Star-Studded Canadian Stocks Tour：Canopy Growth，Leading Global Cannabis Industry

In December 2023, Canopy Growth divested its This Works business, which provided natural skincare and sleep products. Currently, Canopy Growth's operations are primarily focused on the following core areas:

（1）Canadian Adult-Use and Medical Cannabis: As the largest cannabis provider in the Canadian market, Canopy Growth offers cannabis products to consumers through its brands such as Tweed and Spectrum Therapeutics. The company's business in Canada includes not only product sales but also research and innovation, committed to delivering high-quality medical cannabis solutions.

（2）Premium Brand Storz & Bickel: As the company's premium vaporizer brand, Storz & Bickel leads the market with its superior quality and innovative design. The brand's new Venty portable vaporizer has achieved significant success in the market.

（3）International Market Cannabis: Canopy Growth is actively expanding into international markets, especially in countries like the United States, Australia, and Poland. The company operates in multiple states across the U.S. market through Canopy USA, actively expanding in the U.S. cannabis market and seizing the opportunities of the rapidly growing industry; it also continuously broadens its global influence through localization strategies and product innovation, meeting the demand for cannabis products in various countries and regions.

Chart： Main Business Composition (%)

In this financial quarter, Canopy Growth has implemented a light-asset model, streamlining its business structure to achieve strategic transformation. By divesting non-core businesses such as This Works, the company has become more agile in responding to market changes and enhancing its market competitiveness.

Additionally, the Storz & Bickel brand launched the Venty portable cannabis vaporizer this quarter, which has received a very positive market response, driving a significant 43% increase in segment revenue and further demonstrating the market competitiveness of the company's products.

Thanks to the aforementioned measures, Canopy Growth's performance this quarter has been outstanding. The company's overall net revenue reached 73million, showing the strong competitiveness of the company's products in the cannabis market.

In terms of profitability, the company's gross margin for fiscal year 2024 was 27%, a significant increase from 11% last year, reflecting the company's advantages in cost control. The sales, general, and administrative expense ratio decreased from 81% in the same period last year to 61.43% in the current fiscal year.

Moreover, although the adjusted EBITDA for the latest quarter still shows a loss of $15 million, it has improved by 63% compared to the same period last year. Considering the company is the world's largest cannabis producer with limited market competition, it is expected that the sales expense ratio will further decrease in the next few quarters, and the company is expected to achieve profitability in fiscal year 2025.

In terms of the balance sheet, the company reduced its total debt by over 1.1 billion in fiscal year 2024 through measures such as debt−to−equity swaps(including but not limited to converting 81 million of principal and interest from $100 million of debt into exchangeable shares), significantly improving the balance sheet and providing a solid financial foundation for the company's development.

As of the end of fiscal year 2024, Canopy Growth has not disclosed any repurchase or dividend plans, and it is expected that the possibility of substantial shareholder returns in the short term is not high. However, the company has a healthy cash balance of over $200 million at the end of fiscal year 2024, no longer incurring losses as it did in the same period last year, indicating that the company's cash flow situation is gradually improving.

The company's management also indicated in the earnings call that there are no significant debts to be repaid before March 2026, and the cash flow on hand is expected to continue to grow healthily. Therefore, looking at a longer timeline, the company is expected to provide considerable shareholder returns in the next few fiscal years.

According to the earnings call guidance, in fiscal year 2025, Canopy Growth will continue to promote the growth of adult-use and medical cannabis businesses in the Canadian market. By improving product quality and expanding cannabis distribution channels, the company aims to increase its profitability and market share in the Canadian domestic market.

In addition to continuing to develop the Canadian market, Canopy Growth also plans to continuously enhance its competitiveness in international markets to seek more long-term and international development. For example, the company's Canopy USA has been deepening its business in the U.S., acquiring Acreage this quarter and expanding the company's product SKUs. Against the backdrop of the gradual legalization of the cannabis industry in the U.S., these initiatives are expected to drive accelerated revenue growth in multiple state-level cannabis markets in the U.S. in the future.

In recent years, numerous countries and regions around the world have begun to re-examine and relax legal and policy restrictions on cannabis. Especially in the field of medical cannabis, more and more countries have recognized the potential medical value of cannabis in treating certain diseases. Major mainstream countries such as Australia and Germany began allowing the medical use of cannabis as early as 2019.

Furthermore, many countries are considering or have already implemented the legalization of recreational cannabis, creating new market space for the cannabis industry. The latest data shows that countries such as Germany, Canada, some U.S. states, and Mexico have legalized recreational cannabis. Germany even allows adults to legally possess up to 25 grams of cannabis, bring it into some public places, and allows adults to store 50 grams of cannabis at home and grow up to three cannabis plants.

Overall, Canopy Growth's performance in this quarter has preliminarily demonstrated the effectiveness of the company's transformation strategy. By focusing on core businesses and optimizing financial conditions, the company has laid the foundation for future profit growth.

With the continued development of the global cannabis market, Canopy Growth Corp is expected to continue to consolidate its leadership position in the industry and create continuously increasing value for shareholders. The company's innovation capabilities, brand influence, and global layout make it a company worth paying attention to in the cannabis industry for investors.