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Canopy Growth Corporation (TSX: WEED) (Nasdaq: CGC) announced its financial results for the third quarter ended December 31st, 2023 yesterday. All financial information below is reported in Canadian dollars unless otherwise indicated, and compared to the previous quarter.

Q3 Financial Highlights

• Total Revenue: UP 12.8% to $78.5M
  • Adj. Gross Margin: UP to 36% from 33% 
• Canadian: NC @ $39.0M 
  • Recreational: DOWN 2.5% to $23.4M
  • Medical: UP 4.0% to $15.6M
  • Adj. Gross Margin: DOWN to 28% from 34%
• International: UP 16.7% to $10.5M
  • Adj. Gross Margin: UP to 40% from 30%
• Total Cannabis: UP 3.1% to $49.5M 
  • Share of Total Revenue: DOWN to 63.1% from 68.8%
• Other Consumer Products: UP 33.6% to $29.0M 
  • Storz & Bickel (vaporizers): UP 54.2% to $18.5M
    • Adj. Gross Margin: UP to 54% from 33%
  • This Works: UP 15.5% to $8.2M
    • Adj. Gross Margin: UP to 52% from 48%
  • Other: DOWN 11.5% to $2.3M
    • Adj. Gross Margin: DOWN to (33)% from (27)%
  • Share of Total Revenue: UP to 36.9% from 31.2%
• Adj. EBITDA: Improved 24.4% to $(9.0)M
• Net Loss from Continuing Operations: Increased by 46.3% to $(216.8)M
   

Q3 Operational Highlights

• 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.
• Sales of the new Storz & Bickel Venty vaporizer, a device priced at the top of the range for comparable portable devices, exceeded expectations, selling approximately double the number of the next highest selling device during the critical holiday sales window of December 2023, and 55% more than the number of devices sold during the prior year's Black Friday event.

Management Commentary

• David Klein, Chief Executive Officer, said:

"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."
 

• Judy Hong, Chief Financial Officer, said:

"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." 

Stock Performance

Canopy Growth's stock price went DOWN 34.7% in Q3 (ending December 31st, 2023) and had declined a further 21.3% as of the close of business last Friday, February 9th The stock is DOWN another 6% so far today and is now DOWN 26% YTD.

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