All right, good afternoon, everyone. Welcome to the UBS Global Consumer and Retail Conference here in New York City. My name is Peter Grom. I'm the U.S. Beverages and Household Products Analyst here at UBS, and we are very excited to have joining us this morning from Celsius, Chief of Staff Toby David, and Chief Marketing Officer Kyle Watson. Both recent promotions, so congratulations to you both. So over the last few years, we've seen some pretty meaningful fragmentation in the broader energy drinks category with the emergence of performance energy. A lot of brands are clearly seeing some pretty good growth, but Celsius has really emerged from the pack, and it has become a competitive threat to an industry that has long been dominated by Monster and Red Bull. We've got a lot of ground to cover today, but just in terms of format for the first, you know, 30-35 minutes or so, I'm just going to run through a series of questions with Toby and Kyle. The last 10-15 minutes, we will open it up for audience Q&A. I think you all have received instructions on how to submit questions. They'll come up here on this iPad, and I'll be happy to ask questions on your behalf. Before we start, I am required to read a legal disclaimer. As a research analyst, I'm required to provide certain disclosures relating to the nature of my own relationship and that of UBS with any company on which I express a view on this call today. These disclosures are available at www.ubs.com/disclosures. Alternatively, please reach out to me, and I can provide them to you after the call. So with that, why don't we get started? So, you know, I obviously want to touch on, you know, recent trends and the path forward, but I think it would be helpful to give some perspective to the kind of the listening audience and a bit of the background of the brand. At this point, I think most here are aware of the brand, but the continued success you've seen in the last few years has been pretty remarkable and in some ways really hasn't been seen in the energy category before. So for an industry that's kind of been, you know, dominated by two players and one that almost every beverage company has tried to get into and kind of failed, what has Celsius done differently? I think, so what we did differently really started from the beginning, where our brand was really ahead of its time. It was very different. It has evolved a lot. I think that, you know, the way it was positioned was around the science and negative calorie, weight loss, and there were obviously a lot of learnings that happened early on in the company growth trajectory. But what I will say is that having, you know, we launched initially in fitness and vitamin specialty versus typical route to market, especially for energy drinks being, you know, retail and convenience. So that was one interesting thing that really helped us build this brand positioning around health and wellness, you know, fitness. So it was kind of then it kind of evolved from, you know, we weren't pushing out this negative calorie. We looked at, you know, we need to premiumize it and make it more about this Live Fit lifestyle. Then in line with some of the trends we're seeing around health and wellness, the category really hadn't had a disruptor that was, you know, positioned as an energy drink, a true energy drink, and also a healthy halo, a better-for-you option and a more premium option. So I think that was really where our brand did it differently from the beginning. We've continued to build our brand and keep that fitness-centric DNA that we have that gives us that credibility around this better-for-you and, like, L ive Fit space that we've created. It's taken, you know, it's a different piece of the category. We've seen other brands emerge within the performance energy space. I think one thing we've done is with our growth, we've also embraced, you know, more of a fitness lifestyle. I think, you know, that's really the macro trend, too. It is more of a life fitness is becoming more of a lifestyle. Great. And then I guess maybe building on that a little bit, another or two components that also stand out to me is just how you touch on the channel differences, but also just who your core customer is. And in many ways, the brand seems to appeal to a much wider audience and actually is bringing in new users to the energy drink category. Can you maybe just help us understand who your core customer is today? And has that changed at all, particularly as kind of the brand awareness has grown so much? Yeah, it's definitely changed. I think one thing that's unique about our brand is that we do have a very wide variety of core demographic. Originally, you know, especially when I came to the brand about five years ago, we saw a lot of this, you know, this female that was coming into the category through our brand, 25-40. I mean, that was really a big piece of our demographic. Then something we've been doing very strategically is understanding how important it is to bring consumers as they're aging into the category. So bringing them into the category and being the brand that does that, but then also keep some in the category within the brand. That's our Gen Z focus. And we've, like I said, you know, we have to make sure we're not only focused on Gen Z and new to category through that demographic, but that we're also still appealing to the demographic we already had. I think one thing is, you know, not only bringing females into it, but you're also looking at, you know, aging out of the category. So there was an audience and segment of the population that was introduced to the key players in energy and drank energy drinks in college and, you know, and beyond. And I think there is an evolution of expectation as you get into a different life stage of, you know, are you going to walk into the boardroom as a 40-year-old vice president with a Bang in your hand or, you know, what do you want to be carrying? It's an extension of yourself. So what we've really seen is that a lot of people are aging out of the category and then into our brand as a