Monster Beverage Corporation

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Business

When this report uses the words “the Company”, “we”, “us”, and “our”, these words refer to Monster Beverage Corporation and its subsidiaries, unless the context otherwise requires. Based in Corona, California, Monster Beverage Corporation is a holding company and conducts no operating business except through its consolidated subsidiaries. The Company’s subsidiaries primarily develop and market energy drinks, and to a lesser extent, craft beers, flavored malt beverages (“FMBs”) and hard seltzers.

Pricing Actions

We implemented price increases in the fourth quarter of 2025 (for core brands and packages) in the United States and at various times in certain international markets during 2025 (collectively, the “Pricing Actions”). The Pricing Actions positively impacted gross profit margins in 2026 as compared to 2025.

Overview

We develop, market, sell and distribute energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names:

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We also develop, market, sell and distribute craft beers, FMBs and hard seltzers under a number of brands, including Jai Alai® IPA, Florida Man® IPA, Dale’s Pale Ale®, Wild Basin® Hard Seltzers, Dallas Blonde®, Deep Ellum^TM IPA, Perrin Brewing Company® Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast^TM, Beast® Tea, Blind Lemon®, Blinder Lemon^TM and other brands.

We have four operating and reportable segments: (i) Monster Energy® Drinks segment (“Monster Energy® Drinks”), which is primarily comprised of our Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks, Reign Storm® total wellness energy drinks, Bang Energy® drinks and FLRT^TM total wellness energy drinks, (ii) Strategic Brands segment (“Strategic Brands”), which is primarily comprised of the various energy drink brands acquired from The Coca-Cola Company (“TCCC”) in 2015 as well as our affordable energy brands, Predator® and Fury®, (iii) Alcohol Brands segment (“Alcohol Brands”), which is comprised of various craft beers, FMBs and hard seltzers and (iv) Other segment (“Other”), which is comprised of certain products sold by American Fruits and Flavors LLC, a wholly-owned subsidiary of the Company, to independent third-party customers (the “AFF Third-Party Products”).

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During the three-months ended March 31, 2026, we continued to expand our existing drink portfolio by adding additional products to our portfolio in a number of countries and further developed our distribution markets. During the three-months ended March 31, 2026, we sold the following new products to our customers:

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In the normal course of business, we discontinue certain products and/or product lines. Those products or product lines discontinued in the three-months ended March 31, 2026, either individually or in aggregate, did not have a material adverse impact on our financial position, results of operations or liquidity.

Our net sales were $2.35 billion for the three-months ended March 31, 2026. Net changes in foreign currency exchange rates had a favorable impact on net sales of approximately $89.3 million for the three-months ended March 31, 2026. Net sales on a foreign currency adjusted basis increased 22.1% for the three-months ended March 31, 2026.

The vast majority of our net sales are derived from our Monster Energy® Drinks segment. Net sales of our Monster Energy® Drinks segment were $2.19 billion for the three-months ended March 31, 2026. Net sales of our Strategic Brands segment were $126.7 million for the three-months ended March 31, 2026. Net sales of our Alcohol Brands segment were $32.7 million for the three-months ended March 31, 2026. Net sales of our Other segment were $5.3 million for the three-months ended March 31, 2026.

Our Monster Energy® Drinks segment represented 93.0% and 92.5% of our net sales for the three-months ended March 31, 2026 and 2025, respectively. Our Strategic Brands segment represented 5.4% and 5.3% of our net sales for the three-months ended March 31, 2026 and 2025, respectively. Our Alcohol Brands segment represented 1.4% and 1.9% of our net sales for the three-months ended March 31, 2026 and 2025, respectively. Our Other segment represented 0.2% and 0.3% of our net sales for the three-months ended March 31, 2026 and 2025, respectively.

Our growth strategy includes further developing our domestic markets and expanding our international business. Net sales to customers outside the United States were $1.06 billion for the three-months ended March 31, 2026, an increase of approximately $329.3 million, or 44.9% higher than net sales to customers outside of the United States of $733.2 million for the three-months ended March 31, 2025. Such sales were approximately 45% and 40% of net sales for the three-months ended March 31, 2026 and 2025, respectively. Net changes in foreign currency exchange rates had a favorable impact on net sales to customers outside of the United States of approximately $89.3 million for the three-months ended March 31, 2026. Net sales to customers outside the United States, on a foreign currency adjusted basis, increased 32.7% for the three-months ended March 31, 2026.

