024, from $9.9 million for the year ended December 31, 2023, driven by CE volume decline of 10.4%.

During 2024, the Company strategically simplified the product assortment within this category to decrease complexity and maximize profitability.

Americas net sales increased $66.4 million, or 15.0%, primarily driven by CE volume growth of 11.2% with additional benefit from branded pricing.

These increases were partially offset by a decline in Private Label sales in certain regions of key retailers.

Vita Coco Coconut Water net sales increased $81.0 million, or 23.6%, reflecting a combination of increased CE volume growth and benefits from net pricing actions.

Private Label net sales decreased $27.2 million, or 30.2%, driven by CE volume decline of 26.4%, due to lost regions with key retailers.

Net Sales for Other products increased $12.6 million, or 137.3%, driven by CE volume increase of 178.2% as Vita Coco Treats launched nationally.

International Segment

International net sales increased by $10.3 million, or 16.3%, to $73.7 million for the year ended December 31, 2024 from $63.4 million for the year ended December 31, 2023.

The increased sales were driven by CE volume growth of 12.8%, with notable growth in the Europe, the Middle East and Africa ("EMEA") region, in addition to benefits from net pricing actions.

Vita Coco Coconut Water net sales increased by $8.5 million, or 20.3%, to $50.3 million for the year ended December 31, 2024, from $41.8 million for the year ended December 31, 2023.

The increased sales was driven by higher CE volume, primarily in the European region, and benefits from net pricing actions.

These increases were partially offset by volume decreases in the Asia Pacific region ("APAC").

Private Label net sales increased by $0.6 million, or 3.3%, to $19.3 million for the year ended December 31, 2024, as compared to $18.7 million for the year ended December 31, 2023, which was driven by CE volume growth in EMEA, which was partially offset by CE volume decline in shipments from APAC.

Net Sales for Other products increased by $1.2 million, or 42.6%, to $4.0 million for the year ended December 31, 2024, from $2.8 million for the year ended December 31, 2023, driven primarily by CE volume growth in both EMEA and APAC regions.

International net sales increased $27.3 million, or 37.1%, driven by 33.7% CE volume growth, with notable growth in the United Kingdom ("U.K.") and Germany, in addition to benefits from net pricing actions.

Vita Coco Coconut Water net sales increased $21.6 million, or 43.0%, reflecting higher CE volume, primarily in Europe, and benefits from net pricing actions.

Private Label net sales increased $6.6 million, or 34.3%, primarily due to CE volume growth in Europe, partially offset by the loss of Private Label coconut oil sales in the Asia Pacific region.

Net Sales for Other products decreased $0.9 million, or 22.7%, to $3.1 million driven primarily by the decrease in sales of Vita Coco coconut oil partially offset by the launch of Vita Coco Treats.

Year Ended December 31, Change

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Consolidated 36.5 % 38.5 % (2.0 %)

On a consolidated basis, cost of goods sold increased $4.3 million, or 1.4%, to $317.2 million for the year ended December 31, 2024, from $312.9 million for the year ended December 31, 2023.

On a consolidated and segment basis, the increase was primarily driven by elevated transportation costs relating to ocean freight, which was partly offset by lower finished goods costs, partially driven by private label product mix, and domestic logistics.

On a consolidated basis, gross profit increased by $18.1 million, or 10.0%, to $198.8 million for the year ended December 31, 2024, from $180.7 million for the year ended December 31, 2023.

This was a result of CE volume growth, Vita Coco Coconut Water net pricing improvement and lower domestic transportation costs, partially offset by elevated transportation costs relating to ocean freight.

As a result, gross margin increased approximately 1.9% percentage points to 38.5% for the year ended December 31, 2024, as compared to 36.6% for the year ended December 31, 2023.

On a consolidated basis, cost of goods sold increased $70.0 million, or 22.1%, driven predominantly by the CE volume increase and the impact of tariffs, in addition to cost increases for finished goods and domestic logistics costs.

On a consolidated basis, gross profit increased by $23.8 million, or 12.0%, reflecting volume growth, net pricing improvement in Vita Coco Coconut Water, partially offset by tariffs, higher finished good product costs and domestic transportation costs.

Gross margin decreased approximately 2.0% percentage points to 36.5% primarily due to increased product cost and the impact of tariffs, partially offset by the benefit of Vita Coco Coconut Water p ricing and favorable product mix due to lower Private Label volumes.

Operating Expenses

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Selling, General and Administrative Expenses

SG&A expense increased by $0.7 million, or 0.6%, to $125.0 million for the year ended December 31, 2024, from $124.2 million for the year ended December 31, 2023.