better-for-you option and still in that usage occasion of energy. And then maybe building on that, I mean, where are you sourcing customers from? I would imagine, obviously, some of it's coming from that traditional energy consumer, but it also seems like you're going to source customers from outside the energy drink category. So just, you know, any thoughts on that? Yeah, I think we've seen some insights on outside. We don't have anything specific that we're sharing on, you know, what other categories. But one thing, you know, just looking at where we can definitely identify, we're sourcing about 80% of consumers that are increasing their frequency, but also that are new to category. So that's all incremental to the category. And then additionally, there is, you know, around 20% that is basically we're taking from other brands. So I think that's amazing. That's our goal. We really want to make sure we're continuing to drive growth in the category and bring new consumers to the category. And I do think there has been, you know, some insights we've seen where, yes, like we're pulling from, you know, ready-to-drink coffee, coffee. You know, one thing we'll talk about, too, is with foods ervice. It's a massive opportunity for our brand. Our energy is differentiated by the flavor profile in a big way. So if you look at some of the traditional energy drinks and the flavor profile, it doesn't pair as well with food. It's not as fruit-forward, refreshing. So I think that's kind of something that has allowed us to maybe pull from some of the more traditional categories like CSD because people are drinking it with their food, you know, with their meals, you know, around lunchtime. And that, to me, is, you know, something that's significant, and it's an opportunity as well. All right. And I touched on this a bit earlier, but just another thing that's been different is just kind of in the channel strategy with C-stores kind of really being later to the game in terms of your distribution. Can you just maybe help us understand what your distribution mix looks like today? How much of your sales are in tracked channels versus non-tracked channels? And I guess if you were to look out over the next several years, is there kind of a target in mind in terms of what your channel mix is going to look like? So we haven't really given public data as far as what percent of our mix is tracked versus untracked. But, you know, some of the interesting what I feel is interesting data points are if you look at Red Bull and Monster, about 70% of their tracked sales are coming through convenience, whereas for us, it's around 58%. And that's not because of a lack of performance. It's just because, as Kyle referenced earlier, convenience was really our last channel that we went into. So view that certainly as the biggest opportunity right now is to increase that as part of our mix. While we continue to grow, the growth through the mass, the drug, the, you know, the non-tracked channels, the convenience is the most robust part of energy consumption. So we feel like if we can continue to grow within that and we, you know, we plan to have quite a bit of consumption, not only do you get great sales through convenience, but also trial. You get a lot of that, you know, somebody trying it for the first time and then going to purchase it off of Amazon or Costco, which are both two markets where we excel. Great. Then, you know, Kyle, you kind of mentioned, you know, the away-from-home opportunity here. I think I believe it was, you know, 12% of Pepsi sales was mentioned on the last call, so call it, you know, 6%-7% of total company sales. Out of curiosity, I mean, how does that actually compare to other energy drink companies, if you know? And then, you know, why do you know, you kind of just touched on how it's going to be different. You know, there's a lot of opportunity for colleges, university sporting events. That makes a lot of sense. But how big can food service really be when you think about the opportunity longer term? From my perspective, and I think, you know, Toby will weigh in on this as well, but I think that it's really more about, like, the opportunity to continue to grow our brand equity. You know, you think about how many touchpoints a person or a consumer needs to have with a brand before they're going to convert at retail. By having our products basically everywhere where people work, like live, work, play, it's providing a totally different touchpoint, and it's really increasing our ability to drive brand awareness and have it be more this funnel that's driving to an ultimate conversion to our brand. So I think it's very important when it comes to, you know, how, like, the food service piece is such a marketing play to me. It holds so much value. We've never been able to play in food service. That's one place that we really, you know, you're up against Coke and Pepsi contracts everywhere. And even, you know, when we look at all the events we do, we have our own Essential Vibes Tour. That's a brand-owned property that we're creating where we, you know, sponsor different music festivals across the country. And having that, you know, being able to be at the concessions, and we've embraced this, like, mocktail, this whole, you know, building a mocktail campaign around, you know, sober curious movement and people drinking less alcohol at these events. I think there is a lot of opportunity, and it really, for me, it's huge value when it comes to marketing. And I think Toby can speak more to, you know, the overall, like, from a sales perspective. Yeah. I mean, you asked what for Red Bull, Monster. I don't know exactly what it is as a percentage of their sales. I mean, obviously, for Red Bull, the mixing of it with alcohol was a significant portion of their business. I mean, I've heard what the figure is. I don't want to speculate because it's secondhand. I will say Bang when Bang was at its peak and part of the Pepsi portfolio, that we're already well past where they were at within food service. But it's also important to define what food