Adult-Use Cannabis Boom Powers Canopy Growth Sales, But Wider Loss Hits Margins
The company reported a first-quarter loss of 16 cents (or 22 cents in Canadian dollars) on Friday, missing the consensus estimate of 15 cents.
Revenue rose 9% year over year to $64.12 million (or 72.13 million Canadian dollars), topping expectations of $47.91 million, driven by growth in Canada's adult-use and medical cannabis segments, as well as international cannabis sales.This growth was partially offset by a decline in its Storz & Bickel vaporizer division.
Canada adult-use cannabis net revenue reached 27 million Canadian dollars, representing an increase of 43%, driven by increased distribution and strong consumer demand for flower and manufactured cannabis products, including infused pre-rolled joint (PRJ) offerings.
Canada medical cannabis net revenue increased 13% due to increased insured customers, increased order sizes from insured customers, and a larger assortment of cannabis products on the Spectrum online store.
Storz & Bickel delivered net revenue of 15 million Canadian dollars, representing a decrease of 25%, primarily attributable to lapping strong sales in the prior year and consumer economic uncertainty.
View more earnings on CGC
Storz & Bickel is preparing to launch a new vaporizer in the second half of 2025. The company believes the new device will generate strong consumer interest.
Consolidated gross margin decreased to 25% compared to 35% a year ago, primarily driven by lower Storz & Bickel sales, lower cannabis sales in the high-margin Poland market, and a shift in product mix in Canada due to increased consumer demand for manufactured adult-use cannabis products.
Operating loss was 23 million Canadian dollars, representing an improvement of 21% year over year.
Cannabis gross margins decreased to 24% from 33%, primarily attributable to a shift in Canada of the adult-use cannabis consumers to higher cost manufactured products like infused PRJs and lower sales in Poland which historically has high margins.
Canopy Growth says several actions are underway that are expected to improve cannabis gross margins in the second half of fiscal 2026, including the deployment of automation technology and increased PRJ production capacity, and the continued pursuit of margin-accretive bulk cannabis sales in Canada and Europe.
'Our financial discipline has already delivered meaningful operating expense reductions, and we see further opportunity to simplify and focus the business. Improving gross margin remains a key priority while maintaining topline performance in all areas of the business. These actions are critical to strengthening our financial position through the remainder of fiscal 2026 and ultimately achieving Adjusted EBITDA profitability,' said Tom Stewart, Interim CFO.
Price Action: CGC stock is trading higher by 5.71% to $1.110 at last check Friday.
Read Next:Photo by T. Schneider via Shutterstock
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This article Adult-Use Cannabis Boom Powers Canopy Growth Sales, But Wider Loss Hits Margins originally appeared on Benzinga.com
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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