Cannabis company SNDL Inc. (NASDAQ: SNDL) saw its stock soar 5.09% on November 5, 2024, following the release of its third-quarter financial results. Despite a slight year-over-year decline in revenue, the company's efforts to improve profitability and cash flow fueled investor enthusiasm.

For the third quarter of 2024, SNDL reported revenue of CA$236.9 million, down 0.3% from CA$237.6 million in the same period last year. This decrease was attributed to market softness in the liquor retail segment, which offset strong growth in the cannabis retail and operations segments.

However, the company achieved a significant milestone with a record gross margin of 26.6% in Q3 2024, up from 20.5% in the prior-year quarter. This impressive margin improvement was driven by SNDL's initiatives focusing on data licensing programs, mix optimization, and supply chain productivity.

While SNDL reported an operating loss of CA$18.5 million, this figure was impacted by a CA$13.4 million negative valuation adjustment related to its equity-accounted investees (SunStream portfolio) and CA$1.9 million in restructuring charges. In contrast, the year-ago quarter's loss included a favorable valuation adjustment.

Notably, SNDL generated positive cash flow of CA$80 million in Q3 2024, compared to CA$16.5 million in Q3 2023, driven by profitability improvements and the repayment of loan investments. Year-to-date cash flow stood at a positive CA$67.9 million. Additionally, the company reported positive free cash flow of CA$9.2 million in the quarter and is on track to deliver positive free cash flow for the full year 2024.