Oatly's Q3 2025: Contradictions Emerge on North America Sales Strategy, European Market Share, Gross Margins, and EBITDA Guidance

Date of Call: October 29, 2025

Financials Results

• Revenue: Revenue grew 7.1% YOY (3.8% on a constant currency basis) in Q3
• Gross Margin: 29.8%, flat versus Q3 last year

Guidance:

• Constant currency revenue growth for 2025 expected approximately flat to +1%.
• Adjusted EBITDA guidance range of $5M to $15M; company expects to be in the lower half of the range.
• Capital expenditures expected to be approximately $20M for the full year.
• FX now estimated to add ~250 basis points to full-year net sales growth (vs prior 150 bps assumption).
• Assumes no direct impact from U.S. tariffs and stable macro/consumer behavior for the remainder of the year.

Business Commentary:

• Profitability Milestone:
• Oatly Group AB achieved its first quarter of profitable growth, marking a significant milestone with solid constant currency revenue growth and positive adjusted EBITDA.

• This was driven by disciplined strategic actions taken over the past three years, including a 25% reduction in both COGS per liter and total SG&A, reflecting a focus on operational efficiency and cost reduction.

• European and International Revenue Growth:

• The Europe and International segment grew revenue by 12% in Q3, driven by strong 8% volume growth.

• The growth was a result of the rollout of a refreshed growth playbook, which has expanded margins and improved profitability with an EBITDA margin of 18%.

• North American Market Challenges and Progress:

• North America's revenue declined by 10.1%, primarily due to a large customer sourcing change and frozen SKU rationalization.

• However, excluding the impacts of these headwinds, the segment showed a 5% revenue growth, indicating underlying progress.

• Greater China Segment Performance:

• The Greater China segment reported strong growth, with the foodservice business growing by 18% and retail volume reaching an all-time high.
• This growth was attributed to strategic execution and ongoing customer relationship maintenance amidst a challenging consumer environment.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted "first time since our IPO" of profitable growth and "positive adjusted EBITDA," CFO reported revenue up 7.1% (3.8% cc) and gross margin of 29.8% flat YOY, and the team reaffirmed 2025 guidance while describing the growth playbook as working across markets.

Q&A:

• Question from Andrew Lazar (Barclays Bank PLC): As we start to lap some one-time headwinds in North America and momentum in Europe remains strong, how are you thinking about what sales growth might look like next year and the key puts and takes?
  Response: Europe: playbook driving demand-led growth; U.S.: step-by-step recovery as one-offs are lapped and foodservice/clubs distribution expands—early but directionally positive for 2026.

• Question from Andrew Lazar (Barclays Bank PLC): What drove the acceleration in European oat-milk consumption vs plant-based milk this quarter and will that trend continue?
  Response: Acceleration attributed to the "experience and taste" playbook resonating with Gen Z, creating category demand; management expects the trend to continue as playbook scales.

• Question from Thomas Palmer (J.P. Morgan): What are the most effective ways you've found to drive trial and how does that translate into distribution, especially in the U.S.?
  Response: Primary trial engine is foodservice via 60+ Barista market developers to create signature drinks, then scale successful flavors into retail (e.g., popcorn, Matcha) to complete the foodservice-to-retail flywheel.

• Question from Thomas Palmer (J.P. Morgan): Regarding the EBITDA guidance range, what are the key swing items between the upper and lower end?
  Response: Key swings are Q4 gross-margin phasing (impact from a Q3 true-up) and continued SG&A improvements; these factors point to FY adjusted EBITDA likely in the lower half of $5M–$15M.

• Question from Dara Mohsenian (Morgan Stanley): What learnings from Europe are applicable to North America to return to consistent growth, and how will you drive greater household penetration (e.g., club expansion)?
  Response: Same consumer trends (taste-driven) apply; playbook will be deployed with local nuances—focus on foodservice momentum, club expansion and tailored retail execution; progress expected step-by-step.

• Question from Dara Mohsenian (Morgan Stanley): Any thoughts on continued cost savings (supply chain, SG&A) for 2026 and beyond?
  Response: Company will continue harvesting savings across supply chain and SG&A via a permanent continuous-improvement mindset; too early to quantify but ongoing.

• Question from John Baumgartner (Mizuho Securities USA LLC): How do you see North America margin evolution given recent volatility and what efficiency or reinvestment levers exist; long-term margins vs Europe?
  Response: NA margins were impacted by volume-driven absorption and supplier penalties; as volumes recover via demand generation (foodservice, clubs), absorption will improve and margins should recover—no structural long-term concern.