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Our non-alcohol customers are primarily full service beverage bottlers/distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience and gas chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military. Our alcohol customers are primarily beer distributors who in turn sell to retailers within the alcohol distribution system. Percentages of our gross billings to our various customer types for the three- months ended March 31, 2026 and 2025 are reflected below. Such information includes sales made by us directly to the customer types concerned, which include our full service beverage bottlers/distributors in the United States. Such full service beverage bottlers/distributors in turn sell certain of our products to some of the same customer types listed below. We limit our description of our customer types to include only our sales to our full service bottlers/distributors without reference to such bottlers/distributors’ sales to their own customers.

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Our non-alcohol customers include Coca-Cola Canada Bottling Limited, Coca-Cola Consolidated, Inc., Coca-Cola Bottling Company United, Inc., Reyes Holdings, LLC, Coca-Cola Southwest Beverages LLC, The Coca-Cola Bottling Company of Northern New England, Inc., Swire Pacific Holdings, Inc. (USA), Liberty Coca-Cola Beverages, LLC, Coca-Cola Europacific Partners, Coca-Cola Hellenic, Coca-Cola FEMSA, Swire Coca-Cola (China), COFCO Coca-Cola, Coca-Cola Beverages Africa, Coca-Cola İçecek and certain other TCCC network bottlers, Asahi Soft Drinks, Co., Ltd., Wal-Mart, Inc. (including Sam’s Club), Costco Wholesale Corporation and Amazon.com, Inc.

Our alcohol customers include Reyes Beverage Group, Ben E. Keith Company, J.J. Taylor Distributing and Admiral Beverage Corporation.

A decision by any large customer to decrease amounts purchased from us or to cease carrying our products could have a material adverse effect on our financial condition and consolidated results of operations.

Coca-Cola Europacific Partners accounted for approximately 17% and 14% of the Company’s net sales for the three-months ended March 31, 2026 and 2025, respectively.

Coca-Cola Consolidated, Inc. accounted for approximately 9% and 10% of the Company’s net sales for the three-months ended March 31, 2026 and 2025, respectively.

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Results of Operations

The following table sets forth key statistics for the three-months ended March 31, 2026 and 2025.

¹Includes $9.9 million for both the three-months ended March 31, 2026 and 2025, related to the recognition of deferred revenue.

*Gross profit may not be comparable to that of other entities since some entities include all costs associated with their distribution process in cost of sales, whereas others exclude certain costs and instead include such costs within another line item such as operating expenses. We include out-bound freight and warehouse costs in operating expenses rather than in cost of sales.

Three-Months Ended March 31, 2026 Compared to the Three-Months Ended March 31, 2025.

Net Sales

Net sales were $2.35 billion for the three-months ended March 31, 2026, an increase of approximately $498.7 million, or 26.9% higher than net sales of $1.85 billion for the three-months ended March 31, 2025. Net sales increased primarily due to increased worldwide sales of our Monster Energy® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had a favorable impact on net sales of approximately $89.3 million for the three-months ended March 31, 2026. Net sales on a foreign currency adjusted basis increased 22.1% for the three-months ended March 31, 2026.

Net sales for the Monster Energy® Drinks segment were $2.19 billion for the three-months ended March 31, 2026, an increase of approximately $473.1 million, or 27.6% higher than net sales of $1.72 billion for the three-months ended March 31, 2025. Net sales increased primarily due to increased worldwide sales of our Monster Energy® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had a favorable impact on net sales for the Monster Energy® Drinks segment of approximately $82.0 million for the three-months ended March 31, 2026. Net sales for the Monster Energy® Drinks segment on a foreign currency adjusted basis increased 22.8% for the three-months ended March 31, 2026.

