LOUISVILLE, Colo. – Charlotte’s Web Holdings Inc., a market leader in full-spectrum hemp extract wellness products, reported financial results for the fourth quarter and year-ended December 31, 2024.
2024 business highlights
- Achieved sequential quarterly revenue growth throughout 2024
- Reduced operating expenses by over $22.4 million while strengthening operational performance
- Successfully launched a new e-commerce platform with significantly enhanced capabilities
- Expanded retail distribution, including 847 Walmart stores and now with a presence on Walmart.com, as well as Chewy.com, America’s largest online pet retailer
- Introduced new product innovations, including functional mushroom gummies and CBD gel caps
- Reduced operating expenses by over $22.4 million while strengthening operational performance
“2024 marked a turning point for Charlotte’s Web operationally as we delivered consecutive quarterly revenue growth, strengthened operations, and positioned the Company for sustained growth in 2025,” said Bill Morachnick, chief executive officer. “With the successful launch of new product innovations, expanded retail partnerships, and transition underway to in-house manufacturing, we have laid the foundation for further strengthening the business in 2025. We’re particularly excited to announce that we will soon be offering our functional mushroom gummies on Amazon.com, representing our first meaningful presence on Amazon and introducing the Charlotte’s Web brand to millions of potential new customers. This not only diversifies our revenue streams but also reflects our commitment to access, including where consumers increasingly purchase health and wellness products. We are committed to delivering shareholder value through disciplined execution and continued expansion, evolving as a broader botanical wellness leader, beyond CBD.”
“Disciplined expense and cash flow management were top priorities throughout 2024,” added Erika Lind, chief financial officer. “Our omnichannel strategy and operational optimization have been instrumental in navigating a complex regulatory environment while improving our cost structure. We executed significant expense reductions, reduced cash burn, and improved efficiencies across the business. The substantial improvement in our fourth quarter Adjusted EBITDA1 performance reflects the effectiveness of these measures, positioning us to continue reducing cash burn as we approach positive cash flow. We anticipate further improvements in 2025.”
2024 business review
Charlotte’s Web made significant strides in 2024, stabilizing its business and advancing strategic initiatives across product innovation, retail expansion, and operational efficiency.
Omnichannel expansion and e-commerce growth
The Company’s new e-commerce platform, launched in mid-2024, improved site performance, enhanced the shopping experience and drove higher customer engagement. Advanced customer tools and marketing automation have increased conversion rates and sales volumes. New retail partnerships were added, including Walmart for topicals and Chewy.com for pet wellness products, further strengthening Charlotte’s Web’s national footprint. The transition toward an omnichannel model allows Charlotte’s Web to leverage direct-to-consumer (DTC), retail, and third-party platforms, streamlining distribution while broadening consumer accessibility.
New products
New product innovations and categories included a successful expansion into minor cannabinoid CBN with the launch of Stay Asleep CBN Gummies, demonstrating strong demand for targeted botanical solutions and reinforcing Charlotte’s Web’s position in sleep wellness. In addition, launched in Q4 2024, Charlotte’s Web expanded into botanical wellness beyond CBD with functional mushroom gummies for focus, stress support, and energy.
Operational efficiencies and cost management
Preparation for in-house manufacturing of gummies for full commercial production progressed in Q4 2024, with production ramp-up expected in 2025, improving margins and enhancing speed-to-market for future innovations. Expense reductions initiated in early 2024 materially lowered operating costs by $22.4 million, with similar spending continuing in 2025. The Company ended 2024 with $22.6 million in cash reserves, and the discipline of stringent expense management supports a strategic roadmap toward positive cash flow.
“With deeper retail penetration, new product categories, and improved operational efficiencies, we enter 2025 with momentum,” added Morachnick. “Charlotte’s Web is positioned to lead the next growth phase in botanical wellness while creating lasting value for shareholders.”
DeFloria milestone
On February 24, 2025, the Company announced that the U.S. Food and Drug Administration (“FDA”) completed its review of the Phase 1 data and Investigational New Drug (“IND”) application submitted by DeFloria, Inc., an entity in which the Company is a stakeholder. The FDA has concluded that DeFloria may now proceed with the Phase 2 clinical trial for its botanical pharmaceutical candidate, AJA001 Oral Solution, a treatment for symptoms of autism spectrum disorder (“ASD”).
DeFloria is a collaboration between Charlotte’s Web, Ajna Biosciences, and British American Tobacco to develop AJA001 as a treatment for irritability associated with autism spectrum disorder. AJA001 employs the Company’s proprietary full-spectrum cannabidiol hemp extract derived from one of its patented cultivars. Charlotte’s Web has rights related to manufacturing for any eventual commercialization of AJA001 as an FDA-regulated botanical drug. Being the manufacturer of this product could represent a substantial long-term revenue opportunity for Charlotte’s Web upon potential FDA approval.
Fourth quarter 2024 financial review
Consolidated net revenue for the fourth quarter ended December 31, 2024, was $12.7 million, compared to $15.9 million in the fourth quarter of 2023. Revenue increased modestly on a quarter-over-quarter basis versus Q3 2024 revenue of $12.6 million.
In the fourth quarter, some retailers were negatively impacted by state regulations restricting the sale of certain CBD products, despite meeting federal requirements. However, e-commerce revenue increased quarter-over-quarter following the launch of the Company’s new e-commerce platform.