service even means because it obviously means food. So the QSR is out there, and we're seeing quite a bit of success there. And that's somewhere where, you know, as Kyle kind of referenced, we differentiate ourselves versus the Monster's and Red Bulls where people actually drink Celsius with their meals. So you've seen us go into Jersey Mike's, Dunkin' Donuts, which is actually very interesting given their coffee is a big piece of their business, brought us in. So that's certainly a big opportunity for us. But as you define the rest of the category, it's hospitals, hotels, casinos, college, and university. So just the multiple touchpoints, it gives us a great opportunity to build the brand, the brand awareness. Great. And then, you know, obviously, you've seen tremendous success, but clearly the move into the Pepsi system, you know, aided in that success. Can you maybe just touch on the relationship or the health of the relationship between you and Pepsi at this point? Yeah, great relationship. I mean, we work very closely through all different levels of their organization. You know, we meet with their executive team pretty frequently. We have a lot of ex-Rockstar and Pepsi folks on our team. It actually is part of what helped the transition from our previous network into Pepsi be as seamless as it was. But listen, they've been phenomenal for us. We were able to reach different areas, food service. Just talking about that, we wouldn't be able to tap into that in the meaningful way that we've been able to, whether it's college or university. You can't get onto college campuses unless you're on a red or a blue truck. So Pepsi's been instrumental on that. You've seen our TDPs have expanded significantly, especially independent convenience, big opportunity, as well as the incremental placements you get within the retail footprint. I mean, it's important to note that our sales reps are the ones calling on the tier one and tier two accounts, which are pretty much any chain account that you'll find across the country. So we're fighting to gain space in the planograms with our own reps. Where Pepsi helps us is they get us incremental placements within the store, whether it's a Pepsi cooler, whether it's display activity. They merchandise for us, and they do a phenomenal job. Them and Circle K both, you know, a notch above the rest. Great. So let's shift gears to just, you know, talking about the path from here. And I recognize you don't give specific guidance, but Toby, we'd love to get your perspective on kind of the growth drivers in the U.S. at this stage. You know, you touched on this many earnings calls, but, you know, ACV is already quite high, but your TDPs are kind of still well below the competition. So when you think about the building blocks of growth for 2024, what are you expecting in terms of, you know, TDP growth versus velocity? You know, there's obviously a lot of discussion on the velocity numbers in the standard data, but just would love some perspective on how you're thinking about the building blocks of growth for this year. Yeah, absolutely. So 98% ACV, we're essentially a full distribution within the tracked channels. But all that means is you have at least 1 SKU in 98% of the tracked stores. So where we're really focused on this year is that breadth of distribution within the store. So getting more SKUs, number one, which we average close to 16 SKUs per location within the tracked data. If you look at Red Bull and Monster, they're close to 25. That only tells you part of the story. You've got the Monster super SKU, the Green Claw, for example, where that's 1 SKU. But if you walk into a lot of convenience stores, I might have 2 full shelves' worth of product, just that 1 SKU. So their facings that they'll have within a cooler, within the C-store cooler, they might have 45, 50 facings with 25 SKUs. Whereas typically for Celsius, if we have 16 SKUs, it's going to be 16 facings. You come down to South Florida, and you're starting to see us get double and triple facings. So you're seeing 3 Orange, 3 Watermelon, 3 Peach Vibe. You build out this massive footprint. So that's a big opportunity for us. Then you look at Monster and Red Bull. The stores are littered with products. So they'll have their Monster coolers that are branded. Then you'll have a countertop cooler. You referenced TDPs. Yeah, we've got a ways to go. So just because we're at a 98% ACV, that only tells part of the story. So we expect for the breadth of distribution to improve. We don't, as you said, we don't give the guidance. You'll see by the end of May what that total planogram reset looked like, and it'll stair step probably each month up until May. Then on top of that, I think independent convenience is really a massive opportunity for us. There's, you know, probably 250,000 independent convenience stores around the country. They don't have the same velocity typically as a chain, like a 7-Eleven, but it's just a lot of big numbers. So we want to be in there. Pepsi is one of the few distributors that can get you that reach with those independent convenience stores. So again, convenience is really a high priority for us, but we're going to continue to grow the total pie. Great. And then maybe building on the shelf reset point, obviously a big topic of discussion on CBG, but energy drinks more broadly. You've sounded constructive, you know, on the call, on the last call, just on expecting some favorable outcomes as it relates to shelf resets. But a lot of your competitors are also sounding pretty constructive, so. Nobody's ever had a bad meeting. Well, I'm just wondering, is it possible that you could see optimism across the entire energy drink categories as it pertains to shelf resets? Like, maybe energy is actually taking more share from or more shelf space from, you know, other categories. Yeah, absolutely. We're seeing that across the board. The energy as a category is growing, not only in consumers, but the retail footprint. So you see coffee, CSDs, dairies, teas, waters are all, you know, shrinking a bit, and it's all to