We recently published 10 Big Names With Whopping Gains; 6 Jump All-Time Highs. Tilray Brands Inc. (NASDAQ:TLRY) is one of the best performers on Thursday. Tilray Brands soared to a new all-time high on Thursday after posting a stellar earnings performance in the first quarter of the fiscal year 2026. During the session, Tilray Brands Inc. (NASDAQ:TLRY) jumped to its highest price of $2.32 before paring gains to end the day just up by 22.09 percent at $2.1 apiece. Tilray Brands (TLRY) Hits All-Time High ...

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides unaudited condensed interim consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents Tilray Brands, Inc.'s unaudited condensed interim consolidated financial statements and notes for Q1 2025 [Consolidated Statements of Financial Position (Unaudited)](index=5&type=section&id=Consolidated%20Statements%20of%20Financial%20Position%20%28Unaudited%29) This section presents the company's unaudited consolidated financial position for Q1 2025 Consolidated Statements of Financial Position (in thousands of USD) | Metric | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Total current assets | $701,140 | $688,626 | | Total assets | $2,082,646 | $2,074,327 | | Total current liabilities | $267,632 | $280,303 | | Total liabilities | $561,988 | $584,752 | | Total stockholders' equity | $1,520,658 | $1,489,575 | - Total assets increased by **$8.3 million** from May 31, 2025, to August 31, 2025, reaching **$2.08 billion**[11](index=11&type=chunk) - Total liabilities decreased by **$22.8 million**, from **$584.8 million** to **$562.0 million**, over the three-month period[11](index=11&type=chunk) - Total stockholders' equity increased by **$31.1 million**, from **$1.49 billion** to **$1.52 billion**[11](index=11&type=chunk) [Consolidated Statements of Loss and Comprehensive Loss (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Loss%20and%20Comprehensive%20Loss%20%28Unaudited%29) This section details the company's unaudited consolidated loss and comprehensive loss for Q1 2025 Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (in thousands of USD) | Metric | Three months ended August 31, 2025 | Three months ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Net revenue | $209,501 | $200,044 | | Cost of goods sold | $152,032 | $140,338 | | Gross profit | $57,469 | $59,706 | | Operating income (loss) | $2,092 | $(36,570) | | Net income (loss) | $1,513 | $(34,652) | | Net loss per share - basic | $(0.00) | $(0.04) | | Net loss per share - diluted | $(0.00) | $(0.04) | - Net revenue increased by **4.7%** to **$209.5 million** for the three months ended August 31, 2025, compared to **$200.0 million** in the prior year period[13](index=13&type=chunk) - The company reported a net income of **$1.5 million** for the three months ended August 31, 2025, a significant improvement from a net loss of **$34.7 million** in the prior year period[13](index=13&type=chunk) - Operating income improved substantially, moving from a loss of **$36.6 million** in Q1 2024 to an income of **$2.1 million** in Q1 2025[13](index=13&type=chunk) [Consolidated Statements of Stockholders' Equity (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%28Unaudited%29) This section outlines changes in the company's unaudited consolidated stockholders' equity for Q1 2025 - Total stockholders' equity increased from **$1.49 billion** at May 31, 2025, to **$1.52 billion** at August 31, 2025[16](index=16&type=chunk) - Share issuance through the At-the-Market (ATM) program generated **$22.5 million** in additional paid-in capital during the three months ended August 31, 2025[16](index=16&type=chunk) - The company repurchased **$5.0 million** of TLRY 27 convertible notes by issuing **12,591,816 shares** of Common Stock, resulting in a **$4.8 million** increase in additional paid-in capital and a **$1.2 million** reduction in additional paid-in capital for the equity component settlement[16](index=16&type=chunk)[54](index=54&type=chunk)[65](index=65&type=chunk) - Stock-based compensation contributed **$5.1 million** to additional paid-in capital for the three months ended August 31, 2025[16](index=16&type=chunk)[64](index=64&type=chunk) [Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) This section presents the company's unaudited consolidated cash flow activities for Q1 2025 Consolidated Statements of Cash Flows (in thousands of USD) | Cash Flow Activity | Three months ended August 31, 2025 | Three months ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Net cash provided by (used in) operating activities | $(1,341) | $(35,307) | | Net cash provided by (used in) investing activities | $24,467 | $(49,395) | | Net cash provided by (used in) financing activities | $19,848 | $60,590 | | Net increase (decrease) in cash and cash equivalents | $43,162 | $(23,154) | | Cash and cash equivalents, end of period | $264,828 | $205,186 | - Net cash used in operating activities significantly decreased from **$(35.3) million** in Q1 2024 to **$(1.3) million** in Q1 2025, indicating improved operational cash management[18](index=18&type=chunk)[187](index=187&type=chunk) - Investing activities shifted from using **$49.4 million** in Q1 2024 to providing **$24.5 million** in Q1 2025, primarily due to the sale of marketable securities in the current period[18](index=18&type=chunk)[188](index=188&type=chunk) - Cash provided by financing activities decreased from **$60.6 million** in Q1 2024 to **$19.8 million** in Q1 2025, mainly due to variability in funds from the ATM Program[18](index=18&type=chunk)[189](index=189&type=chunk) [Notes to Condensed Interim Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Interim%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section provides detailed notes supporting the unaudited condensed interim consolidated financial statements [Note 1. Basis of presentation and summary of significant accounting policies](index=9&type=section&id=Note%201.%20Basis%20of%20presentation%20and%20summary%20of%20significant%20accounting%20policies) This note outlines the basis of financial statement presentation and significant accounting policies - The interim financial statements are prepared in accordance with U.S. GAAP for interim financial information and SEC rules, and should be read with the Annual Report on Form 10-K[20](index=20&type=chunk) - The financial statements are prepared on a going concern basis, assuming continued operations and realization of assets/discharge of liabilities in the normal course[21](index=21&type=chunk) - The company adopted ASU 2023-08 (Accounting for and Disclosure of Crypto Assets) in conjunction with digital asset acquisition during Q1 2025, requiring fair value measurement with gains/losses reported as **unrealized**[32](index=32&type=chunk) - New accounting pronouncements not yet adopted include ASU 2023-05 (Joint Venture Formations), ASU 2023-06 (Disclosure Improvements), ASU 2023-09 (Income Tax Disclosures), and ASU 2024-03 (Expense Disaggregation Disclosures), with effective dates ranging from June 2026 to May 2026[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [Note 2. Inventory](index=12&type=section&id=Note%202.