The results were driven by the company’s popular loyalty program.
Canadian Canna Cabana chain owner High Tide Inc. (Nasdaq: HITI) (TSXV: HITI) reported its financial results for the first quarter of fiscal 2024 ending Jan. 31, in which revenue continued to climb despite a sales slowdown in the overall Canadian cannabis industry.
The Calgary-based company announced revenue of $128.1 million, an 8% increase from the same period the previous year. That beat Yahoo’s analyst average expectation by $6.54 million.
Net income for the company was at a break-even point, with fully diluted earnings per share at $0.00, however that was an improvement from a loss in the previous year. High Tide also reported a record income from operations of $2.8 million.
“While there has been industry-wide softening of Canadian cannabis sales in the post-holiday months and having made essentially no acquisitions in over a year, I am proud to report that our company continues to grow organically and has never had a sequential decline in revenue since going public in 2018,” founder and CEO Raj Grover said in a statement.
“Due to our strong cost controls, we have generated significant increases in our adjusted EBITDA margin as shown by achieving a level of 8.1% this quarter versus 4.7% in the first fiscal quarter of 2023. Given our size and scale, we are seeing the positive impact of operating leverage. For instance, while revenue increased by 1% sequentially, we were able to increase adjusted EBITDA by 25%.”
Year-over-year adjusted EBITDA was up 90% to $10.4 million. The company also reported positive free cash flow of $3.6 million, despite a decrease in accounts payable and accrued liabilities.
High Tide’s ELITE loyalty program has grown quickly, with the number of members jumping to about 32,000, showing a 237% rise versus last year.
“Accordingly, we see a tremendous opportunity to continue upgrading many more base members to ELITE,” Grover said. “We have reached over 10% market share across the five provinces where we operate. Our long-term goal is to reach 15% market share while operating approximately 300 retail stores across Canada.”
High Tide opened seven new stores in the first quarter of 2024, which likely helped to increase the membership base of the ELITE program. Looking ahead to the rest of 2024, High Tide plans to continue growing by opening 20 to 30 new stores.
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