Aurora Cannabis sales volume nearly doubles as net revenue jumps 52 per cent
Aurora Cannabis Inc. sold almost double the amount of cannabis and reported a 52 per cent increase in net revenue in its latest fiscal quarter, results that were mostly in line with what the Edmonton-based licensed producer had forecast a month ago.
For the period ending June 30, 2019 — Aurora’s fourth fiscal quarter — the company sold 17,793 kilograms of cannabis to the recreational and medical markets, a sharp increase from just 9,160 kilograms sold in the previous quarter.
The company’s net revenue for this quarter was almost $99 million versus $65 million in the third fiscal quarter. The licensed producer had released a preview of its earnings in early July, which anticipated gross revenue to be in the $100 million to $107 million range.
Net revenue from the sale of medical cannabis made up almost $30 million of total revenue, while the recreational market earned the company approximately $44 million.
The company attributed the substantial increase in cannabis production and sales to its Aurora Sky facility near Edmonton International Airport, which received full licensing from Health Canada in late February this year.
“Our best-in-class cultivation methods allow us to grow consistent, high-quality cannabis at scale. Because of this, we’ve delivered solid revenue growth in the fourth quarter,” said Aurora’s chief executive officer Terry Booth in a statement.
Although its results were a vast improvement from its performance in the previous quarter, Aurora has yet to achieve profitability, reporting an adjusted EBIDTA loss of almost $12 million. The company’s August guidance did not state that it expected to achieve profitability in its fourth quarter, only that it was “on track” to hit the target in the future.
Gross margins on cannabis net revenue came in at 58 per cent, an increase of just three per cent from the previous quarter.
Aurora’s stock, which has seen consistent declines over the past six months, reflective of the pot sector as a whole, was up by three per cent ahead of the earnings report, closing at $8.51.
… we believe results could support a ‘stand out’ quarter of sorts for the company on a relative basis.
Douglas Miehm, RBC analyst, prior to release of results
Prior to their release, analysts were, for the most part, optimistic on the company’s earnings this quarter.
“We expect Aurora to achieve an impressive 54 per cent increase in its fiscal fourth quarter gross cannabis sales to $105.7 million,” wrote Canaccord Genuity Corp. cannabis analyst Matt Bottomley in a recent note. “During the quarter, we expect the company continued to progress towards reaching an annualized output capacity of 150,000 kilograms,” he added.
“Despite revenues that ultimately look to come in below our initial expectations, we believe results could support a ‘stand out’ quarter of sorts for the company on a relative basis,” wrote Royal Bank of Canada analyst Douglas Miehm in a recent note. Miehm believes investors will likely look favourably at recreational growth this quarter compared with Canopy Growth Corp., which has seen a decline in recreational sales for two subsequent quarters.
Aurora most recently sold its remaining stake in licensed producer The Green Organic Dutchman Holdings Ltd., which generated the company gross proceeds of $86.5 million, which it says represented a “50 per cent internal rate of return” for the company.
The company will hold a conference call Thursday morning to discuss this quarter’s results.