Canopy Growth: Q2 Net Revenue Drops 9% YoY, Projects Positive Earnings Ahead

Canopy Growth Corporation WEED CGC announced its financial results on Friday for the second quarter of fiscal 2025, which ended Sept. 30, 2024.

The Canadian cannabis giant reported a 9% year-over-year decrease in net revenue to CA$63 million ($45.4 million). Canopy said excluding net revenue from businesses divested during the prior fiscal year, net revenue increased 3%.

David Klein, the company's CEO, said the company "delivered a solid second quarter led by strong growth across our Storz & Bickel, Canadian medical, and European cannabis businesses," adding Canopy is "well positioned to accelerate momentum in the second half of our fiscal year."

Read Also: Canopy Growth Q1 Revenue Drops 13% YoY, Reports Wider Net Loss

Q2 2025 Financial Highlights

• Canada’s cannabis net revenue was CA$37 million, representing a decrease of 8% year over year. Canada’s medical cannabis net revenue increased 16% over the same period, while Canada’s adult-use cannabis declined 24%, in part due to an interruption in the supply of Wana edibles.
• International market’s net revenue was CA$10 million, representing an increase of 12% year over year. Strong growth in Poland and Germany was partially offset by a decline in Australia.
• Storz & Bickel delivered net revenue of CA$16 million, representing a 32% increase year-over-year driven primarily by strong growth in Germany following regulatory reform/
• Consolidated gross margin increased by 100 basis points to 35% year-over-year due to the realized benefit of the company's cost-savings program as well as a shift to higher-margin medical cannabis sales.
• Operating loss from continuing operations was CA$46 million, compared to a loss of CA$7 million in the same quarter of last year.
• Adjusted EBITDA loss was CA$6 million, representing a 54% improvement year-over-year, driven primarily by the realized benefit of the company's cost savings program.
• Free cash flow was an outflow of CA$56 million, representing a 16% improvement compared to the second quarter of last year, primarily driven by a reduction in cash interest expenses.
• Cash and short-term investments balance increased to CA$231 million on Sept. 30, 2024, from CA$195 million on June 30, 2024.

"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," said Judy Hong, the company's CFO.

Canopy USA

Canopy USA, LLC completed its acquisition of Wana in October, which included Wana Wellness, LLC, The CIMA Group LLC, and Mountain High Products, LLC. The top edibles brand, Wana, generated roughly $150 million in retail sales across 19 states in 2023.

Combined with the wrapped-up acquisition of roughly 75% of the shares of cannabis edibles producer, Lemurian, Inc. (Jetty) as announced this past June, Canopy USA has fulfilled its plan to set up a brand-focused cannabis company in the U.S.

The completed acquisitions of Wana and roughly 75% of Jetty shares followed by the contemplated acquisition of Acreage Holdings, Inc., are expected to enable Canopy USA to boost its financial position.

Klein, who recently announced his plan to retire at the end of the company's fiscal year on March 31, 2025, said, “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."

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CGC Price Action

Canopy Growth's shares traded 4.4% lower at $4.35 per share during the pre-market session on Friday morning.