• Question from John Baumgartner (Mizuho Securities USA LLC): What are you seeing from other plant-based varieties in Europe and can price competition derail oat progress?
  Response: Category penetration remains low so significant upside exists; oat commands a premium and Oatly focuses on a value proposition—private labels address price-sensitive segment but management sees continued growth and profitability for Oatly.

• Question from Unknown Analyst (Nordea Markets): Sequentially you didn't see free cash flow improvement from Q2 despite a lower cash conversion cycle; how much more can be squeezed and what magnitude of improvement do you expect?
  Response: Progress continues across P&L, working capital and disciplined CapEx with room for improvement; management declined to give numeric guidance but says they are on track and fully funded.

Contradiction Point 1

North America Sales Growth Strategy

It involves differing perspectives on the sales and growth strategy in North America, which impacts investor expectations and market positioning.

How are you thinking about 2024 sales growth, considering the one-time North America headwinds and product discontinuations this year? What key factors should be considered for next year’s guidance? - Andrew Lazar (Barclays Bank PLC, Research Division)

2025Q3: We see progress, with the highest sales on records in both foodservice and retail, excluding the large customer effects. We expect more distribution and club sales to grow significantly. Foodservice is already showing double-digit growth quarter-on-quarter, proving the playbook's effectiveness. - Daniel Ordonez(COO)

Has there been a recent increase in promotional activity in the U.S., and should we be aware of any industry changes as we start 2025? - Daniel Ordoñez (Global President and COO)

2024Q4: We are feeling good about our performance in the U.S. Not only because of the strong performance of foodservice and the takeoff of customized and super premium, but also because of the overall strength of Oatly in the U.S. - Daniel Ordoñez(COO)

Contradiction Point 2

European Market Share and Growth Strategy

It highlights the differing perspectives on the company's strategy and market share trends in the European oat milk category, which is a critical growth region for the company.

What factors contributed to oat milk surpassing the broader plant-based milk category in European retail consumption during Q3, and will this trend continue or was it a one-time event? - Andrew Lazar(Barclays Bank PLC, Research Division)

2025Q3: The attribution is to the experience and taste strategy, creating consumer relevance and category demand in Europe. We see strong volume growth and increasing oat milk penetration. This strategy hits the bull's eye of what Gen Z expects, making oat milk a center of the beverage space rather than just an alternative to milk. - Daniel Ordonez(COO)

Is the North American volume decline due to frequency or penetration issues, and how is protein content related? - John Joseph Baumgartner(Mizuho Securities USA LLC, Research Division)

2025Q2: Penetration for oat milk in the U.S. is stable, and Oatly's penetration has shown consistent growth. The protein topic is more of a value phenomenon than a volume one. - Daniel Ordonez(COO)

Contradiction Point 3

North America Gross Margin Outlook

It involves differing expectations regarding gross margin performance, which is a critical financial metric for investors and stakeholders.

Can you provide an update on your gross margin outlook given recent progress? - Max Davenport (BNP Paribas)

2025Q3: Gross margin is expected to increase compared to last year. Factors driving this include supply chain improvements, contract negotiations, and product mix. Key variables could influence where we land, but we continue to progress towards our long-term target of 35%-40% gross margin. - Jean-Christophe Flatin(CEO)

What caused the price mix drag in Europe this quarter and what are your expectations for the remainder of the year? - Max Davenport (BNP Paribas)

2025Q1: Gross margins for Q3 are expected around 75%, with full-year guidance in the mid-70s. - Jean-Christophe Flatin(CEO)

Contradiction Point 4

EBITDA Guidance and Timing of Sales

It involves differing expectations regarding EBITDA guidance and the timing of sales, which are critical for financial planning and investor expectations.

Given the narrow EBITDA guidance range, what key factors could impact the upper versus lower end of the range? - Thomas Palmer (JPMorgan Chase & Co, Research Division)

2025Q3: We expect a timing shift impacting sales in Q4. This, along with supply chain efficiencies and SG&A improvements, will move adjusted EBITDA to the bottom half of the guidance range. - Marie-José David(CFO)

What is the expected timeline for supply chain productivity improvements in 2025? - Elsa Evans (JPMorgan)

2024Q4: For 2025, we expect significantly greater progress in our gross margin target, we expect adjusted EBITDA margin improvement of 5 to 7 points. - Marie-José David(CFO)