Fubotv earnings beat by $0.10, revenue topped estimates
Cannabist Company Holdings Inc. (CBSTF) reported its Q2 2025 earnings, revealing a slight decrease in revenue and a decline in gross margin. The company is undergoing significant restructuring efforts, including market exits and cost reductions. Despite these challenges, Cannabist remains focused on its core markets and brand growth. The stock price saw a decrease of 8.79% following the earnings announcement. According to InvestingPro analysis, the company currently appears undervalued based on its Fair Value assessment, though it maintains a "FAIR" overall financial health rating of 2.49 out of 5.
Key Takeaways
- Revenue for Q2 2025 was $87 million, a 1% decrease from Q1.
- The company improved its adjusted EBITDA margin by 30 basis points to 9.8%.
- Cannabist is focusing on 10 core markets after reducing its operational footprint.
- Significant cost savings are expected from ongoing restructuring efforts.
- The stock price fell 8.79% post-earnings release.
Company Performance
Cannabist Company Holdings Inc. reported a slight decline in revenue for Q2 2025, with $87 million, down 1% from the previous quarter. The company is actively restructuring, having reduced its operational presence from 18 to 10 markets. Despite the revenue dip, Cannabist reported a 30 basis point improvement in its adjusted EBITDA margin, highlighting its focus on operational efficiency. InvestingPro data reveals the company’s significant debt burden of $464.42 million, with a concerning debt-to-capital ratio of 0.91.
Financial Highlights
- Revenue: $87 million, down 1% from Q1 2025.
- Adjusted EBITDA: $8.5 million, with a margin improvement to 9.8%.
- Gross Margin: 33%, down from 36% in Q1 2025.
- Cash Position: $15.5 million, decreased from $18.9 million in Q1 2025.
Outlook & Guidance
Cannabist is committed to its market optimization strategy, focusing on 10 core markets. The company anticipates new store openings in Ohio and Virginia and is preparing for the Pennsylvania adult-use market transition. Cost optimization remains a priority, with significant savings expected from corporate restructuring and labor reductions. InvestingPro analysts project revenue growth of 2.08% for FY2025, with the company expected to turn profitable this year. Get access to 10+ additional exclusive ProTips and comprehensive financial analysis through an InvestingPro subscription.
Executive Commentary
CEO David Hart emphasized the company’s focus on liquidity and operational improvements, stating, "We are focused on liquidity and balance sheet management while continuing to make operational improvements." President Jesse Shannon highlighted the strength of Cannabist’s brands, noting, "Our first party brands continue to resonate with our customers."
Risks and Challenges
- Market Saturation: As Cannabist exits certain markets, there is a risk of losing market share.
- Regulatory Changes: The cannabis industry is subject to regulatory shifts that could impact operations.
- Economic Pressures: Broader economic conditions may affect consumer spending on cannabis products.
- Supply Chain Disruptions: Potential disruptions could impact product availability and costs.
- Competition: Increased competition in key markets could pressure Cannabist’s market position.
Full transcript - Cannabist Company Holdings Inc (CBSTF) Q2 2025:
Conference Operator: Good day, and thank you for standing by. Welcome to The Cannabis Company Second Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Leigh Evans, SVP, Investor Relations.
Please go ahead. Good morning, and thank you for joining The Cannabis Company’s second quarter twenty twenty five earnings conference call. With me today are Chief Executive Officer, David Hart President, Jesse Shannon and Chief Financial Officer, Derek Watson. Earlier this morning, we issued a press release reporting our results. A copy of this release is available on the Investors section of our corporate website, where you will also be able to access a replay of this call for up to thirty days.
Certain remarks we make today regarding future plans and prospects for the company constitute forward looking statements within the meaning of applicable Canadian and U. S. Securities laws. Actual results may differ materially from those indicated by such forward looking statements as a result of various important factors, which we disclose in more detail in the Risk Factors section of our annual Form 10 ks for the year ended 12/31/2024, and in our subsequent quarterly filings. Any forward looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date.
While we may update any such forward looking statements in the future, we specifically disclaim any obligation to do so except as otherwise required by applicable law. Also, please note that on today’s call, we will refer to certain non GAAP financial measures such as EBITDA and adjusted EBITDA. These measures do not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies. The cannabis company considers certain non GAAP measures to be meaningful indicators of the performance of its business in addition to but not as a substitute for our GAAP results. A reconciliation of such non GAAP financial measures to their nearest comparable GAAP measure is included in our press release issued earlier today.