the benefit of everyone within the energy category. So we have that to our benefit as we look to expand space. And then, you know, we don't look to target Red Bull and Monster space at this point in time. Those are two very powerful brands, great brands. There's plenty of other, you know, we call them wounded gazelles that are just not paying their fair share of rent within the cooler that we target. And, you know, hopefully, we'll see where we what comes to fruition by the end of May. So within the energy cooler itself, it sounds like you are expecting, you know, more space. Are you going to get better placement as well? Yeah, that's subjective. I mean, many times in certain regions in the country, especially some of the regions where we're still in our infancy, you'll find us down in the basement or the crack, and you might only have four or five facings, and it's very difficult to find. So not only are we looking to get more space, we try to get that eye-level placement or touching Red Bull and Monster is the ideal situation. And then I guess when, you know, you kind of touched on this, you're expecting a, like, a step function change each month. But, like, really, when should we start to see the benefits of this in the data? We started to see some acceleration in the dollar share in the tracked data. Kind of the start of the year, that seemed to be more around the essentials line rather than necessarily shelf resets. Maybe I'm wrong on that front. But, you know, with the big accounts, is this dynamic something we should start to see in the data in the coming weeks, or is this more kind of like April, May time frame? I think March, April are big months as far as resets. I don't know the exact percentages of where you're at throughout the total retail reset at that point in time. But I think March and April, you'll start seeing it. So but if you're looking, it depends if you're looking at a 2-week snapshot or a 4-week snapshot. You know, you're always looking back into the past. So, I mean, I think by the end of April, you'll have a pretty good idea. And then there's still a couple. I know, like, Circle K, for example, is a May reset typically, which is the second largest convenience store chain in the country. So that's still meaningful in May. So again, by the end of May, you'll have the totality of it, but you should see a stair step over the, you know, if you're looking at two-week data, it should every two weeks or four weeks start to, you know, hopefully notice improvement. Great. Then I guess just maybe kind of talking into the market share opportunity. I know you're not going to give guidance, and you're not going to specifically give a target on market share, but I guess I'm going to still try to get it out of you anyway, Toby. But you've long talked about the market share on Amazon, the market share in South Florida, you know, 24%. More recently, you started to add more cities to that conversation. I think you cited, you know, 12 markets where you have 15% share or more. So when you think about the path from here, low double-digit share, 11.5, like, how quickly can we reach mid-teens? Like, I mean, it seems like it would be hard to add another 400 basis points, like, in the next year as you won't get the same distribution benefit. Curious how you think about, like, kind of the glide path from here? Yeah. So, you know, as we wrap up, I'm not going to give guidance, but, you know, we try to provide color when we can. You know, we do talk about Amazon, and there's a reason why we talk about Amazon because we feel like that's when there's an apples-to-apples comparison where it's not about shelf space or anything else that we can compete with Red Bull and Monster where we're number one. Costco is another example. I mean, we're one of the top-selling beverages at Costco. And when you look at the footprint we have there, it's very similar to Monster and Red Bull. So as we gain the shelf space, and, you know, we hope to gain, you know, significant shelf space, not just this year, but in coming years, we feel like that should narrow the gap. We've said it. You mentioned the South Florida data. Last time we referenced it, I think, was the Q3 data, and it was 24%. There's no reason why we didn't mention it last time. I think it kind of, we were busy and it escaped us in the Q4 earnings. So maybe we'll update that in Q1. But, you know, 12 markets that are over 15% share, several of them, you know, like a hair under 20, they're some of the largest markets in the country. So we have a proof of concept. We believe that it works. As far as timing on it, we'll see. But we're, you know, John, our CEO, has said over the years, and I think early on, people looked at him like he was crazy, that we would take over as the number one energy drink in the country. I think now people are starting to think, "OK, it's not so crazy anymore," and we certainly don't think it is. OK. And then I guess, you know, it sounded like on the last call, one of the biggest opportunities or one of the gaps, if you will, in terms of getting to that share, call it like 15% share, was really in the convenience. And that was an area that you were later to the game at. But is there anything from a channel, or is there anything about that channel that actually would limit your ability to see similar market share to what you see online or in FDM? Maybe the core consumer is different, right? It's a more competitive shelf. Like, just any thoughts on if the opportunity is different versus what we've seen elsewhere? Yeah. I mean, I would just say that we've proven, I mean, we haven't given the data on 7-Eleven as an example. We know what our market share is at 7-Eleven, and I think it shows that we can, you know, we can compete nicely with the big players. It's larger than what our national average is, and that's, you know, in total MULOC at 7-Eleven data. Can't give it out, but it's sizable. And that's a national, to me, in-store chain. I think a couple of years ago, people were concerned of whether or not Celsius could play, whether it was because