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Tilray Brands (NASDAQ: $TLRY) Delivers Record Q2 Fiscal 2024 Net Revenue, Yet Drops 9%

Tilray Brands, Inc. Logo

Tilray Brands (NASDAQ: $TLRY) is a producer and cultivator of medical and recreational cannabis products. It is based in Canada and also produces wellness foods and craft beer. On January 9, 2024, it released its Q2 2024 earnings report.

Record Net Revenue in Q224

Tilray Brands reported a record net revenue of $194 million for the quarter, a Y/Y increase of 34%. The latest earnings report cements it as the global leader in the cannabis industry. 

 Additionally, it is the 5th largest craft beer maker in the US and is on its way to becoming the 12th largest beverage-alcohol company.

The company reported that adjusted gross profit rose 18% to $52 million in Q224. Tilray’s adjusted gross margin for the quarter was 27%. Its net revenue from cannabis sales grew 35% to $67 million compared to the $450 million reported in the previous year. The adjusted gross margin for cannabis stood at 35%, compared to 43% last year.

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Its beverage alcohol segment grew 117% to hit $47 million from the $21 million reported in the same quarter in the previous fiscal year. The adjusted gross margin for the beverage alcohol segment was 38%, compared to the 52% reported last year. Excluding acquisitions, the adjusted gross margin would have stood at 55%. Adjusted gross profit for the beverage alcohol segment stood at $18 million, compared to the $11 million reported in the previous year. It had a net loss of $46 million, a decline compared to the $62 million loss reported in the same quarter last year.

Consequently, the GAAP loss per share was $0.07. Adjusted net loss was $2.7 million in Q224, an adjusted loss per share of $0.0. Its EPS was better than the analysts’ prediction of a $0.06 loss per share. However, it missed revenue estimates of $195.07 million.

Stock Performance

Tilray Brands (TLRY) stock closed trading on Tuesday, January 8, 2024, 9.8291% lower at $2.11 per share. That was despite the positive earnings report. After the recent performance, TLRY stock is down 24.37% in the past 12 months.

Why TLRY Stock Dropped

While Tilray Brands numbers appear positive at first glance, a closer look reveals that there might be trouble. Its gross profit margins fell by 12 points to 31% for the cannabis segment and by 13 points for the beer segment to 34%. Additionally, its distribution margins were also down 2 points to 11%.

Additionally, the company reported an adjusted net loss of $0.0. However, it still reported an adjusted net loss of $2.7 million. Another noteworthy figure is the GAAP EPS, which stood at $0.07 per share.

Tilray Brands’ Guidance

The outlook section may also have caused concern among investors. For instance, management stated that it expected FY24 to end with an EBITDA of $68-78 million. That would be a growth rate of 11%-27%. However, they failed to provide estimates for sales growth or margins. Additionally, management did not make promises on actual GAAP profits. Another noteworthy point is that even the promised EBITDA growth of 27% would be slower than the Q2 results.

However, management said they expected to generate positive adjusted free cash flow in 2024. On the downside, the company already burned through $56.2 million in Q2. That is twice the rate at which they burned through cash in Q223.

TLRY Stock Forecast

Two analysts give TLRY stock a buy rating. Their highest forecast is $2.50, and the lowest is $2.0. The average forecast for the stock is $2.25, a 6.64% upside based on the Tuesday closing price of $2.11.

Tilray Stock

Should You Buy TLRY Stock?

Tilray Brands (TLRY) is the leader in the cannabis industry worldwide. Additionally, its craft beer segment is doing quite well. While there is skepticism regarding the Q224 earnings report, the analysts’ buy rating accurately represents the stock’s medium-term future. However, it is worth noting that the stock is trading at a significant discount on its ATH price of $214.06, which it reached in September 2018.


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