%20Inventory) This note details the composition and changes in the company's inventory balances Inventory Breakdown (in thousands of USD) | Inventory Type | August 31, 2025 | May 31, 2025 | | :--------------------- | :-------------- | :----------- | | Beverage inventory | $70,622 | $63,965 | | Cannabis plants | $27,033 | $24,045 | | Dried cannabis | $106,653 | $103,507 | | Cannabis derivatives | $4,481 | $7,877 | | Cannabis vapes | $1,892 | $1,860 | | Packaging and other | $14,508 | $15,366 | | Distribution inventory | $44,450 | $38,735 | | Wellness inventory | $13,148 | $15,527 | | Total | $282,787 | $270,882 | - Total inventory increased by **$11.9 million**, from **$270.9 million** to **$282.8 million**, between May 31, 2025, and August 31, 2025[34](index=34&type=chunk) - Beverage inventory saw the largest increase, rising by **$6.6 million**, while cannabis derivatives inventory decreased by **$3.4 million**[34](index=34&type=chunk) [Note 3. Capital assets](index=12&type=section&id=Note%203.%20Capital%20assets) This note provides a breakdown of the company's capital assets and related changes Capital Assets Breakdown (in thousands of USD) | Capital Asset Type | August 31, 2025 | May 31, 2025 | | :------------------------- | :-------------- | :----------- | | Land | $45,122 | $44,529 | | Production facilities | $416,605 | $407,650 | | Equipment | $278,584 | $280,585 | | Leasehold improvements | $20,415 | $20,415 | | Finance lease, ROU assets | $40,019 | $40,308 | | Construction in progress | $11,190 | $11,241 | | Less: accumulated amortization | $(251,778) | $(236,295) | | Total | $560,157 | $568,433 | - Total capital assets decreased by **$8.3 million** to **$560.2 million** as of August 31, 2025, primarily due to increased accumulated amortization[35](index=35&type=chunk) - The company classified a Fort Collins, CO warehouse facility from its Cannabis segment as held for sale, valued at **$5.8 million**, with the sale expected to complete by May 31, 2026[35](index=35&type=chunk) [Note 4. Leases](index=13&type=section&id=Note%204.%20Leases) This note describes the company's lease arrangements, including right-of-use assets and liabilities Lease-Related Assets and Liabilities (in thousands of USD) | Metric | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Total right-of-use assets | $61,022 | $62,587 | | Total lease liabilities | $70,822 | $71,866 | Future Undiscounted Lease Payments (in thousands of USD) | Fiscal Year | Operating Leases | Finance Leases | | :-------------------- | :--------------- | :------------- | | 2026 (remaining 9 mos) | $5,902 | $3,388 | | 2027 | $6,931 | $4,518 | | 2028 | $5,916 | $4,518 | | 2029 | $2,941 | $4,370 | | Thereafter | $10,647 | $66,694 | | Total minimum lease payments | $32,337 | $83,488 | [Note 5. Intangible Assets](index=13&type=section&id=Note%205.%20Intangible%20Assets) This note details the company's intangible assets and their expected future amortization expense Intangible Assets Breakdown (in thousands of USD) | Intangible Asset Type | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Customer relationships & distribution channel | $2,368 | $0 | | Licenses, permits & applications | $9,503 | $10,523 | | Intellectual property, trademarks, knowhow & brands | $13,302 | $10,900 | | Total | $25,173 | $21,423 | - Total intangible assets increased by **$3.75 million** to **$25.2 million** as of August 31, 2025, primarily driven by an increase in customer relationships & distribution channel assets[39](index=39&type=chunk) Expected Future Amortization Expense for Intangible Assets (in thousands of USD) | Fiscal Year | Amortization | | :-------------------- | :------------- | | 2026 (remaining 9 mos) | $5,737 | | 2027 | $7,649 | | 2028 | $4,085 | | 2029 | $2,897 | | 2030 | $2,897 | | Thereafter | $1,908 | | Total | $25,173 | [Note 6. Goodwill](index=15&type=section&id=Note%206.%20Goodwill) This note presents the company's goodwill by reporting unit, primarily within the Cannabis segment Goodwill by Reporting Unit (in thousands of USD) | Reporting Unit | August 31, 2025 | May 31, 2025 | | :--------------------- | :-------------- | :----------- | | Cannabis Goodwill | $752,350 | $752,350 | | Beverage Goodwill | $0 | $0 | | Wellness Goodwill | $0 | $0 | | Distribution Goodwill | $0 | $0 | | Total | $752,350 | $752,350 | - Goodwill remained constant at **$752.4 million** for the Cannabis segment, with no goodwill reported for Beverage, Wellness, or Distribution segments as of August 31, 2025[42](index=42&type=chunk) [Note 7. Business acquisitions](index=16&type=section&id=Note%207.%20Business%20acquisitions) This note provides details on recent business acquisitions, including the Craft Acquisition II - Effective September 1, 2024, Tilray acquired four craft beer brands and breweries (Atwater Brewery, Hop Valley Brewing Company, Terrapin Beer Co., and Revolver Brewing) from Molson Coors Beverage Company for **$23.0 million** in cash (Craft Acquisition II)[43](index=43&type=chunk) - The Craft Acquisition II would have generated approximately **$13.7 million** in additional net revenue and **$4.0 million** in net income for the three months ended August 31, 2024, on a proforma basis[44](index=44&type=chunk) [Note 8. Long term investments](index=17&type=section&id=Note%208.%20Long%20term%20investments) This note outlines the company's long-term investments, including equity investments Long-Term Investments (in thousands of USD) | Investment Type | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Equity investments measured at fair value | $2,012 | $1,972 | | Equity investments under measurement alternative | $8,160 | $8,160 | | Total | $10,172 | $10,132 | - Long-term investments remained stable at **$10.2 million**, with an option to acquire a **68%** membership interest in SH Acquisition for **$1.00** upon U.S. federal cannabis legalization valued at **$8.2 million**[45](index=45&type=chunk) [Note 9. Bank indebtedness](index=18&type=section&id=Note%209.