Canopy Growth Q3 Revenue Increases 23% to $153 Million

Canopy Growth Reports Third Quarter Fiscal 2021 Financial Results
  • Business transformation continues to gain traction
  • Improved commercial and operational execution drives record net revenue of $153 million, up 23% vs Q3 2020
  • Q3 2021 Canadian recreational market share increased by 30bps vs Q2 2021 based on our proprietary market share tracker
  • Provides medium-term financial targets, including expectations to achieve profitability during the second half of FY 2022, while continuing to invest behind consumer insights, R&D and the U.S. market
  • With renewed sense of optimism, Canopy further advanced the U.S. growth strategy ahead of potential cannabis reform

SMITHS FALLS, ON, Feb. 9, 2021 /PRNewswire/ – Canopy Growth Corporation (“Canopy Growth” or the “Company”) (TSX: WEED) (NASDAQ: CGC) today announces its financial results for the third quarter fiscal 2021 ended December 31, 2020. All financial information in this press release is reported in millions of Canadian dollars, unless otherwise indicated.

Third Quarter Fiscal 2021 Financial Summary

We delivered another quarter of record net revenue, with growth across all our businesses, led by improved commercial and supply chain execution.

David Klein, CEO

We are building a track record of winning in our core markets, while also accelerating our U.S. growth strategy with the momentum building behind the promising cannabis reform in the U.S.

“We are executing against our cost savings program, with several initiatives already completed and more underway to build a leaner and more agile business,” added Mike Lee, CFO. “These cost savings, along with our top-line growth and continued cost discipline, puts Canopy firmly on a path to achieve profitability during Fiscal 2022, with further improvement anticipated beyond.”

Medium-Term Financial Milestones

With our new strategy in place, our organizational changes complete, and our operational cost savings program now underway, the Company is in position to establish the following medium-term financial targets:

  • Net revenue CAGR of 40%-50% from FY 2022 to FY 2024;
  • Positive Adjusted EBITDA during the second half of FY 2022 and 20% Adjusted EBITDA margin for the full year FY 2024; and
  • Positive operating cash flow for the full year FY 2023 and positive free cash flow for the full year FY 2024.

Key drivers underpinning the Company’s financial targets include:

  • The Canadian legal recreational cannabis market growth of 40% in FY 2022 and 25%-30% CAGR from FY 2022 to FY 2024;
  • The Company’s Canadian recreational cannabis sales growth expected to be driven by overall market growth and market share gains;
  • The Company’s Canadian medical cannabis sales growth expected to be driven by market share gains in a stable-to-declining Canada medical cannabis market;
  • The Company’s international medical cannabis growth expected to be driven by the growth in Germany medical market;
  • Growth of the Company’s U.S. CBD business, and consumer packaged goods (CPG) businesses, namely BioSteel, This Works and Storz & Bickel (“S&B”), expected to be driven by distribution expansion in the U.S. and new product launches;
  • The Company’s announced cost savings program of $150$200 million expected to be realized over the next 12-18 months; and
  • The Company’s Capital Expenditures (CapEx) expected to be below $200 million per year in FY 2021 and FY 2022.

Third Quarter Fiscal 2021 Corporate Financial Highlights

  • Revenues: We achieved net revenue of $153 million in Q3 2021, an increase of 23% versus Q3 2020. Net cannabis revenue of $99 million was driven by an increase in Canadian recreational and International medical cannabis revenue. In addition, an increase in sales of S&B vaporizers, This Works health & wellness products, and BioSteel contributed to overall net revenue growth.
  • Gross margin: Reported gross margin in Q3 2021 was 16%. Adjusted gross margin, excluding restructuring charges recorded in cost of goods sold, was 26% in Q3 2021, representing a decrease of 500 bps from Q3 2020. Adjusted gross margin was impacted by continued under absorption of fixed costs, which is expected to moderate driven by the announced cost savings program.
  • Operating expenses: Total SG&A (“SG&A”) expenses declined by 15% versus Q3 2020, driven by year-over-year reductions in Sales & Marketing, General & Administrative (“G&A”) and Research and Development (“R&D”) expenses. Sales & Marketing expense decline of 15% reflects lower advertising and marketing expenses versus last year’s spending attributable to product marketing and brand awareness campaigns in support of our Cannabis 2.0 products, partially offset by higher sponsorship fees for BioSteel and increased brand spending in support of our U.S. CBD business. G&A expense decline of 23% was due primarily to a reduction in costs attributable to corporate restructuring actions taken earlier in the year. R&D expenses decreased by 33% also driven by lower compensations expenses resulting from corporate restructuring actions taken earlier in the year. Share-based Compensation expenses decreased 68% over Q3 2020.
  • Net Loss: Net loss of $829 million, a $720 million wider loss versus Q3 2020, was driven primarily by impairment and restructuring charges and other related charges of $416 million, of which $382 million relates to our announcement on December 9, 2020. Of the total impairment and restructuring charges recorded during Q3 2021, approximately 15% was a cash charge. Additionally, Other Expense totalled $291 million during Q3 2021 stemming from non-cash fair value changes, mostly driven by the Company’s higher stock price.
  • Adjusted EBITDA: Adjusted EBITDA loss was $68 million in Q3 2021, compared to a loss of $97 million in Q3 2020 driven by net revenue growth and a decline in operating expenses.
  • Cash Position: Cash and Short-term Investments amounted to $1.59 billion at December 31, 2020, representing a decrease of $0.39 billion from $1.98 billion at March 31, 2020 reflecting the EBITDA loss and capital investments.

