Q2 2025 Canopy Growth Corp Earnings Call

Following remarks by David and Judy We will conduct a question and answer session, where we will take questions from analysts with that I will turn the call over to David.

David: Thanks, Tyler good morning, and thank you for joining us to discuss canopy growth's results for the second quarter of fiscal 2025.

David: We've had a busy and productive quarter led by outstanding performance from Storz, <unk> bickel as well as solid progress across our Canadian and medical and European medical cannabis businesses.

David: In addition, we've taken substantial steps forward in our Canadian adult use cannabis business, which we feel is well set up for growth in the second half of the year.

David: Overall canopies performance in each of these areas supports our strategy to drive sustainable profitability as well as to build a competitive foundation for long term success across North America and key global markets.

David: Especially when we combine the growing momentum within canopy, USA, which we feel continues to set us apart from our competition. As this strategy was specifically designed to succeed independent of the need for U S Federal legalization.

David: During the call today I will cover three main topics.

David: First the exceptional performance of Storz, <unk> bickel device business as well as that of our medical cannabis businesses.

David: Second I'll address our continued focus on profitability in Canada, and the actions, we're implementing to drive growth in our Canadian adult use cannabis business in the second half of fiscal 2025 and.

David: And third I'll update you on the developments happening within canopy, USA, which we believe is well positioned to capture significant growth in the U S cannabis and hemp derived markets.

David: Following my remarks, Judy will provide a detailed overview of our results market conditions and the actions we've taken to further strengthen our financial standing.

David: So let's start with stores in vehicle and our medical cannabis business, which performed very well in Q2.

David: These segments are critical drivers for canopy, particularly as they are high margin.

David: Aligned with our focus on expanding within our existing markets, which are demonstrating strong and consistent demand.

David: Our German based storz, <unk> bickel business known for premium devices like the volcano <unk> delivered overall net revenue growth of 32% year over year.

This exceptional performance was in part driven by the brands well established well established reputation among German consumers extensive end market activities as well as increased demand following the reform of cannabis regulations. This past April.

David: Beyond Germany Storz <unk> Bickel also saw the resumption of strong growth in the U S led by increased orders from new distribution partners.

David: The growth across these markets was driven by strong sales of the recently launched <unk> as well as sell through of inventory of the Mighty Classic Vaporizer, which is being phased out in favor of the 90 plus.

David: Overall, the achievements of storz <unk> bickel in the quarter underscore how the brand's premium position in the market and portfolio innovation are driving our growth in high margin device sales.

David: Our medical cannabis businesses in Canada, and Europe also produced great results in Q2.

David: Our Canada medical business delivered an outstanding second quarter with revenues up 16% year over year.

This growth is a result of the continued expansion of the product selection in our spectrum online store as well as constant availability.

David: Which are enabling us to capture a progressively larger share of the high margin Canadian medical cannabis market, particularly as we see more insured patients accessing spectrum for their medical cannabis needs.

David: On the international front demand continues to be robust driving substantial year over year revenue growth.

David: This reinforces the potential that we see across the high margin European markets, where canopies revenues are up 72% year over year.

David: In Germany, our medical cannabis revenue surged by 47% from the first to second quarter, demonstrating the rapidly rising demand in Germany's medical market since legalization and canopies positioning as one of the long term players within that market.

David: In Poland, our revenues grew 200% year over year.

It's also worth noting that this European growth is currently being largely supported by our Kincardine GMP cultivation. However, our asset light model for Europe is now coming online supported by agreements with multiple EU based cultivators and we expect this will provide the scalability that we need to meet rising demand over the coming.

David: <unk> without the need for heavy capital investments.

David: This approach not only preserves our flexibility, but also supports strong gross margins across our international medical business.

David: Now, let's dive a bit deeper into our Canadian adult use business.

David: With our improved cost structure, we're highly focused on profitably growing the top line in Canada to power. This growth, we're executing several targeted initiatives to drive <unk> back to its position of leadership in the edibles category.

David: Rejuvenate and strengthen the competitive position of our core flower offerings and to bring new and innovative products to market.

I am pleased to share that the production of one of edibles as fully resumed within the quarter and supply is now coming back into retailers across Canada as well as into the spectrum online store supported by end market Activations and blood tender education.

David: In addition, we anticipate bringing new premium and better for you Wanna Gummies to the Canadian market early in the new year as part of our focus on delivering innovation to consumers.

David: In our core portfolio, the quality and variety of Tweed and seven acres product offerings within the flower as well as pre rolled joints segments is driving consumer demand.

David: And further honing our production platform and its ability to cultivate high quality strains with elevated and consistent THC levels. We've strengthened the competitive positioning of these brands in the market.

David: We're seeing this pay off through the reinvigorated performance of Tweed, Crishman's and a significant uptake of Tweed Cherry Asaf E. <unk>, which is now carried in all markets nationally.

David: In addition, as the sign of things to come our team was thrilled to bring seven acres ultra Jack to markets Ultra Jack for those that haven't yet had a chance to sample. It is a homegrown seven acres creation.

David: The brand will also be bringing.