Tilray’s stock price has tumbled some 24% since the start of the week as its Q3 2025 financial figures failed to meet analysts’ expectations.
For the three months to February 28, 2025, the international cannabis giant reported net revenues of US$186m, down slightly year-on-year from $183m.
This fell well below the consensus estimate of approximately $210m, with Tilray attributing the shortfall to ‘SKU rationalization’ efforts, as it reduced and simplified its product offering in multiple categories.
According to the company, $6m in revenues generated in Q3 2024 came from now-discontinued SKUs, and the overall impact of its rationalization efforts impacted revenues by $13.2m.
Its cannabis segment was the worst performer, seeing net revenue fall from $63m to $54m year-on-year, again citing SKU adjustments.
Specifically, it said a decision to ‘pause are presence in margin dilutive categories’ like vapes and pre-rolls saw a drop of $4m.
Furthermore, its increasing focus outside of the Canadian cannabis market ‘resulted in a timing impact on revenue of $3.2m’.
Meanwhile, its alcohol division performed ‘modestly’, with net revenue up to $55.9m, despite a further $6m impact from SKU rationalization.
In the wellness and distribution segments, Tilray reported steady gains. Wellness revenue rose 5% to $14.1m, while distribution revenue climbed 8% to $61.5 million.
On a profitability basis, Tilray posted a net loss of $793.5m, primarily driven by a $700m non-cash impairment charge, as a result of ‘macroeconomic conditions, declines in market capitalization, and foreign exchange losses’.
Stripping out these one-off charges, the adjusted net loss narrowed to $2.9m versus a $0.9m gain in the prior-year quarter. Adjusted EBITDA declined slightly to $9 million, down from $10.2 million.
Equating to a net loss of $0.87 per share, this also missed forecasts of a loss of $0.0433 per share.
Despite this, Tilray’s gross margins across key segments, with overall margin rising to 28%, up 200 basis points from the previous year. Its cannabis segment gross margin jumped to 41%, an 800 basis point improvement, bolstered by its SKU realignment.
Looking ahead, Tilray has revised its guidance for 2025 down from $900m to $850m. Furthermore, Tilray says it expects the swathe of international Tariffs issued in the US this week ‘should not impact sales’.