Business & Operational Highlights

  • Further strengthened competitive positioning in Canada recreational market
    • Our Canadian recreational market share increased to 15.7% during Q3 2021, up 30bps versus Q2 2021. Notably, our market share grew by 60 bps in Alberta and 120 bps in British Columbia, while it declined by 80 bps in Ontario in Q3 2021 vs Q2 2021. Our market share in Ontario improved by 150 bps during the latest 4-weeks ended January 17, 2021, vs Q3 2021.
    • We grew our market share in the flower category by 180 bps during Q3 2021 vs. Q2 2021. Twd. continued to drive market share gains in the growing value flower segment, as our market share of value flower sold in Ontario increased by 310 bps to 16.8% in Q3 2021 from Q2 2021.
    • Our beverages captured 34% market share in Q3, even as new beverage brands have entered the marketplace. Canopy beverages retained the top 3 brands and our beverage brands are commanding higher velocity versus competitive set on a per SKU basis.
  • Built further momentum in the U.S. market driven by our CBD products and non-CBD brands
    • Martha Stewart health and wellness CBD products are seeing strong consumer demand, with the brand already outselling over 94% of all CBD brands in the U.S. in just 4 months since launch. Canopy has secured distribution of Martha Stewart CBD collection in 580+ Vitamin Shoppe and Super Supplements retail locations nationwide.
    • Subsequent to quarter end, the Company launched CBD pet products under the Martha Stewart CBD and SurityPro CBD brands.
    • BioSteel has established a direct-store-delivery (“DSD”) network with Constellation Brands’ beer distributors with the products starting to hit shelves in independent retailers in the U.S. market. BioSteel has secured agreements with several large key chain accounts across convenience & gas and food/drug/mass channels.
    • S&B vaporizer products continued to see strong growth driven by strengthened distribution and strong consumer pull.
    • This Works strengthened direct (, and third-party ecommerce sales channels.
  • Further streamlined operations and improved organizational focus
    • Ceased operations at a number of production facilities in Canada as part of the end-to-end review of our operations aimed at optimizing the Company’s footprint.
    • Entered into an arrangement with Canopy Rivers Inc. (“Canopy Rivers”) (TSX: RIV) and its wholly-owned subsidiary Canopy Rivers Corporation (“CRC”) that will divest Canopy Growth’s interest in Canopy Rivers, increase the Company’s direct conditional ownership of U.S. MSO TerrAscend Corp. and increase Canopy Growth’s ownership of Vert Mirabel greenhouse. As additional consideration for the assets being transferred and the termination of the royalty agreement, Canopy Growth will make a cash payment to CRC of $115 million and issue an aggregate of 3,750,000 commons shares to CRC. The Plan of Arrangement is subject to approval by shareholders of Canopy Rivers Inc. at a special shareholder meeting that is expected to be held on February 16, 2021, and applicable approvals by the Ontario Superior Court of Justice and certain other closing conditions.

Third Quarter Fiscal 2021 Financial and Operational Review

Revenue by Channel

Revenue by Form

Canadian Cannabis

  • Recreational B2B net sales were flat versus Q3 2020, as higher volume from our flower products and increased contribution from Cannabis 2.0 product were offset by a negative mix shift to value flower products. Recreational B2B net sales increased by 2% compared to Q2 2021 driven by store openings across Canada and improved market share performance.
  • Recreational B2C net sales increased 33% versus Q3 2020 due primarily to an increase in number of corporate stores as well as both Cannabis 1.0 products (dried flower, oils and soft gels) and Cannabis 2.0 products driving higher average basket size. Recreational B2C net sales increased 8% versus Q2 2021 due to a full quarter of sales from ten new stores in Alberta, and same store sales growth of 4% over Q2 2021 resulting from seasonal sales and promotional programs.
  • Canadian medical net revenue increased 4% from Q3 2020 driven primarily by a higher number of orders in Q3 2021.

