TORONTO – Auxly Cannabis Group Inc., a leading consumer packaged goods company in the cannabis products market, reported financial results for the three months ended March 31, 2025.
Financial highlights for the first quarter ended March 31, 2025
- Net revenues of $32.7 million, an increase of 29% compared to the same period in 2024.
- Gross Margin on Finished Cannabis Inventory Sold of 48%, an increase of 1,000 bps or 26%, compared to the same period in 2024.
- SG&A of $9.7 million, an increase of 12% compared to the same period in 2024.
- Adjusted EBITDA of $7.4 million, or 23% of net revenue, an increase of 232% compared to the same period in 2024.
- Cash flow from operations of $2.0 million and cash at quarter end totalled $17.1 million.
- Reduced debt by another 5% from the end of 2024.
- Commercial highlights for the first quarter ended March 31, 2025
- #4 largest Canadian Licensed Producer with market share of 5.8% at quarter end.
- Back Forty exited the quarter as the #1 cannabis brand in Canada.
- Launched new cultivar Chemzilla in Ontario which rose to become the #1 SKU in the 14g flower category, reinforcing the strength of the Back Forty brand.
- Maintained a leadership position in the competitive vapour category, holding ten of the top fifteen all-in-one SKU positions nationally.
- Back Forty remained the #1 non-infused pre-roll brand in Ontario, supported by the launch of high THC cultivars Lemon Diesel and Pine Tar Kush.
Management Commentary
Hugo Alves, CEO of Auxly, commented: “We are pleased to report another exceptional quarter of financial and commercial performance, highlighted by a 29% year-over-year increase in net revenue, and a 232% improvement in adjusted EBITDA. These results reflect the successful execution of our strategy and our focus on teamwork, innovation, and operational efficiency. We continued to see strong growth in distribution, driven in particular by the expanding reach of our flower portfolio. As we continue to strengthen our balance sheet and reduce debt, we are building a solid foundation for long-term leadership and sustainable growth. The future of Auxly is bright and we’re just getting started.”
Net Revenues
For the three months ended March 31, 2025, net revenues were $32.7 million as compared to $25.2 million during the same period in 2024, representing increases of 29%. Revenues for the three months ended March 31, 2025 were comprised of approximately 63% (2024 – 59%) in sales of dried flower and pre-roll Cannabis Products, with the remainder from oils and Cannabis 2.0 Product sales.
During the first quarter of 2025, approximately 75% (2024 – 76%) of cannabis sales originated from sales to British Columbia, Alberta and Ontario. Since 2024, the Company had sales in all Canadian provinces and the Yukon and Northwest Territories.
Gross Profit
Auxly realized a gross profit of $18.7 million for the three months ended March 31, 2025, resulting in a 57% Gross Profit Margin as compared to $9.5 million or 37% during the same periods in 2024. The Gross Margin on Finished Cannabis Inventory Sold for the three months ended March 31, 2025 improved to 48% versus 38% in 2024 as a result of the streamlining and improvements made in our manufacturing process to reduce operating costs and increased demand and pricing of adult-use recreational market and bulk flower products. Higher cultivation yields lowered costs, and efficiency improvements at our Auxly Charlottetown facility further reduced costs.
Realized and unrealized fair value gains and losses reflect accounting treatments associated with Auxly Leamington cultivation activities and sales and are influenced by changes in production, sales and net realizable value assumptions.
Inventory impairments during the first quarter of 2025 of $0.1 million were associated with charges related to reductions in net realizable value of dried cannabis under the Company’s product specifications, a decrease of $0.3 million from the comparative period.
Total Expenses
Selling, general and administrative expenses (“SG&A”) are comprised of wages and benefits, office and administrative, professional fees, business development, and selling expenses. SG&A expenses were $9.7 million in the first quarter of 2025, $1.1 million or 12% higher than the same period in 2024. The increase in SG&A was primarily driven by investments to support higher sales.
Wages and benefits were $4.7 million for the quarter, as compared to $4.3 million during the same period in 2024. Wages and benefits increased compared to 2024 due to an increase in bonus accruals which was partially offset by cost savings from the streamlining of operations and support staff as a result of a more focused product portfolio.
Office and administrative expenses were $1.6 million for the quarter, $0.2 million higher than the same period in 2024. The Company continues to actively control overhead spend in the organization while growing sales.
Auxly’s professional fees were $0.3 million during the first quarter of 2025, $0.2 million lower than 2024. Professional fees incurred primarily related to accounting fees, regulatory matters, reporting issuer fees, and legal fees associated with certain corporate activities and as a result can fluctuate significantly from one period to the next.
Business development expenses were $nil for three months ended March 31, 2025 as compared to $0.1 million for the same period in 2024. These expenses primarily relate to business development and travel related expenses.
Selling expenses were $3.1 million for the three months ended March 31, 2025, an increase of $0.7 million from the same periods in 2024. The increase in expenditures was primarily as a result of investments in marketing initiatives and higher Health Canada fees related to higher revenues.
