Canopy Growth Q1 2022 Revenue Spikes 23% YoY, Misses Estimates, Adjusted EBITDA Loss Narrows

Canadian cannabis giant Canopy Growth Corporation WEED CGC reported Friday having generated CA$136 million ($108,6 million) in revenues in the first three months of fiscal 2022, missing estimates by CA$15.08 million, according to Seeking Alpha. Diluted earnings per share totaled CA$0.84.

Based in Smiths Falls, Ontario, the company revealed a 23% year-over-year revenue growth,

which can be attributed to double-digit growth in both cannabis and other consumer products segments, while maintaining a number one market share in tracked Canadian recreational cannabis market share.

"With the right strategy and strong foundation in place, we are confident in our ability to deliver long-term success as Canopy's products and brands continue to demonstrate their appeal to consumers in our core markets," David Klein, the company's CEO, commented on the financial results.

Q1 2022 Financial Highlights

• Total cannabis revenue amounted to CA$93 million, representing a year-over-year increase of 17%.
• Total for other consumer products revenue grew by 39% year-over-year to CA$43 million.
• The gross margin was 20%, compared to 6% in the corresponding quarter of 2021.
• Adjusted gross margin, excluding charges related to the flow-through of inventory step-up on business combinations, was 21%.
• Total selling, general and administrative expenses dropped by 17% versus the same quarter of the fiscal year.
• Net earnings totaled CA$390 million, representing a CA$518 million or 404% improvement versus the same quarter of 2021.
• Adjusted EBITDA came in negative at CA$64 million versus an adjusted EBITDA loss of CA$92.2 million in the quarter ended June 30, 2020.
• Free cash flow was an outflow of CA$186 million, a 3% greater outflow than last year's same period.
• As of June 30, the company had CA$2.1 billion in cash and short-term investments, down by CA$0.2 billion from CA$2.3 billion in the prior period.

"We're continuing to drive cost savings and operational efficiencies across the company and remain broadly on track to our target of CA$150-CA$200 million in fiscal 2022- fiscal 2023," said Mike Lee, the company's CFO.

Business And Operational Highlights

Over the quarter, the company boosted its product portfolio by wrapping up the merger with Supreme Cannabis Company, Inc. FIRE SPRWF that brought 7ACRES and 7ACRES Craft Collective brands as well as Supreme's Kincardine under its helm, as well as 

acquiring the cannabis brand Ace Valley.

To wrap up July, Canopy announced the expansion of its pre-roll offering with two new product lines: Tweed Quickies and Ace Valley Pinners. In addition, it also granted its leadership team over CA$4 million ($3.2 million) in cash bonuses in fiscal 2021.

Price Action

Canopy Growth's shares were trading 0.21% higher at $19.18 per share at pre-market hours Friday morning.

Photo: Courtesy of Canopy Growth Corporation