Cronos Q1 2023 Revenue Declines 19.5% YoY, Provides Outlook

Cronos Group Inc. CRON CRON, released its 2023 first quarter business results, revealing net revenue of $20.1 million, a decrease of 19.5% compared to $25 million in Q1 2022.

Q1 2023 Financial Highlights

• Gross profit of $2.4 million in Q1 2023, a decrease of 65.6% compared to $6.9 million in Q1 2022.

• Gross profit margin of 11.8% compared to 27.7% in Q1 2022.

• Net loss was $19.3 million compared to net loss of $32.7 million in Q1 2022.

• Adjusted EBITDA of $(16.8) million in Q1 2023 improved by $2.1 million from Q1 2022.

“I am encouraged by our results across categories in Canada as we are defending our leading position in edibles and climbing market share ranks in other critical product categories,” stated Mike Gorenstein, chairman, president and CEO, Cronos. “We intend to build off the strength of our number one position in edibles and utilize our borderless gummy platform for new innovative introductions, including additional rare cannabinoids and flavor profiles throughout 2023. The pre-roll category is a top focus for our team this year, and we are pleased by the early results of our infused pre-rolls and the encouraging progression of our base business. What you see on the market today from us in pre-rolls is just the beginning.”

“Optimizing the returns of our industry-leading cash balance has also been a priority for us as we are in a great position to take advantage of the higher rate environment, especially given we have no debt,” continued Gorenstein. “You are now starting to see the higher interest income flow through our income statement, which is an underappreciated component of our company. Additionally, looking forward to the balance of 2023, we are on track to achieve the high end of the projected $10 to $20 million in cash operating expense savings we announced in February and are committed to further improvements as we target to be cash flow positive in 2024.”

Guidance and Outlook

Net revenue for full-year 2023 is expected to be between $100 to $110 million. Additionally, the company is on track to achieve the high-end of the previously identified $10 to $20 million in operating expense savings for 2023, primarily driven by savings in sales and marketing, general and administrative, and research and development.

Cronos anticipates that cash flow, defined as the net change in cash and cash equivalents, excluding the impact of the purchase or proceeds of short-term investments, for the last nine months of fiscal year 2023 will decline less than $25 million. The company also expects that cash flow will be positive in 2024.

Photo by Tim Foster on Unsplash

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