CPG
Oatly teardown: gross margin from 11% to 32%, equity gone
Oatly's gross margin collapsed from ~31% to 11.1% in 2022 after it overbuilt manufacturing ahead of demand, then recovered to 32.1% by FY2025. Operating cash burn fell from -$269M to -$24M and 2025 was its first positive adjusted-EBITDA year, but shareholder equity dropped 98% from $1.2B to $20M paying for the lesson.
Key Takeaways
- Gross margin round-tripped: ~31% (2020) to an 11.1% trough (2022) to 32.1% (2025). The 11% number is the single most operator-relevant figure in the filing. It is what overbuilding factories ahead of demand does to a P&L.
- Revenue grew every year but has flattened to a crawl: $862.5M in FY2025, up just 4.7% YoY. The whole story is margin repair on a top line that stopped compounding, not a growth story.
- Cash burn is nearly extinguished: operating cash flow improved from -$268.9M (2022) to -$23.7M (2025). At that rate the $64.3M cash balance implies roughly 2.7 years of runway, but the burn is still negative and FX-sensitive.
- SG&A discipline is the under-told win: from a 57.2%-of-revenue peak (2022) to 37.2% (2025). Oatly bundles marketing inside SG&A, so the drop in overhead intensity is the real efficiency story.
- The balance sheet paid the bill: shareholders' equity fell from $1,245.3M (2021) to $19.7M (2025), a 98.4% wipeout. Cash dropped from $295.6M to $64.3M. That is the price of the lesson.
Oatly (NASDAQ: OTLY) is the cleanest public-market cautionary tale a scaling consumer brand has for what happens when you build capacity and marketing ahead of demand. Read the 2019-2025 20-F filings the way a CFO would diligence them and the arc is brutal but instructive: revenue more than quadrupled, but gross margin collapsed to 11% before clawing its way back, and shareholder equity was almost entirely destroyed paying for the lesson. A 20-F, for context, is the annual report a foreign company files with the SEC instead of a 10-K. Oatly is Swedish, reports under IFRS, and files in US dollars, so every number here comes straight from those filings.
The reason this teardown matters for an operator is not that Oatly is a direct comp for your $30M Shopify brand. It is that the mistake Oatly made is the most common mistake we see at scale, just played out on a public stage where you can read every line of the damage.
The number that explains everything: 11% gross margin
If you only remember one figure from Oatly's filings, make it this one. In FY2022, gross margin fell to 11.1%. For a branded consumer product, that is a catastrophe. A healthy branded CPG product typically runs gross margin somewhere in the 40-60% range. Oatly was selling premium-priced oat milk at a gross margin you would expect from a commodity distributor.
The cause was not pricing or competition. It was capacity. Between 2020 and 2022 Oatly poured capital into new factories across the US, Europe, and Asia on the bet that demand would keep compounding at the 50-60% annual rates it had seen. When demand softened, those plants sat half-empty. Fixed manufacturing overhead does not care how much you sell. Depreciation, plant labor, and facility costs landed against far less revenue than the plants were built for, and gross margin imploded.
The chart shows the round trip clearly: ~30.7% in 2020, down to the 11.1% trough in 2022, then a steady climb back to 32.1% by 2025. When I talk to founders running a brand at the point where they are about to sign a lease on a bigger warehouse or commit to a minimum-order contract with a co-packer, this is the slide I show them. The instinct is always to build for the demand you are forecasting. The discipline is building for the demand you can actually see on the books.
How Oatly clawed margin back from 11% to 32%
The recovery is a playbook worth copying. Oatly did three things, roughly in order. It stopped building, it closed what it could not fill, and it squeezed utilization out of what remained.
Capex came down hard. The company halted construction on its second China facility (Asia III) and closed its Singapore plant, taking an asset impairment of roughly $41.7M in 2024 tied to those decisions. Painful in the year it hits, but the right call: an impairment is a one-time admission that capital was misallocated, and carrying the plant would have kept bleeding gross margin every quarter. By 2025 the impairment line was down to about $0.7M.