International Cannabis

  • C3 revenue in Q3 2021 increased 19% over Q3 2020 in part due to market growth. C3 revenue in Q3 2021 increased 30% over Q2 2021 due to the resolution of a packaging issue with a distributor that limited sales in Q2 2021.
  • Dried flower sales in Germany declined 2% in Q3 2021 over Q3 2020 due to supply challenges and slower market growth in part driven by COVID 19 restrictions.

Strategic Businesses

  • S&B vaporizer revenue in Q3 2021 increased 53% over Q3 2020, benefiting from strengthened distribution in the U.S., a strong consumer demand, a broader product portfolio and strong seasonal sales.
  • This Works sales in Q3 2021 increased 32% over Q3 2020, benefitting from strong organic growth driven by e-commerce sales and sales of the Stress Check hand sanitizer launched in the UK and U.S. during fiscal 2021.
  • BioSteel sales increased due primarily to expanded distribution in the U.S. that drove strong organic growth. Over half of BioSteel’s sales during the period came from the U.S. market.

The third quarter fiscal 2021 and third quarter fiscal 2020 financial results presented in this press release have been prepared in accordance with U.S. GAAP.


i) Calculated using internal proprietary market share tool that utilizes point of sales data supplied by a third-party data provider, government agencies and our own retail store operations across the country. Tool captures point of sale data from an average of 39% of stores in Alberta, British Columbia, Saskatchewan, Manitoba and Newfoundland & Labrador, point of sale data from 100% of stores in New Brunswick, Nova Scotia and Prince Edward Island, as well as depletions and ecommerce sales data from the OCS.

Webcast and Conference Call Information

The Company will host a conference call and audio webcast with David Klein, CEO and Mike Lee, CFO at 10:00 AM Eastern Time on February 9, 2021.

Webcast Information

A live audio webcast will be available at:

Replay Information

A replay will be accessible by webcast until 11:59 PM ET on May 10, 2021 at:

Non-GAAP Measures

Adjusted EBITDA is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted EBITDA is calculated as the reported net loss, adjusted to exclude income tax recovery (expense); other income (expense), net; loss on equity method investments; share-based compensation expense; depreciation and amortization expense; asset impairment and restructuring costs; expected credit losses on financial assets and related charges; restructuring costs recorded in cost of goods sold; and charges related to the flow-through of inventory step-up on business combinations, and further adjusted to remove acquisition-related costs. The Adjusted EBITDA reconciliation is presented within this news release and explained in the Company’s Quarterly Report on Form 10-Q to be filed with the SEC.

Free Cash Flow is a non-GAAP measure used by management that is not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. This measure is calculated as net cash provided by (used in) operating activities less purchases of and deposits on property, plant and equipment. The Free Cash Flow reconciliation is presented within this news release and explained in the Company’s Quarterly Report on Form 10-Q to be filed with the SEC.

Adjusted Gross Margin and Adjusted Gross Margin Percentage are non-GAAP measures used by management that are not defined by U.S. GAAP and may not be comparable to similar measures presented by other companies. Adjusted Gross Margin is calculated as gross margin excluding restructuring costs recorded in cost of goods sold. Adjusted Gross Margin Percentage is calculated as Adjusted Gross Margin divided by net revenue. The Adjusted Gross Margin and Adjusted Gross Margin Percentage reconciliation is presented within this news release.

About Canopy Growth Corporation

Canopy Growth (TSX:WEED,NASDAQ:CGC) is a world-leading diversified cannabis and cannabinoid-based consumer product company, driven by a passion to improve lives, end prohibition, and strengthen communities by unleashing the full potential of cannabis. Leveraging consumer insights and innovation, we offer product varieties in high quality dried flower, oil, softgel capsule, infused beverage, edible, and topical formats, as well as vaporizer devices by Canopy Growth and industry-leader Storz & Bickel. Our global medical brand, Spectrum Therapeutics, sells a range of full-spectrum products using its colour-coded classification system and is a market leader in both Canada and Germany. Through our award-winning Tweed and Tokyo Smoke banners, we reach our adult-use consumers and have built a loyal following by focusing on top quality products and meaningful customer relationships. Canopy Growth has entered into the health and wellness consumer space in key markets including Canada, the United States, and Europe through BioSteel sports nutrition, and This Works skin and sleep solutions; and has introduced additional federally-permissible CBD products to the United States through our First & Free and Martha Stewart CBD brands. Canopy Growth has an established partnership with Fortune 500 alcohol leader Constellation Brands. For more information visit

Original press release

Published by NCV Newswire
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