Net sales for the Strategic Brands segment were $126.7 million for the three-months ended March 31, 2026, an increase of approximately $28.4 million, or 28.9% higher than net sales of $98.3 million for the three-months ended March 31, 2025. Net sales for the Strategic Brands segment increased primarily due to increased sales of our Burn®, Predator®, and Fury® brand energy drinks. Net

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changes in foreign currency exchange rates had a favorable impact on net sales of approximately $7.3 million for the Strategic Brands segment for the three-months ended March 31, 2026. Net sales for the Strategic Brands segment on a foreign currency adjusted basis increased 21.4% for the three-months ended March 31, 2026. Net sales of concentrates within the Strategic Brands segment tend to have more pronounced fluctuations from period to period as compared to net sales of our finished goods within the Monster Energy® Drinks segment primarily as a result of bottler production schedules.

Net sales for the Alcohol Brands segment were $32.7 million for the three-months ended March 31, 2026, a decrease of approximately $2.0 million, or 5.9% lower than net sales of $34.7 million for the three-months ended March 31, 2025. The decrease in net sales for the three-months ended March 31, 2026 was primarily due to decreased sales of craft beers.

Net sales for the Other segment were $5.3 million for the three-months ended March 31, 2026, a decrease of approximately $0.7 million, or 12.0% lower than net sales of $6.0 million for the three-months ended March 31, 2025.

Case sales for our energy drink products, in 192-ounce case equivalents, were 274.5 million cases for the three-months ended March 31, 2026, an increase of approximately 61.4 million cases or 28.8% higher than case sales of 213.1 million cases for the three-months ended March 31, 2025. The overall average net sales per case for our energy drink products (excluding net sales of Alcohol Brands and Other segments) decreased marginally to $8.44 for the three-months ended March 31, 2026 from $8.51 for the three-months ended March 31, 2025.

Case sales for our craft beers, FMBs and hard seltzers, in 192-ounce equivalents, were 2.3 million cases for the three-months ended March 31, 2026, a decrease of approximately 0.1 million cases or 5.7% lower than case sales of 2.4 million cases for the three-months ended March 31, 2025. Barrel sales for our craft beers, FMBs and hard seltzers, in 31 U.S. gallon equivalents, were 0.11 million barrels for the three-months ended March 31, 2026, a decrease of approximately 0.01 million barrels or 5.7% lower than barrel sales of 0.12 million barrels for the three-months ended March 31, 2025.

Gross Profit

Gross profit was $1.29 billion for the three-months ended March 31, 2026, an increase of approximately $245.4 million, or 23.4% higher than the gross profit of $1.05 billion for the three-months ended March 31, 2025. The increase in gross profit dollars was primarily the result of the increase in net sales.

Gross profit as a percentage of net sales decreased to 55.0% for the three-months ended March 31, 2026 from 56.5% for the three-months ended March 31, 2025. The decrease in gross profit as a percentage of net sales for the three-months ended March 31, 2026 was primarily the result of geographical sales mix, increased aluminum can costs and increased freight-in costs, partially offset by the Pricing Actions.

Operating Expenses

Total operating expenses were $563.4 million for the three-months ended March 31, 2026, an increase of approximately $85.2 million, or 17.8% higher than total operating expenses of $478.2 million for the three-months ended March 31, 2025.

The increase in operating expenses was primarily due to increased payroll expenses of $28.3 million, distribution expenses of $25.3 million and selling and marketing expenses of $22.7 million. Operating expenses as a percentage of net sales for the three-months ended March 31, 2026 and 2025 were 23.9% and 25.8%, respectively.

Operating Income

Operating income was $730.0 million for the three-months ended March 31, 2026, an increase of approximately $160.2 million, or 28.1% higher than operating income of $569.7 million for the three-months ended March 31, 2025. Operating income as a percentage of net sales increased to 31.0% for the three-months ended March 31, 2026 from 30.7% for the three-months ended March 31, 2025.

Operating income was $233.8 million and $142.6 million for the three-months ended March 31, 2026 and 2025, respectively, for our international operations, exclusive of Canada.

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Operating income for the Monster Energy® Drinks segment, exclusive of corporate and unallocated expenses, was $848.9 million for the three-months ended March 31, 2026, an increase of approximately $168.5 million, or 24.8% higher than operating income of $680.4 million for the three-months ended March 31, 2025. The increase in operating income for the Monster Energy® Drinks segment was primarily the result of an increase in net sales.

