Retailer High Tide reports break-even net income, record cannabis sales

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Canadian cannabis retailer High Tide reported break-even net income and positive free cash flow in its financial results for the first quarter of fiscal 2024.

The Calgary, Alberta-based company said late Friday that its revenue for the November-January quarter increased to 128.1 million Canadian dollars ($94.6 million), a year-over-year increase of 8% from CA$118.1 million.

High Tide said it remains the highest revenue-generating cannabis company that reports in Canadian dollars.

The company’s chief executive called breaking even in net income a critical milestone.

“I am very proud to announce that High Tide has reached break-even net income this quarter, which is a critical milestone in our ongoing corporate trajectory and is a rarity in the global cannabis space,” CEO Raj Grover said in a news release.

“While there has been industry-wide softening of Canadian cannabis sales in the post-holiday months and having made essentially no acquisitions in over a year, I am proud to report that our company continues to grow organically and has never had a sequential decline in revenue since going public in 2018.”

The company said it generated CA$3.6 million of positive free cash flow in the quarter, which it defines as net cash used in operating activities, minus sustaining capex and lease-liability payments.

High Tide said it intends to remain free cash flow positive through fiscal 2024.

Cash on hand as of Jan. 31 was CA$28.7 million.

The company has 165 locations across Canada, which High Tide – citing data by ATB Capital Markets – says is enough to make it the second-largest cannabis retailer in North America by store count.

In the quarter, High Tide opened seven new stores, including two each in Alberta and Ontario and one apiece in British Columbia, Manitoba and Saskatchewan.

The company entered Ontario’s third-largest city, Mississauga, after helping spearhead efforts to convince its City Council to opt into cannabis retail sales.

Other High Tide highlights of the quarter included:

  • A record CA$7.3 million in sales from its Cabanalytics Business Data and Insights platform, including advertising revenue. That’s an increase of 11% year-over-year.
  • Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased to CA$10.4 million in the first quarter, up 90% over the same period last year.
  • 32,000 people in its paid loyalty program as of March 2024.
  • More than 1.32 million memberships in the company’s Cabana Club loyalty program as of March, an increase from 975,000 one year earlier.

High Tide shares trade as HITI on the Nasdaq and TSX Venture Exchange.