Jones Soda (OTCMKTS:JSDA) raised its fiscal 2026 revenue-growth outlook and introduced guidance for positive adjusted EBITDA, citing strong sales of Fallout-branded products, improving operating efficiency and an expected recovery in gross margin during the second half of the year.
Chief Financial Officer Brian Meadows said second-quarter revenue increased 108% to $10.8 million for the quarter ended June 30, compared with $4.9 million a year earlier. The growth was driven primarily by higher sales volumes of Fallout products through club retail and direct-to-consumer channels. CEO Scott Harvey said the company reported more than 100% revenue growth during the quarter and emphasized that commercial activity continued to build despite the timing of certain shipments.
Fallout Sales Drive Growth as HD9 Declines
Fallout-branded offerings have become a significant source of growth for Jones Soda, according to management. Harvey said the company’s initial Nuka-Cola Quantum Rocket Bottle release sold out rapidly, followed by another limited Rocket Bottle launch that also generated a strong consumer response. The company plans additional bottle launches during the remainder of 2026 and has a Fallout partnership agreement extending through the end of 2028.
Harvey said Jones Soda is being careful about expanding Fallout’s availability beyond its existing club retail format. While individual bottles could enter additional channels, he said the company does not currently expect to distribute the same full-pack club format broadly through retailers such as big-box stores.
Meanwhile, sales from the Mary Jones HD9 adult-beverage business fell sharply. Meadows said HD9 revenue declined to $0.1 million in the second quarter from $0.9 million in the year-ago period, citing regulatory challenges and broader industry declines. Regulations taking effect in November will prohibit the sale of HD9 products containing more than one milligram of THC, Meadows said.
Harvey said both adult beverages and the company’s modern soda offerings have not developed at the pace management expected. He said Jones Soda is responding by directing capital and resources toward areas with what it considers stronger growth and return potential, including core beverages, zero-sugar products and branded collaborations.
Margins Pressured by Freight Costs
Second-quarter gross profit increased 72% to $2.8 million, but gross margin declined to 27.5% from 33.3% in the prior-year quarter. Meadows attributed the 580-basis-point decline primarily to increased freight charges linked to higher oil prices.
The company issued a request for proposals in May to reduce shipping costs on major freight lanes. Meadows said Jones Soda secured rate reductions ranging from 10% to 34% in the Southeast, 35% in the Midwest and 36% in the Northeast, compared with average rates paid from January through May. The lower rates began to affect results in June and July.
Management expects gross margin to return to the 30% range in the second half, assuming West Texas Intermediate crude remains near $80 per barrel. The company is also seeking lower costs for packaging, co-manufacturing, cans and bottles as sales volumes increase.
Sales and marketing expense rose to $1.9 million from $1.1 million, mainly reflecting Fallout royalties and broker fees associated with higher sales. However, marketing expenses declined as a percentage of revenue to 18.7% from 21.7%. General and administrative expense increased 6.7% but declined as a share of revenue to 13.9% from 27.1%.
Jones Soda reported a net loss of $650,000, or $0.01 per share, compared with net income of $2.6 million, or $0.02 per share, a year earlier. The prior-year result included a one-time $3.7 million gain on the disposition of the company’s cannabis business. Adjusted EBITDA loss narrowed to $312,000 from a loss of $739,000 a year earlier.
Zero-Sugar Distribution and New Partnerships
Harvey said the company’s zero-sugar craft soda lineup is an important growth opportunity, particularly as consumers seek lower-sugar and lower-calorie alternatives. Jones Soda launched its Zero Sugar products at Western Canadian Club Stores during the quarter. Harvey said initial sales moved quickly and that the company has already sent additional product for reorders.
The company is seeking to expand Zero Sugar distribution in the U.S. and Canada. Harvey also said Jones four-packs at Walmart have performed above management’s expectations, with stronger sales velocities than prior products sold through the retailer.
Jones Soda announced a collaboration with Rap Snacks after the second quarter ended. The initial lineup is expected to include three custom craft sodas supported by artist collaborations, retail activations and marketing from both brands. Harvey said the partnership could help Jones enter convenience stores, bodegas, inner-city outlets and second-tier grocery locations where the company has had less presence.
Management expects Rap Snacks to begin contributing revenue in 2027, potentially in the first or second quarter. Harvey said the collaboration is intended to diversify Jones Soda’s branded-partnership portfolio beyond Fallout and create new retail opportunities. The company also returned its Crayola collaboration for the 2026 back-to-school season, including six-packs in six flavors and a new fruit punch flavor.
Liquidity, Working Capital and Uplisting Plans
As of June 30, Jones Soda had $2.4 million in cash, down from $3.6 million at year-end. After the quarter, the company completed two private placements that generated approximately $1.9 million in gross proceeds. Management also cited a $10 million credit facility with Two Shores Capital.
Meadows highlighted improved working-capital metrics. Accounts receivable days outstanding fell to 29.4 days from 78.4 days a year earlier, while inventory turnover improved to 6.8 times from 2.8 times. Days payable outstanding declined to approximately 60 days from 122 days, which Meadows characterized as a more sustainable level.
The company has filed an updated S-1 registration statement and plans to continue pursuing a potential uplisting in the second half of 2026. Meadows said an uplisting to Nasdaq or the NYSE would likely require raising between $10 million and $15 million, though he said timing cannot be guaranteed because the process requires regulatory and exchange reviews.
About Jones Soda (OTCMKTS:JSDA)
Jones Soda Co is a Seattle-based beverage company known for its craft sodas featuring unconventional flavors and personalized label artwork. Founded in 1995, the company produces a variety of carbonated soft drinks, including its signature Tomato, Creamy Red & Black, and Blue Bubblegum flavors, alongside diet and zero-sugar alternatives. In addition to traditional soda offerings, Jones Soda has expanded its portfolio to include energy drinks, sparkling waters and limited-edition seasonal flavors that cater to niche consumer preferences.
Beyond its core product lineup, Jones Soda operates a direct-to-consumer ecommerce platform that allows customers to create custom photo labels for special occasions and corporate events.
