As earnings season kicks into high gear, analysts are closely following the numbers that are reported by some of the best known cannabis companies.
Expectations are high for cannabis companies and the market has responded negatively to high-profile operators that reported numbers which missed expectations.
Aphria, Inc. (APHA.TO) (APHA) was one of the first Canadian cannabis producers to release quarterly financial results. During the conference call, the management team highlighted the risk of price compression in Canada and this comment put additional pressure on Canadian cannabis producers.
Organigram Holdings Inc. (OGI.TO) (OGI) also traded lower after reporting quarterly financial results that missed expectations. This comes after the Canadian cannabis producer received a $171 million investment from British American Tobacco (BTI). We are favorable on how the relationship with BTI could support Organigram and will monitor how the relationship advances from here.
Earlier this week, Auxly Cannabis Group Inc. (XLY.V) (CBWTF) released fourth quarter and full year financial results and the market responded…to the numbers. During the quarter, the Canadian cannabis company reported to have generated $18.3 million of net cannabis revenue. When compared to the same period last year, revenue has spiked higher and we attribute the growth to Auxly’s cannabis 2.0 business.
In 2020, Auxly generated more than $50 million of revenue ($46.6 million of net cannabis revenue). When compared to 2019, revenues increased by more than 500% and we will monitor how revenue numbers grow from here. The comparable quarters in 2019 have a low bar and we are not surprised by Auxly’s success.
During the last year, Auxly has significantly strengthened its balance sheet and this is an important development. The company achieved this through a series of capital raises and we will monitor how the management team puts the capital to work to grow the business.
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