The increased SG&A expense was primarily driven by an increase of $4.5 million in personnel-related expenses and bad debt expense of $2.2 million primarily due to the uncertainty of product delivery and repayment of advances made to a supplier.

These increases were partially offset by $4.1 million lower investments in marketing expenses primarily due to inventory constraints through the third quarter of 2024, as well as the absence of a Vita Coco Community Foundation donation of $1.5 million and an impairment loss of $0.4 million related to land in Ecuador recorded in the year ended December 31, 2023.

Selling, General & Administrative ("SG&A") expense increased by $15.1 million, or 12.1%, primarily driven by higher personnel-related expenses of $11.0 million, increased marketing spend of $3.0 million, $1.3 million additional charitable contributions, and $1.2 million of overlapping rent expense for the New York office transition.

These increases were partially offset by a $2.7 million reduction in sales-related expenses.

Other Income (Expense), Net

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Unrealized gain/(loss) on derivative instruments $ 4,737 $ (8,176) $ 12,913 n/m

Foreign currency gain/(loss) (1,571) (251) (1,320) n/m

Interest income 6,715 2,581 4,134 160.2 %

Interest expense — (31) 31 (100.0 %)

Foreign currency loss

(1,037) (1,571) 534 (34.0 %)

Interest income, net

6,548 6,715 (167) (2.5 %)

$ 191 $ — 191 n/m

Other Income (Expense), Net

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Unrealized Gain/(Loss) on Derivative Instruments

During the year ended December 31, 2024, we recorded an unrealized loss of $8.2 million for the mark-to-market changes in the fair value on the outstanding derivative instruments for forward foreign currency exchange contracts, with the largest loss for the year ended December 31, 2024 related to the contracts hedging the Brazilian real, offset by gains in British Pound, Euro, and Canadian dollar.

During the year ended December 31, 2023, we recorded an unrealized loss of $0.9 million relating to outstanding derivative instruments for forward foreign currency exchange contracts.

All forward foreign currency exchange contracts were entered to hedge some of our exposures to the British pound, Canadian dollar, Brazilian real, Malaysian ringgit, Euro, and Thai baht.

For the year ended December 31, 2025, we recorded an unrealized gain of $4.7 million related to mark-to-market changes on outstanding forward foreign currency exchange contracts, with the gains related to contracts hedging the Brazilian real and Thai baht, partially offset by losses on the British Pound, Euro, and Canadian dollar.

During the year ended December 31, 2024, we recorded an unrealized loss of $8.2 million, primarily related to outstanding forward foreign currency exchange contracts hedging the Brazilian real, partially offset by gains on the British Pound, Euro, and Canadian dollar.

All forward foreign currency exchange contracts were entered into to hedge exposures to the British pound, Canadian dollar, Brazilian real, Malaysian ringgit, Euro, and Thai baht.

Foreign Currency Gain/(Loss)

Foreign currency loss was $1.6 million for the year ended December 31, 2024, as compared to a $0.3 million loss for the year ended December 31, 2023.

The change in both years was a result of movements in various foreign currency exchange rates related to transactions denominated in currencies other than the functional currency.

Foreign currency loss was $1.0 million, compared to a $1.6 million loss for the prior year driven by movements in various foreign currency exchange rates on transactions denominated in currencies other than the functional currency.

Interest Income

Interest income increased by $4.1 million, to $6.7 million for the year ended December 31, 2024, from $2.6 million from December 31, 2023.

The increase in interest income period over period was due to the cash investment program that began in April 2023, in addition to higher levels of cash invested with financial institutions compared to prior year.

Interest Expense

The change in interest expense is immaterial.

Interest income decreased by $0.2 million, to $6.5 million due to the decline in interest rates, partially offset by increased investment balances.

Other income of $0.2 million in the year ended December 31, 2025, resulted from the sale of intellectual property.

Income Tax Expense

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Tax Rate 23.3 % 21.0 %

Income tax expense was $14.8 million for the year ended December 31, 2024, as compared to $11.3 million for the year ended December 31, 2023.

Income tax expense was $21.7 million in the year ended December 31, 2025 compared to $14.8 million in the prior year.

The effective combined federal, state, and foreign tax rate increased to 23.3% from 21.0% for the years ended December 31, 2025 and 2024, respectively.

The effective tax rate for the current period is in line with the U.S.

statutory rate of 21%, due to offsetting items having minimal net impact on the rate.

Primarily, the benefit of lower statutory tax rates in foreign jurisdictions is offset by state income taxes.

The effective tax rate for the same period in the prior year is lower than the U.S.

statutory rate of 21% primarily driven by lower tax rates in foreign jurisdictions and the associated credits available to offset U.S.

