uploads/2019/06/green-1648353_1280-1.jpg

How Profitable Was Canopy Growth in Q4 and Fiscal 2019?

By

Updated

Margins

Canopy Growth (WEED) (CGC) reported its Q4 earnings on June 20 with net revenue of 94 million Canadian dollars for the fourth quarter and 226 million Canadian dollars for the fiscal year ending in 2019. For the fourth quarter, the company reported a gross margin before adjustments to biological assets of 16%. The company’s Q4 margins declined sequentially from 22% in the previous quarter.

While the company’s gross margins declined, the operating margins remained negative. Canopy Growth had an operating loss of 174 million Canadian dollars in the fourth quarter, which remained a continuation of the trend from the third quarter when the company reported an operating loss of 157 million Canadian dollars.

Article continues below advertisement

The three biggest operating expenses for Canopy Growth during the fourth quarter were sales and marketing with 53 million Canadian dollars, general and admin costs at 65 million Canadian dollars, and share-based compensation expense, which stood at 74 million Canadian dollars during the quarter. These three operating costs weighed down the company’s margins in the third quarter as well with sales and marketing at 44 million Canadian dollars, general and admin at 46 million Canadian dollars and share-based compensation at 40 million Canadian dollars in the third quarter.

Net margins

Canopy Growth reported a net loss of about 323 million Canadian dollars compared with net income of 233 million Canadian dollars in the third quarter. Note that the company’s net income in the previous quarter was due to the positive impact of unrealized gains from fair value changes.

Advertisement

More From Market Realist