Financial Data and Key Metrics Changes - In Q1, net revenue increased by 49% to CAD 65.3 million from CAD 42.7 million in the same prior year period, primarily due to growth in the Canadian business, integration of Motif, and higher international sales [17] - Adjusted gross profit for the quarter increased by 67% to CAD 23.9 million compared to CAD 14.3 million in Q1 last year, supported by higher revenue and efficiency gains [17][18] - Adjusted EBITDA in Q1 was CAD 5.3 million, up 273% from CAD 1.4 million in the prior year period, driven by increased scale and higher international sales [20][21] - Net income for the quarter was CAD 20 million compared to a net loss of CAD 23 million in the same prior year period, reflecting a CAD 43 million year-over-year improvement [21][22] Business Line Data and Key Metrics Changes - In Q1, international sales reached CAD 5 million, up 55% from Q1 fiscal 2025, despite a sequential decline due to a higher-than-expected proportion of flower that did not meet international specifications [12][17] - The company maintained the number one position in overall vapes with a 20.4% market share and moved to the number two position in overall pre-rolls at 7.7% [8][10] - In beverages, market share increased by 80 basis points year-over-year to 5.9%, while in concentrates, the company achieved a 15.5% category share [8][10] Market Data and Key Metrics Changes - The company holds the number one market share position in Canada with 11.3% total share in Q1 and 11.7% over the past 12 months [5][6] - In Quebec, the company moved up to the number three position with 9.9% market share for the quarter, driven by successful vape launches [7] - The company outperformed in most provinces, holding 33.1% market share in New Brunswick and 21.9% in Newfoundland [8] Company Strategy and Development Direction - The company is focused on operational execution, improving margins, and delivering to markets while balancing risk and growth opportunities in international markets [29][30] - The company aims to expand into international markets prudently while maintaining a strong focus on consumer needs and innovation [30][31] - The company is optimistic about long-term growth in the cannabis industry and its ability to compete and lead as the market matures [5] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of the BC General Employees' Union strike and increased competition in vapes and pre-rolls on market share [6][15] - The company remains confident in its ability to deliver against previously issued guidance, expecting revenue to exceed CAD 300 million for the full year [24] - Management expressed optimism about international sales growth in fiscal 2026, despite temporary issues with product specifications [12][13] Other Important Information - The company harvested over 28,000 kilograms of flower in Q1, representing a 43% year-over-year increase, driven by improved yields and ongoing refinements [10] - The company announced a proprietary breakthrough in powdery mildew resistance, allowing for quicker screening of seedlings [11] - Total cash and short-term investments at quarter end were CAD 63 million, including CAD 7.6 million of unrestricted cash [23] Q&A Session Summary Question: Near-term opportunities and prioritization of initiatives - Management emphasized operational execution and cost base improvement as short-term priorities, while focusing on international expansion for long-term growth [29][30] Question: Insight on international volumes and flower issues - Management noted stringent international flower requirements and identified core drivers of recent issues, expecting to resolve them soon [35] - The estimated impact on international revenue was about CAD 3.5 million due to out-of-spec flower [36] Question: Recovery in the Canadian market - Management confirmed recovery in BC distribution levels and acknowledged increased competition in vapes and pre-rolls, with plans for new innovations to regain market share [42][43] Question: EU GMP certification timeline - Management is working closely with regulators to address feedback and is unable to provide a specific timeline for certification [47][48] Question: Route to market in Europe - Management indicated a mixed approach for market entry, utilizing both direct sales and partnerships depending on regulations [51][53] Question: U.S. market investment strategy - Management stated that the U.S. market is currently a minor part of the business, and they are being cautious with investments due to regulatory uncertainties [55][56]

Core Insights - Auxly Cannabis Group Inc. reported strong financial results for Q3 2025, with net revenues of $39.9 million, a 20% increase year-over-year, driven by higher volumes and improved pricing across its product portfolio [9][5][19] - The company achieved a gross profit of $28.2 million, resulting in a gross profit margin of 71% for the quarter, up from 52% in Q3 2024 [11][12] - Adjusted EBITDA grew by 48% to $12.3 million, reflecting improved operational efficiency and cost control [3][21] Financial Highlights - Net revenues for Q3 2025 were $39.9 million, compared to $33.3 million in Q3 2024, marking a 20% increase [9][5] - Gross margin on finished cannabis inventory sold improved to 56% from 47% in Q3 2024 [12][11] - Net income for Q3 2025 was $20.5 million, a significant increase of 533% compared to $3.2 million in Q3 2024 [19][20] - Cash flow from operations before working capital changes was $11 million, an increase of 82% year-over-year [5][3] Operational Highlights - The company maintained a strong market position, being the third-largest licensed producer in Canada by market share [5] - Back Forty was recognized as the number one cannabis brand in Canada, with Liquid Imagination and Fire Breath 28g being the top-selling SKUs [5][3] - Auxly's operational efficiency led to a 48% year-over-year growth in Adjusted EBITDA, with margins reaching 31% [3][21] Strategic Outlook - Auxly aims to leverage its strong financial position to pursue organic growth opportunities and maintain profitability through innovation and cost control [22][24] - The company plans to allocate $2.0 million to $2.5 million of cash flow from operations towards capital projects in 2025 [25] - Auxly is exploring international market opportunities, supported by its strong brands and scalable production capabilities [26][27]