Canopy Growth Implements Renewed Strategy As Revenue Climbs 22%

Canopy Growth Corporation CGC WEED disclosed its net revenue rose by 22% year over year, reaching CA$110 million (US$82 million) in the first quarter of fiscal 2021.

The revenue growth can be attributed to higher medical cannabis sales in Canada and Germany, as well as Storz & Bickel vaporizer sales and the full quarter contributions of its acquired businesses.

Canopy acquired German cannabis company C3 for $253 million, and This Works for about $74 million.

Canopy CEO David Klein said Monday they are "proud of our strong first-quarter performance, despite unprecedented volatility and uncertainty in the market and across the globe."

Canopy is implementing a "renewed corporate strategy" alongside a new leadership team, that way positioning its business for "continued growth," added Klein.

Moreover, over the quarter, the Smith Falls, Ontario-based company strengthened its position in the cannabis-infused beverage segment.

Canopy has been expanding its presence in the market, following the purchase of Ebbu, an infused technology company from Colorado, for $297 million in 2018.

Meantime, here's what the company's latest earnings report revealed:

• Gross margin of 6%, a year-over-year decrease of 1,400 bps.
• Adjusted gross margin (excluding inventory step-up costs) of 7%, a drop of 1,300 bps compared to the first quarter of fiscal 2020
• Total SG&A expenses decreased by 23% over a year
• Sales & Marketing expenses declined by 25% during the same period
• G&A and R&D expenses rose by 2% and 61%, respectively
• Net loss of $128 million, up by 34% compared to the same quarter last year
• Negative adjusted EBITDA of CA$92 million, versus a loss of CA$93 million in the corresponding quarter of fiscal 2020
• Cash and Short-term Investments were CA$2.0 billion
• Canadian medical revenue rose 19% year-over-year
• Recreational B2C and B2B net sales in Canada declined by 12% and 10%, respectively

Quarterly Highlights

Other quarterly highlights include the launching of e-commerce site ShopCanopy, expansion of S&B vaporizer product distribution in the U.S., and final preparations for the introduction of Martha Stewart branded health and wellness CBD products, to name a few.

Mike Lee, the company's CFO, explained they are "focused on further optimizing our operating footprint through a full end-to-end strategy that looks at people, process, technology, and infrastructure that we believe will lead to best in class margins over time." 

Courtesy photo