Cronos Group (TSX: CRON) (NASDAQ: CRON) this morning reported their second quarter financial results. Revenues improved over the first quarter of 2021, with the company posting consolidated net revenue of $15.6 million for the quarter. Despite this, the company still managed to post gross losses, which grew on a quarterly basis.
Revenues for the quarter of $15.6 million were a significant improvement over the net revenue of $12.6 million reported in Q1, with results just barely making consensus estimates. Despite this, the company posted a larger gross loss, with the loss growing from $3.0 million in Q1 to $15.8 million in Q2 – a figure larger than consolidated net revenue itself. Gross margins as a result sat at -101%. The significant gross loss was a result of $12.0 million in inventory write-downs – which means that even before writedowns, the company is running at a gross loss, and that the business is entirely unsustainable.
Operating expenses grew on a quarterly basis as well, climbing to $44.4 million. The largest expense consisted of general and administrative, at $22.4 million, followed by sales and marketing at $13.2 million, and R&D at $5.2 million. Operating expenses as a whole effectively amounted to $2.84 per dollar of consolidated net revenue.
Despite the disastrous results, the company managed to post a net income, which is largely the function of a $115.2 million gain on the revaluation of derivative liabilities. The company managed to post a net income of $56.8 million as a result, while adjusted EBITDA came in at negative $49.8 million.
Also notable is the fact that the company has finally sunk below a billion dollars in cash and cash equivalents, which now sits at $895.2 million, down from $1.0 billion last quarter. Short term investments also declined, from $214.9 million to $201.7 million.
The company this morning also announced the appointment of Bob Madore as CFO, replacing Jerry Barbato. Reasoning for his departure was not provided.
Cronos Group last traded at $9.28 on the TSX.
Information for this briefing was found via Sedar and Cronos Group. The author has no securities or affiliations related to these organizations. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.