Decibel Cannabis Company Inc. Earnings Report for the first quarter of 2024

TDR’s Three Key Takeaways from Decibel Cannabis Company Inc.’s Earnings Report for the first quarter of 2024:

1. Decibel reports Q1 2024 net revenue of $21.0 million, down 16% from Q1 2023.
2. Adjusted EBITDA of $3.6 million, down 45% from Q1 2023.
3. Gross margin before fair value adjustments was 48%, compared to 51% in Q1 2023.

Decibel Cannabis Company Inc. (OTCQB: DBCCF, DB), a Calgary, Canada-based cannabis extract products company, announced unaudited interim financial results for the first quarter of 2024. The company reported net revenue of $21.0 million, down 16% from $24.9 million in the first quarter of 2023. Gross margin before fair value adjustments was 48% compared to 51% in the same period last year.

Decibel focuses on innovation and quality, with brands such as General Admission, Qwest and Vox in its portfolio. The company has facilities in Calgary, Alberta, Creston, British Columbia, and Battleford, Saskatchewan, as it prepares for growth and market expansion.

Adjusted EBITDA showed a decline to $3.6 million from $6.6 million in the first quarter of 2023, primarily due to a decline in Canadian recreational and net international sales. Net loss and total loss for the first quarter of 2024 were $3.3 million, compared to a net loss of $0.6 million for the first quarter of 2023. Adjusted net loss was $3.5 million, impacted by the loss the value of Prairie Records’ assets held for sale, which were subsequently sold on $3.3 million. April 10, 2024

Despite the decline in revenue, Decibel maintained its domestic market share at 6.0%, making it the fourth largest licensed producer in Canada. CEO Benjamin Sze commented: “Despite declining revenues, we remain one of the top brands in Canada in terms of market share. By focusing on our strategy, we expect a stronger second quarter and, more importantly, a continued path to sustainable growth and profitability.

Operating cash flows were positive and amounted to PLN 905 thousand. USD, although free cash flow fell to 375 thousand. USD from USD 1.7 million in Q1 2023. The company ended the quarter with USD 2.6 million in cash, compared to USD 3.9 million at the end of Q1 2023.

Benjamin Sze, CEO, admitted that the competitive market and changes in consumer preferences are affecting the pre-roll and vape market. “I am currently undergoing a comprehensive business review and look forward to sharing the initiatives undertaken before July 15,” Sze added.

Decibel has responded to market changes with the launch of 510 large-format cartridges and disposables, expecting these products to drive revenue growth in the second quarter of 2024. The company is also seeking a new distribution partner to export to Israel, with the goal of stabilizing and increase in international sales.

CFO Janis Risbin said: “Despite market challenges, our resilience and adaptability have allowed us to maintain significant market position. We remain focused on strengthening our financial fundamentals and investing opportunistically for growth in 2024 and beyond.” Decibel focuses on innovation and quality, and its portfolio includes brands such as General Admission, Qwest and Vox. The company has facilities in Calgary, Alberta, Creston, British Columbia, and Battleford, Saskatchewan, as it prepares for continued growth and market expansion. Want to stay up to date with everything related to psychedelia, cannabis, artificial intelligence and cryptocurrencies? Sign up for our Daily Baked in newsletter!