The pattern we see again and again with overbuilt operators is that they wait too long to take the write-down because it feels like admitting defeat. Oatly's filings are a useful counterexample. The faster you close the plant you cannot fill, the faster gross margin recovers, because you stop spreading fixed cost across volume that is not coming. Margin climbed from 11.1% to 19.4% to 28.7% to 32.1% over the three years it took to work through that.
The honest caveat: some of the reported improvement in any given quarter was FX. But a 21-point gross-margin recovery over three years is not a currency artifact. It is structural, and it came from making the cost base match the demand.
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Revenue grew, losses shrank, burn nearly stopped
Here is the part that surprises people who only know Oatly as a money-losing meme stock. The turnaround in the operating numbers is dramatic.
Revenue rose every year, from $643.2M in 2021 to $862.5M in 2025, though the growth has slowed to a crawl: just 4.7% in FY2025. Meanwhile the operating loss, which peaked at a staggering -$457.0M in 2023, narrowed to -$67.7M in 2025. Operating cash burn, the number that actually decides whether a company lives, fell from -$268.9M in 2022 to -$23.7M in 2025. That is a company that went from setting fire to a quarter-billion dollars a year to nearly breaking even on cash.
A big chunk of that improvement is falling overhead intensity. SG&A, which is where Oatly buries its marketing and advertising spend, fell from a 57.2%-of-revenue peak in 2022 to 37.2% in 2025. In absolute dollars SG&A dropped from $412.8M to $320.6M even as revenue rose. That is the under-told win in this filing. The gross-margin story gets the headlines, but the overhead-discipline story is just as instructive for an operator, because overhead is the line you control fastest.
| Fiscal year | Revenue ($M) | Gross margin % | SG&A % of rev | Operating loss ($M) | Net loss ($M) | Operating cash flow ($M) |
|---|---|---|---|---|---|---|
| 2021 | 643.2 | 24.1% | 55.0% | -213.7 | -212.4 | -213.8 |
| 2022 | 722.2 | 11.1% | 57.2% | -396.0 | -392.6 | -268.9 |
| 2023 | 783.3 | 19.4% | 47.7% | -457.0 | -417.1 | -165.6 |
| 2024 | 823.7 | 28.7% | 39.4% | -186.2 | -202.3 | -114.4 |
| 2025 | 862.5 | 32.1% | 37.2% | -67.7 | -153.1 | -23.7 |
One number to flag as guidance, not fact: management has told the market it expects FY2026 adjusted EBITDA of $25-30M on +3-5% constant-currency revenue growth, a 4-5x step-up from the +$6.8M it posted in 2025. That is a forecast. The 2025 actuals are real; the 2026 numbers are a bet.
The bill came due on the balance sheet
The operating turnaround is genuine, but it did not come free. Someone paid for the overbuild, and that someone was the shareholder.
Shareholders' equity fell from $1,245.3M in 2021 to $19.7M in 2025. That is a 98.4% destruction of book equity in four years. The mechanism is simple and worth understanding, because it is how every cash-burning company eventually runs out of room: the losses on the income statement flow into accumulated deficit on the balance sheet, and when the deficit grows faster than new capital comes in, equity drains toward zero.
Cash followed the same path, from $295.6M in 2021 to $64.3M in 2025, and the company diluted heavily and restructured its debt along the way (including a reverse split and convertible-note activity) to stay alive. The one genuinely clean part of the balance-sheet story is working capital. Inventory was rationalized from a $114.5M, roughly 65-day peak in 2022 to $68.5M and about 43 days in 2025. That is the kind of disciplined inventory teardown we wish more operators did before the cash got tight, not after.
| Fiscal year | Cash & equivalents ($M) | Inventory ($M) | Inventory days | Shareholders' equity ($M) |
|---|---|---|---|---|
| 2021 | 295.6 | 95.7 | 72 | 1,245.3 |
| 2022 | 82.6 | 114.5 | 65 | 791.1 |
| 2023 | 249.3 | 67.9 | 39 | 335.8 |
| 2024 | 98.9 | 65.6 | 41 | 106.1 |
| 2025 | 64.3 | 68.5 | 43 | 19.7 |
The operating turnaround and the equity wipeout are the same story told from two ends of the financial statements. Oatly fixed the business and destroyed the stock at the same time, because the fix took four years and the cash to survive it had to come from somewhere. The lesson is not "do not overbuild" in the abstract. It is that the cost of overbuilding is paid in equity and dilution long after the P&L has recovered.