The change in effective tax rates between the periods is primarily attributable to state income taxes.

The effective tax rate for the year ended December 31, 2025 exceeded the U.S.

federal statutory rate of 21% primarily due to state income taxes, and permanently nondeductible compensation costs, partially offset by tax benefits associated with windfall deductions recognized during the year.

Other nondeductible expenses and discrete tax items also contributed to the higher effective tax rate.

Non-GAAP Financial Measures

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Depreciation and amortization 1,072 745

Interest income (6,715) (2,581)

Interest expense — 31

Interest income, net

(6,548) (6,715)

Income tax expense 21,651 14,836

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Other adjustments (d)

$ 3,603 $ 964

Adjusted EBITDA $ 98,241 $ 84,127

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(b) Unrealized gains or losses on derivative instruments and foreign currency gains or losses are not considered in our evaluation of our ongoing performance.

(c) Reflects other non-recurring expenses related to costs associated with two secondary offerings in which Verlinvest Beverages SA sold shares of the Company.

The shares were sold in an underwritten public offering, which closed on May 26, 2023 and a block trade that was executed on November 9, 2023.

(c) Reflects an expense waiver of certain costs associated with a secondary offering in which Verlinvest Beverages SA sold shares of the Company.

The shares were sold in a block trade that was executed on November 9, 2023.

The Company did not receive any proceeds from the sale of the shares.

(d) For the year ended December 31, 2024, the amount reflects the write-off of prepayments made to a supplier for inventory orders.

(d) For the year ended December 31, 2025, the amount reflects $2.4 million related to a one-time 2023 incentive program that is measured based on full-year 2025 performance relative to 2022 structured differently from our other ongoing employee incentive programs, $1.2 million of overlapping rent expense related to our New York City office, $0.2 million of impairment loss related to Runa, and a gain of $0.2 million from a sale of intellectual property.

For the year ended December 31, 2024, the amount reflects the write-off of prepayments made to a supplier for inventory orders.

In November 2024, we learned that the supplier failed to produce the orders placed and paused operations.

Further, the supplier did not provide a refund for such orders.

For the year ended December 31, 2023, the amount relates to the impairment loss of assets held for sale.

Liquidity and Capital Resources

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We had $196.9 million and $164.7 million of cash and cash equivalents as of December 31, 2025 and 2024, respectively.

Considering recent market conditions and our business assumptions, we have reevaluated our operating cash flows and cash requirements and believe that current cash, cash equivalents, future cash flows from operating activities and cash available under our 2020 Credit Facility will be sufficient to meet our anticipated cash needs, including working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of the condensed consolidated financial statements included herein and the foreseeable future.

Considering recent market conditions and our business assumptions, we have reevaluated our operating cash flows and cash requirements and believe that current cash, cash equivalents, future cash flows from operating activities and cash available under our Credit Facility will be sufficient to meet our anticipated cash needs, including working capital needs, capital expenditures and contractual obligations for at least 12 months from the issuance date of the consolidated financial statements included herein and the foreseeable future.

Our future capital requirements will depend on many factors, including our revenue growth rate, our working capital needs primarily for inventory build, our global footprint, the expansion of our marketing activities, the timing and extent of spending to support product development efforts, the introduction of new and enhanced products and the continued market consumption of our products, as well as any shareholder distribution either through equity buybacks or dividends.

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Operating activities $ 47,174 $ 42,899 $ 4,275 10.0 %

Investing activities (974) (594) (380) 64.0 %

Investing activities (8,253) (974) (7,279) n/m

Financing activities (7,534) (8,296) 762 (9.2) %

Effects of exchange rate on changes on cash and cash equivalents (563) 387 (950) (245.5) %

Net (decrease) increase in cash and cash equivalents $ 33,066 $ 113,238 $ (80,172) (70.8) %

Effects of exchange rate on changes on cash and cash equivalents 834 (563) 1,397 n/m

Net increase in cash and cash equivalents

$ 32,221 $ 33,066 $ (845) (2.6) %

n/m—represents percentage calculated not being meaningful

Operating Activities

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Our primary use of cash in operating activities are for cost of goods sold and SG&A expenses.

During the year ended December 31, 2024, cash provided by operating activities decreased $64.3 million as compared to the year ended December 31, 2023.

The decrease in cash provided by operating activities was substantially driven by an increase in inventory purchases to rebuild inventory to improved levels to better support the business, and the timing of certain working capital payments, partly offset by higher cash generation from the business growth.