%20Bank%20indebtedness) This note details the company's bank indebtedness, including operating lines of credit - Aphria Inc. has an operating line of credit of **C$1.0 million**, undrawn as of August 31, 2025[47](index=47&type=chunk) - CC Pharma GmbH has two operating lines of credit totaling **€7.5 million**, with **€7.46 million** (**$8.2 million**) drawn as of August 31, 2025[48](index=48&type=chunk) - American Beverage Crafts Group Inc. (ABC Group) has a **$25.0 million** revolving credit facility, undrawn as of August 31, 2025, with new financial covenants for minimum consolidated EBITDA and liquidity[49](index=49&type=chunk) [Note 10. Accounts payable and accrued liabilities](index=18&type=section&id=Note%2010.%20Accounts%20payable%20and%20accrued%20liabilities) This note provides a breakdown of the company's accounts payable and accrued liabilities Accounts Payable and Accrued Liabilities (in thousands of USD) | Category | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Trade payables | $110,802 | $107,348 | | Accrued liabilities | $91,993 | $103,260 | | Litigation accruals | $12,021 | $12,431 | | Accrued payroll and employment related taxes | $2,796 | $1,436 | | Income taxes payable | $1,038 | $58 | | Accrued interest | $2,677 | $4,193 | | Sales taxes payable | $9,586 | $6,596 | | Total | $230,913 | $235,322 | - Total accounts payable and accrued liabilities decreased by **$4.4 million** to **$230.9 million** as of August 31, 2025[50](index=50&type=chunk) - Accrued liabilities decreased by **$11.3 million**, while trade payables increased by **$3.4 million**[50](index=50&type=chunk) [Note 11. Long-term debt](index=19&type=section&id=Note%2011.%20Long-term%20debt) This note details the company's long-term debt instruments and their carrying amounts Long-Term Debt Instruments (in thousands of USD) | Debt Instrument | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Term loan - C$53,000 | $38,690 | $38,690 | | Term loan - C$25,000 (1) | $11,222 | $11,501 | | Term loan - C$25,000 (2) | $9,127 | $9,354 | | Term loan - C$1,250 | $125 | $157 | | Mortgage payable - C$3,750 | $1,988 | $2,020 | | Term loan - €3,500 | $2,437 | $2,546 | | Mortgage payable - $22,635 | $19,233 | $19,418 | | Term loan - $90,000 | $78,750 | $80,438 | | Carrying amount of long-term debt | $161,572 | $164,124 | | Net carrying amount | $160,470 | $163,260 | | Total non-current portion | $144,175 | $148,493 | - The total non-current portion of long-term debt decreased by **$4.3 million** to **$144.2 million** as of August 31, 2025[51](index=51&type=chunk) [Note 12. Convertible debentures payable](index=20&type=section&id=Note%2012.%20Convertible%20debentures%20payable) This note describes the company's convertible debentures, including the TLRY 27 Notes Convertible Debentures Payable (in thousands of USD) | Metric | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | 5.20% Convertible Notes ("TLRY 27") | $84,267 | $86,428 | | Total convertible debentures payable, non current portion | $84,267 | $86,428 | - The net carrying amount of TLRY 27 Notes decreased by **$2.16 million** to **$84.3 million** as of August 31, 2025[52](index=52&type=chunk) - During Q1 2025, the company exchanged **$5.0 million** of TLRY 27 Notes for cancellation by issuing **12,591,816 shares** of Common Stock and paying **$6 thousand** in cash, resulting in a **$495 thousand** gain[54](index=54&type=chunk) - Interest expense recognized for TLRY 27 Notes was **$1.4 million**, and accretion of amortized discount interest was **$2.0 million** for the three months ended August 31, 2025[55](index=55&type=chunk) [Note 13. Warrant liability](index=22&type=section&id=Note%2013.%20Warrant%20liability) This note details the company's warrant liability, including outstanding warrants and fair value - As of August 31, 2025, there were **6,209,000 warrants** outstanding, expiring September 17, 2025[57](index=57&type=chunk) - The exercise price of each warrant was adjusted to **$0.38** due to anti-dilution price protection features triggered by recent Common Stock issuances[58](index=58&type=chunk) - The fair value of outstanding warrants was estimated at **$1.00 per warrant** as of August 31, 2025, using the Black Scholes pricing model[59](index=59&type=chunk) [Note 14. Stockholders' equity](index=22&type=section&id=Note%2014.%20Stockholders%27%20equity) This note provides information on the company's stockholders' equity, including common stock and compensation - As of August 31, 2025, the company had **1,118,291,159 shares** of Common Stock issued and outstanding[61](index=61&type=chunk) - During Q1 2025, **34,443,799 shares** of Common Stock were issued under the ATM program, generating **$22.5 million** in net proceeds[65](index=65&type=chunk) - Stock-based compensation expense for Q1 2025 was **$5.1 million**, a decrease from **$6.9 million** in the prior year period[64](index=64&type=chunk) [Note 15. Accumulated other comprehensive income (loss)](index=24&type=section&id=Note%2015.%20Accumulated%20other%20comprehensive%20income%20%28loss%29) This note details the components of accumulated other comprehensive income (loss) Accumulated Other Comprehensive Income (Loss) (in thousands of USD) | Metric | August 31, 2025 | August 31, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Balance May 31 | $(43,063) | $(43,499) | | Other comprehensive income (loss) | $(167) | $3,622 | | Balance August 31 | $(43,230) | $(39,877) | - Accumulated other comprehensive loss increased to **$(43.2) million** as of August 31, 2025, primarily due to a foreign currency translation loss of **$(167) thousand** in the current period[66](index=66&type=chunk) [Note 16. Non-controlling interests](index=24&type=section&id=Note%2016.%20Non-controlling%20interests) This note describes non-controlling interests in majority-owned subsidiaries and their attributable income - Majority-owned subsidiaries with non-controlling interests include Aphria Diamond (**51%** owned) and Colcanna S.A.S. (**90%** owned)[67](index=67&type=chunk) Net Comprehensive Income (Loss) Attributable to NCI (in thousands of USD) | Subsidiary | August 31, 2025 | August 31, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Aphria Diamond | $1,810 | $5,088 | | ColCanna S.A.S. | $4 | $(35) | | Total | $1,814 | $5,051 | - Net comprehensive income attributable to non-controlling interests decreased from **$5.1 million** in Q1 2024 to **$1.8 million** in Q1 2025[68](index=68&type=chunk) [Note 17. Income taxes](index=25&type=section&id=Note%2017.%20Income%20taxes) This note explains the company's income tax recovery or expense and related factors - The company reported an income tax recovery of **$2.3 million** for the three months ended August 31, 2025, compared to an income tax expense of **$886 thousand** in the prior year period[70](index=70&type=chunk) - The change in income tax is primarily due to the geographical mix of earnings and losses, with no tax benefit from valuation allowances in certain jurisdictions[70](index=70&type=chunk) [Note 18. Commitments and contingencies](index=26&type=section&id=Note%2018.