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It is still crucial that one of the major cannabis producing companies publishes its report on the results. Given the nascent nature of the sector, the performance of these companies gives us important clues about market developments.
Aurora Cannabis (TSX: ACB) (NYSE: ACB) is the latest company in the financial pot industry to report its financial results.
Let's see how Aurora performed.
Before a fall …
As the old saying goes, pride precedes a fall. That may be what happened to Aurora Cannabis in the last quarter.
Just a month ago, the Edmonton – based marijuana company predicted that it would generate revenues in the range of $ 100 million to $ 107 million. The consensus analyst also estimates that Aurora's revenues will exceed $ 100 million, bringing them to approximately $ 108 million for the quarter.
However, the company did not keep its promises and did not keep analysts' estimates. Aurora's "only" revenues reached $ 98.9 million. As a result, the Company's share price fell sharply during the trading session after the business hours following the publication of its results.
While it's important to hold Aurora accountable for its failure, it's also essential to focus on an overview. All in all, the marijuana company's revenues were not bad at all. After all, the $ 98.9 million represented an increase of 415% over the previous year and, most importantly, a sequential increase of 52%.
Note that Aurora's biggest rival on the Canadian market – Cover growth – failure to generate a sequential increase in revenue during its last quarter.
As the Canadian market narrows, cannabis companies are finding it increasingly difficult to acquire and retain a significant share of the market. Aurora, however, has managed to generate solid organic growth in this competitive environment.
In addition, the medical sector of society seems to be in full swing. The average net sales price of Aurora's leisure products declined by approximately 6%, but its average retail price for medical products remained flat. There will inevitably be an overabundance of supply in the leisure market, which will lead to lower prices and margins.
Fortunately, Canadian cannabis companies are eagerly awaiting the launch of the derivatives market. So while the lion's share of Aurora's revenue comes from its leisure segment, it should not be a cause for concern.
Finally, the company continues to increase its production capacity. During the quarter, Aurora added several new growing facilities, resulting in a sequential 86% increase in production volume.
The bottom line
Aurora has more than one trick in her bag. The company recently completed an acquisition that will enhance its position in the lucrative CBD market. All these developments should help the company maintain a strong growth of its turnover.
Finally, I still believe that Aurora will eventually find a partner with considerable financial means to further improve its prospects. All of these factors make Aurora one of the best games in the cannabis market, in my opinion.
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