Equity-based compensation for the quarter was $1.5 million, primarily driven by the Cash Settled RSUs granted in 2023 and RSUs issued in 2024. During the same period in 2024, equity-based compensation was $1.9 million.
Depreciation and amortization expenses were $1.3 million for the three months ended March 31, 2025, representing an increase of $0.1 million over the same period in 2024 as a result of capital investments made during 2024.
Interest expenses were $2.2 million for the three months ended March 31, 2025, a decrease of $4.7 million over the same period in 2024. The decrease in expenses were primarily a result of the conversion of Imperial Debentures into Shares and lower interest expense on adjustable-rate debt. Interest expense includes accretion on the convertible debentures and interest paid in kind on the Imperial Debenture. Interest payable in cash was approximately $1.8 million for the first quarter of 2025, $0.5 million lower than the same period in 2024 as a result of lower principal amounts outstanding on debt instruments.
Total Other Incomes and Losses
Total other incomes and losses was a net loss of $0.1 million for the three months ended March 31, 2025, compared to a net loss of $0.8 million in the same period in 2024. The other incomes and losses in the first quarter of 2025 were primarily driven by foreign exchange losses. The other incomes and losses in the first quarter of 2024 were primarily driven by the loss on the adjustment to the provision related to the claim filed by Kindred Partners Inc. and foreign exchange losses.
Net Income and Loss
Net income for the three months ended March 31, 2025 was $12.1 million, representing a net income of $0.01 per share on a basic and diluted basis. The net income of $12.1 million in 2025 includes $8.1 million of deferred tax recovery related to the change in estimated useful life of intangible assets. The net loss of $26.0 million for the three months ended March 31, 2024 included $16.0 million of deferred tax expense on the conversion of Imperial Debenture into Shares. Excluding the deferred tax recovery related to the change in estimated useful life of intangible assets in 2025 and the deferred tax expense on the conversion of Imperial Debenture into Shares in 2024, net income increased by $14.0 million primarily due to improved gross profits and reduction in interest and accretion expenses.
Adjusted EBITDA
Adjusted EBITDA was $7.4 million for the quarter, an improvement of $5.2 million when compared to $2.2 million during the same period in 2024. Adjusted EBITDA for the three months ended March 31, 2025 improved primarily as a result of improved gross profits.
Outlook
The Company remains focused on achieving long-term, profitable growth by strengthening its leadership position in the Canadian cannabis market. Auxly consistently develops and commercializes products that resonate with Canadian consumers under trusted brands known for quality and consistency and will continue to execute against its strategy of focused innovation, enhanced product distribution, operational efficiency, and debt reduction.
In the quarter, the Company reported net revenues of $32.7 million, a 29% increase year-over-year, driven by strong performance across key product categories. Liquid Imagination 28G remained a top-selling dried flower SKU, while the launch of Chemzilla 14G supported flower portfolio diversification and product mix optimization. The Fire Breath cultivar, originally launched in late 2024 in Quebec and Ontario, has expanded distribution in British Columbia, Nova Scotia and PEI, aligning with our national growth strategy. The Company has continued to strengthen its position in the value segment through the expansion of milled flower offerings. The Company continues to defend its leadership position in the competitive vape category. During the quarter, the Company launched a new flavor within the Back Forty all-in-one vape line-up, which quickly became a top-selling SKU. This strong consumer uptake reflects the brand equity that the Company has built in the category, as consumers were eager to trial the new flavor offering. In the pre-roll category, the Company refreshed its product portfolio led by the successful launch of Lemon Diesel and Pine Tar Kush which drove incremental volumes.
Gross margin on finished cannabis inventory sold improved to 48% in the quarter, compared to 38% in the same period of 2024, driven by higher cultivation yields, improved product pricing in the adult-use market, and a refined customer mix. SG&A expenses were $9.7 million, a 12% increase year-over-year, primarily reflecting strategic investments to support higher sales volumes, build brand equity, expand distribution networks, and deepen retail relationships — critical barriers to entry in a competitive market.
Auxly remains committed to strengthening its balance sheet. During the quarter, the Company continued to reduce its debt and remained actively engaged with its creditors to manage liabilities and ensure working capital flexibility to fund future growth initiatives.
The Company remains confident in its ability to deliver sustainable, profitable growth through a focus on innovation, operational excellence, and disciplined execution. By advancing its strategic priorities, Auxly aims to reinforce its leadership in the Canadian cannabis market, build a strong foundation for future global opportunities, and create long-term value for all stakeholders.
About Auxly Cannabis Group Inc.
Auxly (TSX: XLY) is a leading Canadian consumer packaged goods company in the cannabis products market, headquartered in Toronto, Canada. Our mission is to help consumers live happier lives through quality cannabis products that they trust and love.
Our vision is to be a leader in branded cannabis products that deliver on our consumer promise of quality, safety and efficacy.