%20Commitments%20and%20contingencies) This note outlines the company's financial commitments and potential litigation contingencies Financial Commitments (in thousands of USD) | Commitment Type | Total | 2026 | 2027 | 2028 | 2029 | Thereafter | | :---------------------- | :---------- | :---------- | :---------- | :---------- | :-------- | :--------- | | Long-term debt repayment | $161,572 | $16,295 | $16,241 | $96,436 | $3,531 | $29,069 | | Convertible debentures payable | $100,000 | $0 | $0 | $100,000 | $0 | $0 | | Material purchase obligations | $73,691 | $41,073 | $26,580 | $6,038 | $0 | $0 | | Construction commitments | $888 | $888 | $0 | $0 | $0 | $0 | | Total | $336,151 | $58,256 | $42,821 | $202,474 | $3,531 | $29,069 | - Total financial commitments amount to **$336.2 million**, with the largest portion (**$202.5 million**) due in 2028, primarily from convertible debentures[71](index=71&type=chunk) - Litigation accruals totaled **$12.0 million** as of August 31, 2025, a slight decrease from **$12.4 million** at May 31, 2025[74](index=74&type=chunk) [Note 19. Net revenue](index=27&type=section&id=Note%2019.%20Net%20revenue) This note provides a breakdown of the company's net revenue by operating segment Net Revenue by Segment (in thousands of USD) | Segment | Three months ended August 31, 2025 | Three months ended August 31, 2024 | | :---------------- | :--------------------------------- | :--------------------------------- | | Net beverage revenue | $55,739 | $55,972 | | Net cannabis revenue | $64,511 | $61,249 | | Distribution revenue | $74,007 | $68,071 | | Wellness revenue | $15,244 | $14,752 | | Total | $209,501 | $200,044 | - Total net revenue increased by **4.7%** to **$209.5 million** for the three months ended August 31, 2025, compared to the prior year[76](index=76&type=chunk) - Distribution revenue showed the strongest growth, increasing by **$5.9 million** (**9%**), followed by net cannabis revenue, which grew by **$3.3 million** (**5%**)[76](index=76&type=chunk) [Note 20. Cost of goods sold](index=27&type=section&id=Note%2020.%20Cost%20of%20goods%20sold) This note details the company's cost of goods sold by operating segment Cost of Goods Sold by Segment (in thousands of USD) | Segment | Three months ended August 31, 2025 | Three months ended August 31, 2024 | | :---------------- | :--------------------------------- | :--------------------------------- | | Beverage costs | $34,413 | $33,050 | | Cannabis costs | $41,241 | $37,054 | | Distribution costs | $66,008 | $60,138 | | Wellness costs | $10,370 | $10,096 | | Total | $152,032 | $140,338 | - Total cost of goods sold increased by **$11.7 million** (**8%**) to **$152.0 million** for the three months ended August 31, 2025[77](index=77&type=chunk) - Distribution costs and Cannabis costs experienced the largest absolute increases, rising by **$5.9 million** and **$4.2 million**, respectively[77](index=77&type=chunk) [Note 21. General and administrative expenses](index=27&type=section&id=Note%2021.%20General%20and%20administrative%20expenses) This note presents a breakdown of the company's general and administrative expenses General and Administrative Expenses (in thousands of USD) | Category | Three months ended August 31, 2025 | Three months ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Salaries and wages | $21,736 | $21,567 | | Office and general | $8,697 | $9,260 | | Stock-based compensation | $5,052 | $6,917 | | Insurance | $2,393 | $2,455 | | Professional fees | $1,218 | $1,178 | | Gain on sale of capital assets | $(241) | $(26) | | Travel and accommodation | $1,312 | $1,493 | | Rent | $886 | $1,269 | | Total | $41,053 | $44,113 | - Total general and administrative expenses decreased by **$3.1 million** (**7%**) to **$41.1 million** for the three months ended August 31, 2025[78](index=78&type=chunk) - The decrease was primarily driven by a **$1.9 million** reduction in stock-based compensation and a **$0.6 million** decrease in office and general expenses[78](index=78&type=chunk) [Note 22. Restructuring charges](index=28&type=section&id=Note%2022.%20Restructuring%20charges) This note details the company's restructuring and exit costs by segment - Restructuring and exit costs decreased significantly to **$869 thousand** for the three months ended August 31, 2025, from **$4.2 million** in the prior year period[79](index=79&type=chunk) - Within the Cannabis segment, **$692 thousand** was recognized for employee termination severance and benefits due to reorganization of the Canadian cannabis commercial function[80](index=80&type=chunk) - An additional **$177 thousand** in restructuring charges related to exiting the New Zealand medical cannabis market[80](index=80&type=chunk) [Note 23. Non-operating income (expense), net](index=28&type=section&id=Note%2023.%20Non-operating%20income%20%28expense%29%2C%20net) This note outlines the company's non-operating income and expenses, including fair value changes Non-Operating Income (Expense), Net (in thousands of USD) | Category | Three months ended August 31, 2025 | Three months ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Change in fair value of warrant liability | $(3,670) | $696 | | Foreign exchange gain (loss) | $6,928 | $11,881 | | (Loss) gain on long-term investments | $39 | $(39) | | Unrealized loss on digital assets | $(8) | $0 | | Other non-operating (losses) gains, net | $543 | $108 | | Total | $3,832 | $12,646 | - Total non-operating income (expense), net decreased by **$8.8 million** to **$3.8 million** for the three months ended August 31, 2025[82](index=82&type=chunk) - This decrease was primarily driven by a **$4.4 million** negative change in the fair value of warrant liability and a **$4.9 million** decrease in foreign exchange gain[82](index=82&type=chunk) [Note 24. Financial risk management and financial instruments](index=28&type=section&id=Note%2024.