Canopy Growth Reports Lower Sales in Q3, But Narrows Losses

By Dean Seal

Canopy Growth, the cannabis company, experienced a decline in sales during its fiscal third quarter following the divestment of its Canadian national retail business last year. However, the company managed to narrow its losses as margins improved.

Key Details:

  • The company reported a loss of 216.8 million Canadian dollars ($161.2 million), or C$2.62 a share, for the final quarter of calendar 2023. This is in comparison to a loss of C$259.5 million, or C$5.34 a share, in the same period of the previous year.
  • Quarterly revenue declined to C$90.1 million from C$97 million last year.
  • Excluding the impact of Canopy’s divestment and transition to an asset-light model in the year-ago quarter, revenue saw a 6% increase.
  • Business-to-business sales of adult-use cannabis grew by 9% year-over-year, while medical cannabis sales in Canada rose by 11%.
  • Revenue from international markets increased by 81% year-over-year, with Australia leading the way along with a return to growth in Europe.
  • Gross margin improved by three percentage points to 36%. Within the Canadian cannabis reporting unit, gross margin improved from negative 11% in the previous year to 28%. This improvement was driven by lower excess and obsolete inventory charges, as well as reduced operating costs and lower cost inputs.
  • Revenue at the Storz & Bickel vaporizer brand was lower than the previous year but showed a 54% increase from the previous quarter. This growth was attributed to the successful launch of the VENTY portable vaporizer, as well as strong seasonal sales including a Black Friday event.
  • Lower input costs and a positive shift in product mix contributed to the vaporizer unit’s quarterly gross margin of 51%, compared to 45% last year.
  • Canopy managed to cut its overhead costs from $90 million in the year-ago quarter to $54 million.

It’s clear that despite lower sales, Canopy Growth has made significant strides in narrowing their losses and improving margins. The company’s shift towards an asset-light model and successful product launches have contributed to this positive outcome. With continued growth in international markets and cost-saving measures in place, Canopy Growth remains positioned for future success.

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