SNDL Q1 2025 Earnings Report
Key Takeaways
SNDL reported net revenue of $204.9 million in Q1 2025, a 3.6% increase year-over-year. Gross profit grew by 12.4% to $56.6 million, achieving a record gross margin of 27.6%. Operating loss was $(12.1) million, impacted by a negative SunStream portfolio valuation and restructuring charges. Cash flow was positive at $2.5 million, driven by loan collection, while free cash flow was slightly negative at $(1.1) million.
Net revenue grew by 3.6% year-over-year to $204.9 million, primarily due to a 16.8% increase in the total Cannabis business.
Achieved record gross margin of 27.6% in Q1 2025, an improvement of 2.2 percentage points from the prior year.
Operating loss was $(12.1) million, influenced by a $(4.5) million loss from the SunStream portfolio and $(3.0) million in restructuring charges.
Cash flow was positive at $2.5 million, bolstered by the collection of a $28 million loan from FIKA (Delta 9), while free cash flow was $(1.1) million.
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SNDL Revenue by Segment
Forward Guidance
SNDL's Board of Directors has initiated a formal strategic review of the Company's exposure to U.S. multi-state licensed cannabis enterprises and its current exchange listing status to align with long-term growth strategy and maximize shareholder value. The review will assess maintaining current listings or transitioning to an alternative structure to potentially consolidate licensed cannabis businesses in the U.S. The Company is also focused on expanding its retail footprint through acquisitions and enhancing customer loyalty programs.
Positive Outlook
- Formal strategic review initiated to potentially enhance U.S. platform and listing structure.
- Evaluating opportunities to consolidate licensed cannabis businesses across multiple U.S. states.
- Received inbound interest from multiple cannabis operators for potential transactions.
- Strong balance sheet and management strength position SNDL as a well-capitalized consolidator.
- Intends to expand the Rise Rewards loyalty program across its retail banners.
Challenges Ahead
- No assurance that any transaction or listing change will result from the strategic review.
- Potential transition to an alternative listing structure could impact current equity market listings.
- Ongoing market demand softness continues to impact Liquor Retail net revenue.
- Operating loss in Q1 2025 was higher year-over-year.
- Free cash flow was slightly negative in Q1 2025.