With that, I will turn the call over to David Hart to get us started. David?
David Hart, Chief Executive Officer, The Cannabis Company: Thank you, Lee, and thank you to everyone who has joined us on the call today. As we consider the results of the 2025, our priorities remain unchanged. We are focused on liquidity and balance sheet management while continuing to make operational improvements, including taking costs out of our business. As we begin, I want to highlight some of the transformational initiatives that have been completed and those that are underway. First and foremost, we want to emphasize the completion of the debt restructuring transaction that we announced on February 27 and closed on May 29, extending the maturity of all February of our senior debt obligations until at least December 2028.
As we simplify the business, we made strides with footprint optimization and bringing cash onto the balance sheet. During the quarter, we closed on the sale of our remaining license in Florida and are now focused on divesting our loan remaining asset in Florida, a cultivation facility. During Q2, we also closed on the sale of two retail locations in California, and as of July our manufacturing facility in California is now under MSA. As we continue to make progress on our exit of that market on a facility by facility basis. As we have noted previously we’re also working on divesting our business in the state of Illinois which consists of two dispensaries and a cultivation facility.
And as a new update, we are announcing today the signing of a transaction in Pennsylvania that will result in the sale of three retail locations for roughly $10,000,000 as we pivot to a wholesale business model in Pennsylvania in order to better utilize the cultivation and manufacturing facility and to retain exposure in a market that should see an adult use transition in the future. Once we complete the Florida, California and Illinois market exits, as well as the wholesale shift in Pennsylvania, the cannabis company will be active in 10 markets, down from as many as 18 in the past. On the operational front, we succeeded in taking costs out of the business in the quarter. As Derek will discuss shortly, we generated roughly 30 sequential basis points of improved adjusted EBITDA margin in Q2, despite pervasive and persistent headwinds in the sector. Lastly, I want to highlight some of our recent wins with a very successful launch of adult use sales in all three of our retail locations in Delaware on August 1.
I want to thank the team for getting Delaware AU off to a great start. Furthermore, we anticipate new stores opening in Ohio during the third and fourth quarters and we look forward to further strengthening in our core markets like New Jersey and Virginia. With that, let me turn the call over to Jesse to discuss our operational results and initiatives in more detail. Jesse?
Jesse Shannon, President, The Cannabis Company: Thanks, David. During the second quarter, the operations team continued its relentless efforts to simplify and optimize our business, focusing on the right products in the right locations to drive efficiencies, reduce costs and meet our customers’ needs. While the industry continues to battle pervasive headwinds, we achieved a number of positive outcomes. In Q2, our top five markets by revenue and EBITDA in alphabetical order were once again Colorado, Maryland, New Jersey, Ohio and Virginia, with New Jersey and Colorado achieving the biggest sequential revenue growth. Maryland, New Jersey and Ohio saw the largest increases in adjusted EBITDA sequentially.
In New Jersey, we kicked up adult use sales in our third Garden State dispensary in April. During the second quarter, we completed the sale of two retail locations in California and we have one dispensary remaining in San Francisco. We ended the quarter with 53 operational retail locations compared to 55 at the end of Q1. We currently have three stores in development in Ohio and one in Virginia. We expect our Norwalk, Ohio store to open during the third quarter.
I’m pleased to note that our first party brands continue to resonate with our customers and achieved strong growth in the second quarter. The cannabis portfolio of brands saw revenue growth of 17% sequentially in New Jersey with seed and strain leading the pack, followed by seven seventy seven. Across all markets, seven seventy seven was up 10% sequentially driven by markets like Colorado, Maryland and New Jersey. Seed and Strain is also a bright spot for our portfolio in Ohio, up marginally sequentially and over 74 over the prior year. Growth in the vape category for Seed and Strain in Ohio is a perfect example of our progress in aligning the product portfolio to meet the market demand in top selling product formats.
As for brand partners, during q two, we launched Coast Edibles in Maryland and plan to add additional markets soon as we’re already seeing excellent results. Coast launched in June and quickly became the number one brand for the Maryland wholesale portfolio. We also saw revenue growth out of our other brand partners led by Bloom and Old Pal. Our efforts to methodically rationalize our SKUs and pricing architecture at the retail level continued in the quarter, and we expect additional progress in the 2025. As Derek will detail, during the quarter, we executed an initiative to clear obsolete wholesale inventory, which had a significant impact on margins in the quarter.