Gross Profit in Q4 2024 was $5.1 million, or 40.2% of revenue, compared to Gross Profit of $8.9 million, or 56.0% of revenue, in Q4 2023. The reduction in gross margin reflected holiday promotional investments, temporary shipping inefficiencies, and reduced fixed cost absorption on lower-than-expected revenue. The Company models gross margin to return above 50% in 2025.
Total selling, general, and administrative (“SG&A”) expenses in the quarter were $10.6 million, a 43% improvement from $18.6 million in Q4 2023. Stringent expense controls were implemented during the year to better align with current revenue levels.
Net loss for the fourth quarter of 2024 was $3.4 million, or ($0.02) per share basic and diluted, compared to a net loss of $8.5 million, or ($0.06) per share basic and diluted, for the fourth quarter of 2023.
Excluding depreciation, amortization and other non-cash items, Charlotte’s Web reported positive Adjusted EBITDA1 for the fourth quarter of 2024 of $0.3 million, a $6.8 million improvement compared to negative Adjusted EBITDA of $6.5 million in the fourth quarter of 2023.
Fiscal year 2024 financial review
On a year-over-year basis, consolidated net revenue for the twelve months ended December 31, 2024, was $49.7 million, a decrease of 21.4% from $63.2 million in 2023. Revenue was negatively impacted by inflationary impacts on consumer spending and reduced retailer shelf allocations to the CBD category. The Company adopted a new e-commerce platform mid-year that has resulted in improving marketing, customer management, and sales volumes.
Gross profit for the year ended December 31, 2024, was $21.3 million, compared to $35.6 million for the year ended December 31, 2023. Gross profit was negatively impacted by a $4.1 million increase in inventory provision for 2024 due to the revaluation of aged hemp based on current market conditions. The increase was partially offset by lower inventory expenses and other variable costs associated with lower revenue in 2024. Gross profit before inventory provision was $25.4 million, or 51.1%, and $36.6 million, or 58.0%, in 2024 and 2023, respectively.
Total SG&A expense for 2024 was $53.3 million, compared to $75.6 million in the prior year. The $22.4 million or 29.6% decrease resulted from multiple actions taken in 2024 to reduce operating expenses and better align SG&A against the lower revenue levels, including workforce and insurance program adjustments, contract reviews and negotiations, and software optimizations. Additionally, in 2024, the Company amended its MLB Promotional Rights Agreement, resulting in a decrease in amortization and media expense related to MLB assets of approximately $4.9 million compared to 2023.
An operating loss of $32 million in 2024 improved 21.2% from an operating loss of $40.6 million in 2023. Net loss for 2024 was $29.8 million, or $(0.19) per share, basic and diluted, compared to a net loss of $23.8 million, or $(0.16) per share, basic and diluted, in 2023. The lower net loss in 2023 was due to a combined net gain of $20.0 million in that year in the fair value of the Company’s debt derivative and from its investment in DeFloria.
Excluding depreciation, amortization, and interest, the EBITDA1 loss for 2024 was $17.6 million, as compared to an EBITDA loss of $6.3 million for 2023. 2024 included a higher inventory provision than 2023, which included the combined net gain of $20.0 million in fair value of the Company’s debt derivative and from its investment in DeFloria. Excluding these items, the Adjusted EBITDA1 loss was $12.6 million for 2024, as compared to the Adjusted EBITDA loss of $22.7 million for 2023.
Balance sheet and cash flow
Net cash used for operations in the fourth quarter of 2024 was $1.8 million. Net cash used for operations in the year ended December 31, 2024, was $21.2 million, including cash paid to MLB for license and media rights assets of $5 million. Capital expenditures of $3.9 million were primarily used for the in-house production of topical and gummy projects.
The Company’s cash and working capital as of December 31, 2024, were $22.6 million and $31.1 million, respectively, compared to $47.8 million and $54.5 million as of December 31, 2023, respectively.
“With reduced cash burn, having cash reserves exceeding $22 million provides the runway for 2025 growth and beyond,” said Mrs. Lind. “In-house production will increase in 2025, and continued expense discipline is key to stabilizing our financial position.”
About Charlotte’s Web Holdings Inc.
Charlotte’s Web Holdings Inc., a Certified B Corporation headquartered in Louisville, Colorado, produces hemp extract wellness products that include Charlotte’s Web whole-plant full-spectrum CBD extracts as well as broad-spectrum CBD certified NSF for Sport. Charlotte’s Web branded premium quality full-spectrum CBD extract products start with proprietary hemp genetics that are North American farm-grown using organic and regenerative cultivation practices. The Company’s hemp extracts have naturally occurring botanical compounds including CBD, CBN, CBC, CBG, terpenes, flavonoids, and other beneficial compounds. Charlotte’s Web product categories include CBD oil tinctures (liquid products), CBD gummies (sleep, calming, exercise recovery, immunity), CBN gummies, functional mushroom gummies, CBD capsules, CBD topical creams, and lotions, as well as CBD pet products for dogs. Through its substantially vertically integrated business model, Charlotte’s Web maintains control over product quality and consistency with analytic testing from soil to shelf for quality assurance. Charlotte’s Web products are distributed to retailers and healthcare practitioners throughout the U.S.A. and online.
Shares of Charlotte’s Web trade on the Toronto Stock Exchange (TSX) under the symbol CWEB and are quoted in U.S. Dollars in the United States on the OTCQX under the symbol CWBHF.
Charlotte’s Web is the official CBD of Major League Baseball.