%20Financial%20risk%20management%20and%20financial%20instruments) This note discusses the company's financial risk management and fair value measurements of instruments Fair Value Measurements (in thousands of USD) | Category | Level 1 | Level 2 | Level 3 | Total (August 31, 2025) | | :-------------------------------- | :------ | :------ | :------ | :---------------------- | | Cash and cash equivalents | $264,828 | $0 | $0 | $264,828 | | Equity investments measured at fair value | $995 | $1,017 | $8,160 | $10,172 | | Digital assets | $992 | $0 | $0 | $992 | | Warrant liability | $0 | $0 | $(4,762) | $(4,762) | | Contingent consideration | $0 | $0 | $0 | $0 | | Total recurring fair value measurements | $266,815 | $1,017 | $3,398 | $271,230 | - The company's digital assets, consisting of **9.16 units of Bitcoin**, are measured at fair value (Level 1) with a cumulative unrealized loss of **$8 thousand** as of August 31, 2025[86](index=86&type=chunk) - The warrant liability is classified as a Level 3 derivative, with its fair value determined using the Black-Scholes pricing model, and a change in fair value of **$(3.7) million** recognized in Q1 2025[87](index=87&type=chunk)[91](index=91&type=chunk) - Contingent consideration related to the Montauk Brewing acquisition was reduced to **$0 thousand** as of August 31, 2025, due to a **0%** probability of achievement of financial measures, resulting in a **$15.0 million** change in fair value[88](index=88&type=chunk)[91](index=91&type=chunk) [Note 25. Segment reporting](index=31&type=section&id=Note%2025.%20Segment%20reporting) This note provides financial information by operating segment, including gross profit and revenue by channel - The company operates in four segments: Cannabis, Beverage, Distribution, and Wellness, with the Chief Operating Decision Maker (CODM) using segment gross profit for resource allocation and performance assessment[94](index=94&type=chunk) Segment Gross Profit (in thousands of USD) | Segment | Three months ended August 31, 2025 | Three months ended August 31, 2024 | | :---------------- | :--------------------------------- | :--------------------------------- | | Beverage gross profit | $21,326 | $22,922 | | Cannabis gross profit | $23,270 | $24,195 | | Distribution gross profit | $7,999 | $7,933 | | Wellness gross profit | $4,874 | $4,656 | | Total gross profit | $57,469 | $59,706 | Cannabis Revenue by Channel (in thousands of USD) | Channel | Three months ended August 31, 2025 | Three months ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Canadian medical cannabis | $6,146 | $6,261 | | Canadian adult-use cannabis | $64,067 | $57,235 | | Wholesale cannabis | $4,155 | $5,507 | | International cannabis | $13,367 | $12,191 | | Total cannabis revenue | $87,735 | $81,194 | | Excise taxes | $(23,224) | $(19,945) | | Total cannabis net revenue | $64,511 | $61,249 | Geographic Net Revenue (in thousands of USD) | Region | Three months ended August 31, 2025 | Three months ended August 31, 2024 | | :---------------- | :--------------------------------- | :--------------------------------- | | USA | $63,961 | $63,880 | | Canada | $58,167 | $55,905 | | EMEA | $85,253 | $77,672 | | Rest of World | $2,120 | $2,587 | | Total | $209,501 | $200,044 | [Note 26. Subsequent Events](index=34&type=section&id=Note%2026.%20Subsequent%20Events) This note discloses significant events occurring after the reporting period, such as warrant exercises - Between September 5 and 15, 2025, **6,209,000 warrants** were exercised, generating **$2.1 million** in cash and issuing **6,209,000 shares** of common stock[101](index=101&type=chunk) - On October 9, 2025, Tilray acquired a **$14.8 million** promissory note from Double Diamond Holdings Ltd. (DDH) payable by Aphria Diamond Inc., in exchange for **8,617,068 shares** of Tilray's Common Stock[102](index=102&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=35&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses Tilray's business, strategy, market trends, and financial performance for Q1 2025 [Company Overview](index=35&type=section&id=Company%20Overview) This section provides an overview of Tilray Brands, Inc.'s global lifestyle consumer products business and strategy - Tilray Brands, Inc. is a global lifestyle consumer products company focused on cannabis, beverage, wellness, and entertainment, aiming to be a leading premium lifestyle company[105](index=105&type=chunk) - The company's strategy involves leveraging brands, infrastructure, and expertise to drive revenue growth, achieve industry-leading profitability, and build long-term shareholder value[106](index=106&type=chunk) - Key strategic focuses include data analytics, consumer insights, category management leadership, new product/geography expansion, and cost structure management[106](index=106&type=chunk) [Trends and Other Factors Affecting Our Business](index=36&type=section&id=Trends%20and%20Other%20Factors%20Affecting%20Our%20Business) This section discusses market trends and external factors impacting Tilray's Beverage, Cannabis, and Wellness segments - Beverage market trends: Focus on expanding Breckenridge Distillery's market share in spirits, optimizing craft beer portfolio and distribution (Project 420), and diversifying with HD-D9, non-alcoholic, and clean label energy drinks[108](index=108&type=chunk)[110](index=110&type=chunk) - Canadian cannabis market trends: Tilray leads the Canadian market in cannabis revenue, with a marginal market share increase to **9.4%**, driven by strength in flower and non-infused pre-roll categories. Price compression is expected to persist[111](index=111&type=chunk) - International cannabis trends: Europe's medical cannabis market is developing, with Germany being the largest. Tilray is well-positioned with EU-GMP facilities and a broad product portfolio, pioneering research into therapeutic value[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - Wellness market trends: Continued growth in brick-and-mortar and e-commerce, with a focus on value-added innovation in natural and organic food and beverages, including super-seeds, breakfast, snacking, and natural energy drinks[122](index=122&type=chunk) [Acquisitions, Strategic Transactions and Synergies](index=39&type=section&id=Acquisitions%2C%20Strategic%20Transactions%20and%20Synergies) This section details Tilray's strategic acquisitions and Project 420 initiatives for synergy optimization - Tilray continues to expand through organic growth and strategic acquisitions, evaluating businesses that complement its portfolio or offer new market/product opportunities[123](index=123&type=chunk) - The company has made multiple beverage acquisitions (SweetWater, Alpine, Green Flash, Breckenridge Distillery, Montauk, Craft Acquisition I & II) to scale its beverage business[124](index=124&type=chunk)[125](index=125&type=chunk) - Project 420 initiatives (SKU, Geographic, Distributor rationalization, and synergy optimization) aim to improve profitability and accelerate revenue growth in the beverage segment. **$25.1 million** in savings achieved to date out of a **$33 million** synergy plan[126](index=126&type=chunk)[127](index=127&type=chunk) [Political and Economic Environment](index=41&type=section&id=Political%20and%20Economic%20Environment) This section addresses how economic, political, and regulatory factors may affect Tilray's operations - Operations may be affected by