Operating income for the Strategic Brands segment, exclusive of corporate and unallocated expenses, was $63.9 million for the three-months ended March 31, 2026, an increase of approximately $12.0 million, or 23.1% higher than operating income of $51.9 million for the three-months ended March 31, 2025. The increase in operating income for the Strategic Brands segment was primarily the result of an increase in net sales.

Operating loss for the Alcohol Brands segment, exclusive of corporate and unallocated expenses, was $9.6 million for the three-months ended March 31, 2026, a decrease of approximately $11.8 million, or 55.1% lower than the operating loss of $21.5 million for the three-months ended March 31, 2025. The decrease in operating loss for the three-months ended March 31, 2026 was primarily due to decreased general administrative expenses of $8.1 million.

Operating income for the Other segment, exclusive of corporate and unallocated expenses, was $0.4 million for the three-months ended March 31, 2026, as compared to operating income of $0.2 million for the three-months ended March 31, 2025.

Interest and Other Income, net

Interest and other income, net, was $20.2 million for the three-months ended March 31, 2026, as compared to interest and other income, net, of $8.3 million for the three-months ended March 31, 2025. Interest income was $28.6 million and $16.8 million for the three-months ended March 31, 2026 and 2025, respectively. Interest expense was $0.6 million and $4.0 million for the three-months ended March 31, 2026 and 2025, respectively. Foreign currency transaction losses were $6.8 million and $3.7 million for the three-months ended March 31, 2026 and 2025, respectively.

Provision for Income Taxes

Provision for income taxes was $180.6 million for the three-months ended March 31, 2026, an increase of $45.6 million from the provision for income taxes of $135.0 million for the three-months ended March 31, 2025. The effective combined federal, state and foreign tax rate increased to 24.1% from 23.4% for the three-months ended March 31, 2026 and 2025, respectively.

Net Income

Net income was $569.5 million for the three-months ended March 31, 2026, an increase of $126.5 million, or 28.6% higher than net income of $443.0 million for the three-months ended March 31, 2025.

Key Business Metrics

We use certain key metrics and financial measures not prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) to evaluate and manage our business. For a further discussion of how we use key metrics and certain non-GAAP financial measures, see “Non-GAAP Financial Measures and Other Key Metrics.”

Non-GAAP Financial Measures and Other Key Metrics

Gross Billings**

Three-Months Ended March 31, 2026 Compared to the Three-Months Ended March 31, 2025.

Gross billings were $2.77 billion for the three-months ended March 31, 2026, an increase of approximately $603.7 million, or 27.9% higher than gross billings of $2.16 billion for the three-months ended March 31, 2025. Gross billings increased primarily due to increased worldwide sales of our Monster Energy® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had a favorable impact on gross billings of approximately $107.9 million for the three-months ended March 31, 2026. Gross billings on a foreign currency adjusted basis increased 22.9% for the three-months ended March 31, 2026.

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Gross billings for the Monster Energy® Drinks segment were $2.58 billion for the three-months ended March 31, 2026, an increase of approximately $571.8 million, or 28.5% higher than gross billings of $2.01 billion for the three-months ended March 31, 2025. Gross billings increased primarily due to increased worldwide sales of our Monster Energy® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had a favorable impact on gross billings for the Monster Energy® Drinks segment of approximately $100.7 million for the three-months ended March 31, 2026. Gross billings for the Monster Energy® Drinks segment on a foreign currency adjusted basis increased 23.5% for the three-months ended March 31, 2026.

Gross billings for the Strategic Brands segment were $149.2 million for the three-months ended March 31, 2026, an increase of $35.5 million, or 31.2% higher than gross billings of $113.8 million for the three-months ended March 31, 2025. Gross billings for the Strategic Brands segment increased primarily due to increased sales of our Burn®, Predator®, and Fury® brand energy drinks. Net changes in foreign currency exchange rates had a favorable impact on gross billings in the Strategic Brands segment of approximately $7.3 million for the three-months ended March 31, 2026. Gross billings for the Strategic Brands segment on a foreign currency adjusted basis increased 24.8% for the three-months ended March 31, 2026.

