Decibel Cannabis Reports 22% YoY Decrease In Q2 Net Revenue, Plans To Benefit With New Product Launches

Decibel Cannabis Company Inc. DB DBCCF reported on Wednesday its unaudited interim financial results for the second quarter ending June 30, 2024.

“Decibel has shown good discipline in reducing our current liabilities by ~5mm this quarter," said Benjamin Sze, Decibel’s CEO. "Market share has been challenged but early indications from Qwest relaunch suggest we will regain market share in flower.  A continued focus on execution and capital efficiency will serve as the platform for future growth.”

The company reported net revenue of CA$22.1 million ($16.1 million), down from CA$28.5 million in the prior year's period, representing a 22% year-over-year drop. Its first quarter report published this past April revealed a 16% year-over-year revenue drop to CA$21 million and an adjusted net loss of CA$3.5 million.

In his recent analysis senior analyst Pablo Zuanic of Zuanic & Associates said Decibel’s management acknowledges the competitive pressures in the vape and pre-roll categories, particularly from competitors like Jeeter and Organigram.

"The company was slow to react to the rise of larger 510 cartridge formats and higher potency extracts," as highlighted in a recent recap of Zuanic's analysis by Beniznga's Nicolás Jose Rodriguez. "However, Zuanic shared new product launches in 2Q24 aim to address these gaps. Decibel is expanding distribution for infused pre-rolls and innovating around the Vox brand. Additionally, flower production at the company’s craft facilities is set to ramp up."

Read Also: This Undervalued Cannabis Stock Has Another Year Of Growth: Reports Record 2023 Revenue And Adjusted EBITDA

Q2 2024 Financial Highlights

• Gross profit before fair value adjustments was CA$9.3 million, down from CA$12.3 million in the prior year's period.
• Gross margin before fair value adjustments was 42% in the second quarter of 2024, compared to 43% in the second quarter of 2023.
• Adjusted EBITDA came in positive at CA$3.9 million, down from CA$7.3 million adjusted EBITDA gain in the prior year's quarter.
• Net income and comprehensive income was CA$122 000, compared to a net loss and comprehensive loss of CA$423 000 in the second quarter of fiscal 2023.
• Cash flow from operations was CA$985 000, compared to CA$768 000 in the prior year's period.
• Free cash flow was CA$895 000, up from CA$304 000 in the prior year's period.

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DBCCF Price Action

Decibel's shares traded 4.29% higher at $0.0365 per share at the time of writing on Wednesday.