Canopy Growth Inc. (CGC), a diversified cannabis, hemp, and cannabis device company that sells a line of distinct brands and curated cannabis varieties in dried, oil, and softgel capsule forms in over a dozen countries across five continents. is a constituent in the munKNEE.com Pure-Play Pot Stock Index, and it reported its Q2 2021 financials today, as follows:

Q2 Financial Highlights (All figures are in Canadian dollars and compared to the previous quarter)

• Net Revenue: increased 22.6% to a quarterly record of $135.3M
  • Other Revenue: +34.0% to $43.0M
  • Cannabis Revenue: +17.9% to $92.3M
    • Business-to-Business Recreational: +20.9% to $42.2M
    • Business-to-Consumer Recreational: +101.1% to $18.7M
    • Canadian Medical: No Change @ $13.9M
    • International Medical: -13.4% to $17.5M
• Gross Margin: improved to 19% from 7%
• Adj. EBITDA: improved by 7.0% to $(85.7M)
• Net Income (Loss): improved by 24.7% to $(96.6M)
• Cash on Hand: declined by 13.9% to $1,722M 

Q2 Business & Operational Highlights (All figures are compared to the previous quarter.)

• Strengthened recreational market in Canada by 200 bps to 15.5%.
  • Grew their market share in the flower category by 320bps primarily from gains in the growing value flower segment with market share of value flower sold in Ontario more than doubling to 13.7%.
  • Established a commanding 54% dollar share leadership position in the cannabis-infused beverage segment with five Ready-to- Drink THC cannabis beverages in the Canadian recreational market.
  • Opened 9 retail stores in Alberta bringing the total number of stores in Canada to 48 (32 Corporate-owned) at the end of Q2 2021.
• Stepped up activities in the U.S. market to drive accelerated revenue growth:
  • Launched Martha Stewart branded health and wellness CBD gummies, oil and soft gels in September 2020. 
  • BioSteel signed distribution agreements with leading beverage distribution companies, Reyes Beer Division and Manhattan Beer which will bring BioSteel's ready-to-drink, electrolyte-packed sports hydration beverages to consumers, covering 100% of the U.S. market through direct-store-delivery (DSD) networks by early 2021.
  • See strong growth in Storz & Bickel (S&B) vaporizer products driven by both distribution gains and reorders from new US distributors.
  • Strengthened direct and third-party ecommerce sales channels. 
  • Launched StressCheck hand sanitizer in U.S.
• Implemented an amended arrangement with Acreage Holdings, Inc. that reduced the total purchase obligation for Canopy and provides flexibility to majority or total ownership of Acreage upon the occurrence (or waiver by the Company) of changes in federal laws in the U.S. to permit the general cultivation, distribution and possession of marijuana or the removal of the regulation of such activities from the federal laws of the U.S..
• Announced initial plans for Acreage to launch THC-Infused beverages in the states of California and Illinois in the summer of 2021.

Management Comments:

David Klein, CEO, said: "...Our renewed strategy of winning consumer mindshare, along with increased agility and execution, has resulted in record net revenue for the second quarter and momentum across key areas of business positioning Canopy for continued growth..."

Mike Lee, CFO, added: "We saw another quarter of improvement in our operating expense ratio while our marketing and R&D investments are being re-directed to drive sales, Importantly, we have identified cost savings opportunities in the range of $150-$200 million across cost of goods sold, general and administrative expenses, and inventory, and efforts are underway to quickly capture value.  Leveraging ongoing improvements across our business, we are accelerating our path to profitability, notably in our largest market, Canada."

Stock Performance

It has taken 10 months for Canopy Growth to surpass its December 31st, 2019, stock price advancing 35% already in the month of November as the chart below illustrates.

(Click on image to enlarge)