Canopy Growth — Q2 FY2027 Earnings Summary

Financial Performance

• Consolidated net revenue reached $81.4 million in Q2 FY2027, a 22% year-over-year increase compared to $66.7 million in Q2 FY2026.
• Cannabis segment net revenue grew 30% to $66.2 million, driven by a 141% increase in international markets to $12.3 million, an 18% rise in Canada medical cannabis to $25.8 million, and a 17% increase in Canada adult-use cannabis to $28.1 million.
• Storz & Bickel net revenue decreased 4% to $15.1 million.
• 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, with adjusted gross margin at 29% versus 31% previously.
• Storz & Bickel gross margin was 39% in Q2 FY2027, up from 38% in Q2 FY2026.
• Selling, general and administrative expenses were 9% higher in Q2 FY2027 compared to Q2 FY2026.
• Net loss increased by $35.7 million to $40.7 million in Q2 FY2027, primarily due to $35.8 million in fair value charges related to Canopy USA assets.
• Adjusted EBITDA loss was $2.9 million, an improvement of $0.2 million (6%) compared to Q2 FY2026.
• Free cash outflow decreased to $15.5 million in Q2 FY2027 from $19.2 million in Q2 FY2026.
• Cash and cash equivalents were $247.3 million as of September 30, 2026, down from $364.7 million as of March 31, 2026.
• Total assets were $1.06 billion as of September 30, 2026, compared to $1.12 billion as of March 31, 2026.
• Total liabilities were $407.5 million as of September 30, 2026, compared to $421.1 million as of March 31, 2026.
• Total shareholders' equity was $650.3 million as of September 30, 2026, down from $697.6 million as of March 31, 2026.

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.
• The company anticipates that the expansion of its end-to-end EU GMP-certified supply chain will facilitate further international growth.

Business Segments and Product Lines

• The Smiths Falls, Ontario facility received EU GMP certification, becoming Canada's only EU GMP-certified site combining softgel manufacturing with primary packaging of softgels, oral liquids, and dried cannabis flower.
• The Kincardine, Ontario cultivation facility received renewed EU GMP certification to continue supplying medical cannabis to European markets.
• 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 company expanded its Australian medical cannabis portfolio with two new product formats, expanded oil and softgel formulations, and two new flower SKUs.
• A Country Manager was appointed for Germany to lead commercial strategy in the German medical cannabis market.
• Canada medical cannabis growth was driven by an increase in insured customers and the acquisition of MTL Cannabis Corp., partially offset by a reduction in the Veterans Affairs Canada reimbursement rate.
• Canada adult-use cannabis growth was primarily attributable to increased flower sales from the MTL Cannabis acquisition, partially offset by declines in opportunistic bulk sales.

Market and Competitive Landscape

• International cannabis revenue growth of 141% was primarily driven by strong sales in Germany and Poland.
• Storz & Bickel revenue decline was attributed to decreased customer spending in certain geographic regions.
• The company maintains a portfolio of owned and licensed brands including Tweed, 7ACRES, DOJA, Deep Space, DeeLish, Claybourne, MTL Cannabis, Low Key by MTL, R'belle, and Storz & Bickel.
• Canopy Growth holds an unconsolidated, non-controlling interest in Canopy USA, providing exposure to the U.S. THC market.

Risks and Challenges

• The reduction in the Veterans Affairs Canada reimbursement rate negatively impacted medical cannabis gross margins.
• Significant fair value charges related to Canopy USA assets contributed to the increased net loss.
• Forward-looking statements highlight risks regarding regulatory changes, U.S. state and federal law uncertainty, potential impairment losses, and the ability to refinance debt.
• Risks include the remediation of material weaknesses in internal controls over financial reporting and the integration of acquired businesses like MTL Cannabis.
• Potential impacts from tariffs, inflation, interest rates, and global commerce disruptions are noted as risks to costs and margins.

Management Commentary and Tone

• CEO Luc Mongeau stated the company made "tremendous progress on our international strategy" and highlighted the 141% international revenue growth.
• CFO Tom Stewart noted "another quarter of strong net revenue growth" and emphasized a "disciplined approach" showing improvements in adjusted EBITDA, placing the company "within reach of reporting positive adjusted EBITDA during fiscal 2027."
• Management expressed confidence that the elevation of cultivation capabilities will drive further momentum.

Other Key Points

• The acquisition of MTL Cannabis Corp. contributed to revenue growth in both medical and adult-use Canada segments.
• The company's adjusted gross margin excludes $2.1 million in inventory step-up charges related to the MTL Cannabis acquisition.
• Acquisition, divestiture, and other costs for the quarter included $0.5 million for MTL integration, $0.2 million for BioSteel restatement review, $0.1 million in litigation costs, and $0.3 million in other acquisition costs.
• The company hosts a conference call and audio webcast with CEO Luc Mongeau and CFO Tom Stewart on November 6, 2026.
• The company holds an investment in Canopy USA, which includes potential future issuance of shares to satisfy deferred payments to Wana Wellness, The Cima Group, and Mountain High Products shareholders, as well as potential additional investment from the Huneeus 2017 Irrevocable Trust.