economic, political, legislative, and regulatory factors, including geopolitical tensions (Russia-Ukraine, Middle East), recessionary trends, inflation, and supply chain disruptions[129](index=129&type=chunk) - U.S. tariffs and foreign retaliatory tariffs could impact input materials like aluminum, hops, barley, malt, and vape componentry, though the company intends to mitigate these impacts[129](index=129&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) This section analyzes Tilray's consolidated and segment-specific financial results for Q1 2025 Consolidated Results of Operations (in thousands of U.S. dollars) | Metric | August 31, 2025 | August 31, 2024 | Change (2025 vs. 2024) | % Change | | :-------------------------------- | :-------------- | :-------------- | :--------------------- | :------- | | Net revenue | $209,501 | $200,044 | $9,457 | 5% | | Cost of goods sold | $152,032 | $140,338 | $11,694 | 8% | | Gross profit | $57,469 | $59,706 | $(2,237) | (4)% | | Operating income (loss) | $2,092 | $(36,570) | $38,662 | (106)% | | Net income (loss) | $1,513 | $(34,652) | $36,165 | (104)% | - Total operating expenses decreased by **$40.9 million** (**42%**) to **$55.4 million**, primarily due to lower amortization expense, a gain from contingent consideration fair value change, and reduced non-recurring costs[155](index=155&type=chunk) Segment Net Revenue (in thousands of U.S. dollars) | Segment | August 31, 2025 | August 31, 2024 | Change (2025 vs. 2024) | % Change | | :---------------- | :-------------- | :-------------- | :--------------------- | :------- | | Beverage business | $55,739 | $55,972 | $(233) | (0)% | | Cannabis business | $64,511 | $61,249 | $3,262 | 5% | | Distribution business | $74,007 | $68,071 | $5,936 | 9% | | Wellness business | $15,244 | $14,752 | $492 | 3% | | Total net revenue | $209,501 | $200,044 | $9,457 | 5% | Adjusted EBITDA Reconciliation (in thousands of U.S. dollars) | Metric | August 31, 2025 | August 31, 2024 | Change (2025 vs. 2024) | % Change | | :-------------------------------- | :-------------- | :-------------- | :--------------------- | :------- | | Net income (loss) | $1,513 | $(34,652) | $36,165 | (104)% | | Income tax expense (recovery), net | $(2,285) | $886 | $(3,171) | (358)% | | Interest expense, net | $6,696 | $9,842 | $(3,146) | (32)% | | Non-operating income (expense), net | $(3,832) | $(12,646) | $8,814 | (70)% | | Amortization | $15,561 | $31,814 | $(16,253) | (51)% | | Stock-based compensation | $5,052 | $6,917 | $(1,865) | (27)% | | Change in fair value of contingent consideration | $(15,000) | $0 | $(15,000) | NM | | Project 420 business optimization | $200 | $0 | $200 | NM | | Purchase price accounting step-up | $0 | $175 | $(175) | (100)% | | Litigation costs, net of recoveries | $1,007 | $1,595 | $(588) | (37)% | | Restructuring costs | $869 | $4,247 | $(3,378) | (80)% | | Transaction costs (income), net | $400 | $1,156 | $(756) | (65)% | | Adjusted EBITDA | $10,181 | $9,334 | $847 | 9% | [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses Tilray's management of cash, investments, and capital to fund operations and growth - The company actively manages cash and investments to fund operations, debt payments, and acquisitions, believing existing cash, marketable securities, and operational cash flow, along with external funds, will meet short and long-term capital needs[181](index=181&type=chunk) - For short-term liquidity, the focus is on generating positive cash flow from operations and optimizing working capital, including investing excess cash in short-term marketable securities and digital assets[182](index=182&type=chunk) - For long-term liquidity, the company aims to fund operations through profitable organic growth and accretive acquisitions, potentially seeking additional debt or equity financing[183](index=183&type=chunk) - During Q1 2025, the ATM Program issued **34,443,799 shares**, generating **$22.5 million** in net proceeds, intended for strategic acquisitions and capital expenditures[184](index=184&type=chunk) [Critical Accounting Estimates](index=58&type=section&id=Critical%20Accounting%20Estimates) This section identifies key accounting estimates that require significant judgment and assumptions - Critical accounting estimates include revenue recognition, valuation of inventory, long-lived assets, goodwill and intangible assets, stock-based compensation, and valuation allowances for deferred tax assets[192](index=192&type=chunk) [Recently Issued Accounting Pronouncements](index=58&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section refers to disclosures regarding recently issued accounting pronouncements in Note 1 - A description of recently issued accounting pronouncements is disclosed in Note 1 – Basis of presentation and summary of significant accounting policies[193](index=193&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section confirms no material changes in market risk for Q1 2025 compared to the prior fiscal year - No material changes in market risk were identified for the three months ended August 31, 2025, compared to the prior fiscal year's Annual Report on Form 10-K[194](index=194&type=chunk) [Item 4. Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the effectiveness of disclosure controls and changes in internal control over financial reporting [Disclosure Controls and Procedures](index=59&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of August 31, 2025 - As of August 31, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective[196](index=196&type=chunk) - The assessment of disclosure controls did not include the internal controls over financial reporting of the recently acquired Craft Acquisition II businesses, which represented **1.3%** of consolidated assets and **4.2%** of consolidated net revenues[197](index=197&type=chunk) [Changes in Internal Control over Financial Reporting](index=59&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports no material changes in internal control over financial reporting during the period - There have been no material changes in internal control over financial reporting during the period covered by this report[198](index=198&type=chunk) - The company is reviewing and integrating the internal control structure of the Craft Acquisition II brands and businesses into its overall internal control over financial reporting process[198](index=198&type=chunk) [PART II. OTHER INFORMATION](index=60&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and other significant corporate information [Item 1. Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms no material changes in legal proceedings and assesses related liabilities - No material changes in legal proceedings have occurred since the Annual Report on Form 10-K for the fiscal year ended May 31, 2025[201](index=201&type=chunk) - Management believes established legal reserves are appropriate and that incremental liabilities from pending legal proceedings are not expected to have a material adverse effect on the company's financial position, results of operations, or cash flows[200](index=200&type=chunk) [Item 1A. Risk Factors](index=61&type=section&id=Item%201A.%20Risk%20Factors) This section outlines key risk factors, including acquisition integration, regulatory, and competitive challenges - No material changes from the risk factors described in the Form 10-K, except for specific updates[203](index=203&type=chunk) - Key risks include potential failure to achieve expected benefits from craft beer acquisitions, difficulties integrating recent acquisitions, and dependence on regulatory approvals and compliance for the cannabis business[203](index=203&type=chunk) - Evolving government regulations for cannabis (e.g., rescheduling in the U.S., international legalization delays) and intense competition, including from the illicit market, pose significant risks[203](index=203&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports the issuance of common stock in exchange for convertible notes, relying on a Section 3(a)(9) exemption - On June 16, 2025, Tilray issued **12,591,816 shares** of Common Stock in exchange for **$5.0 million** principal amount of its 5.20% Convertible Senior Notes due June 1, 2027[205](index=205&type=chunk) - The shares were issued without registration under the Securities Act of 1933, relying on the exemption provided by Section 3(a)(9)[206](index=206&type=chunk) [Item 3. Defaults Upon Senior Securities](index=63&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there are no applicable defaults upon senior securities - Not applicable[207](index=207&type=chunk) [Item 4. Mine Safety Disclosures](index=63&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that there are no applicable mine safety disclosures - Not applicable[208](index=208&type=chunk) [Item 5. Other Information](index=63&type=section&id=Item%205.%20Other%20Information) This section details an amendment to the CEO's employment agreement and a promissory note acquisition - On October 7, 2025, an amendment to CEO Irwin D. Simon's employment agreement was made, modifying compensation benefits to include a **$5,000 monthly after-tax amount** for retirement/welfare plans and a **$500 monthly car allowance**, effective Fiscal Year 2026[209](index=209&type=chunk) - On October 9, 2025, Tilray acquired a **$14.8 million** promissory note from Double Diamond Holdings Ltd. (DDH), payable by Aphria Diamond Inc., in exchange for **8,617,068 shares** of Tilray's Common Stock[210](index=210&type=chunk) - DDH's management team will provide additional services, including expert advice on maximizing vegetable cultivation, cannabis yields for Quebec and Cayuga facilities, and cannabis cultivation insights for the Portugal facility, at no incremental cost[210](index=210&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including amendments to credit agreements and employment agreements, promissory notes, certifications from executive officers, and financial statements formatted in Inline XBRL - Exhibits include the Fifth Amendment to Credit Agreement, Amendment No. 1 to Employment Agreement for Irwin D. Simon, and a Promissory Note from Aphria Diamond Inc. to Double Diamond Holdings Ltd[212](index=212&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer (pursuant to Sarbanes-Oxley Act Sections 302 and 906) are filed[212](index=212&type=chunk)[214](index=214&type=chunk) - Financial statements (Consolidated Statements of Financial Position, Loss and Comprehensive Loss, Stockholders' Equity, Cash Flows, and Notes) are provided in Inline XBRL format[214](index=214&type=chunk) [Signatures](index=66&type=section&id=Signatures) This section contains the duly authorized signatures of the company's executive officers for the report - The report is signed by Irwin D. Simon, Chairman and Chief Executive Officer, and Carl Merton, Chief Financial Officer, on October 9, 2025[217](index=217&type=chunk)

Ferrari - Ferrari unveiled details about its first electric vehicle, tentatively named Elettrica, which will feature in-house-developed electric motors producing 1,000 horsepower and accelerating from 0 to 62 mph in 2.5 seconds [4] - The Elettrica will have a range exceeding 323 miles and a top speed of 192 mph, powered by a 122-kWh battery pack [4] - A unique sound system will replicate the signature Ferrari roar using real powertrain vibrations, distinguishing it from other electric vehicles [4] - Ferrari has revised its forecast for electric vehicles, now expecting them to comprise 20% of its lineup by 2030, down from a previous target of 40% [5] PepsiCo - PepsiCo exceeded Q3 earnings expectations and appointed a new CFO, with Walmart U.S. CFO Steve Schmitt set to take on the role [5] - The company anticipates a low-single-digit increase in full-year organic revenue and core constant currency EPS to be about even with the prior year [6] Delta Air Lines - Delta Air Lines reported strong Q3 results, driven by premium, corporate, and loyalty segments, and expects Q4 top and bottom lines to surpass current forecasts [7] Nvidia - Nvidia received a Street-high price target of $300 from Cantor analyst C.J. Muse, who reiterated it as a Top Pick Overweight, citing strong customer demand for computing resources [7] Cannabis Stocks - Cannabis stocks are rising following Tilray Brands' first revenue beat in four quarters, positively impacting Canopy Growth, Aurora Cannabis, and SNDL [7] Silver Market - Spot silver prices have surpassed $50 per ounce for the first time since 2011, driven by industrial demand, supply tightness, and economic uncertainty [7] Rare Earth Exports - China has tightened regulations on rare earth exports, crucial for high-tech products, with new rules likely denying licenses to arm makers and some semiconductor companies [7] Hollywood and AI - The Creative Artists Agency expressed concerns over OpenAI's video-generating tool Sora, stating it poses significant risks to artists and emphasizes the need for compensation and credit for creative work [7] Short Opportunities - J.P. Morgan identified Mobileye Global and Skyworks Solutions as top tech shorts, citing valuation concerns and underperformance relative to the semiconductor group [7]

Tilray Brands Inc (NASDAQ: TLRY) soared on market open today after coming in ahead of Street estimates for its fiscal Q1, with net income printing at $1.5 million and revenue climbing to a record $210... ...

