SMITHS FALLS, ON – Canopy Growth Corporation today announces its financial results for the third quarter ended December 31, 2023. All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.
Achieved consolidated gross margins of 36% in Q3 FY2024, with Canada cannabis gross margins increasing to 28% in Q3 FY2024, up from (11)% in Q3 FY2023.
Excluding the impact of the divestiture of the Canada national retail business in Q3 FY2023, Q3 FY2024 consolidated net revenue grew by 6% year-over-year. Delivered Q3 FY2024
consolidated net revenue of $79MM representing a decline of 7% year-over-year.
Rest-of-World cannabis revenue in Q3 FY2024 increased 81% year-over-year, led by continued strong growth in Australia, return to growth in Europe driven by new products and
improved sales execution, and lapping negative revenue impacts in non-core markets during the prior year.
Storz & Bickel® net revenue in Q3 FY2024 increased 54% sequentially driven by strong sales of the new VENTY portable vaporizer, traditionally strong seasonal sales,
including the most successful Black Friday sales event in the brand’s 20-year history.
Free cash flow from continuing operations of $(34)MM in Q3 FY2024, representing a 57% improvement year-over-year.
Cash and short-term investments balance of $186MM as at December 31, 2023. Reduced overall debt by $69MM during Q3 FY2024.
Management reaffirms expectation to achieve positive Adjusted EBITDA in each business unit exiting FY2024.
“This is the dawn of a new era at Canopy Growth. We’re singularly focused on cannabis and demonstrating growth across all of our business units. With our Canopy USA strategy now moving forward, we expect
to be the first and only U.S. listed company offering shareholders a unique opportunity to gain exposure to the fastest growing cannabis market in the world.”
David Klein, Chief Executive Officer
“Our Q3 FY2024 results demonstrate the substantial improvement in profitability and reduction in cash burn compared to the previous year as well as Q2 FY2024. Our right-sized business is consistently delivering
profitability improvements as well as sequential growth. These results, paired with our ongoing actions to strengthen Canopy Growth’s balance sheet, reinforce our confidence in continued performance along this path for a sustainable, profitable future.”
Judy Hong, Chief Financial Officer
Canada adult-use cannabis business-to-business revenue increased 9% year-over-year to $23MM in Q3 FY2024 driven by growth in the large format products of Tweed flower as well
as the addition of the Wana® brand edibles to the portfolio.
Canadian medical cannabis generated record net revenue in Q3 FY2024, with revenue increasing 11% compared to the prior year primarily attributable to an increase in the average
size of medical orders placed by our customers. Canadian medical cannabis revenue increase was due largely to a shift in our customer mix and a larger assortment of cannabis product choices offered to our customers.
Canada cannabis segment gross margins improved to 28% in Q3 FY2024, compared to (11)% in Q3 FY2023, driven by lower excess and obsolete inventory charges, lower operating costs
resulting from the cost reduction actions taken to date, and the opportunistic use of lower cost inputs.
Despite a decrease in revenues compared to Q3 FY2023, Storz & Bickel® net revenue in Q3 FY2024 increased 54% sequentially driven by strong sales of the new VENTY
portable vaporizer, traditionally strong seasonal sales, including the brand’s most successful Black Friday sales event to date. Gross margins improved to 51% in Q3 FY2024, compared to 45% in Q3 FY2023, driven primarily by lower input costs and a positive
shift in product mix to higher-margin newly launched products.
Selling, general and administrative expenses were $54MM in Q3 FY2024, down from $90MM in Q3 FY2023.
Operating loss from continuing operations of $60MM in Q3 FY2024, compared to a loss of $113MM in Q3 FY2023. Adjusted EBITDA loss was $9MM in Q3 FY2024, representing an improvement
of 82% compared to the $50MM Adjusted EBTIDA loss in Q3 FY2023, the narrowest loss since FY2017, driven primarily by lower operating costs resulting from the cost reduction actions taken to date.
Demand for quality products driving profitable growth of Canada cannabis business
The Company held its ranking of top 3 supplier of cannabis flower4 in British Columbia and added over 900 points of distribution nationally for flower in Q3 FY2024.
The Company’s re-introduction of Wana® brand cannabis edibles in Q3 FY2024 has re-established robust distribution nationally and returned distribution to growth in Ontario driven by key accounts. Wana® brand cannabis gummies delivered top 3 and 4 market share in British Columbia and Ontario, respectively.
Strong demand for proven flower strains is driving growth in our Rest-of-World medical cannabis business Canopy Growth’s Australian medical cannabis business has generated 12 straight quarters of revenue growth.
Shipments of proven Canadian strains Kush Mints, Tiger Cake and OG Delux, and increased engagements with medical practitioners contributed to growth in the Australian and German medical cannabis markets in Q3 FY2024.
Strong demand for new Storz & Bickel® Venty portable vaporizer helped drive strong sequential revenue growth
Demand for the new Venty vaporizer, a device priced at the top of the range for comparable portable devices, has exceeded expectations, and a second production shift was added to help meet demand. In the critical holiday sales window of December 2023, the Venty vaporizer was Storz & Bickel®’s best-selling device, selling approximately double the number of the next highest selling device.
