Tilray, Inc. (NASDAQ:TLRY) shares plummeted 21% after the company reported a wider-than-expected loss for the third quarter and lowered its full-year adjusted EBITDA guidance. The cannabis and beverage-alcohol company posted an adjusted third-quarter loss of -$0.12 per share, missing analysts' estimates of -$0.05. Revenue also fell short of expectations, coming in at $188.3 million against the consensus estimate of $198.44 million.
Despite a significant increase in net revenue of approximately 30% YoY, from $145.6 million in the same quarter last year, Tilray's results did not meet market expectations. The company's beverage-alcohol net revenue saw a notable rise of 165% to $54.7 million, largely due to its Craft Acquisition brands. However, this was offset by a decrease in beverage-alcohol gross margin, attributed to the lower margins of the newly acquired brands.
The company's cannabis segment reported a 33% increase in net revenue to $63.4 million, reflecting recent acquisitions and growth across various market segments. Cannabis gross profit turned positive at $20.9 million compared to a loss of -$32.8 million in the prior year quarter. Yet, adjusted cannabis gross margin saw a decline, partly due to the termination of a key advisory services agreement.
Tilray's distribution and wellness segments experienced mixed results, with distribution net revenue declining due to regulatory changes and other challenges, while wellness net revenue grew by 12% YoY.
The company's net loss narrowed significantly to -$105.0 million from a loss of -$1.2 billion in the prior year quarter, and adjusted EBITDA decreased to $10.2 million from $13.3 million YoY. Tilray's financial position remains strong, with approximately $226 million in liquidity.
Irwin Simon, Tilray Brands’ Chairman and CEO, highlighted the company's strategic expansions and operational achievements. "We are proud of our position as the #1 Canadian cannabis LP, the European market leader in medical cannabis, the leader in hemp foods, the 5th largest craft brewer in the U.S., and are now aiming to become a top 12 beer and alcohol beverage company in the U.S.," said Simon.
Looking ahead, Tilray has revised its fiscal year 2024 adjusted EBITDA guidance downward to $60 million to $63 million from the previous range of $68 million to $78 million. The company also no longer anticipates generating positive adjusted free cash flow for the full fiscal year due to delays in collecting cash from asset sales.
Investors reacted negatively to the earnings and revenue miss, coupled with the cut in guidance, leading to a sharp decline in Tilray's stock price.