- Canopy Growth (TSX:WEED) continued its progress towards profitability in Q2 fiscal 2025 ended September 30, 2024
- The company registered an adjusted EBITDA loss of C$6 million, a 54 per cent improvement YoY driven by its cost savings program
- Canopy Growth is the global cannabis company behind the brands Doja, Wana, Jetty Extracts, 7ACRES, Ace Valley, Tweed, Hi Way, Deep Space and Storz & Bickel, among others
- Canopy Growth stock has given back 23.17 per cent year-over-year and 97.78 per cent since 2019
Canopy Growth (TSX:WEED) continued its progress towards profitability in Q2 fiscal 2025 ended September 30, 2024.
Revenue decreased by 9 per cent year-over-year (YoY). Excluding net revenue from businesses divested during the previous fiscal year, revenue increased by 3 per cent.
Gross margin reached 35 per cent, up by 1 per cent YoY thanks to the company’s cost savings program and its pivot to higher-margin medical cannabis sales.
Operating loss from continuing operations was C$46 million, down from a loss of C$7 million YoY resulting from the sale of a facility in Smiths Falls, Ontario.
Adjusted EBITDA came in at a loss of C$6 million, a 54 per cent improvement YoY driven by the company’s cost savings program.
Free cash flow for the quarter ended on an outflow of C$56 million, an improvement of 16 per cent YoY thanks to a reduction in cash interest expenses.
Cash and short-term investments increased to C$231 million, up from C$195 million in Q1 fiscal 2025.
Business segment breakdown
Canadian revenue was C$37 million, down by 8 per cent YoY. Medical cannabis revenue increased by 16 per cent YoY, while adult-use cannabis declined by 24 per cent because of an interruption in the supply of Wana edibles. Initiatives expected to strengthen Canopy’s Canadian adult-use cannabis business in the second half of the fiscal year include the re-introduction of Wana edibles, enhancing the quality and variety of Tweed and 7ACRES flower and pre-roll joint product offerings, increased investments to improve distribution and velocity of core brands, and a robust new product pipeline focused on vape, pre-roll joints and concentrates.
International revenue was C$10 million, up by 12 per cent YoY, with notable growth in Poland and Germany and a slight decline in Australia. Cannabis gross margin reached 47 per cent, a 17 per cent increase YoY reflecting a shift in sales mix to the higher-margin and lower-cost Polish market. Canopy expects multiple agreements with European Union cultivators to increase its supply of cannabis flower and enable growth in the region over the coming quarters.
Canopy USA finalized its acquisition of Wana Brands, which recently launched the ShopWanderous online marketplace for hemp-derived THC and CBD products. Additional notable product launches include Lemurian’s new solventless all-in-one vapes in California and Colorado over the coming weeks and in New York in early calendar 2025. The acquisition of Acreage Holdings, for its part, remains on track to close by the first half of calendar 2025.
Storz & Bickel delivered revenue of C$16 million, up by 32 per cent YoY, benefitting from strong growth in Germany following regulatory reform, as well as a significant improvement in U.S. sales. Canopy expects continued growth in Germany, Europe and through U.S. affiliates thanks to numerous active marketing campaigns.
Leadership insights
“We delivered a solid second quarter led by strong growth across our Storz & Bickel, Canadian medical and European cannabis businesses and we are well-positioned to accelerate momentum in the second half of our fiscal year. In addition, we remain highly optimistic about the momentum building within Canopy USA as this strategy was uniquely designed to succeed independent of the need for federal legalization,” David Klein, Canopy Growth’s outgoing chief executive officer, said in a statement.
“We’ve demonstrated another quarter of progress towards profitability driven by improvement in gross margins as well as a reduction in SG&A expenses,” added Judy Hong, Canopy’s chief financial officer. “With expected improvement in top-line growth in the second half of the fiscal year and continued cost discipline, we believe we remain on a path to achieve positive adjusted EBITDA at the consolidated level in the coming quarters.”
About Canopy Growth
Canopy Growth is the global cannabis company behind the brands Doja, Wana, Jetty Extracts, 7ACRES, Ace Valley, Tweed, Hi Way, Deep Space and Storz & Bickel, among others.
Canopy Growth stock (TSX:WEED) last traded at C$6.30 per share. The stock has given back 23.17 per cent year-over-year and 97.78 per cent since 2019.
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(Top image of Tweed-branded cannabis drinks: Tweed)