CALGARY, AB – High Tide Inc. released its financial results for the first fiscal quarter of 2025 ended January 31, 2025.
Financial highlights
Revenue increased to $142.5 million for the three months ended January 31, 2025, an all-time record, compared to $128.1 million during the same period last year, representing an increase of 11% year over year and 3% sequentially.
Gross profit was $35.4 million for the three months ended January 31, 2025, which was relatively consistent year over year and sequentially.
Gross profit margin was 25% for the three months ended January 31, 2025, which compared to 28% year over year and 26% sequentially. The margins in the Company’s core bricks-and-mortar segment, which generates 95% of its revenue, remained consistent. During the first fiscal quarter, the Company took its Cabana Club loyalty program global across its ancillary e-commerce platforms. As part of this strategy, the Company proactively lowered its gross margins in its E-commerce segment, which it believes will be offset by increased volumes in the quarters to come.
The Company generated a net loss of $2.7 million during the three months ended January 31, 2025, which compared to break even in the prior year and a net loss of $4.8 million sequentially, where adjusted net income was $0.2 million excluding non-cash impairment charges.
Adjusted EBITDA was $7.1 million in the three months ended January 31, 2025, representing the 20th consecutive positive quarter, and compared to $10.4 million during the previous year, representing a decline of 32% year over year and 14% sequentially. This was due to the Company accelerating the pace of its organic store openings during 2024, and continuing into 2025. Given the mature and competitive cannabis retail landscape, these new locations experience a longer initial ramp up period, thus impacting EBITDA in the short-term. Additionally, the Company’s e-commerce segment was negatively impacted as expected given its new disruptive international loyalty strategy.
The Company generated $(1.9) million of free cash flow in the first fiscal quarter primarily due to heightened investments in working capital which represented the largest outflow in the past seven quarters. As per the Company’s prior commentary, free cash flow generation can vary significantly in any given quarter, however, the Company continues to anticipate being free cash flow positive for the fiscal year. The Company has generated $16.5 million of positive free cash flow in the trailing four quarters.
General and administration expenses represented 4.6% of revenue in the three months ended January 31, 2025, which remained relatively consistent when compared to the previous year, and were 4.2% sequentially.
Salaries, wages, and benefits represented 12.3% of revenue in the three months ended January 31, 2025, which remained relatively consistent when compared to the previous year and sequentially.
Cabanalytics Business Data and Insights platform, advertising revenue, and other revenue, which includes management fees, interest income, and rental income, was $11.3 million for the three months ended January 31, 2025—an all time-record—compared to $7.6 million in the same period last year, representing an increase of 49% year over year and 4% sequentially.
Cash and cash equivalents in the three months ended January 31, 2025 totalled $33.3 million, compared to $28.7 million a year ago, representing an increase of 16% year over year and a decrease of 29% sequentially. The Company notes that during the quarter it issued $5.0 million of secured debentures and paid down $13.0 million of notes payable which matured on December 31, 2024.
“I am pleased to report yet another quarter featuring record revenue. This continued momentum is supported by our core Canadian bricks-and-mortar business which is generating double digit growth, and continues to get stronger every day. This is demonstrated by the fact that Q1 same store sales experienced their fastest pace of growth in four quarters. At the same time, Canadian Cabana Club membership has exceeded 1.76 million, with ELITE memberships also growing at their fastest rate since the club’s inception,” said Raj Grover, founder and chief executive officer.
“I also want to address the lower EBITDA number head on. This was due to a purposeful shift in our strategy to win market share in our ancillary business lines, which will provide long-term benefits by expanding our Cabana Club globally and diversifying our customer base. International opportunities in the medical cannabis space are very exciting and can contribute meaningfully to our bottom line acting as a hedge against short to medium-term volatility in our e-commerce platforms. We look forward to leveraging our $1.5 billion procurement expertise with Canadian licensed producers to fulfill demand in the growing German medical cannabis market, as well as other international markets in due course. As excited as I am about the opportunities outside of Canada, our team will keep working on all fronts in 2025–including growing our core bricks-and-mortar business,” added Grover.
Operational highlights
- On November 13, 2024, the Company announced the closing of the final tranche of its previously disclosed $15,000 subordinated debt facility
- On December 31, 2024, the Company repaid the $13,000 principal balance of the notes payable to Opaskwayak Cree Nation
- The Company opened four new Canna Cabana locations in Ontario—Richmond, Pembroke, Scarborough and Hamilton—and one new Canna Cabana location in Hinton, Alberta
- The Company expanded the first of its kind innovative Cabana Club membership program across the entirety of the United States (U.S.) through cabanaclubusa.com, as well as the European Union (E.U.) and the United Kingdom (U.K.) through cabanaclub.eu, with total Cabana Club membership now reaching over 5.66 million
Subsequent events
- The Company opened three new Canna Cabana locations in Ontario—located in Hamilton, Cambridge and Collingwood—bringing High Tide’s Canna Cabana branded retail store count to 194 in Canada, and 79 in the province of Ontario.
