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Aurora Cannabis: Key Takeaways from Its Q2 Earnings


Feb. 12 2019, Published 11:04 a.m. ET

Second-quarter earnings

On February 11, Aurora Cannabis (ACB) reported its second-quarter earnings after the market closed. The company beat the top-line (revenue) estimates but missed the bottom-line (net income) estimates. The stock was ~1.8% lower in the after-market trading session. In this series, we’ll discuss our key takeaways from Aurora Cannabis’s earnings.

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Sales growth

Aurora Cannabis reported net revenues of 54.1 million Canadian dollars in its second quarter, which rose 83% sequentially from 29.6 million Canadian dollars and 363% year-over-year from 11.7 million Canadian dollars in the second quarter of 2018. The growth in the company’s sales came from recreational cannabis, which brought in 21.6 million Canadian dollars compared to ~553,000 Canadian dollars in the previous quarter. The company’s sales growth was also driven by growth in the medical and international markets.

Sales drivers

Among the 21.6 million sales to recreational users in Canada, ~86% of the company’s sales came from dried cannabis, while the remaining sales came from cannabis extract sales. Cannabis extract includes capsules, cannabis oils, softgels, and topical revenue. The higher mix of dried cannabis sales was expected—something we might see in companies’ (HMMJ) earnings like Canopy Growth (WEED), Cronos Group (CRON), and Tilray (TLRY). In the future, we might start to see a shift in the mix driven by value-added products in various formats, which is where higher margins lie.

Next, we’ll discuss how Aurora Cannabis’s margins performed.


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