# Tilray Brands Inc Earnings Call Transcript Q2 2025
## Key Financial Highlights
- **Net Revenue**: $211 million, a 9% year-over-year growth.
- **Gross Profit**: Increased by 29% to $61.2 million, with a gross margin improvement of 500 basis points to 29%.
- **Adjusted Net Loss**: $2.2 million, an improvement from prior-year losses due to operational efficiencies.
- **Adjusted EBITDA**: $9 million compared to $10.1 million in the previous quarter.
- **Cash Flow Used in Operations**: Increased to $40.7 million.
## Segment Performance
### Beverage Segment
- **Net Revenue**: $63.1 million, a 36% year-over-year increase.
- Achieved through strategic acquisitions and brand expansion efforts.
### Cannabis Segment
- **Net Revenue**: $25.8 million, reflecting consistent performance despite challenges in regulatory clarity.
### International Cannabis Growth
- Earnings highlighted the success of international operations with revenue growth exceeding expectations.
## Negative Performance Highlights
1. **Cannabis Beverage Market Challenges**
- Limited market penetration due to restricted sales channels (only available in cannabis dispensaries).
- Potential opportunity if expanded to include beer stores or on-tap sales, as this could significantly enlarge the market.
2. **Storefront Limitations**
- Cannabinoid products are currently restricted to cannabis retail locations, constraining overall market size compared to other product categories.
## Financial Guidance
- Provide guidance for Q3 2025:
- **Net Revenue**: Expected between $189 million and $194 million.
- **Gross Profit Margin**: Targeted at approximately 27%.
## Earnings Per Share (EPS)
- *Noticeable improvements* in EPS due to enhanced operational efficiency, though full-year implications remain under evaluation.
## Key Factors Impacting Performance
- **Regulatory Clarity**: Ongoing discussions with Canadian provinces on market expansion.
- **Distribution Network**: Leverage existing network for potential growth opportunities during peak consumption periods.
## Q&A Session Highlights
1. **Cannabis Beverage Market Penetration**
- Key factors: Brand strength, distribution network, and marketing efforts.
2. **Opportunities in Regulatory Expansion**
- Potential market enlargement if permitted to sell in additional retail channels like beer stores or on-tap stands.
3. **Market Size Constraint**
- Current sales are modest due to limited access, but growth is expected as regulations loosen.
## Closing Remarks
- Strong execution and operational improvements have been instrumental in recent performance.
- Ongoing focus on strategic initiatives for future growth.
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