Gross billings for the Alcohol Brands segment were $33.5 million for the three-months ended March 31, 2026, a decrease of approximately $2.7 million, or 7.5% lower than gross billings of $36.2 million for the three-months ended March 31, 2025. The decrease in gross billings for the three-months ended March 31, 2026 was primarily due to decreased sales of craft beers.

Gross billings for the Other segment were $5.4 million for the three-months ended March 31, 2026, a decrease of $0.8 million, or 12.9% lower than gross billings of $6.1 million for the three-months ended March 31, 2025.

Promotional allowances, commissions and other expenses, as described in the footnote below, were $422.5 million for the three-months ended March 31, 2026, an increase of $105.0 million, or 33.1% higher than promotional allowances, commissions and other expenses of $317.5 million for the three-months ended March 31, 2025. Promotional allowances, commissions and other expenses as a percentage of gross billings increased to 15.3% from 14.7% for the three-months ended March 31, 2026 and 2025, respectively.

**Gross billings represent amounts invoiced to customers net of cash discounts, returns and excise taxes. Gross billings are used internally by management as an indicator of and to monitor operating performance, including sales performance of particular products, salesperson performance, product growth or declines and is useful to investors in evaluating overall Company performance. The use of gross billings allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. We therefore believe that the presentation of gross billings provides a useful measure of our operating performance. The use of gross billings is not a measure that is recognized under GAAP and should not be considered as an alternative to net sales, which is determined in accordance with GAAP, and should not be used alone as an indicator of operating performance in place of net sales. Additionally, gross billings may not be comparable to similarly titled measures used by other companies, as gross billings has been defined by our internal reporting practices. In addition, gross billings may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers.

The following table reconciles the non-GAAP financial measure of gross billings with the most directly comparable GAAP financial measure of net sales:

***Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the presentation thereof does not conform to GAAP presentation requirements. Additionally, our definition of promotional and other allowances may not be comparable to similar items presented by other companies. Promotional and other allowances for our energy drink products primarily include consideration given to our non-alcohol bottlers/distributors or customers including, but not limited to the following: (i) discounts granted off list prices to support price promotions to end-consumers by retailers; (ii) reimbursements given to our bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; (iii) our agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; (iv) our agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers; (v) incentives given to our bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; (vi) discounted and/or free products or cash rebates; (vii) contractual fees

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given to our bottlers/distributors related to sales made by us direct to certain customers that fall within the bottlers’/distributors’ sales territories; and (viii) certain commissions paid based on sales to our bottlers/distributors. The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. Promotional and other allowances for our energy drink products constitute a material portion of our marketing activities. Our promotional allowance programs for our energy drink products with our numerous bottlers/distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, ranging from one week to one year. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted.

Sales

The table below discloses selected quarterly data regarding sales for the three-months ended March 31, 2026 and 2025, respectively. Data from any one or more quarters or periods is not necessarily indicative of annual results or continuing trends.

Sales of our energy drinks are expressed in unit case volume. A “unit case” means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings). Unit case volume means the number of unit cases (or unit case equivalents) of finished products or concentrates as if converted into finished products sold by us.

Our quarterly results of operations reflect seasonal trends that are primarily the result of increased demand in the warmer months of the year. Beverage sales tend to be lower during the first and fourth quarters of each calendar year. However, our experience with our energy drink products suggests they are less seasonal than the seasonality expected from traditional beverages. In addition, our continued growth internationally may further reduce the impact of seasonality on our business. Quarterly fluctuations may also be affected by other factors including the introduction of new products, the opening of new markets where temperature fluctuations are more pronounced, the addition of new bottlers/distributors, changes in the sales mix of our products and changes in advertising and promotional expenses.

¹Excludes Alcohol Brands segment and Other segment net sales.

Net changes in foreign currency exchange rates had a favorable impact on the overall average net sales per case for the three-months ended March 31, 2026.

The following represents case sales for our craft beers, FMBs and hard seltzers, in 192-ounce equivalents:

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See Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Results of Operations” for additional information related to net sales.

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Liquidity and Capital Resources

Cash and cash equivalents.