Canopy sticks to profit vow despite revenue miss

FILE PHOTO: A sign featuring Canopy Growth Corporation's logo is pictured at their facility in Smiths Falls

By Arunima Kumar and Shariq Khan

(Reuters) -Canopy Growth Corp’s chief executive reassured investors that the world’s most valuable pot producer is on track to be profitable within a year, shrugging off a slightly weaker-than-expected fourth-quarter performance.

The company – which sells a range of products from dried flowers to gummies, to chocolates and drinks mixed with weed – posted a near 38% surge in revenue to C$148.4 million in the quarter but missed estimates of C$151.8 million, according to Refinitiv IBES.

The company’s revenue growth was subdued by a fresh round of COVID-19 related lockdowns in Canada and Germany, Canopy’s CEO David Klein told Reuters in an interview.

While the company is “a little concerned” that the lockdowns, especially in Canada, might also hold back growth in the current quarter, Klein said the company was still on track to be profitable by the end of its current fiscal year.

“The way it looks, there will be sequential improvement (in adjusted EBITDA) throughout the year,” Klein said.

A host of cost-cutting through last year helped Canopy narrow its quarterly adjusted loss before interest, taxes, depreciation, and amortization to C$94 million from C$102 million.

“You have a company that is building on revenue growth success … and a lot of their strategic initiatives are paying off when it comes to the brands they have in their portfolio,” Global X analyst Andrew Little said.

Global X, which owns about 600,000 Canopy Growth shares, runs a cannabis focused ETF.

Klien said the focus was now firmly on the U.S. market, where expectations were rising for federal marijuana reform.

“We’re very happy with our portfolio in Canada and with the ability of that portfolio to travel to the U.S. … wouldn’t see us doing much more in the way of M&A in Canada”, Klein said on a post-earnings call.

($1 = 1.2044 Canadian dollars)

(Reporting by Arunima Kumar and Shariq Khan in Bengaluru; Editing by Aditya Soni, Shailesh Kuber and Anil D’Silva)