I’ll wrap up my comments by taking a moment to express my profound thanks to the entire cannabis team for their hard fought efforts and continued commitment to serving our patients and customers with the highest experience. Lastly, a special shout out to the team in Delaware for a fantastic adult use launch last week. Now let me turn the call over to Derek to dive into the financial results. Derek?
Derek Watson, Chief Financial Officer, The Cannabis Company: Thank you, Jesse, and good morning, everyone. I’ll provide a summary of the key financial results for the second quarter, the impact of our balance sheet restructuring completed on May 29, and comment on our continuing efforts to enhance liquidity and improve profitability. For the second quarter, we achieved $87,000,000 in revenue, a decrease of 1% from the first quarter, primarily due to the sale of two retail locations in California and ongoing pricing pressure the sector is experiencing. We ended the first quarter with 53 active retail locations compared to 55 at the end of Q1. On an adjusted basis, gross margin in the second quarter was 33% compared to 36% in the first quarter.
The larger decline in our reported gross margin in the quarter was driven largely by inventory obsolescence, primarily in New York, as well as the wholesale inventory reduction initiative implemented across eight markets to clear older products or SKUs we are sunsetting as we simplify the business. This initiative significantly reduced our quarter over quarter inventory balance, but also caused a large decrease in our reported wholesale margin as we sought to transact at market clearing prices for these specific products. Adjusted EBITDA in Q2 was $8,500,000 compared to $8,300,000 in the first quarter, representing a 30 basis point improvement in adjusted EBITDA margin to 9.8% in the second quarter. On a pro form a basis, reflecting just the 10 continuing markets once our announced divestitures have been completed, we achieved an adjusted EBITDA margin of 11.7. In the second quarter, wholesale revenue increased 16% sequentially to $18,400,000 compared to growth of 3.5% we reported in the first quarter and driven by the inventory reduction initiative we’ve discussed.
As previously noted, this large increase in wholesale revenue was accompanied by a sequential decline in wholesale gross margin. Retail gross margin was also down in the quarter, by pricing pressure and a slightly higher level of discounting, including the annual impact of our promotions around four twenty. Wholesale revenue represented 21% of revenue in the quarter compared to 18% in Q1 and 16% in Q4. The overhang from the unabsorbed overhead and our underutilized production facilities remained flat at around a four percentage point impact on gross margin. As our footprint is reduced, we’re continuing to reduce overhead costs.
In addition to the $23,000,000 in annualized cost savings due to corporate restructuring we achieved during 2024, in the 2025, we completed a smaller restructuring representing approximately $2,000,000 in annualized labor savings expense. We plan to continue to take costs out of the business through the 2025. In the second quarter, operating cash flow was a positive $4,000,000 inclusive of a $10,000,000 one time receipt as a full and early settlement of a note receivable. CapEx in the quarter was $2,000,000 and we continue to expect CapEx to average less than $3,000,000 per quarter, primarily supporting new store openings in Ohio and Virginia and enhancing our back of house capabilities. Together with proceeds from divestitures and almost $11,000,000 in cost to complete our debt refinancing on May 29, free cash flow in the quarter was negative 3,500,000.0.
We ended the second quarter with 15,500,000.0 in cash compared to 18,900,000.0 at the end of the first quarter. During Q2, we contracted to $7,000,000 in divestitures from asset sales, approximately $5,000,000 of which was received and $2,000,000 is still outstanding for payment at the end of the quarter. As we’ve announced today, we anticipate a short closing window for the sale of retail assets in Pennsylvania, which will add $10,000,000 of gross proceeds to our balance sheet. This transaction will also provide us with new revenue streams in Pennsylvania through an incremental supply agreement and a related sublease transaction. As David stressed, liquidity management continues to be paramount, and we’re continuing to work towards closing the pending divestitures in Florida, California, Illinois, and now Pennsylvania, and making further operational improvements to our business.
With that, I’ll turn the call back to David for final comments. David?
David Hart, Chief Executive Officer, The Cannabis Company: Thank you, Derek. Thanks to everyone for joining. We look forward to providing additional updates on our key priorities as we focus on liquidity and balance sheet management while simplifying operations.
Conference Operator: And this concludes today’s conference call. You may now disconnect. We appreciate you for joining.
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