Cannabis retailer High Tide Inc. (NASDAQ: HITI) (TSXV: HITI) (FSE: 2LYA) released first-quarter results Friday, posting a 64% year-over-year revenue increase.
“Our Q1 earnings numbers represent the best quarter ever in High Tide’s history in terms of revenue, adjusted EBITDA, and market share growth. Q1 is now our second consecutive quarter of record revenue and adjusted EBITDA and saw a meaningful improvement in our free cash flow position,” said CEO Raj Grover.
HITI Financial Highlights
- Revenue increased to $118.1 million in the first fiscal quarter of 2023 compared to $72.2 million during the same period in 2022, representing an increase of 64% year-over-year and 9% sequentially.
- Gross profit increased to $32.2 million in the first fiscal quarter of 2023 compared to $23 million during the same period in 2022, representing an increase of 40% year-over-year and 9% sequentially.
- The gross profit margin in the three months ended Jan. 31, 2023, was 27%, consistent with the previous three quarters. Gross margins earned in High Tide’s brick-and-mortar stores ticked higher sequentiallym the company said.
- Adjusted EBITDA increased to $5.5 million in the first fiscal quarter of 2023 compared to $3 million during the same period in 2022, representing an increase of 86% year-over-year and 10% sequentially, per the news release.
The company has achieved its 12th consecutive quarter of positive adjusted EBITDA, Grover said, with a fourth consecutive quarter of sequential same-store sales growth, indicating its strength in the market.
The company represents 9% of the Canadian cannabis retail market outside of Quebec, as reported exclusively by Benzinga.
In the first fiscal quarter of 2023, salaries, wages and benefits accounted for 12% of revenue, an improvement from 14% in the same quarter of the previous year and consistent with the previous three quarters.
General and administrative expenses represented 6% of revenue in Q1 2023, an improvement from 8% in Q1 2022 and 7% in the previous quarter, indicating strong cost controls by the company. The sales of Cabanalytics data totaled $6.6 million in Q1 2023, an increase from $4.7 million in the same period last year, with a 3% sequential increase.
During the first fiscal quarter of 2023, same-store sales increased by 52% compared to the same period in 2022, with a sequential increase of 4%, marking six consecutive quarters of same-store sales growth.
The company also reported a 58% increase in the ELITE cannabis paid loyalty program membership, reaching about 9,500 members. As of Jan. 31, the company had $23.7 million in cash on hand.
“We are also pleased to share a shift in our strategy to ensure long-term growth and sustainability, with a goal of becoming free cash flow positive by the end of this calendar year. In contrast with much of the cannabis industry, we’ve remained focused on continuing to strengthen our operations and set attainable growth goals. While we are not abandoning growth through M+A in the medium and long-term, our short-term focus has shifted to attaining free cash flow profitability in the coming months,” said Grover.
High Tide aims to become free cash flow positive within this calendar year and remains the highest revenue-generating cannabis company reporting in Canadian dollars. The company has 151 locations, over 975,000 Cabana Club members and a global customer database of over 4.5 million, making it the largest non-franchised cannabis retailer in Canada.
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