Canopy Growth (TSX: WEED) today delivered its third fiscal quarter 2025 results, reporting a quarterly loss of $121.9 million for the period ended December 31, 2024, a marked improvement from the $216.8 million loss recorded in the same quarter of 2023.
Despite this progress, the reported loss per share of $1.11 fell far short of market expectations, which had been set at a modest $0.38 loss per share. In response, the firm’s shares dropped more than 24%.
Revenue for the quarter declined 5% year-over-year to $74.8 million, surpassing analyst forecasts of $69.2 million. When excluding revenue from businesses divested in the prior fiscal year, underlying performance improved by 8%.
Growth in Canada’s medical cannabis segment, which saw a 16% increase in revenue, partly offset a 10% decline in the adult-use category, where total net revenue reached $41 million—up 1% from the previous year. International operations also contributed positively, with revenue climbing 14% to $12 million, bolstered by strong sales in Poland and Germany, even as Australian medical cannabis sales softened and the company exited US CBD operations earlier in the year.
Gross margins fell by 400 basis points to 32%, a decline attributed primarily to incremental costs incurred from the launch of Claybourne infused pre-rolls in Canada and increased indirect expenses related to its Storz & Bickel branded vaporizer devices. Yet, the company managed to achieve its best adjusted EBITDA performance to date, posting an adjusted EBITDA loss of $3 million—an improvement of 61% compared to the prior year, driven mainly by Storz & Bickel sales.
Operating expenses dropped from $88.5 million last year to $47.9 million this year, reducing the operating loss to $23.8 million, down from $60.3 million in the corresponding quarter of the previous fiscal year.
Free cash flow saw a reduction in the outflow from $33.9 million to $28.2 million this year, thanks in part to lower cash interest expenses. On the balance sheet, a notable development was the reduction in total debt—from $554 million as of previous quarter, to $442 million as of December 31, 2024—primarily achieved through an early prepayment of a senior secured term loan.
Following its acquisition of Acreage Holdings in December, Canopy USA has fully integrated its key subsidiaries—Mountain High Products, Wana Wellness, The Cima Group, and Lemurian—with the integration already delivering cost savings, the company said.
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