It also issued above-expectation guidance for full year 2019, forecasting sales to rise 140% year on year to $210m (vs a consensus estimates of $205m).
Gross margins were 26.8% in Q1, vs 25% last quarter, and 16.1% in Q1 2018, driven by increased scale, operational efficiencies, and the favorable mix impact as the company shifts its portfolio towards higher margin fresh products. Operating losses were -$5.3m in the quarter (vs. guidance of -$6.7m to - $7.7m).
“Management believes that the top-line guidance could be conservative as it does not include the onboarding of new customers until they are post trial,” noted analysts at Bernstein, adding: “The preliminary repeat rate is also encouraging in the 40-50% range.”
Lower prices could significantly increase addressable market
They added: “We continue to expect significant growth potential in the plant-based meat category and believe that Beyond Meat is well positioned as one of the front-runners leading the new wave of plant-based meat products. In particular, as plant-based meat products tend to be relatively complex to manufacture, moats could prove to be deep.
“Management also expects to make at least one of their products price competitive relative to traditional meat products down the road, which could significantly increase its addressable market.
“That being said, Beyond Meat has traded in a highly volatile manner since its IPO likely partly due to its limited public float, and we expect continued volatility at least in the near-term.”
CEO: Consumers feel they have too much soy and wheat in the diets already
Speaking on the Q1 earnings call yesterday, Beyond Meat CEO Ethan Brown said the fact its burgers are made primarily from peas – rather than soy or wheat – gave the company an advantage over rivals in the minds of some consumers: “[Consumers have] made it very clear that… they don't want artificial ingredients, that they feel they have too much soy and wheat in their diets already, they want familiar and short ingredient list.”
He added: “To start 2019, Beyond Meat has made noticeable strides securing a runway for continued growth. We launched two new products, breakfast sausage and ground meat, which are generating significant positive consumer responses. We’ve continued to rollout in foodservice for Beyond Burger 2.0 [the latest iteration of the burger, which contains mug bean and rice protein in addition to pea], already this 2.0 burger platform [is scheduled] for retail release later this summer.
“We've also introduced our products in Del Taco and Carl's Jr. to much fanfare and most recently Tim Hortons began testing our new breakfast sausage in select stores.”
Significant demand in Europe
Asked about the brand’s international potential, he said: “We've also made progress extending our international reach… Beyond Meat is not only in the United States and Canada, we’ve also begun to respond to significant demand for products across Europe where we recently launched distribution and announced the new manufacturing partnership with Zandbergen World's Finest Meat, a leader in international protein supply chain.
“In addition, we’ve also secured limited distribution in parts of South Africa, Chile, Australia and Korea among others.”