it was too fitness-oriented, maybe too female-oriented. They didn't feel like it could play in convenience. And, you know, a lot of the data points we have seem to indicate otherwise. We're confident that given this is the last channel for us to go into and the data points we see, it gives us more confidence than any point we've ever been at it in the lifecycle of this brand that we can not only grow but also compete with Red Bull and Monster in a meaningful way. Maybe sticking with that point just on the competition, would love to kind of get your perspective on the competitive landscape. You know, Reign Storm, it's been around. It feels like it's, you know, kind of going through a bit of a refresh. You have Bang coming back under Monster. There seems to be some concern from at least investors that I speak with that this could alter the momentum of your portfolio. Like, what are your views on the competitive landscape and how, you know, how it may or may not impact your momentum? Yeah. I think so, we were all, we're paranoid about everything, by the way, as a brand. Like, we are, you know, we legitimately, like, we watch every brand that comes out. And no matter how big, how small, I mean, it can be influencer-led brands. Like, there's always this competition looming. But I would say with Reign Storm specifically, obviously coming from Monster, that's a huge immediate threat, right? Like, we're looking at that and looking at the design of the can, the flavor profiles. I mean, some of the flavor profiles are almost identical. And it's, of course, they're executing flawlessly, merchandised right next to our brand. So I think in the beginning, they were watching it really closely. We aren't as concerned, but of course, we're still paranoid. I think that it's something where it's positioned almost like more of a value proposition. I think that by making it look so close to our brand but not spot-on, it looks just like it's, you know, trying to be us but not us. I think that I'm a marketer, and I think I obviously am drinking a little bit of the Kool-Aid. But I think that what we've done is it's not just a product. We built a brand. And that does have a lot of value when it comes to is somebody just going to look in the cold vault and see, you know, a brand that looks like ours with a similar flavor profile and immediately go to that brand? Or are they going to stay true to a brand that they feel like has aligned with themselves and that they feel more of an emotional connection to? And that's something that's important for us: we've built these communities of people around whether it's fitness, you know, our athletes, lifestyle. We've always been very active from a social media and, you know, influencer standpoint. And it's really important because you're building these really, like, loyal communities of followers and consumers that they're not only drinking your product. So when a brand like that comes out, it's a, you know, a similar product. But is it a similar brand? I think that that's part of it. And that's why we're not as paranoid maybe as, you know, we used to be. Yeah. I would just say as far as Bang, you know, Bang was a great brand. They were close to a 10% share. I mean, we could probably sit up here for an hour and a half, probably create a documentary on what happened with that company. It is fascinating that Monster is the one with the brand now, and they're, you know, they were at each other's throats for years and for a variety of reasons. But, you know, Bang was eating share from Monster. Monster creates Reign to try to take share and block Bang. Now they're all three on the same truck, right? I don't know where Bang goes from here. I don't—I mean, it's going to be—I would be amazed if they got anywhere near where they were previously because they had done so well, and it's going to be tough to recapture that magic, I think. But, you know, even if they get to a 4 or 5 share again, I don't know where that comes from. Maybe it comes from Monster and Reign. Maybe it comes from Ghost and C4. We don't think it's coming from us. We know we got shelf space when Bang was going through its issues, but we're not going to cede that shelf space back to them. We're getting more shelf space. So, you know, we'll see what ends up happening. I will note that our essential 16 ounce line happened to come out, you know, right around the time that, you know, Bang was, you know, coming back out. You know, sometimes the best defense is a good offense. I hear that. So maybe another area of focus has been on pricing and promotion, not just for Celsius or energy. This is true across broader CPG. But in the data, it does seem as if Celsius has been a bit more promotional and maybe embedded in kind of the flattish gross margin commentary or guidance. Is some assumption for that to remain? You know, I mean, I guess how do you think about promotion versus advertising, particularly just given where we are in the company's growth trajectory? Well, I'll touch on the promotions, and you can jump in. As far as promotions, you know, I'd say it has ticked up a bit. And part of that's because we launched the Essentials, the 16-ounce line in Q4, exclusively at 7-Eleven. And any time you launch a totally new line extension, packaging looks different. You need to promote it in order to induce trial, right? And so 7-Eleven, they got behind it for us. They were excited to take it in as an exclusive. And I think I felt like we ran a promotion on it for almost the entire quarter. So we saw that, you know, as part of the promotional activity, as part of the strategy, you know, short-term pain for long-term gain. Q1, it rolls out nationally, Essentials. We're already at a 40% or at least mentioned during the earnings call, it's up to a 40% ACV pretty quickly. We're going to continue. Those are new locations. We need to continue to promote it to gain trial, bringing new consumers. So I would expect, you know, again, short-term, you're going to see the promotional spend up a little bit. I think as the year goes on, you'll start to see it