- The Company was recognized as a Top 50 company by the TSX Venture Exchange for the second consecutive year
- During ongoing due diligence, the Company paused its previously announced acquisition of Purecan GmbH in order to explore alternative arrangements to enter the German medical cannabis market
Outlook
High Tide’s wholly owned subsidiary, Canna Cabana, is the second-largest cannabis retail brand globally with 194 current operating locations. The Company’s objective remains to add another 20-30 locations during calendar 2025, while generating positive free cash flow, as was the case in the previous year. The Company reiterates its long-term goal to reach 300 locations across Canada.
The Company’s Cabana Club loyalty program continues to expand at a rapid pace across Canada, currently exceeding 1.76 million members, which is up 33% over the past year. Given this trajectory, the Company is raising its long-term target to exceed 2.5 million members in Canada, up from the Company’s previous target of 2 million. ELITE, the paid membership tier, continues to break quarterly growth records and now exceeds 81,000 members with additional members being onboarded daily. ELITE members tend to shop more frequently and in larger quantities than base tier members.
Following the successful launch of its innovative discount club model in its core business of bricks-and-mortar cannabis stores in Canada, in late 2024, the Company expanded the Cabana Club across all its global e-commerce businesses, offering disruptive three-tier pricing. The Company is encouraged by the initial trajectory of members signing up to its loyalty plan—and maintains its expectation that this initiative will be revenue neutral approximately six months from launch and EBITDA neutral approximately 12 months from launch. The Company is pleased to report that 4,500 members in the U.S. and Europe have signed up to ELITE. With 3.9 million total Cabana Club members in U.S. and Europe, the community has grown to a global base of 5.66 million today.
On January 13, 2025, the company announced its intention to enter into the German medical cannabis market by acquiring a 51% interest in Purecan GmbH for approximately €4.8 Million. During ongoing due diligence, the Company reassessed the optimal structure for this transaction and is now exploring alternative arrangements to allow High Tide to maintain its planned commercial exposure into the German market. Given that approximately half of all German medical cannabis imports come from Canada, the Company continues to be committed to the German medical cannabis market and is exploring both alternative structures with Purecan GmbH and other opportunities for entry into Germany.
As expressed by the company previously, the quantum of free cash flow generated can vary significantly in any given quarter. In the first fiscal quarter, changes in non-cash working capital represented a use of cash of $4.0 million, which was the highest level in the past seven quarters and resulted in negative free cash flow in the quarter. The company notes that over the past four quarters, it has generated $16.5 million in free cash flow, and it expects to remain free cash flow positive for the fiscal year.
The company’s balance sheet remains healthy with total debt of $26.4 million as of today, representing just 0.8x Adjusted EBITDA generated during the past 12 months, and with no maturities for over two years. As a result, the company believes it can continue to fund future store growth with cash generated from existing locations.
ATM program quarterly update
Pursuant to the company’s ATM Program that allows the company to issue up to $30 million (or the equivalent in U.S. dollars) of Common Shares from the treasury to the public from time to time, at the Company’s discretion and subject to regulatory requirements, as required pursuant to National Instrument 44-102 – Shelf Distributions and the policies of the TSXV, the Company announces that, during the three months ended January 31, 2025, the Company issued an aggregate of 11,600 Common Shares over the Nasdaq or TSXV, for aggregate gross proceeds of $52.
Pursuant to an Equity Distribution Agreement cash commission of $1 on the aggregate gross proceeds raised was paid to the Agents in connection with their services under the Equity Distribution Agreement during three months ended January 31, 2025.
The company intends to use the net proceeds of the ATM Program at the discretion of the Company, to fund strategic initiatives it is currently developing, to support the growth and development of the Company’s existing operations, funding future acquisitions as well as working capital and general corporate purposes.
Common Shares issued pursuant to the ATM Program are issued pursuant to a prospectus supplement dated August 31, 2023 (the “Canadian Prospectus Supplement”) to the Company’s final base shelf prospectus dated August 3, 2023, filed with the securities commissions or similar regulatory authorities in each of the provinces and territories of Canada and pursuant to a prospectus supplement dated August 31, 2023, to the company’s U.S. base prospectus dated August 3, 2023, included in its registration statement on Form F-10 and filed with the U.S. Securities and Exchange Commission (SEC).
The ATM Program is effective until the earlier of (i) the date that all Common Shares available for issue under the ATM Program have been sold, (ii) the date the Canadian Prospectus Supplement in respect of the ATM Program or Canadian Shelf Prospectus is withdrawn and (iii) the date that the ATM Program is terminated by the Company or Agents.
About High Tide
High Tide Inc. is a leading community-grown, retail-forward cannabis enterprise engineered to unleash the full value of the world’s most powerful plant. Its wholly owned subsidiary, Canna Cabana, is the second-largest cannabis retail brand globally. High Tide (HITI) is built around the cannabis consumer, with wholly-diversified and fully-integrated operations across all components of cannabis.