Is the category even there anymore?
One risk hangs over the whole turnaround: demand. Oatly is repairing its economics into a category that has stopped growing.
US plant-based milk was about $2.7B in retail sales in 2025, with dollars down roughly 2% and units down about 5% year over year, per SPINS and GFI data. Oat milk specifically held up better than the category, roughly flat in dollars and the clear number-two segment behind almond at about 21% of unit share, but "better than a shrinking category" is not the same as growth. The plant-based protein wave that drove 2019-2021 has matured, consumers are trading down on a premium-priced product, and dairy has actually held up better in value terms.
For an operator the read is straightforward. Oatly's margin and cash story can be excellent and the company can still struggle, because you cannot cost-cut your way to growth in a flat category forever. A margin turnaround buys you time and optionality. It does not, by itself, create demand.
What a $50M DTC operator should steal from this teardown
A quick framing note on the word "DTC." Oatly is not a Shopify storefront. It sells overwhelmingly through grocery, retail, and foodservice, so we use "teardown" here in the sense of "a consumer brand whose public financials any operator can benchmark against," not "an ecommerce checkout business." The lessons travel regardless of channel.
Here is the sequence worth copying, in order:
- Fix gross margin first. It is where a capacity, sourcing, or co-packer mistake hides, and it is the hardest line to move quickly, so start there. If your gross margin is below 40% on a branded product, that is your number-one problem regardless of what the growth chart says.
- Kill the cash burn second. Oatly took operating cash burn from -$269M to -$24M largely by cutting capex and closing what it could not fill. Cash buys survival; survival buys time to fix everything else.
- Chase GAAP profit third. Oatly is still not GAAP-profitable, and that is fine in this order, because the residual loss is mostly non-operating. Adjusted EBITDA turning positive was the milestone that mattered.
- Never let overhead run at 55%+ of revenue. Oatly's SG&A hit 57.2% of revenue in 2022. When I talk to founders carrying overhead that heavy, the conversation is always the same: the team was built for a revenue number that never arrived. Build the overhead to the revenue you have, not the revenue you are pitching.
When we have struggled with this ourselves and with operators we work with, the thing that breaks the pattern is making the margin number the headline metric on the weekly dashboard, above revenue. Revenue growth hides a broken gross margin until the cash runs out. Oatly is the proof of what that looks like: a -$457M operating loss at the 2023 peak, paid for in a 98% equity wipeout.
Sources and methodology
All financial figures in this teardown come from Oatly Group AB's SEC filings under CIK 0001843586. Oatly is a Swedish foreign private issuer that reports under IFRS and files Form 20-F rather than a 10-K, and all amounts are stated in US dollars. The primary source is the FY2025 20-F (accession 0001843586-26-000004, filed 2026-03-13, document otly-20251231.htm), with the five-year series built from the FY2021 through FY2024 20-Fs.
Because Oatly reports under IFRS, the standard US-GAAP XBRL endpoints returned empty, so the financials were pulled using the IFRS taxonomy tags: Revenue, GrossProfit, CostOfSales, ProfitLossFromOperatingActivities, ProfitLoss, SellingGeneralAndAdministrativeExpense, CashAndCashEquivalents, Inventories, Equity, and CashFlowsFromUsedInOperatingActivities.
Several figures in this post are derived, not reported. Gross margin % is gross profit divided by revenue. SG&A % is SG&A divided by revenue. Inventory days are inventory divided by cost of sales, times 365. The equity change is the 2025 figure versus 2021. All inputs are reported 20-F line items; only the ratios are computed.
