(Reuters) - Cronos Group Inc (TO:CRON) (N:CRON) fell short of quarterly revenue estimates on Tuesday, as the Canadian producer's revenue per gram of cannabis sold fell in a market suffering from surplus supply.
The cannabis industry in the country is facing a supply glut as companies ramp up production. But retail sales have failed to offset the surplus, even though there has been a rise in the number of weed stores and the sale of cannabis-derivative products has been allowed in Canada.
Cronos said its net product revenue per gram sold outside the United States nearly halved to C$3.75 in the third quarter, dulling a 31% improvement in cost of sales per gram sold.
Total operating expenses rose nearly five fold to C$34.8 million, driven by a surge in general and administrative expenses.
Higher spending on research and development, acquisitions and expanding in new markets has weighed on cannabis companies' profitability, with the sector down about 25% this year.
Cronos said cannabis sales rose six fold to 3,142 kilograms outside the United States, primarily driven by increased cannabis production.
The Toronto-based company reported a wider-than-expected adjusted core loss of C$23.9 million, in the quarter ended Sept. 30, compared with the average analyst estimate of C$19.87 million, according to IBES data from Refinitiv.
Revenue rose more than three fold to C$12.70 million, but missed expectations of C$14.14 million.