The Venty vaporizer has been positively reviewed by leading vape and vaporizer-related publications and influencers.5
Black Friday sales were the most successful in Storz & Bickel®’s over 20-year history with device sales increasing 55% over the number of devices sold during the prior year’s Black Friday event.
Advancing Canopy USA, LLC strategy with special shareholder meeting scheduled for April 12, 2024
The Company expects to file its definitive proxy statement with the U.S. Securities and Exchange Commission (“SEC”) on or about February 13, 20 24 and to host a special meeting of the Company’s shareholders on April 12, 2024. At the Special Meeting, Shareholders will be asked to consider a special resolution authorizing an amendment to its articles of incorporation to, among other things,
create a new class of non-voting, non-participating exchangeable shares in the capital of the Company.
Upon creation of the Exchangeable Shares, and Canopy USA’s acquisition of U.S. THC businesses, the Company’s investors are expected to have an opportunity to participate in
the U.S. cannabis market through Canopy Growth’s non-controlling interest in Canopy USA.
The Q3 FY2024 and Q3 FY2023 financial results presented in this press release have been prepared in accordance with U.S. GAAP.
Board of Directors Appointment
The Company also announced that Robert L. Hanson has resigned from Canopy Growth’s Board of Directors, effective as of February 6, 2024. As part of the advancement of Canopy USA, and the expected
departure of CBI appointed Board members following the creation of the Exchangeable Shares, Canopy Growth is pleased to announce the appointment of two new Board members, Willy Kruh and Luc Mongeau, to the Company’s Board, effective as of February
Willy Kruh – Director, Member of the Audit Committee
Willy J. Kruh CPA, CA, MBA, is a retired Partner and Global Chairman of Consumer and Retail at KPMG LLP, with over 35 years of experience. As a recognized and trusted, advisor, consultant, and auditor, Willy has been instrumental in shaping the
financial landscape of leading consumer packaged goods (“CPG”), retail, food, and beverage, multinational corporations, offering strategic guidance and invaluable insights to industry leaders in North America and globally. Willy brings wide ranging financial
as well as consumer and retail industry experience to the Board.
Luc Mongeau – Director, Member of the Corporate Governance, Compensation & Nominating Committee
Luc Mongeau is a seasoned executive with over 25 years of experience spearheading multi-billion-dollar CPG companies throughout North America, including Weston Foods, Mars and Mars Petcare. An established leader with
a demonstrated track record of marketing and sales agility, Luc has consistently delivered transformative growth and operational excellence in brand led businesses. Luc brings his extensive experience in business transformation and strategic leadership to
Adjusted EBITDA is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted EBITDA is calculated as the reported
net income (loss), adjusted to exclude income tax recovery (expense); other income (expense), net; loss on equity method investments; share-based compensation expense; depreciation and amortization expense; asset impairment and restructuring costs; restructuring
costs recorded in cost of goods sold; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition, divestiture, and other costs. Asset impairments related to periodic changes to the Company’s
supply chain processes are not excluded from Adjusted EBITDA given their occurrence through the normal course of core operational activities. The Adjusted EBITDA reconciliation is presented within this news release and explained in the Company’s Quarterly
Report on Form 10-Q for the quarterly period ended December 31, 2023 to be filed with the SEC.
Free cash flow is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. This measure is calculated as net cash provided
by (used in) operating activities less purchases of and deposits on property, plant and equipment. The free cash flow reconciliation is presented within this news release and explained in the Form 10-Q to be filed with the SEC.
Adjusted gross margin and adjusted gross margin percentage are non-GAAP measures used by management that are not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies.
Adjusted gross margin is calculated as gross margin excluding restructuring and other charges recorded in cost of goods sold, and charges related to the flow-through of inventory step-up on business combinations. Adjusted gross margin percentage is calculated
as adjusted gross margin divided by net revenue. The adjusted gross margin and adjusted gross margin percentage reconciliation is presented within this news release and explained in the Form 10-Q to be filed with the SEC.
About Canopy Growth
Canopy Growth is a leading North American cannabis and CPG company dedicated to unleashing the power of cannabis to improve lives.
Through an unwavering commitment to our consumers, Canopy Growth delivers innovative products with a focus on premium and mainstream cannabis brands including Doja, 7ACRES, Tweed, and Deep Space. Canopy Growth’s
CPG portfolio features gourmet wellness products by Martha Stewart CBD, and category defining vaporizer technology made in Germany by Storz & Bickel.
Canopy Growth has also established a comprehensive ecosystem to realize the opportunities presented by the U.S. THC market through its rights to Acreage, a vertically integrated multi-state cannabis operator
with principal operations in densely populated states across the Northeast, as well as Wana Brands, a leading cannabis edible brand in North America, and Jetty Extracts, a California-based producer of high‑quality cannabis extracts and pioneer of clean vape
Beyond its world-class products, Canopy Growth is leading the industry forward through a commitment to social equity, responsible use, and community reinvestment—pioneering a future where cannabis is understood
and welcomed for its potential to help achieve greater well-being and life enhancement.
For more information visit www.canopygrowth.com.
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