A few line items deserve a caveat. Oatly does not disclose a standalone marketing or advertising expense in the 20-F; marketing is bundled inside SG&A, so any "marketing as a percentage of revenue" figure must be read as SG&A% or treated as an estimate. Adjusted EBITDA (+$6.8M for FY2025, -$35.3M for FY2024) and the FY2026 guidance ($25-30M adjusted EBITDA, +3-5% constant-currency revenue) are company-defined non-IFRS and forward-looking figures, sourced from the Q4/FY2025 earnings release and corroborated against the 20-F. The 2024 impairment of roughly $41.7M relates to the Singapore facility closure and the halted Asia III construction in China.
Category-demand context (US plant-based milk approximately $2.7B in 2025, dollars down about 2% and units down about 5%; oat milk roughly flat and about 21% of unit share) comes from SPINS, NIQ, and GFI retail data and is used as a demand-side risk indicator, not as Oatly-specific revenue. Channel context comes from the 20-F segment and customer disclosures rather than ecommerce tooling: Oatly's primary site is not indexed as a Shopify or DTC-checkout store, which is itself a reminder that "DTC" here means a benchmarkable consumer brand, not an ecommerce business. If you want a CFO read on your own margin and runway against numbers like these, talk to a fractional CFO before the next capacity decision. For sibling teardowns in this series, see our Allbirds teardown and Celsius teardown.
Frequently asked questions
what is oatly's gross margin in 2025 and why did it collapse to 11% in 2022?
Oatly's gross margin was 32.1% in FY2025, up 3.4 points from 28.7% in 2024. It had collapsed to 11.1% in 2022 because the company built out factories faster than demand showed up, so it carried heavy fixed manufacturing costs against under-filled plants. Closing capacity and cutting capex is what pulled the margin back up.
is oatly profitable yet or just adjusted EBITDA positive?
Not on a GAAP basis. FY2025 net loss was -$153.1M, though that is heavily non-operating (interest and convertible-note fair-value movements). 2025 was its first full year of positive adjusted EBITDA at +$6.8M, which is a company-defined non-IFRS number, not the same as actual profit. Read them as two different stories.
how much does oatly spend on marketing as a percentage of revenue?
Oatly does not break out a standalone marketing line in its 20-F. Marketing sits inside SG&A, which ran 37.2% of revenue in 2025 versus a 57.2% peak in 2022. Anyone quoting a precise marketing percentage for Oatly is estimating, because the filing does not disclose it.
how much cash does oatly have left and what is the runway?
Oatly ended FY2025 with $64.3M in cash and equivalents. At the FY2025 operating cash burn of -$23.7M, that is roughly 2.7 years of runway on a straight-line basis. The caveat is that the burn is still negative and sensitive to FX, so a bad currency or demand quarter shortens it.
why did oatly's shareholder equity drop from $1.2 billion to almost nothing?
Years of accumulated losses ate through the capital it raised at and after IPO. Equity fell from $1,245.3M in 2021 to $19.7M in 2025, a 98.4% wipeout. The losses that hit the income statement flow into accumulated deficit on the balance sheet, and the deficit grew faster than new capital came in.
is oatly's gross-margin improvement real or just FX and accounting?
It is mostly real. The recovery came from closing under-used plants, cutting capex, and improving plant utilization, which lowers cost of sales structurally. FX helped reported numbers in some quarters, but the move from 11% to 32% over three years is too large to be a currency artifact. The underlying capacity discipline is the driver.
why is everyone ditching oat milk, is the category actually shrinking?
Softening, not collapsing. US plant-based milk was about $2.7B in 2025 with dollars down ~2% and units down ~5% year over year (SPINS/GFI). Oat milk specifically is roughly flat in dollars and held up better than almond. It is a mature category with a price premium to dairy, which is the demand-side risk to Oatly's turnaround.
what can a sub-$100M dtc brand actually learn from oatly's financials?
The sequence. Fix gross margin first, because that is where a capacity or sourcing mistake hides. Then kill the cash burn. Then chase GAAP profit. And never let overhead run at 55%+ of revenue the way Oatly did in 2021-2022. The order matters more than the speed.