Canopy Growth — Q2 FY2027 Earnings Summary

Financial Performance:

• Consolidated net revenue increased 22% year-over-year to $81.4M in Q2 FY2027, compared to $66.7M in Q2 FY2026.
• Cannabis segment net revenue grew 30% to $66.2M, driven by a 141% increase in international markets cannabis revenue to $12.3M.
• Canada medical cannabis revenue rose 18% to $25.8M, while Canada adult-use cannabis revenue increased 17% to $28.1M.
• Storz & Bickel net revenue decreased 4% to $15.1M.
• Consolidated gross margin was 29% in Q2 FY2027, down from 33% in Q2 FY2026; adjusted gross margin decreased to 31% from 33%.
• Cannabis segment gross margin was 26% in Q2 FY2027 compared to 31% in Q2 FY2026; adjusted gross margin for the segment was 29% versus 31%.
• Storz & Bickel gross margin was 39% in Q2 FY2027 compared to 38% in Q2 FY2026.
• Selling, general and administrative expenses were 9% higher than in Q2 FY2026.
• Net loss increased by $35.7 million to $40.7M, primarily due to $35.8 million in fair value charges on Canopy USA assets.
• Adjusted EBITDA loss was $2.9M, an improvement of $0.2M (6%) compared to Q2 FY2026.
• Free cash outflow decreased from $19.2M in Q2 FY2026 to $15.5M in Q2 FY2027.

Guidance and Future Outlook:

• Management expects the ongoing elevation of cultivation capabilities to drive momentum across the entire business.
• The Company is progressing steadily toward profitability and aims to report positive adjusted EBITDA during fiscal 2027.

Business Segments and Product Lines:

• International markets cannabis revenue growth was driven by strong sales in Germany and Poland.
• The Company entered the U.K. market via distribution partner GROW Group U.K. Ltd., initially providing four Canadian-grown flower strains under the Spectrum Therapeutics brand.
• The Australian medical cannabis portfolio was broadened with two new product formats, expanded oil and softgel formulations, and two new flower SKUs.
• The Smiths Falls facility received EU GMP certification, becoming Canada's only EU GMP-certified site for softgel manufacturing combined with primary packaging of softgels, oral liquids, and dried cannabis flower.
• The Kincardine cultivation facility received renewed EU GMP certification to supply medical cannabis to European markets.
• The acquisition of MTL Cannabis Corp. contributed to growth in Canada medical and adult-use cannabis revenue.

Market and Competitive Landscape:

• International expansion is a key strategic focus, with the Company strengthening its end-to-end EU GMP supply chain.
• Canada medical cannabis growth was partially offset by the Canadian government's reduction in the Veterans Affairs Canada (VAC) reimbursement rate.
• Adult-use cannabis growth was partially offset by declines in opportunistic bulk sales.

Risks and Challenges:

• Net loss was significantly impacted by $35.8 million in fair value charges related to Canopy USA assets.
• Cannabis segment adjusted gross margin was negatively impacted by the reduction in the VAC reimbursement rate.
• Storz & Bickel revenue decline was attributed to decreased customer spending in certain geographic regions.
• SG&A expenses increased due to the integration of MTL Cannabis operations, though partially offset by headcount reductions.

Management Commentary and Tone:

• CEO Luc Mongeau stated the Company made "tremendous progress on our international strategy," highlighting strong medical cannabis sales in Germany and Poland.
• CFO Tom Stewart noted another quarter of strong net revenue growth and progress toward profitability, citing a disciplined approach improving adjusted EBITDA.
• Management expressed confidence that the elevation of cultivation capabilities will drive further momentum.

Other Key Points:

• The Company appointed a Country Manager for Germany to lead commercial strategy in the German medical cannabis market.
• Canopy Growth holds an unconsolidated, non-controlling interest in Canopy USA, LLC.
• The Company's portfolio includes brands such as Tweed, 7ACRES, DOJA, Deep Space, DeeLish, Claybourne, MTL Cannabis, Low Key by MTL, R'belle, and Storz & Bickel.
• The Company is Canada's leading provider of medical cannabis services through Spectrum Therapeutics, Abba Medix, Apollo, and Canada House Clinics.