Canopy Growth’s revenue falls amid continued losses

Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) announced its financial results for the fiscal year 2025 second quarter ending September 30, 2024. Total revenue fell to C$73.9 million (~$53 million) from last year’s C$82 million for the same period. The company did note that excluding net revenue from businesses divested during the prior fiscal year, net revenue actually increased by 3%.

Canopy Growth reported a net loss of C$128 million, while still a massive number, it was lower than last year’s net loss of C$324 million.

CEO David Klein said, “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.”

Canopy also told investors that it no longer considers itself a going concern. By issuing and selling stock, the company is able to access capital. The company sold 16 million shares which brought in C$138.5 million during the quarter. Canopy has total liabilities of C$722 million.

Breaking down the revenue

Canopy Growth broke down its revenue into four segments: Canadian cannabis, International, Storz & Bickel and Canopy USA.

• Canadian cannabis fell by 8% to C$37 million. The company said that medical cannabis net revenue increased 16% but adult-use cannabis declined 24% in part due to an interruption in the supply of Wana edibles. The company said it will reintroduce Wana edibles and improve the company’s flower quality. Canopy also said it plans to launch new products in the vape and pre-roll categories.
• International market revenue increased by 12% to C$10 million. Canopy attributed the increase to a shift in sales mix to higher-margin Poland and a lower overall cost structure. Looking ahead the company said it has signed with multiple EU-based cultivators are expected to increase the supply of cannabis flower in EU medical cannabis markets
• Storz & Bickel was the winner for the company as sales increased by 32% to C$16 million. The results were as a result of strong growth in Germany following regulatory reform, plus a significant improvement in U.S. sales and the sell-through of the remaining inventory of the Mighty device that is being phased out. The company said that ongoing demand in Germany is expected to drive continued growth in the German and the broader European market.
• Canopy USA completed the acquisition of Wana Brands and launched its hemp-derived THC and CBD products online. The acquisition of Acreage Holdings, Inc. remains on track to close no later than the first half of the calendar year 2025.

CFO Judy Hond said, “We’ve demonstrated another quarter of progress towards profitability driven by improvement in gross margins as well as a reduction in SG&A expenses. 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.”

Operational losses

Despite that, the company’s operating losses from continuing operations were C$46 million in the quarter. Last year the company reported an operating loss of C$7 million but that was only achieved by selling a facility in Smiths Falls, Ontario. While Fong noted that SG&A expenses fell, total operating expenses grew to C$67 million over last year’s C$30 million.