#Canada #Canopy Growth #Smiths Falls #Storz Bickel #Claybourne

Canopy Growth Financial Results for Q3 FY2025

On February 7, 2025, Canopy Growth Corporation, listed on both the Toronto Stock Exchange (TSX: WEED) and Nasdaq (Nasdaq: CGC), shared its financial performance for the third quarter of its fiscal year 2025, which concluded on December 31, 2024. The comprehensive report highlighted significant developments in their cannabis operations, including distinctive achievements in both domestic and international markets.

Corporate Insights

Luc Mongeau, the new CEO of Canopy Growth, expressed optimism about the company's trajectory, emphasizing the momentum gained from their medical cannabis ventures and the successful rollout of the Claybourne brand's infused pre-rolls in Canada. Mongeau stated, "Our third-quarter highlights demonstrate that our business possesses the core elements for sustained success."

Financial Performance Overview

Canopy Growth's total net revenue for Q3 FY2025 reached CAD 74,761, a decrease of 5% compared to CAD 78,505 recorded in Q3 FY2024. However, when excluding revenue from divested businesses, the net revenue showed an 8% increase, primarily due to notable growth in Canada’s medical cannabis sector and contributions from their international operations. Notably, the adjusted EBITDA for the quarter improved significantly, indicating the effectiveness of the company's cost discipline measures.

Key Financial Metrics

• - Net Revenue: CAD 74,761
• - Gross Margin Percentage: 32%
• - Adjusted EBITDA: CAD (3,469)
• - Free Cash Flow: CAD (28,181)

The slight dip in gross margin, which fell by 400 basis points to 32%, was attributed to heightened costs related to the Claybourne launch as well as an uptick in indirect costs involving Storz Bickel vaporizer devices. Nevertheless, operational losses from continuing operations saw a 61% improvement year-over-year, driven largely by slashing operational expenses.

Canadian Market Highlights

In detail, Canada’s cannabis segment recorded net revenues of CAD 41 million, while the medical cannabis net revenue spiked by 16% from the previous year, driven by larger average orders. Conversely, the adult-use cannabis market saw a decline of 10%, though it recovered with a sequential increase of 15% compared to the second fiscal quarter. The successful introduction of the Claybourne infused pre-rolls saw rapid market penetration, placing the brand at the third position in market share across British Columbia and Ontario just six weeks post-launch.

International Markets Growth

International operations yielded CAD 12 million in revenue, reflecting a solid 14% growth, thanks to burgeoning markets in Germany and Poland. The gross margins in international markets also reflected a favorable shift towards higher-margin sales, increasing the percentage to 41% compared to 40% from the prior year. This positive trajectory, however, was partially offset by declining sales in Australia and the exit from the U.S. CBD market earlier this fiscal year.

Storz Bickel Performance

The Storz Bickel brand reported a robust performance with net revenues reaching CAD 22 million, a remarkable increase of 19% year-over-year. This growth is largely attributed to strong demand over the holiday season, coupled with expanding direct-to-consumer online sales, particularly in the German market.

Strategic Partnership - Canopy USA

The quarter also marked a pivotal moment for Canopy USA with the acquisition of Acreage Holdings. The integration of Acreage and other acquired companies is expected to yield significant operational synergies and bolster Canopy’s market position. Brooks Jorgensen was appointed as President of Canopy USA, bringing valuable experience from high-growth sectors.

Conclusion

In summary, while Canopy Growth Corporation faced challenges in certain market segments during the third quarter, the overall outlook remains promising. The firm is well-positioned to leverage its recent growth and adapt strategies to ensure long-term profitability and market leadership in the evolving cannabis landscape. With a continual focus on product innovation and market expansion, Canopy Growth aims to reshape the perception of cannabis and its benefits for consumers worldwide.

For a more in-depth review, visit Canopy Growth's official website.