During the year ended December 31, 2025, cash provided by operating activities increased $4.3 million as compared to the year ended December 31, 2024.

The higher cash generation was driven by the increase in net income after adjusting for non-cash items and a minor improvement in working capital.

Investing Activities

During the year ended December 31, 2024 as compared to the year ended December 31, 2023, cash used in investing activities increased $0.4 million due to equipment purchases and technology related capital expenditures.

During the year ended December 31, 2025 as compared to the year ended December 31, 2024, cash used in investing activities increased $7.3 million.

The increase was primarily due to leasehold improvements related to the new New York, London, and Singapore offices.

Financing Activities

During the year ended December 31, 2024 compared to the year ended December 31, 2023, net cash used by financing activities increased $14.6 million, primarily driven by share repurchases that occurred in 2024 and lower proceeds from stock award exercises.

During the year ended December 31, 2025 compared to the year ended December 31, 2024, net cash used by financing activities decreased $0.8 million, primarily driven by fewer share repurchases that occurred in 2025 compared to 2024.

See Note 14, Stockholders' Equity, for further discussion on share repurchases.

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In May 2020, the Company entered into the Credit Facility with Wells Fargo Bank, National Association consisting of a revolving line of credit, which currently provides for committed borrowings of $60 million.

On February 14, 2024, the 2020 Credit Facility was amended and extended for five years, with an amended maturity date of February 13, 2030.

On February 14, 2025, the Credit Facility was amended, extending the maturity five years to February 13, 2030.

Starting in December 2022, borrowings on the Credit Facility bear interest at rates based on either:

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The Spread ranges from 1.00% to 1.75%, which is based on the Company’s leverage ratio (as defined in the credit agreement) for the immediately preceding fiscal quarter as defined in the credit agreement.

In addition, the Company was subject to an unused commitment fee ranging from 0.10% and 0.20% on the unused amount of the line of credit in the year ended December 31, 2024, with the rate based on the Company’s leverage ratio (as defined in the credit agreement).

Beginning on February 14, 2025, the unused commitment fees will range from 0.125% to 0.225%.

The borrowings made prior to December 2022 bore interest at rates based on either:

1) London Interbank Offered Rate ("LIBOR");

or 2) a specified base rate (determined by reference to the greatest of the prime rate published by Wells Fargo, the federal funds effective rate plus 1.5% and one-month LIBOR plus 1.50%), as selected periodically by the Company.

The LIBOR-based loans bore interest at LIBOR plus the Spread.

The unused commitment fee prior to the December 2022 amendment was the same.

There were no amounts drawn on the Revolving Facility as of December 31, 2024 and December 31, 2023, respectively.

In addition, through February 13, 2025, the Company was subject to an unused commitment fee ranging from 0.10% and 0.20% on the unused amount of the line of credit, with the rate based on the Company’s leverage ratio (as defined in the credit agreement).

Starting February 14, 2025, the unused commitment fees ranged from 0.13% and 0.23% on the unused amount of the line of credit, with the rate being based on the Company’s leverage ratio (as defined in the credit agreement).

There were no amounts drawn on the Credit Facility as of December 31, 2025 and December 31, 2024, respectively.

As of December 31, 2025, we were compliant with all financial covenants.

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Interest rate on these vehicle loans range from 4.56% to 5.68%.

The outstanding balance on the vehicle loans as of December 31, 2024 was less than $0.1 million.

The outstanding balance on the vehicle loans as of December 31, 2025 was immaterial.

For additional information, see Note 10, Debt, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

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Contractual Obligations and Commitments

We have contractual obligations to repay indebtedness and required interest payments and unused commitment fees under our Revolving Facility and vehicle loans.

As of December 31, 2024, we had no outstanding balance on the Revolving Facility.

Any future outstanding balances on the Revolving Facility will be required to be repaid by February 2030.

We lease certain assets under noncancelable operating leases, which expire through 2025.

The leases relate primarily to office space in addition to machinery and equipment.

We have contractual obligations to repay indebtedness and required interest payments and unused commitment fees under our Credit Facility and vehicle loans.

As of December 31, 2025, we had no outstanding balance on the Credit Facility.

Any future outstanding balances on the Credit Facility will be required to be repaid by February 2030.

We lease certain assets under noncancelable operating leases, which expire through 2034 relating to our office spaces.

Future minimum commitments under these leases are 18.6 million as of December 31, 2025.

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Since these sales promotions and sales discounts do not meet the criteria for a distinct good or service, they are primarily accounted for as a reduction of revenue and include payments to customers and distributors for performing activities on our behalf, such as payments for in-store displays, payments to gain distribution of new products, payments for shelf space and discounts to promote lower retail prices.

