Canopy Growth Corporation’s net revenues reached C$90.5m in its fiscal Q1 2020 (calendar Q2 2019) – the three months to end of June.
This figure was down 3.8%, or C$3.58m, on the C$94.1m in net revenues that the firm posted in the prior quarter.
In a note to investors, Canopy clarified that its net revenues figure included “negative impact of revenue adjustments which represent the company’s estimate of variable consideration that may result from rights of return given speed of retail store roll-outs, and which primarily relate to oils and softgels, and the impact from other revenue adjustments on excise taxes”.
Gross revenues, before excise taxes, stood at C$103.4m in fiscal Q1 2020 / calendar Q2 2019.
An adjusted EBITDA loss of C$92m in the quarter was up C$5.7m versus the prior three months, inclusive of investments in US CBD expansion activity.
The firm said it has now “developed a broad CBD product offering that includes skincare and cosmetics, topical creams, vape products, beverages, edibles, oils and softgels, and remains on track to unveil CBD products this fiscal year”.
Other highlights for Canopy in the Q2 2020 fiscal quarter included increased dried cannabis sales in the Canadian recreational market by 94% over Q4 2019. The firm harvested 40,960 kilograms, exceeding expectations in the quarter, an increase of 183% over Q4 2019.
What’s more, Canopy increased international medical cannabis revenue by 209% versus Q1 2019.
“The Company has two primary objectives as we complete Q1 2020 and look to the remainder of the fiscal year,” said Mark Zekulin, CEO, Canopy Growth.
“First, the Company remains focused on laying the foundation for dominance in an emerging global opportunity. This means investments in developing intellectual property, building brands, building international reach, and ensuring scaled production capability for current and future products.
“Second, we are fixated on the process of evolving from builders to operators over the remainder of this fiscal year, meaning that as our expansion program comes to a close in Canada, and as new value-add products come to market in Canada, we demonstrate a sustainable, high margin, profitable Canadian business.”
“Fiscal 2020 is going to be another exciting time for the cannabis industry as we close in on the launch of new product formats.”
Mark Zekulin, Canopy Growth
In first quarter fiscal 2020, Canopy Growth harvested 40,960 kg of product, surpassing its previous estimate of 34,000 kilograms.
The Q1 harvest is the first full-scale harvest since the retrofitting of its large-scale greenhouse facilities started in calendar 2018, and with a majority of the work completed at Mirabel, Delta, and Aldergrove facilities, the company is now shifting its focus to optimizing these facilities for yield and cost.
The Company believes these efforts will contribute to both revenue growth and gross margin improvements in coming months. The recent Q1 harvest demonstrates the Company’s ability to scale production of ‘high-THC’ strains of cannabis, representing over 70% of the harvest, which positions the Company to better meet the burgeoning demand for high-THC products in retail. The Company also saw a steady increase of recreational retail sales which continues to be the primary channel for reaching new consumers.
“Fiscal 2020 is going to be another exciting time for the cannabis industry as we close in on the launch of new product formats. Our recent harvests are proof that our focus on operational excellence is working, and we look forward to showing both our Canadian and U.S. customers what we’ve been working on behind the scenes to prepare for the next wave of products coming later this year,” said Zekulin.
“Internationally we are now executing on the infrastructure we have spent the last several years building, with just under 1,000 kg or kg equivalents of dried flower, oil and softgel products exported from Canada since April 1, and domestic, commercial production now underway in Germany (C3), Denmark (Spectrum Therapeutics) and the United States (CBD only).Cannabis Business Worldwide