normalize. And, you know, we're going to get back to, you know, hopefully, you know, getting the margin to where everybody would like to see it. I think the guidance Jarrod, our CFO, had given not necessarily guidance but color that he had given on the earnings call was that it, you know, gross margins, at least early, you know, this quarter, will probably look more similar to what Q4 looked like. We'll see as the year evolves what it looks like. OK. And then before opening up to the audience, and I do have a few more questions on kind of the margins you were just referencing. I'd love to get some perspective on kind of just the international opportunity. You've been in Canada for a couple of months now. It seems like the brand is doing very well. You're about to launch in the U.K. and Ireland, you know, later this year. You know, how should we think about the international opportunity? And I guess how do you think about building brand awareness and kind of share in those markets? Is it the same as what you did here in the U.S.? Is it going to be different? Yeah. So I'll jump in if you want to tackle the brand awareness. I would just say we're excited about the Canada launch. We went in there with Pepsi. Weren't quite sure exactly how it would roll out because it was our first, you know, pretty large country that we went into. Obviously, it's our neighbor. The proximity to the U.S. was beneficial for us because you get that spillover effect from the U.S. marketing. It's exceeded our expectations. We went in in middle of June or, excuse me, middle of January. We're, you know, it exceeded our expectations by quite a bit. So we'll probably give more color in the Q1 earnings call once we've had, you know, basically a full quarter to look at it. U.K. and Ireland, we're going to be entering into at some point in Q2. Excited about that. U.K., one of the largest energy drink markets in the world, critical market for us. So we're going to go in there, and we're going to go in there to win. We have Suntory as our partner. Really excited to partner with them. Think they're going to do a fantastic job. They're excited to take the brand. I don't know if you want to touch on the branding. Yeah. I think on the branding, we're keeping our brand positioning the same as we launch these new markets. And the opportunity is really taking the playbook that we know has worked for us here and making sure we keep that kind of DNA in the fitness and have that extend into these new markets, continue to market in ways that are smart and strategic around, you know, as our distribution ramps up, making sure we're paying attention to those key accounts that we're launching in those markets with, you know, making sure that we're driving that conversion at retail. But I think it's really about making sure you're not doing casting too wide of a net and then taking it like I said, it's we have global properties now. We have, you know, with our brand, we have big bets that we're really focused on. I mentioned one of them, our Essential Vibes Tour, which is our, you know, brand-owned property that we're going to continue to push out into additional markets. We also have Ferrari as a global partnership. So intentionally, we're going to be using our, you know, global opportunities to launch new markets, including a roster of global influencers that we can also extend into these other markets. So I think one example would just be what PRIME was able to do and, you know, their success in the UK and US. And a lot of that's behind, you know, now everything is so digital, and everything is based on influencer and celebrity. And even something like Netflix. Netflix gives access to, you know, I'll use like Love Island. It's like Love Island UK, Love Island. I mean, now it's like crossing borders based on just how much access we have and how much interest there is in that content. And I think that speaks to our strategy around social media and digital being a really big piece of what we're going to do as we go international but also driving trial in a very smart way. OK. So I just want to remind everyone, I've gotten a question or two. If you want me to ask a question on your behalf, please submit it, and I will do so. But before, while I let you guys compile your questions together, maybe just two on margins for me. Starting with kind of gross margin, I think in the quarter, it was a little maybe less robust than maybe some people were hoping. And the outlook does imply as you kind of touched on, at least in 1 Q, a bit more of a subdued expansion, I guess. Can you maybe just help us, you know, just understand why it's a bit more subdued in the near term? And I know there's some accounting differences between you and Monster. But when we think about longer term, you know, is looking at like kind of their U.S. gross margin north of 60% kind of a is that like a reasonable target for Celsius over time? Yeah. So I think, you know, we had talked about promotions earlier. So promotions are an above-the-line expense and when discount products. So I think that's where you're seeing a little bit of the pressure right now come from because of the Essentials launch. Again, short-term pain for long-term gain. So that's why we're being a little bit more conservative with our approach and the way we're kind of speaking about margins for Q1. Again, we still have we've said for a few years now that we feel like we can approach and have similar margin structure to Monster. And that started a few years ago. And you've seen some vacillations as far as where Monster has been over time. So, you know, we'll go back to when they were about a 59% gross profit margin. That's about probably roughly 55% for us when you take out the upfront component. So that's a target that we think we can meet over or we believe we can meet over time as we're scaling the business. And we still continue to feel that way as well as overall profitability for the company. You look at them, and I think they're around what, 30, close to the mid-30s as far as on the operating side. So still, same way. I