Yesterday, Tilray Inc. (NASDAQ:TLRY) reported its Q4 earnings. Rich went live with the earnings call, and today we’re following up with a break-down and some post-report analysis.
Rich last profiled Tilray in November, after its Q3 report. Back then, the company surprised on both its revenue growth and its earnings miss. Will history repeat itself for Q4?
Tilray is a global leader in the cannabis space. It currently serves tens of thousands of consumers in 15 countries spanning five continents. By analyzing its performance, industry watchers can get an indication of where the cannabis space may be headed. So let’s dive in.
Tilray’s Revenue and Losses are Escalating
The company generated revenue of $46.9 million in the fourth quarter. Although this is up 202% year-over-year, it missed consensus estimates of $55.4 million. Almost 60% of TLRY’s revenue increase in Q4 stemmed from its acquisition of hemp-food maker Manitoba Harvest.
Tilray sold $17 million worth of recreational cannabis in Q4, up 265% year-over-year. Medical cannabis revenue came to $3.3 million for Canada and $4 million abroad. This represents year-over-year increases of 17% and 280%, respectively. Bulk cannabis revenue, however, declined 44% in Q4 from the prior year.
The company ultimately reported a net loss of $219.2 million for the quarter. This amounts to $2.14 a share, up significantly from a loss of $31 million or 33 cents a share a year ago.
Tilray’s full-year revenue came to nearly $167 million, a 287% jump over the prior year. It ended 2019 with $97 million in cash, which some analysts think may not be enough to fully execute operations.
Brendan Kennedy, Tilray’s Chief Executive Officer, said of the results:
“Like our peers, we have faced industry challenges, but we remain committed to driving long-term value for our shareholders. We are still in the early days of this emerging growth industry and will continue being good stewards of shareholder capital as we aim to build the world’s most trusted and valued cannabis and hemp company.”
TLRY’s Performance and Future
The cannabis industry has been battered for nearly a year, and Tilray is no exception.
From its 52-week high of $79.99, TLRY has fallen nearly 85% to $13.21. In the more immediate period, the stock has only lost 19.5% for the year-to-date. Most of that occurred in the 24 hours following its Q4 release.
TLRY’s been subject to considerable market volatility all year, with no immediate signs of stabilizing.
Still, Kennedy says investors should expect Tilray’s revenue growth to continue, and that the company’s diversified revenue will help keep the share price from sinking too far. In the meantime, TLRY will undergo restructuring in order to better compete in the new cannabis landscape.
As Rich previously discussed, The Valens Company (TSXV:VLNS) (OTCQX:VLNCF) also announced plans to shift its business model in light of a stagnating cannabis industry. The difference between VLNS and TLRY, however, is that Valens is already profitable. Tilray still has some work to do to reduce its bottom line.
What do you think? Is Tilray still a good long-term investment, or is its inability to cut spending a red flag? Do these Q4 results indicate that the cannabis space isn’t through its growing pains quite yet?
Featured image: Canva