These consolidated financial statements include accruals for these promotion and discounts.

The accruals are made for invoices that have not yet been received as of year-end and are recorded as a reduction of sales, and are based on contract terms and our historical experience with similar programs and require management judgement with respect to estimating customer and consumer participation and performance levels.

These consolidated financial statements include accruals for these promotions and discounts.

The accruals are made for invoices that have not yet been received as of year-end and are recorded as a reduction of sales, and are based on contract terms and our historical experience with similar programs and require management judgment with respect to estimating customer and consumer participation and performance levels.

The Company accounts for income taxes under ASC Topic 740, Income Taxes ("ASC 740"), which requires an asset and liability approach to financial accounting and reporting for income taxes.

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Such deferred income tax assets and liabilities computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to affect taxable income.

Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.

Valuation allowances are established when necessary to reduce deferred income tax assets to the amount

expected to be realized.

Interest and penalties related to unrecognized tax positions are included in income tax expense in the consolidated statement of operations and comprehensive income and accrued expenses in the consolidated balance sheets.

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Changes to any of the assumptions or judgments could cause our actual income tax obligations to differ from our estimates.

Stock-Based Compensation

We account for stock-based compensation in accordance with ASC Topic 718, Compensation—Stock Compensation ("ASC 718") for stock options issued under the 2014 Stock Option and Restricted Stock Plan and the 2021 Stock Incentive Award Plan.

We measure all awards based on their fair value on the date of the grant and recognize compensation expense for those awards over the requisite service period of each stock award grant, which is generally the vesting period of the respective award by using the accelerated attribution method.

We apply an estimated forfeiture rate derived from historical employee termination behavior.

If the actual forfeitures differ from those estimated by management, adjustment to compensation expense may be required in future periods.

Stock awards are equity-classified, as they do not contain a cash settlement option or other features requiring them to be liability-classified.

We issue stock-based awards with service-based and performance-based and market-based vesting conditions.

The accounting for performance‑based stock awards requires us to make significant judgments regarding the probability of achieving performance targets and the expected number of shares that will ultimately vest.

Certain performance share unit awards allow for the issuance of shares in excess of the target award amount when performance results exceed specified thresholds.

We evaluate performance expectations each reporting period and update our estimates based on current forecasts and available information.

Changes in these estimates may result in adjustments to stock‑based compensation expense in future periods, which could be material to our results of operations.

Goodwill represents the purchase price paid in excess of the fair value of net tangible and intangible assets acquired in a business combination and is measured in accordance with the provisions of ASC Topic 350, Intangibles—Goodwill and Other (ASC 350").

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instead goodwill is tested for impairment on an annual basis on December 31, or more frequently if the Company believes indicators of impairment exist.

The Company has determined that there are three reporting units for purposes of testing goodwill for impairment.

We have determined that there are three reporting units for purposes of testing goodwill for impairment.

The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value.

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otherwise, no further testing is required.

Alternatively, the Company may elect to bypass the qualitative assessment and perform the quantitative impairment test instead, or if the Company reasonably determines that it is more-likely-than-not that the fair value is less than the carrying value, the Company performs its annual, or interim, goodwill impairment test by comparing the fair value of each of the reporting units with their carrying amount.

Alternatively, we may elect to bypass the qualitative assessment and perform the quantitative impairment test instead, or if we reasonably determine that it is more-likely-than-not that the fair value is less than the carrying value, we perform its annual, or interim, goodwill impairment test by comparing the fair value of each of the reporting units with their carrying amount.

The fair value of each of the reporting units is estimated by blending the results from the income approach and the market multiples approach.

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The cash flows are based on five-year financial forecasts developed internally by management and are discounted to a present value using discount rates that properly account for the risk and nature of the respective reporting unit’s cash flows and the rates of return market participants would require to invest their capital in our reporting unit.

The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit’s fair value.

We will recognize an

impairment for the amount by which the carrying amount exceeds a reporting unit’s fair value.

For the years ended December 31, 2025 and 2024, there were no impairments recorded.

Emerging Growth Company Status

The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, permits an “emerging growth company” to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies.

Following the IPO, as an emerging growth company, we elected to apply the extended transition period.

Based on the closing share price and the market value of our common stock, par value $0.01 per share, held by non-affiliates as of June 30, 2023, the Company was deemed a large accelerated public company filer as of December 31, 2023.

As a result, beginning with the Annual Report on Form 10-K for the year ended December 31, 2023, the Company was not able to rely on the extended transition period noted above and was required to adopt all new accounting pronouncements within the same time periods as public companies.

Recently Issued Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis