Oatly Group AB (NASDAQ:OTLY) Q3 2025 Earnings Call Transcript

Oatly Group AB (NASDAQ:OTLY) Q3 2025 Earnings Call Transcript October 29, 2025

Oatly Group AB beats earnings expectations. Reported EPS is $-0.11, expectations were $-0.63.

Operator: Good day, and welcome to the Oatly’s Third Quarter 2025 Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Brian Kearney. Please go ahead.

Brian Kearney: Good morning. Thanks for joining us today. On today’s call are our Chief Executive Officer, Jean-Christophe Flatin; our Global President and Chief Operating Officer, Daniel Ordonez; and our Chief Financial Officer, Marie-Jose David. Please review the cautionary statement regarding forward-looking statements and other disclaimers on Slide 3, which are integrated into this presentation and includes the Q&A that follows. Please also refer to the documents we have filed with the SEC for a detailed discussion of the risks that could cause the actual results to differ materially from those expressed or implied in any forward-looking statements made today. Also on today’s call, management will refer to certain non-IFRS financial measures, including adjusted EBITDA, constant currency revenue, and free cash flow.

Please refer to today’s release for a reconciliation of non-IFRS financial measures to the most comparable measures prepared in accordance with IFRS. In addition, Oatly has posted a supplemental presentation on its website for reference. I’d now like to turn the call over to Jean-Christophe.

Jean-Christophe Flatin: Thank you, Brian, and good morning, everyone. Slide 4 has the key messages I want you to take away. First, I am proud to report that for the first time since our IPO, we drove profitable growth in the quarter with solid constant currency revenue growth and positive adjusted EBITDA. Second, we are seeing clear signs that our refreshed growth playbook is working, and we are driving positive category momentum in every market where we have fully deployed it. And finally, we are reaffirming our 2025 guidance. Turning to Slide 5. This quarter marks an important milestone for Oatly as we achieved our first quarter of profitable growth. Achieving profitability reflects the disciplined strategic actions we have taken over the past 3 years to strengthen the foundation of our business.

Since Daniel and I joined the company in mid-2022, our sales have increased by over 20% and both our COGS per liter and total SG&A each have been reduced by over 25%. These results are the outcome of a company-wide effort to operate smarter, serve customers better, and position the company for sustained success as we execute our company’s mission. A turnaround like this is not the making of just a few people. It has taken everyone throughout the company to deliver these results. And I therefore want to thank our entire team for their trust, dedication, and effort. To be clear, profitability is not our finish line. It’s a marker of progress, a crucial credibility milestone, and even more important, a ramp-up for future profitable growth. On my first earnings call as this company’s CEO, I spoke to the importance of balancing performance and purpose.

I believe achieving profitable growth is validation that we can achieve our dual mandate of driving both purpose and performance. We see further potential ahead, and we are confident that the steps we have taken have set us on a path for durable, scalable, and profitable growth. This quarter’s performance is a proof point of what this team can accomplish, and this is only the beginning of what’s possible. Turning to Slide 6. Here, you can see the results of the deliberate and disciplined execution of our refreshed growth playbook. Put simply, our refreshed growth playbook is working. Our European and International segments started to roll out this playbook last year, and it grew revenue by over 12% in the third quarter. And the North American segment has started to see early progress, especially in the foodservice channel, which is where execution of these playbooks begins.

Daniel will go deeper on the topic, but we are pleased with the progress we are seeing so far, and we are doubling down on the execution of our strategy. On Slide 7, we are reaffirming our 2025 guidance, and we remain on track to deliver our first full year of profitable growth. We continue to expect constant currency revenue growth of approximately flat to 1%, adjusted EBITDA in the range of $5 million to $15 million and CapEx of approximately $20 million. We will continue to deploy our playbook while maintaining strong cost discipline. We believe this is a winning recipe for our company, and we believe we remain on the right path. Finally, Slide 8, gives an update on our Greater China segment and the ongoing strategic review. Our Greater China business and our Greater China team continue to perform well, and it drove strong profitable growth in the quarter.

The strategic review is ongoing, and we continue to evaluate a range of options, including a potential carve-out with the goal of accelerating growth and maximizing the value of this business. We continue to believe in the future potential of this business. As we mentioned last quarter, we continue to operate in the region, including our Ma’anshan facility, and we remain committed to our customers, our consumers, and our employees while maintaining the safety and continuity of our operations. We will update the market on our progress as is necessary and appropriate. Daniel, over to you.

Daniel Ordonez: Thank you, JC. Good morning, everyone. Slide 10 shows how the Europe and International segment has performed. Revenue grew 12% in the quarter, driven by strong 8% volume growth. This growth is a direct result of the rollout of the refreshed growth playbook. As we’re driving the top line, we’re also expanding margins. The segment delivered another quarter of strong profitability with an EBITDA margin of 18%, which is 700 basis points higher than last year’s third quarter. I am enormously thankful to this team who are really hitting its stride. As we move forward, we expect this segment to drive profit growth primarily through generating incremental consumer demand as we continue to execute against our growth playbook.

Slide 11 shows why we believe we are on the right track with our new growth strategy. Recall that the pillars of our playbook are to drive relevance, to attack barriers to conversion, and to increase availability. To do so, we’re partnering with our customers to make their menus and shelves much more relevant for the taste and flavor obsessed Gen Z generation. We start with our iconic Barista market developers to renovate foodservice menus to be ahead of the trend curve with drinks that use Oatly as a default experience canvas, not just as cow’s milk substitute any longer. As these drinks generate vast awareness, consumer engagement and trial, our growth naturally shows up first in the foodservice channel with retail following. Here you can see that exact dynamic occurring in our E&I segment.

Foodservice growth started to accelerate as we rolled out the playbook late last year, driving 28% year-on-year growth in quarter 3. The retail business has started to accelerate, moving from 4% growth in the last few quarters to 11% growth in quarter 3. On Slide 12, you see this dynamic playing out in a specific market. The takeaway of this slide is that Germany is our success story and an example of how this strategy can and will drive repeatable, consistent results. We rolled out this strategy in Germany late last year with relevant messaging that directly attacks the primary barrier to conversion, taste. We then launched the Lookbook to inspire foodservice customers to renovate their menus with much more interesting and Gen Z-friendly offerings.

These actions have driven foodservice growth over 45% for 5 straight quarters. As consumers engage with our products in the foodservice channel, they naturally look for our products in retail. So that outstanding foodservice growth has led to strong growth in retail, accelerating over 14% year-on-year growth in the last 12 weeks. This strong performance has driven 70 basis points increase in our retail market share of the plant-based milk market and 280 basis points increase in the oat-milk market when compared to full year 2024. And it’s not just Germany, Slide 13 shows that we are seeing similar trends across our largest European markets like U.K. and Sweden. Retail sales growth in these markets was about 4% in the last 12 weeks and have accelerated those growth rates in the last 4 weeks.

In the U.K., we have gained 70 basis points of plant-based market share since 2024. And in Sweden, we have gained 40 basis points. In a nutshell, we see that our experience and taste-driven strategy hits the bull’s eye of what young and not so young generations are expecting. Oatly is creating relevance and generating category demand again. We see this strategy working not only in the big established markets, but also in our expansion markets, where we grew nearly 50% year-on-year in quarter 3 as we continue to create the category. When Oatly enters a new market, we consistently see that it goes all oats. We believe these markets have a long runway for growth, and we’re excited to continue bringing the Oatly magic to more people in more places around the world.

We are convinced that making our customer menus and shelves more relevant by sharing the future trends from around the world is no doubt the way to continue to drive excitement and create the next wave of all drinks category momentum. While each market will have its unique execution and timeline, we’re confident that there is still more runway for expansion everywhere. That is why we’re taking this strategy to the next stage. Slide 15 shows the latest steps in capitalizing on the Gen Z-driven flavor bonanza that is going on across the globe. We have seen an explosion in popularity in Matcha-based drinks. And so we fast track the launch of the Oatly take on Matcha, an incredible product at the center of taste and flavor paradigm, tailor-made for Gen Z to shake, open, and pour.

We then execute our unique foodservice-led and experience-based model. As always, we are at our best when we drive culturally relevant experiences like in music festivals, engaging with content creators or meeting with customers. The engagement has been exceptional. Then to enable consumers to enjoy our products at home, we executed the third pillar of our playbook, which is to increase availability. On Slide 16, you can see several of our in-store executions. These products, not only Matcha, but the top conversion we presented last quarter have been performing very well and are driving truly incremental volume by bringing new young consumers into the category and expanding the consumption of the existing consumer base. Across Europe, we’re seeing examples of these new products quickly becoming the fastest turning in the category and with excellent repeat rates.

Importantly, these new products are accretive to our sales mix and gross margin, which is very encouraging indeed as a business model. But we’re not stopping there. Slide 17 shows what we’re working on. We recently launched our first Future of Taste report, where we interviewed hundreds of baristas and drinks experts from all around the world to identify the key trends that we expect to drive menus going forward. Again, we do not just follow trends, but true to our DNA, we aim at creating them. I encourage you all to read it. But if you don’t have the time, you should know that we have used those insights to inform our latest Lookbook, which we recently launched in Berlin at the global event where we invited customers, media, and opinion leaders from around the world.

Our prior Lookbook was a big success and helped us drive incremental demands with provocative drinks and unexpected recipes that totally changed the way in which consumers view oat milk. It is no longer just an alternative to cow’s dairy, but an exciting canvas to experience drink in the broader and more exciting beverage space that is way bigger than only coffee. Turn to North America on Slide 18. We continue to face the discrete headwinds that we have discussed in the past, including a large customer sourcing change and the frozen SKU rationalization. Importantly, though, we made underlying progress. Excluding the impacts of those headwinds, the segment has grown revenue by 5% in the quarter and by 4% year-to-date. We believe these growth rates are a better representation of how the underlying business is actually performing.

We have clearly reduced our dependence on our largest foodservice customer as they represented just 10% of the segment’s revenue in the quarter compared to nearly 30% 3 years ago. This enhanced diversification increases our flexibility to pursue growth where it is most strategic. As we move forward, we are open to partnering and growing with any customer if they are supportive to our mission, helpful in building our brand, and committed to growing the category profitably. As we have started to roll out the playbook, we have found that many new customers checked all those boxes. On Slide 19, you can see that our North American foodservice business, excluding the largest customer, grew up by 11% in the quarter as we are building momentum with the playbook.

Our relevant messaging using the unique Oatly voice to inform consumers that they are likely to prefer Oatly to cow’s dairy. These executions are in super high-traffic areas such as train stations, you see on this slide. And then when consumers are at their local coffee shop, they can now order interesting social media-ready drinks that use oat milk as the default base. On Slide 20, you can see, we have also continued to make progress in retail, where total revenue increased by 4% in the quarter. This growth was helped by extending our relevant messaging to in-store executions. Additionally, I am excited to see the growth contribution by strong club sales, which have rapidly increased to 6% of the segment’s quarter 3 revenue compared to less than 1% in 2024.

We’re driving strong velocities, and we expect clubs to be a growth driver for us. Today, we’re in 5 Costco regions, and we expect to add more clubs and more SKUs in the near future. While foodservice and club sales are not in the scanner data you tracked closely, these are high-quality channels that are very helpful in building our brands, growing the category, improving profitability, and ultimately delivering on our mission. As I mentioned last quarter, we are being thoughtful, deliberate, and disciplined in rolling out our playbook in North America. Given the success in Europe and international, we know what’s possible. We continue to see that the underlying category, coffee, and consumer trends are extremely similar in both regions. However, our execution is a few steps behind and we’re still in the very early stages of rolling out our playbook.

The U.S. market is also more complex. And what we expect, we will continue to improve. We do not expect the growth acceleration to come as quickly as we have seen in the Europe and International markets. Make no mistake, though, we are committed to driving the performance that we expect in these critical segments. And we’re confident that with sharp, locally relevant execution, our playbook can drive strong profitable growth in North America, but step-by-step. Turning to Greater China, on Slide 21. Our Greater China team continued to execute well in a challenging consumer environment. The segment posted strong growth in both channels. The foodservice business, which is the largest part of this segment, grew revenue by 18% in the quarter, and we maintained strong relationship with the largest coffee chains.

We have continued to develop the retail channel with our entrance into club. In the quarter, the segment’s retail volume reached an all-time high. And the segment drove positive adjusted EBITDA in the quarter and on a year-to-date basis. I am proud that the teams have remained focused on the business as we execute the ongoing strategic review. They have continued to build the business and service customers very well. I will now turn the call over to Marie-Jose. MJ.

Marie-Jose David: Thank you, Daniel, and good morning, everyone. Slide 23 shows the quarterly P&L, which is our best performance as a public company. This quarter, we grew revenue 7.1% and 3.8% on a constant currency basis. Gross margin was 29.8%, which is flat compared to last year Q3. Adjusted EBITDA was a positive $3.1 million in the quarter, which is $8.2 million higher than last year Q3. Slide 24, shows the bridging item of our revenue growth. Volume grew 6.6%, partially offset by a 2.8% decline in price mix. Foreign exchange was a 3.2% tailwind. Slide 25, shows our year-over-year gross margin bridge. The benefits of absorption and supply chain efficiency improved margin by 60 basis points. This includes the benefits of the closure of our Singapore manufacturing facility in December.

These benefits were partially offset by the impact of lower volumes in North America, including absorption headwinds and supplier penalties that were higher than anticipated as we true up our accruals. We expect fewer supplier penalties in Q4. Pricing and product mix was neutral to gross margin in the quarter. The benefits of our strategic mix management in Europe and International and customer mix in North America were offset by unfavorable product mix in Greater China. We experienced a 90 basis point headwind from inflation in the quarter, which was mainly driven by higher labor costs in our European supply chain. Finally, the impact of foreign exchange movements added 30 basis points. Slide 26, shows the year-over-year improvement in our adjusted EBITDA.

The $8.2 million improvement was driven by a $4.3 million increase in gross profit and a $3.8 million decrease in SG&A and other. The reduction in SG&A reflects the ongoing work for a more fit-for-purpose cost structure. These reductions are from various areas, including indirect procurement that we mentioned last quarter and were partially offset by the impact of FX movements. Slide 27, shows segment-level detail. Europe and International grew volume by 8.4%, which highlights that our growth playbook is working. This strong growth drove a $9.5 million increase in the segment adjusted EBITDA. North America’s 10.1% revenue decline was driven mainly by the change in sourcing strategy at a large customer. The segment’s adjusted EBITDA declined $4.5 million compared to the prior year, which was mostly driven by the decrease in revenue.

Greater China grew constant currency revenue by 28.7%, which was higher than we expected. This outsized growth was impacted by the timing of customer orders, and we do not expect sales to be as strong in the fourth quarter. Corporate improved by $3 million as we continue to drive out costs. Turning to our cash flow, on Slide 28. In the quarter, free cash flow was a net cash outflow of $5 million, which is $22 million better than last year third quarter. As a big driver of our cash flow improvement has been working capital. Year-to-date, our total working capital as reported in the cash flow statement was a $20 million cash inflow. In the quarter, our cash conversion cycle was below 40 days, which is the best level since our IPO, driven by strong processes to manage inventory, collections, and payment terms.

I continue to see good progress through the company and I believe we still have room for improvement. Turning to Slide 29. In September, we disclosed that we signed a series of transactions to improve our capital structure and our financial foundation. The transactions were fully executed at the beginning of October. Specifically, we reduced the size of our revolving credit facility to SEK 750 million, which is a more appropriate size for our asset-light strategy. We issued SEK 1.7 billion of Nordic bonds. We prepaid our Term Loan B, and we repurchased and canceled a portion of our convertible notes. These transactions will be fully reflected in our financial statements starting next quarter. This slide shows the impact of the transactions on certain financial items of our go-forward business.

We expect to save approximately $5 million in annualized interest expense, which is a 7% reduction. These savings will hit the finance expense line in our P&L. Finally, the repurchase of convertible notes reduced the potential dilution from the convertible notes. We benefit from both the reduction in outstanding convertible notes as well as the avoidance of any future peak interest. The potential dilution from the convertibles is approximately 40 million shares lower or approximately 10%. This equals to 2 million ADS. On Slide 30, we are reaffirming our outlook for our main guidance metrics. We continue to expect constant currency revenue growth in the range of approximately flat to plus 1%. This full year range is slightly below our year-to-date growth of 1.4% and Q3 growth rate largely due to a shift in timing of sales in the Greater China segment.

Based on recent FX rates and assuming no change for the rest of the year, we estimate FX to add approximately 250 basis points to full year net sales growth versus our prior expectations of 150 basis points. For adjusted EBITDA, we are reaffirming the range of positive $5 million to $15 million. Given our year-to-date performance and outlook for the fourth quarter, we are likely to be in the bottom half of that range. Our guidance continued to assume no direct impact from U.S. tariffs. We also assume that the current economic conditions and consumer behavior will remain largely consistent for the rest of the year. Finally, we continue to expect CapEx to be approximately $20 million for the full year. This concludes our prepared remarks. Operator, we are now ready to take questions.

Operator: [Operator Instructions] The first question comes from Andrew Lazar with Barclays.

Q&A Session

Andrew Lazar: I guess, first off, you were able to reaffirm your constant currency top line sales guide for the year. It looks for very modest growth. That’s obviously inclusive of some of the onetime headwinds in North America and the discontinuation of some of the frozen products in the region. It’s obviously still early to give any specific ’26 guidance. But as we start to lap some of these onetime headwinds in North America and momentum in Europe remains strong, how are you thinking through what sales growth might look like next year? And what are the sort of the key puts and takes to consider? And then I’ve got a follow-up.

Daniel Ordonez: Andrew, it’s Daniel here. I will take your question, if that’s okay. As you said, it’s early to talk about 2026, but this is how we’re thinking about the business at the moment, and it’s going in the direction you’re suggesting. First, in Europe, we see solid continuity of the playbook that is clearly working. As we prepared in the prepared remarks, we see profit growth via demand generation. That’s what we see in Europe, and I will unpack it for you a little bit. In the U.S., we will continue to see step-by-step progress. That’s the way we see, without the one-offs, right, that we will be lapping eventually in 2026. So how to think about Europe and how to think about profit growth via demand generation? I think it’s a combination, Andrew, of a much stronger portfolio with focus on new usage drink occasions that are really allowing the taste strategy to bring more exciting recipes to foodservice customers and grow share of shelf.

The growth of share of shelf in retail is very significant at the moment. To that, you should add an increase of the critical mass of the expansion markets. So as Oatly growth returns, so does the category. That’s what we are looking in Europe at the moment. And we’re confident that with the new playbook, the category growth overhaul will take a little bit of time, but we’re already seeing very, very concrete signals that we’re in a good path. When it comes to the U.S., as I was just saying, we see progress. If you exclude the one-off effects, we see the highest sales on records in both channels, retail and foodservice. We continue to outperform the market and also competitors in a market that continues to show softness in retail, and I underline, in retail.

Why do I underline in retail? Because, of course, you need to — you have to expect, Andrew, a bit of a one-off portfolio delisting to continue to hit us for the rest of this year and the start of 2026. Normally we should be lapping that and start with a clean base as of quarter 2. And then you will see some new distribution coming. So there is more distribution to go as of quarter 1 2026. Second to that, you need to add clubs. Clubs is an exciting prospect. We see velocities mounting and significant expansion still to take place, as we prepare in the prepared remarks and at least 2 more Costco regions. The most interesting parts, to give you more color, Andrew, is foodservice. You see the double-digit growth quarter-on-quarter. And that is already proof that, it’s initial proof that the playbook is also working in North America in the channels in which we can activate faster and more strongly.

That’s as far as I can share with you today, I believe, Andrew. I hope that’s okay.

Andrew Lazar: And then just a quick follow-up on Slide 11. It looks as though the European retail consumption for the oat milk category accelerated in the third quarter, surpassing that of plant-based milk category overall. And that had not been the case, I guess, in any of the prior 3 quarters. I guess what would you attribute the acceleration to? And would you expect the trend of oat milk taking share within plant-based to continue in Europe? Or were there any extenuating circumstances that made this quarter sort of more of a one-off?

Daniel Ordonez: Yes. Thank you, Andrew. Daniel again. Yes, I — certainly, the attribution is to the experience and taste strategy. It’s clearly driving consumer relevance and is creating category demand, again, in Europe. If you ask me, we — were we expecting to see this, this fast? Possibly not. The reality is that we see concrete signs that with Oatly’s growth, the category growth follows. You will remember, we use that phrase that we differentiate plant-based milks from oat milk from Oatly. That’s exactly what we’re seeing again. So we see strong volume growth and even oat milk penetration, Andrew, we talked these many times, penetration is a marker of category growth that is the hardest. We see some decimals of category penetration showing signs of growth.

What we see is that it clearly hits a bull’s eye of what Gen Z are expecting: Flavor, excitement, well-being, and sustainability. So this new strategy puts us a bit of — in the center of the storm in the forefront of this much bigger beverage space that we had in one of our slides in the presentation. We’re making both foodservice menus and shelves in retail more relevant and way more exciting, more colorful, more exciting. So that’s why I like this phrase that we used for the prepared remarks that it’s a bit of a reframing of the category, what we’re seeing, Andrew, and time will tell, but it’s not just an alternative to milk any longer, but an experience canvas for drinks that is relevant to all and not just for a few, right? As we lap the first generation of plant-based growth, we are indeed creating the, what we call internally the second revolution.

We are implementing the same playbook in the U.S. with positive signs in foodservice, as I said. So I’m sure you were thinking about the U.S. and so were we every day, the U.S. being a bit more complex. So it will take a bit longer to close the cycle in retail, which you know is a much more slow-moving channel. I hope that’s okay, Andrew.

Operator: The next question is from Tom Palmer with J.P. Morgan.

Thomas Palmer: I wanted to just first ask on kind of some of the trialing that you’ve mentioned this quarter and also in some recent quarters, how the taste preference is a great way to highlight or, I guess, a great differentiator and way to drive traction with customers. What are the most effective ways you found to, I guess, get customers to trial? And maybe some color on kind of how that plays out. I mean it does seem like there is some distribution opportunity, especially in the U.S. that you’re starting to take advantage of. So just kind of driving the trial to bolster that.

Daniel Ordonez: Very good, Tom. So Daniel here again. I will try my best not to repeat, the part of the answer of Andrew were blended in your question, I guess. We believe we’re really capitalizing on this taste and flavor bonanza as we like calling it internally, right? So that has transformed coffee, as you know, from hot to cold and much more of a beverage space than coffee. So how do we generate trial, which was your question? You know that Oatly has this proprietary way of looking at business, which is we have been, since our inception, intimately woven into the coffee space. Today we’ve built an iconic team, Tom, of over 60 Barista market developers who spend more than 1,500 hours a week in coffee shops from Mexico City to Seoul to Paris.

And they are dedicated to working directly with our partners to making their menus more relevant as they capture the evolution of coffee in — really, really in the early stages of the change curve. So that is what we believe, and that is how we generate the trial. So people should experience these signature drinks first. And then we scale it up. We have a very concrete monetization strategy, which is how does that show up in retail. We — you might remember from the last quarter, we talked about the popcorn flavor, which is flying off the shelves and now we added the Matcha Oat drink. So these are drinks that have — people have tried in foodservice, they have tried in concerts and in pop-up stores and then they find in the retail for them to take home.

And that is a bit of the circle or the flywheel, if you want, as to how we see the business model working. That’s what I can add, Tom, to your question.

Thomas Palmer: And then just on the guidance, and you did provide, not a super wide range here in terms of EBITDA. But when thinking about kind of the upper end versus the lower end of the range, what are kind of the key swing items that you’re watching?

Marie-Jose David: Yes. Hello, Tom, this is Marie-Jose. So as we said, I’m going to repeat a little bit what we already said in the prepared remarks. If you look at Q3, right, from a top line standpoint, you do know that there is a timing shift here going into Q4. When it comes to gross margin, if you take back what we said in the prepared remarks, there is an impact that it’s a true-up that happened in Q3 that will not happen in Q4. So we expect this impact to be for about 200 to 300 basis points in Q4. And then if you take that from a gross margin standpoint and you add the work that we’re doing in SG&A, which has been, and you can see that we have made improvement in our Q3 results as well, the combination of the 2 is what will drive a few million dollars to impact in Q4. So if you look at the evolution and the continuous improvement, what I just said explains why we just call out the low end range of our guidance.

Thomas Palmer: I apologize. I meant — I thought it was the bottom half of the range, so essentially the 5% versus the 10%.

Marie-Jose David: Yes, correct. This is — I mean, the way to look at it is it will be on the lower half because of how we are looking at Q4 when it comes from a phasing standpoint on the top line with the true-up that will not happen in gross margin in Q4. And that combined with our SG&A improvement will make the adjusted EBITDA on the lower half for the full year.

Operator: The next question is from the line of Dara Mohsenian with Morgan Stanley.

Dara Mohsenian: So you’ve done an impressive job reinvigorating growth in Europe in the last few quarters. As you mentioned, North America is taking more time. Just anything you’ve learned in Europe from your success there that you think is applicable to the North American market as you think about returning to consistent growth in that region? Obviously, separate consumer dynamics in the 2 regions and the U.S. is a complex market, but any cross-geography learnings you think can be applied? And just as we look forward to 2026, can you just give us a bit more detail on plans to drive greater household penetration in the U.S., more conversion of the oat milk category, the club expansion maybe is perhaps part of that? But just as you think about really trying to unlock new customers for this category, what are the biggest focus points for you?

Daniel Ordonez: Dara, how are you doing? That’s Daniel here again. Yes, as you can imagine, we think day in, day out about that question. So — and we — yes, the way which I would like to start addressing that is that we are confident, we’re very confident that we will be able to drive strong and profitable growth in the U.S. We believe — strongly believe, and I will unpack it for you. We believe it’s a matter of when as opposed to a matter of if, right? So why — the first part of your question, why do we believe that is the case? Well, first, you see — because we see that the evolution of the European and the American consumers in our space is fundamentally similar. I underline, in our space, right? Based on the hard evidence of the underlying consumer trends and the real-life experience of pulse check we have from our Barista market developers.

You saw what I answered to Tom, we have over 60 Barista market developers in different cities in the world scanning what is — how is the change curve happening. And the 3 points that substantiate that, Dara, are the coffee space. It has developed identically in both regions from hot to cold and into experiential beverages. You see exactly identical trends. And you see a lot of customers now pivoting from London to New York in the foodservice space, for instance, right? So that’s #1. #2, younger consumers, Gen Z, but then the Alphas are obsessed with flavor and taste. Obsessed. And #3, as we have mentioned in a couple of quarters ago, the preconceptions on taste for plant-based drinks are the #1 barrier to conversion in both regions. When we do blind taste tests in dairy versus Oatly, we see that both in the U.S. and in Europe, in many markets, the same 50% preference for Oatly everywhere.

So that’s the fundamental. The second one is that we see it working already in coffee and foodservice. So remember that when we look still and when you look at these segments, you are going — we are navigating headwinds that have to do with this large customer that I want to underline now represents only 10% of our revenue. And also some delistings of adjacencies that didn’t fully work, right? So when you remove that, we see it working in coffee and in foodservice, where customers are more receptive to the strategy I was describing, Dara, and so we can move faster. So we do believe that the taste-focused approach is the right approach for the U.S. And of course, we’re adapting the nuances on taste, and we’re adapting to nuances on formats.

We are under no illusion that things are identical when it comes to the product offering in both markets. Now I will pause there to say what are the differences. The U.S. market is very large and more complex. The most notable difference, Dara, is the timing of shelf resets at retail. Typically does once a year and very, very strict and narrow windows. So while these differences and complexities might make progress lower than in Europe, and it will, inevitably, we believe. The important thing is that we understand the differences, and we set the course in the right direction. So we expect progress, but step-by-step.

Dara Mohsenian: And then just on the profitability front, obviously, EBITDA progress this year. Just as we look beyond the guidance that’s in place for this year, any thoughts around being able to drive continued cost savings, whether it be efficiencies on the supply chain front or SG&A in the broader organization as we look out to 2026 and beyond?

Jean-Christophe Flatin: Thank you, Dara, Jean-Christophe speaking. Just to be clear, we will continue harvesting savings on both fronts, both supply chain and SG&A. What was initially 2 to 3 years ago, a turnaround urgent necessity has become a permanent daily mindset. So all the teams are permanently looking for opportunities to be more efficient, leaner, and drive more impact with the same amount or even less of resources. So this continuous improvement obsession is all around and will continue in ’26. As you can imagine, we are still in the middle of the budget planning. So too early to translate that statement into figures, but that’s exactly what we will continue to do.

Operator: The next question is from John Baumgartner with Mizuho Securities.

John Baumgartner: I’m curious, coming back to North America in terms of the profitability there, quarterly EBITDA has been bouncing around breakeven now since, I guess, early 2024. And presumably, some of the operating leverage benefits have now leveled off. I’m curious, in the context of this ongoing productivity, how are you thinking about the margin evolution in the region going forward? Short-term needs for incremental reinvestment relative to new opportunities for efficiencies, what those efficiency buckets might be? And then long-term, how do you anticipate North America margins at normalized levels relative to those in Europe?

Daniel Ordonez: John, I’ll start by, I think MJ possibly will complement or JC here as well. There is a very, very clear and concrete part of your question, which is the volume decline in North America have consequences, of course, in the levels of absorption and some of the penalties that MJ was referring to. So that is the attribution to the — yes, we call it lack of progress, if you want, as we would have intended in North America as we are lapping those effects eventually during quarter 1, quarter 2, as I mentioned in one of the previous questions on both foodservice and on the adjacencies, we do see underlying growth. So you see — you should be seeing those 2 lines crossing in the future. Now there is absolutely nothing structural or long-term that you should be concerned about.