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. The information contained herein is for informational purposes only. Nothing in this article should be ...

Key Points Tilray was "supposed" to lose money in Q1. It delivered a surprise profit instead. Earnings in Q1 were a positive $1.5 million. 10 stocks we like better than Tilray Brands › Tilray Brands (NASDAQ: TLRY) stock exploded higher after reporting a surprise profit in its fiscal Q1 earnings report Thursday. Heading into the report, analysts forecast Tilray would lose $0.04 per share on $205.8 million in quarterly revenue. Instead, Tilray broke even on earnings with a $0.00 profit, while its r ...

Tilray Brands Inc. (NASDAQ:TLRY) stock is surging on Thursday after the cannabis company reported better-than-expected first-quarter 2026 earnings.The company reported a break-even versus a consensus loss of 2 cents per share. It reported adjusted net income of $3.9 million in the first quarter compared to adjusted net loss of $(6.1) million.Adjusted EBITDA increased 9% year over year to $10.2 million in the first quarter, compared to $9.3 million.Net revenue increased 5% to $209.5 million in the first quar ...

About this content About Sean Mason Sean Mason is a Senior Journalist at Proactive, having researched and written about Canadian and US equities for 20 years. Sean graduated from the University of Toronto with a BA in history and economics and has also passed the Canadian Securities Course. He previously worked at Investors Digest of Canada, Stockhouse, and SmallCapPower.com. Read more About the publisher Proactive financial news and online broadcast teams provide fast, accessible, informative and action ...

U.S. stocks were lower, with the Dow Jones index falling around 100 points on Thursday.Shares of Tilray Brands, Inc. (NASDAQ:TLRY) rose sharply during Thursday's session after the company reported better-than-expected first-quarter financial results.Tilray Brands posted adjusted earnings of $0.00 per share, beating market expectations of a loss of $0.02 per share. The company's sales came in at $209.501 million versus estimates of $204.549 million.Tilray Brands shares jumped 30% to $2.2397 on Thursday.Here ...

Financial Data and Key Metrics Changes - The company reported record first-quarter net revenue of $210 million, a 5% increase year over year, driven by increased cannabis sales in Canada and international markets [31][36] - Net income for the quarter was $1.5 million, compared to a net loss of $34.7 million in the prior year period, indicating a significant turnaround in profitability [35][36] - Adjusted EBITDA for the quarter improved to $10.2 million from $9.3 million last year, reflecting operational efficiency [36] Business Line Data and Key Metrics Changes - Cannabis revenue increased by 5% year over year to $64.5 million, supported by a 12% growth in adult use gross revenue and a 10% growth in international cannabis [31][36] - Beverage revenue reached $55.7 million, impacted by SKU rationalization but supported by new product contributions [32][36] - Wellness revenue grew by 3% year over year to CAD 15.2 million, driven by innovations in health-focused products [32][36] Market Data and Key Metrics Changes - The Canadian cannabis business reported revenue up 4% year over year to $51 million, reinforcing its position as the largest legal cannabis company in Canada by revenue [12][36] - International cannabis revenue grew by 10% year over year to $13.4 million, despite permit challenges in Portugal [14][36] - The distribution segment's revenue increased by 9% year over year to CAD 74 million, primarily due to a stronger euro [32][36] Company Strategy and Development Direction - The company aims to leverage its global platform to drive innovation in cannabis, beverage, and wellness sectors, focusing on sustainable growth and operational efficiency [5][7] - The strategic focus includes optimizing the craft beer SKU portfolio under Project Four Twenty, which has already realized $25 million in annual savings [20][21] - The company is well-positioned to capture growth opportunities in the U.S. medical cannabis market, anticipating a potential market share of 3% to 5% in a $10 billion market [11][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the evolving regulatory landscape for cannabis, particularly in the U.S. and Europe, which could enhance patient access and market opportunities [10][11] - The company is confident in its ability to adapt to regulatory changes and is committed to continuous innovation and portfolio expansion [28][36] - Management acknowledged the challenges faced in the beverage segment but emphasized the long-term potential for growth and profitability [20][36] Other Important Information - The company reduced its outstanding debt by $7.7 million during the quarter, bringing its net debt to $3.9 million, which enhances financial flexibility for strategic opportunities [36][37] - The company has built a diversified global platform with over 40 unique brands in more than 20 countries, positioning itself as a leader in the cannabis, beverage, and wellness markets [8][9] Q&A Session Summary Question: International growth opportunities and permit delays - Management noted progress in obtaining permits in Portugal and expressed optimism about increasing production capacity in both Portugal and Germany [41][43][44] Question: Rescheduling opportunities in the U.S. - Management indicated readiness to leverage existing infrastructure and explore partnerships or acquisitions to capture opportunities in the U.S. medical cannabis market [48][51] Question: Canadian adult use market dynamics - Management highlighted a 1.3% decline in overall market pricing, with their pricing up 2% and volume growth of 6.5%, indicating strong performance relative to the market [67][70] Question: Beverage segment profitability improvement plans - Management discussed ongoing efforts in SKU rationalization and integration of acquired brands to improve margins in the beverage segment [75][78] Question: Managing risks in Portugal and Germany - Management emphasized commitment to the Portuguese market while also having contingency plans in Germany, including the ability to ship from Canada [81][84][90]