Jones Soda Reports Wider Quarterly Loss Driven By Lower Sales Volume, Inventory Write-Off

Jones Soda Co. (JSDA) reported a wider net loss for the fourth quarter of 2024, driven by lower sales volumes and a significant inventory write-off. The company's revenue for the quarter was $2.8 million, down from $3.5 million a year earlier. This decline was primarily due to reduced sales volumes resulting from a transition to a new distributor in Canada and the loss of a discount retail customer in the U.S. during the previous quarter.

The company’s beverages segment, which includes craft soda, HD9, Pop Jones, and Fiesta Jones brands, generated approximately $2.6 million in revenue, down from approximately $3.1 million a year ago. The company’s Cannabis (THC) segment, which includes Mary Jones branded cannabis products, generated approximately $0.2 million compared to approximately $0.4 million a year ago. The gross loss for the fourth quarter of 2024 was $(1.3) million compared to a profit of $0.7 million in the year-ago period. This decline was primarily driven by a one-time $1.2 million inventory write-off and a revenue decrease. During the quarter, the company wrote off inventory after stopping selling some new products, including Jones Plus and Low mg HD9, due to poor market performance. The net loss for the fourth quarter was $4.6 million, or 4 cents per share, compared with a net loss of $1.5 million, or 2 cents per share, a year earlier.

The inventory write-off had significant implications for Jones Soda's financial health and future product development. This write-off was primarily due to the discontinuation of products like Jones Plus and Low mg HD9, which performed poorly in the market. The immediate impact was a gross loss of $(1.3) million for the quarter, compared to a profit of $0.7 million in the previous year. This decline was driven by the one-time inventory write-off and a decrease in revenue.

The long-term effects of this write-off are multifaceted. Firstly, the financial strain from the write-off contributed to a net loss of $4.6 million for the quarter, which is a substantial increase from the $1.5 million net loss in the same period the previous year. This financial setback could limit Jones Soda's ability to invest in new product development and marketing initiatives, potentially slowing down innovation and growth.

Secondly, the write-off highlights the risks associated with launching new products. The company's decision to stop selling Jones Plus and Low mg HD9 due to poor market performance indicates a need for more rigorous market research and testing before full-scale product launches. This experience could lead to more cautious and strategic product development in the future, focusing on products with proven market demand.

Additionally, the write-off underscores the importance of effective inventory management. The company's decision to write off inventory suggests that there may have been overproduction or misjudgment in demand forecasting. Improving inventory management practices could help Jones Soda avoid similar financial setbacks in the future, ensuring that resources are allocated more efficiently.

In summary, the $1.2 million inventory write-off had immediate and long-term financial implications for Jones Soda. It highlighted the need for better market research, strategic product development, and effective inventory management to ensure the company's financial health and future growth.



Despite these challenges, Jones Soda has taken several strategic steps to mitigate the impact of the revenue decline and inventory write-off. In February 2025, the company entered into a new $5 million revolving credit facility with Two Shore Capital to support strategic initiatives for expansion and sales growth. Additionally, Jones Soda expanded its distribution network, securing two new Direct Store Delivery partners servicing major retailers in Q1 2025 alone. The company has also increased its distribution network from 75 partners to 81 partners over the past 15 months, increasing penetration in key national and regional retailers, including Kroger, Albertson-Safeway, Meijer, HyVee, Market Basket, Wakefern-Shoprite, and others across 37 states. These efforts are aimed at stabilizing and growing revenue in 2025 despite the initial setbacks.

The company's full-year revenue increased 15% to $19.1 million, driven by strong performance in beverages and cannabis segments. However, the full-year net loss increased to $9.9 million, reflecting the challenges faced during the year. The company's gross profit margin declined to 21.3% from 29.1% in 2023, and the full-year net loss increased to $9.9 million. The company took a one-time $1.2 million inventory write-off for discontinued products. Under new CEO Scott Harvey, Jones is focusing on operational efficiencies and cost structure optimization.

In conclusion, while Jones Soda faced significant challenges in the fourth quarter of 2024, the company is taking proactive steps to address these issues and position itself for future growth. The inventory write-off and revenue decline serve as a reminder of the importance of effective market research, strategic product development, and efficient inventory management. As Jones Soda continues to expand its distribution network and focus on operational efficiencies, the company aims to stabilize its financial performance and drive long-term growth.