After Canopy Growth (NYSE: CGC) reported its first quarter 2021 results yesterday, the shares jumped about 10% in the pre-market trading and closed the regular session by surging 7.82% to $17.93. Contrary to the fourth quarter 2020 results, Canopy Growth’s net loss shrank in Q1 2021, helped by the 22% revenue growth and a reduction in expenses.
Q1 results
The Canada-based cannabis producer’s loss of C$128 million or C$0.30 per share in the first quarter was better than the C$66 million registered in the first quarter of 2020.
Canadian net revenue decreased 11% year on year, due in part to the restricted cannabis retail operating environment in response to COVID-19 pandemic as well as increased competition. B2B net revenue decreased 10% over the last year.
Containing costs
The company had reduced its headcount by more than 18% since the beginning of the year. Operating expenses had declined by 23% versus the year-ago quarter and the cash burn was reduced by more than 50% from the prior-year period.
Acquired businesses
This Works and Biosteel, the acquired businesses of Canopy Growth, performed in line with expectations in the restricted COVID-19 environment. For Biosteel, an increase in sales from the e-commerce channel was offset by a significant decline in traditional retail sales caused by the closure of many brick-and-mortar retailers in Canada due to COVID 19. Canopy expects an improved performance from Biosteel driven by the easing of COVID-19 retail restrictions in Canada as well as expanded distribution in the US in the coming months.
Reopening stores
Since Canopy Growth opened 22 corporate stores in the latter half of Q1, B2C sales have returned to pre-COVID levels. Canopy Growth estimates to open in excess of 1,200 stores across Canada by the end of calendar year.
COVID-19 and recovery
Like other companies, Canopy Growth is also facing a recession caused by COVID-19. The company estimates that the legal sale of recreational cannabis in the US, if legalized in all 50 states now, would generate more than $175 billion by 2025 in federal sales, business and payroll taxes and add nearly 1.6 million jobs by 2026. Canopy Growth expects cannabis industry to be a key driver of the economy when the pandemic is under control.
Outlook
During the earnings call, when answering an analyst’s question on the factors that would affect the future quarters, CFO Mike Lee said,
“Consumers are still spending on cannabis. And with more stores coming, we think that’s going to continue to open up the market. And I know that there’s lots of questions around the future of pricing and value and all of that, but we believe that it’s growing the market, and we believe that we’ve got the production capability that’s going to demonstrate real strong potential as we build toward that market. So all signs are good for Q2.”
Most Popular
Costco (COST) reports strong growth in Q1 FY26 earnings; revenue up 8%
Costco Wholesale Corporation (NASDAQ: COST) has reported an increase in net income for the first quarter of fiscal 2026. Revenues grew 8.3% year-over-year. The Issaquah, Washington-headquartered warehouse giant’s total revenues
AVGO Earnings: Broadcom reports higher Q4 FY25 revenue, profit; results beat
Semiconductor company Broadcom, Inc. (NASDAQ: AVGO) on Thursday reported an increase in revenue and adjusted earnings for the fourth quarter of fiscal 2025. The numbers also surpassed analysts' expectations. Adjusted
Lamb Weston (LW) is set to report Q2 2026 earnings next week, here’s what to look for
Shares of Lamb Weston Holdings, Inc. (NYSE: LW) rose over 1% on Thursday. The stock has gained 4% over the past three months. The French fry giant is slated to
Comments