Reporting its Q2 results for fiscal 2025 on Friday, Canadian cannabis operator Canopy Growth (NASDAQ:CGC) projected positive adjusted EBITDA at the company level in the coming quarters as its cost-saving measures offset declining revenue.

The Smiths Falls, Canada-based firm reported C$63.0M in net revenue for Q2, implying a ~9% decline compared to a ~13% YoY drop in Q1 FY25.

The revenue drop was led by declining domestic cannabis sales, which reached C$37M, falling ~8% YoY as sales from the company’s adult-use cannabis contracted 24% YoY, hurt by supply constraints for Wana Edibles.

However, Canopy’s (NASDAQ:CGC) international and Storz & Bickel segments outperformed, adding C$10M and C$16M to the topline with ~12% YoY and ~32% YoY growth, respectively.

Meanwhile, the company narrowed its adjusted EBITDA loss by ~54% YoY to C$6M, mainly due to its cost savings program, which, along with a transition to higher-margin medical cannabis, helped it improve gross margin by 100 basis points to 35%.

“With expected improvement in topline growth in the second half of the fiscal year and continued cost discipline, we believe we remain on a path to achieve positive adjusted EBITDA at the consolidated level in the coming quarters,” CEO David Klein remarked.

Having recently completed the acquisition of Wana Brands, the company said its Canopy USA unit continues to project the closure of its Acreage Holdings acquisition during the first half of next year.

“We remain highly optimistic about the momentum building within Canopy USA, as this strategy was uniquely designed to succeed independent of the need for federal legalization,” Klein added.