mean, our sales and marketing expense last year was 20% for most of the year in Q3 or, excuse me, Q4. I think we ticked up to 23% because we're going to continue to invest behind a brand that's growing at a rapid rate and trying to catch up with Monster and Red Bull. But Monster is sitting at 9% on the sales and marketing side. So, you know, we'll lever at some point. The question is, is when do you do it? We certainly don't think right now is the time. We're trying to be as efficient as possible with our spends. We've got, you know, John, our CEO, is a CPA by trade, former CFO. You know, he, you know, he squeaks when he walks. I mean, you know, we're trying we're going to be as efficient as we possibly can be, and we're going to continue to do so. But yeah, certainly think that the Monster margin profile is something we can attain at some point. And you mentioned the North American number. It's significant. They vertically integrated in some areas. They acquired a flavor house, I think, back in 2013-ish. You know, they've started to bring in some of their own manufacturing with the acquisition of the Bang facility in Arizona. And I think they have one in California as well. We believe we can get to similar numbers in totality as them, and we'll see where it goes. OK. Then maybe on that selling and marketing line, like is, you know, 23% last quarter, 23% 1Q, where can this go over time? I mean, like, is that 9% number that you referenced for Monster achievable? Yeah. I don't know. You know, we really haven't given color on where we're going to how we're going to get to that, you know, similar profile as Monster. I know we can dial it in quite a bit over time. I don't know what that even if you dial it into 13% or 14%, that's still a 10% improvement over where we were last quarter. Right now, you know, historically, we've been 22%-24%. The last five or six quarters, we've been around 20%, then ticked it up in Q4 because we're investing behind our infrastructure. You know, we're building out our street teams on both the sales and marketing side. Kyle's building out her department. But this is for scale, and this is to win. And you have a duopoly up top. Monster and Red Bull aren't going to just lie by and let us take market share. They're flying people all around the country, flying them into South Florida. They had almost 100 people in South Florida in Q4. Monster did, trying to merchandise against us. They call blitzes and trying to, you know, take space, take, you know, merchandise against us. This is what you would expect. We do the same things, and maybe not, you know, flying 100 people. We'll bus them in because it's cheaper. But, you know, we're going to, you know, we've got to fight against these guys. And, you know, but we're confident. Great. So I have a couple here from the audience. So the first one is, how loyal is an energy drinker to their drink of choice? Like, what is the frequency for a loyal energy drinker? That's a good question. I think it's tough to really, I would say, say loyal. I think loyal is a frequent, a heavy consumer. I'd say you're looking at like somebody who's 2 a day. We do not recommend drinking more than 2 a day. But, you know, we are. But still free. But we, I mean, we're seeing a huge percentage of our growth by more frequency from our current users. So we know that that it's increasing. And, you know, I spoke about like we all talked about kind of like the food service opportunity. I think people are integrating it into their routines and even now into maybe another piece of their day. So if they're waking up in the morning and drinking it or they're drinking it before their workout, they might also be drinking it in another kind of day part. But like, I think that that is part of it. But yeah, I think that, you know, the frequency thing is it changes, too. It evolves. People are maybe not drinking as much caffeine now as they were before. But at the same time, it continues to increase for us. Yeah. I I would just add to that. We know our competitive set very well. We have an incredible data analytics team. So we know Red Bull and Monster consumers. We know what percentage of their consumption is coming from those high-frequency consumers, what percent is coming from, you know, infrequent, which is actually a very large percentage for both of them. That might be just a couple of cans a month. So trying to understand, you know, if, you know, listen, we want to continue to bring in new consumers. But at some point, you need to pull from the two that have 70% of the market share. So if you're going to target them and they're consumers, trying to understand who you should target, who are the most likely they're going to convert. You know, our marketing team in particular, they have some very detailed marching orders on who to be targeting and how we can get people to convert. OK. Then this is a question on just the caffeine amount. Does Celsius need lower caffeine SKU options versus the current 200 milligram caffeine offering to increase per capita consumption rates in the future? Timeline on when that might be needed? I don't know. I probably won't give a timeline. You know, both Kyle and I sit on the innovation team, and we look at a lot of different opportunities. We just launched the 16-ounce line this year. As we look at opportunities to grow the portfolio, there's different ways you can do it. Within energy, there's different ways. We talk about a lower-caffeinated product. Doesn't mean we're, you know, no guidance. Doesn't mean we're coming out with a lower caffeine. It's something we've talked about. It could be an incremental, you know, maybe it's a second consumption later in the day. Maybe people are caffeine-sensitive and just like the taste and want to, you know, just can't, you know, handle a full can of current Celsius. But, you know, these are things we look at. You know, it's something we're interested in. We'll see where we go. OK. Are you concerned at all about GLP-1 drugs or weight loss drugs affecting consumption? Love them. Love them. I mean, if you