Canopy Growth (NASDAQ:CGC) Issues Quarterly Earnings Results

Key Points

• Canopy Growth missed earnings expectations, reporting a loss of C$0.07 per share versus analysts’ expected loss of C$0.02; revenue also came in below estimates.
• Despite the miss, Q2 revenue rose 22% year over year to C$81.4 million, led by a 141% increase in international cannabis revenue. Adjusted gross margin declined to 31% from 33% a year earlier.
• Canopy reported an adjusted EBITDA loss of C$2.9 million and reiterated its target of positive adjusted EBITDA in the second half of fiscal 2027; it ended the quarter with C$320 million in cash and short-term investments.

Canopy Growth (NASDAQ:CGC - Get Free Report) issued its earnings results on Friday. The company reported ($0.07) earnings per share (EPS) for the quarter, missing analysts' consensus estimates of ($0.02) by ($0.05), Zacks reports. Canopy Growth had a negative net margin of 65.33% and a negative return on equity of 21.91%.

Here are the key takeaways from Canopy Growth's conference call:

• Q2 consolidated revenue rose 22% to CAD 81.4 million, with cannabis revenue up 30%. International cannabis revenue surged 141% year over year to CAD 12.3 million, while Canadian medical and adult-use revenue also grew.
• Canopy reported an Adjusted EBITDA loss of CAD 2.9 million, an improvement from Q1, and said it remains on track for positive Adjusted EBITDA in the second half of fiscal 2027. It ended the quarter with CAD 320 million in cash and short-term investments, though adjusted gross margin fell to 31% from 33% a year earlier, partly due to lower Veterans Affairs Canada reimbursement.
• The company expects cultivation changes at Kincardine to lift flower production by at least 25%–30% within the existing footprint. Management expects improvements to become more visible as fiscal 2027 ends, with the full impact anticipated in fiscal 2028.
• New EU GMP certification at Smiths Falls, alongside renewed certification at Kincardine, gives Canopy an end-to-end certified supply chain and a path to offer more product categories in Europe. Management sees international markets as a key growth opportunity, but said new products are likely to have more impact starting in fiscal 2028.
• Storz & Bickel revenue declined 4% year over year to CAD 15.1 million as consumer spending remained variable amid economic uncertainty. The segment’s gross margin improved to 39% from 38%, and management expects a seasonally stronger Q3.

Canopy Growth Stock Performance

Shares of NASDAQ CGC traded down $0.02 during trading hours on Friday, reaching $0.65. 6,816,481 shares of the stock were exchanged, compared to its average volume of 2,459,212. The company has a debt-to-equity ratio of 0.31, a quick ratio of 2.39 and a current ratio of 3.04. The firm has a market capitalization of $292.72 million, a price-to-earnings ratio of -1.45 and a beta of 0.87. The stock's fifty day simple moving average is $0.84 and its 200 day simple moving average is $0.99. Canopy Growth has a 52 week low of $0.58 and a 52 week high of $2.38.

Key Headlines Impacting Canopy Growth

Here are the key news stories impacting Canopy Growth this week:

• Positive Sentiment: Net revenue increased 22% year over year, led by a 141% rise in international cannabis markets, indicating stronger sales despite the overall revenue miss. Canopy Growth Q2 results
• Positive Sentiment: Management said Kincardine flower output is targeted to rise 25%–30% and reiterated its expectation for positive adjusted EBITDA in the second half of fiscal 2027. These goals could support a recovery if achieved. Kincardine output and EBITDA outlook
• Negative Sentiment: Canopy reported a loss of C$0.07 per share, wider than the C$0.02 consensus loss, while revenue also came in below estimates. The earnings miss prompted reports of a sharp decline in the shares. Shares fall after earnings miss
• Negative Sentiment: A $35.8 million charge contributed to the reported loss, and margins weakened as Canadian medical reimbursement fell, tempering the positive revenue trend. Q2 earnings call transcript

Analysts Set New Price Targets

Several equities analysts recently weighed in on CGC shares. Wall Street Zen lowered shares of Canopy Growth from a "hold" rating to a "sell" rating in a research report on Saturday, October 17th. Weiss Ratings lowered shares of Canopy Growth from a "sell (d-)" rating to a "sell (e+)" rating in a report on Friday, October 16th. Two analysts have rated the stock with a Buy rating, two have issued a Hold rating and one has given a Sell rating to the company. According to MarketBeat, the stock currently has an average rating of "Hold".

Canopy Growth Company Profile

Canopy Growth Corporation is a cannabis company headquartered in Smiths Falls, Ontario, Canada. Founded in 2013, the company operates in the production, distribution and sale of cannabis and cannabis-related products for adult-use and medical markets.

Its product portfolio includes dried cannabis flower, pre-rolls, cannabis oils, softgels, vapes, beverages and edibles. Canopy Growth markets products under several brands, including Tweed, 7ACRES, Doja and Deep Space, with offerings designed for different consumer preferences and product segments.

Canopy Growth primarily serves the Canadian recreational and medical cannabis markets and has pursued international opportunities in selected medical-cannabis markets.

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