Presenting the first quarterly report under its new CEO, Canopy Growth Corporation (NYSE: CGC) posted a net loss for the third quarter of 2020 despite double-digit growth in revenues. The company said it started shipments of cannabis-infused edible chocolates, but left the market speculating about the launch of its much-hyped pot-based drinks. The stock rose sharply early Friday following the announcement.
The Canada-based firm reported a net loss of C$124.17 million or $C$0.35 per share for the third quarter, compared to a profit of C$74.86 million last year. Analysts had predicted a wider loss for the latest quarter. Results for the year-ago quarter were restated.
The bottom-line was negatively impacted by a 34% increase in operating expenses. Meanwhile, net revenues climbed 49% annually to C$123.8 million. Revenues, excluding portfolio restructuring charges, move up 13%.
Revenues from Canadian business-to-business recreational cannabis declined 11% compared to last year and increase 8% sequentially. Total Canadian cannabis revenue was down 5% year-over-year and up 9% from the previous quarter.
During the quarter, Canopy Growth appointed David Klein as its new chief executive officer. Klein, a former CFO of Constellation Brands (STZ), replaced Mark Zekulin.
“In Q3 we executed across Canada, in our international markets, and in our strategic acquisitions to drive revenue growth. We have a lot of work to do. We are eager to capitalize on the opportunity to create an unassailable position through a tight focus on the consumer and on critical markets,” said Klein.
Currently, the cannabis industry is going through a difficult phase, and Canopy Growth is no exception. The unfavorable macroeconomic conditions and uncertainties related to the legalization of recreational cannabis are the main challenges facing the companies.
Earlier this week, Aurora Cannabis (ACB) reported a wider net loss for its most recent quarter, reflecting muted sales and a decline in selling prices. Aurora has launched its Cannabis 2.0 products across the Canadian market.
Shares of Canopy Growth gained early Friday after closing the previous session lower. The stock has dropped about 59% in the past twelve months, paring most of the gains it achieved in the early part of last year.