think about what those drugs actually do, it restricts your calorie count, and calories are energy. And so people are going to have a lack of energy. So what are they going to do with that lack of energy? They're going to hopefully pivot to energy drinks. And I don't know. I don't know if you're taking Ozempic, if a Monster is really like the choice that you would go for. I think we're the natural fit for people that are looking to lose weight. We're the one that have that healthy halo, the fitness background that people will probably look at, because that's probably the choice for me. So, you know, I know that the industry and, you know, in general is looking at these, you know, those Ozempics of the world. And it causes concern, not for us. OK. And then a couple more here. So the gross margin weakness in promotion. Is it because consumers are a bit tight on budget, and hence it's harder just to let them try new products? Is it harder to promote new products than before? Well, we're in a heavily promotional category to begin with. I think it's roughly 26 weeks a year that energy drinks are on promotion. So nowadays, it's more about the depth and breadth of the promotion. Like, instead of going two for $4, maybe do two for $4.50. And it's all about figuring out where that sweet spot is so you can keep as much of that profit as possible while inducing trial or getting people to purchase. So, you know, for us, I don't think we're looking necessarily at the economic situation. People are buying energy drinks even back in 2008 when there was, you know, a catastrophic economic environment. You didn't really see much of a slowdown in energy because, you know, one of the things people will sacrifice is going out to dinners, which is getting incredibly more expensive. But people have that need for their coffee in the morning, their energy drink to help them get them through the day. I think it's something important for them. So I don't think from a pricing perspective, I mean, that's one of the questions we get quite a bit. It's about pricing with Red Bull taking price. And, you know, there's a lot of different things you can do there. If you take price, you can also toggle that price and take it all back and deal it down in promotions. And you start finding that sweet spot of where your ultimate price should be, where you don't lose any consumers, but we were able to pick up some margin. Now, that doesn't mean we're going to take price. We're looking at what the, you know, what our peers are doing. Red Bull's taking it. Does Monster take it? Just because Monster takes it, that doesn't mean we'll take it. There's a lot of different components we look at. There's a lot of different ways you can play around with pricing. OK. All right. Well, one more here, and then we'll call it. So we touched on a little bit of this earlier. But maybe this person's looking for just an update on just how the profile of the consumer has evolved. So it says, historically, the Celsius brand has skewed young, wealthy, female. And I guess they're forgetting that some sort of focus on fitness. As the growth has, you know, accelerated, how has the profile changed? And I guess it says, what yeah, just how has that profile changed? Well, I mean, I think we definitely have a nice 50/50 split male/female, which is something we intentionally wanted to cultivate and make sure that we were never, you know, we were gender-neutral and not polarizing. Because I think that you can see the brands that are out there that really went into it wanting to appeal to females to bring them into the category. I think that's also a myth because you're alienating males, which is, you know, a majority of the category. So I would say we're still at kind of this 50/50 split. I think it was prior, you know, years ago, it was a little bit more female-skewed. And we still are hitting that, you know, like Gen Z, Millennial, and even a little bit older than that as kind of our primary consumer. I think, you know, even breaking that out further, it's spread really well over those consumers. Yeah. I think because of the legacy of the brand, it was, and I think Kyle referenced this earlier. We were actually aged up, I think, versus some of our peers previously. Maybe call it 25-45. And I wouldn't say that we've aged down. We've aged down in the terms of we've brought in this younger consumer where we really over-index in any of the surveys that we've seen out there that the younger consumers really view Celsius as their energy drink. But we haven't lost that older consumer. In fact, what you're finding is we actually have these two subsets of the new to category. You have that younger, call it 18, coming in for the first time. But then you have this other age group that's both male and female, but maybe call it 35-55, where when energy was first coming to fruition and we can all remember the media attention that Monster and Red Bull and Rockstar were getting, it was all negative. People were dying. You know, Congress had to, you know, call everybody into session. You know, so people there was a lot of people apprehensive about entering the category. And what we're finding is there's a lot of people who never entered the category for probably a lot of those reasons. It just didn't feel like it was for them. And because of the positioning of Celsius, the packaging, the different flavor profiles, it's just more inviting. So there's a lot of people. Even at these conferences, when Celsius is being handed out, you see a lot of people consuming it where, I don't know, I just feel like if it was a Monster or something else, you probably wouldn't see the same frequency of consumption. So we have a very broad demo that we're able to tap into. And I think that's what gives us confidence that we can win in any market in the country because we have such a broad appeal. OK. Well, we're at time. So why don't we leave it here? Toby, Kyle, thank you so much for joining us today. We wish you nothing but the best of luck moving forward. Thank you. Appreciate it. Thanks, everyone. Thank you.