• Revenue: $142.5 million for Q1, up 11% year-over-year and 3% sequentially.
• Annual Revenue Run Rate: Approximately $570 million.
• Brick-and-Mortar Revenue Growth: Up 17% year-over-year in Q1.
• Same Store Sales Growth: Up 5% year-over-year in Q1; 142% increase from October 2021 to December 2024.
• Gross Margin: 25% in Q1, down from 28% in the previous year.
• Adjusted EBITDA: $7.1 million, down 32% year-over-year and 14% sequentially.
• Free Cash Flow: Negative $1.9 million in Q1; trailing free cash flow of $16.5 million.
• Total Debt: $26.4 million, 0.8 times trailing adjusted EBITDA.
• Store Locations: 194 stores operating, with plans to open 20 to 30 more in 2025.
• Cabana Club Membership: Over 1.76 million members in Canada, with a target of 2.5 million.
• Elite Membership Growth: 81,000 members, up 153% year-over-year.
• Advertising and Other Revenue: $11.3 million, up 49% year-over-year.

• Warning! GuruFocus has detected 4 Warning Signs with HITI.

Release Date: March 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• High Tide Inc (NASDAQ:HITI) achieved record revenue for Q1 2025, reaching $142.5 million, up 11% year-over-year.
• The company remains the highest revenue-generating cannabis company in Canada with an annual revenue run rate of approximately $570 million.
• Same store sales increased by 5% year-over-year in Q1, marking the fastest pace of growth in four quarters.
• The Cabana Club loyalty program has expanded significantly, surpassing 1.76 million members in Canada, with a long-term target of 2.5 million members.
• High Tide Inc (NASDAQ:HITI) plans to expand its retail footprint by opening 20 to 30 new stores in Canada in 2025, with a focus on organic growth.

Negative Points

• Adjusted EBITDA was down 32% year-over-year and 14% sequentially due to initiatives taken to grow the business.
• The resurgence of the illicit market continues to impact the brick-and-mortar business in certain municipalities.
• The e-commerce segment showed a decline in revenue year-on-year, partly due to the launch of the Cabana Club loyalty program.
• New stores initially act as a drag on consolidated results due to upfront costs and longer ramp-up times.
• Free cash flow was negative $1.9 million in Q1, driven by unusually high working capital investments.

Q & A Highlights

Q: Can you provide more details on the changes in Germany's cannabis market and your strategy there? A: Raj Grover, CEO: We remain committed to entering the German medical cannabis market. The recent election in Germany brought the CDU party to power, which has raised concerns about telemedicine platforms. This has impacted our plans with Purecan, leading us to reconsider the structure of our partnership. We are exploring other opportunities and remain focused on entering the market, regardless of the partner. We are also prepared for potential recreational market opportunities in Germany.

Q: What are the dynamics in Canada regarding consumer preferences and market share? A: Raj Grover, CEO: Our long-term goal is to achieve a 15% market share in Canada. We have seen a 5% increase in same-store sales this quarter, and since launching our discount club model in 2021, we've grown same-store sales by 142%. Despite the resurgence of the illicit market, we believe cannabis is recession-resistant, and we are not significantly impacted by inflation or tariffs.

Q: What is the timeline for entering the German market, and are you considering other partners besides Purecan? A: Raj Grover, CEO: We are actively exploring partnerships beyond Purecan and are in discussions with other groups. We aim to enter the German market within a couple of months, ensuring we select the right partner to leverage our strong network and relationships in Canada.

Q: How do tariffs impact your business, particularly regarding accessories sourced from China? A: Raj Grover, CEO: Tariffs have minimal impact on our business. Only 1% of our business involves cross-border transactions, and we procure accessories through internal brokers, insulating us from tariff effects. Our CBD business is domestically sourced, and we are well-protected from tariff impacts.

Q: What factors contributed to the acceleration of retail sales growth in Canada, and how has the HST break impacted cannabis sales? A: Raj Grover, CEO: The acceleration in sales growth is likely due to the leveling off of negative growth trends and the expansion of legal stores. While the HST break may have contributed, we believe the market's natural growth and cannabis's recession-resistant nature are more significant factors. We continue to see positive momentum in our current quarter.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.