And here, we have set very clear long-term guidelines for both our margin and profitability. And we have said consistently that we believe that the U.S. should be driving strong profitable growth in the near future. It’s only that the top line has been more stubborn for the reasons that we have explained so many times. There are some mechanical events that we’re still lapping. Some of them are not under our full control. And we are focused relentlessly on driving consumer demands as we see already in clubs and as we see already in foodservice. So we will be relentless there. And then with volume and with demand generation, you will eventually see what we’re seeing in Europe, which is profit growth through consumer demand.

John Baumgartner: And then looking at Europe, a lot of conversation about the oat milk part of the category. But I’m curious, given how well established plant-based beverages are in general in the region, what are you seeing from some of the other varieties, soy milk, hazelnut? How do you think about the competitive advantage of oat, whether it’s formulation being used in creamers? I’m curious what you’re seeing with interactions with other plant-based varieties. Are volumes softer? Do you see more price competition from other varieties? Can that price competition derail some of the progress that you’re making in oat? Just your thoughts on the competitive environment in Europe.

Daniel Ordonez: Very good. There are many elements of your question. It’s Daniel again here, John. First, you see it’s not necessarily more established. You’re talking about 30% penetration. So this category, when you look with perspective compared to all the categories were used to manage you, us, is on its infancy. So we look at a notion of opportunity of 70% category penetration ahead of us. That’s how we look at the category. And when you look at it like that, you are creating new consumer demand. You’re bringing new consumers into the category and you’re bringing new consumers into a category that why the new generations is not seen just as an alternative to cow’s dairy. That is the most exciting, not that we have nothing — we’re not changing our mission.

Our mission is still identical, and we believe in our mission. It’s just that bringing more people into this category takes a different playbook. So that is the most important part of addressing your question. Then as coffee evolves into beverages and new Gen Z and Alpha are kicking in, yes, you see some other crops evolving, but from a very, very small base. The reality is, as I said, I believe, to Andrew at the beginning, the macro dynamic we see in Europe, whether it’s in the established market for Oatly, on the new is, Oatly growth outgrows the oat milk category, and then that drives plant-based milk penetration and growth. That’s the phenomenon we see today. Then the third angle to your question is pricing. You see, we command a strong premium in Europe.

We have said this many times, there will always be space for pricing and private labels. That’s not our market. And we respect consumers that go for price. That’s not our game. We are in a value game, and we feel very, very comfortable in it. So — and we’re driving growth and profitability in it. So that is, in a nutshell, the way we see Europe at the moment.

Operator: The next question is from Samuel [indiscernible] with Nordea Markets.

Unknown Analyst: Perhaps one question from my side. Looking at the financials, sequentially, we didn’t see any improvement in free cash flow from Q2 despite the decrease in the cash conversion cycle. I’m just curious that how much there is still to squeeze from and what you would expect to be the magnitude for the next improvement in the coming quarters regarding the free cash flow?

Marie-Jose David: Hello, Samuel, this is Marie-Jose. So look, since I joined Oatly 2 years ago, I’ve been repeating how cash is important to me and to the company. And this quarter, as you just mentioned, is another proof point of how much we are progressing on that field. So how to look at it? You know that we’ve been working through a couple of building blocks. First one, of course, is to continue our P&L profitability journey. Second is definitely to double-click on good practices and processes. And we do know that we have room for improvement when it comes to working capital. You saw the slide on the deck that as well show the improvements we’re making, not only from a free cash flow, but as well on the cash conversion cycle.

And then on top of that, we remain disciplined on CapEx, and you saw that as well as we go. So I’m not going to call any numbers or any evolution. But if you take all those building blocks and you look at how we have been continuously improving, it’s a matter of time. We are on track. We are delivering our business plan. We are fully funded. It’s a matter of time. This is all what I can tell you.

Operator: This concludes our question-and-answer session. I would like to turn the conference back to Brian Kearney for any closing remarks.

Brian Kearney: Great. Thanks, everyone, for joining us today. If you have any follow-up questions, please feel free to reach out to me, and we can set something up. Have a great day.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.