Canopy Growth Corp. Q1 FY2025 earnings call

• Drive to profitability: First time all business units delivered profitable adjusted EBITDA. Cost of goods sold down 31%, SG&A down 24% y-o-y. Focus on profitable revenue, directing products to higher-margin channels. • Commercial business actions: In Canada, invested in production capacity, secured partnerships, new products launched. In international markets, Storz & Bickel saw growth in Germany, actions underway for EU-based supply to augment Canadian-grown flower. • Canopy USA advancements: Closed acquisitions of Jetty and two Wana entities, with full Wana acquisition expected by end of summer. Wana entered new states, Jetty expanded vape offerings, Acreage focused on high potential states in US.

In Q1 fiscal 2025, Canopy achieved all business units delivering profitable quarterly adjusted EBITDA. Canada: Q1 net revenue $38M, down 6% y-o-y. Canada medical up 20% y-o-y for sixth consecutive quarter of growth. Canada gross profit $12M, gross margin 32%, cash gross margin 45%. International markets cannabis: Net revenue $10M, down 1% y-o-y, with strong growth in Europe offset by Australia decline. Gross margin 36% y-o-y. Storz & Bickel: Revenue $18M, up 2% y-o-y, gross margin 40% y-o-y. Canopy USA: Acquisitions ongoing, with Wana, Jetty, and Acreage progressing, though financials deconsolidated for now.

• Expect modest improvement in Canada revenue in Q2 with stronger growth in Q3/Q4. • Anticipate stronger year-over-year growth in second half of fiscal 2025 driven by increased supply, new products, and less impact from divested businesses. • Remain on path to achieve positive adjusted EBITDA at consolidated level via sales growth, margin improvement, and G&A savings.

• Regulatory changes in markets like Australia impacted Storz & Bickel shipments. • Supply chain constraints in Canada affecting adult-use revenue initially. • Regulatory approvals needed for full closure of Canopy USA acquisitions, which could delay financial consolidation and growth plans.

Q: Aaron Grey asked about timing of Canopy USA acquisitions, especially Acreage, and financial disclosure.

A: Judy Hong said Acreage acquisition is state-by-state regulatory approval, expected spring next calendar year. David Klein added gating item is state approvals, and financial disclosure of Canopy USA will come after full acquisition closes.

Q: Frederico Gomes asked about Canadian Medical Cannabis growth and upside.

A: David Klein said growth due to strong medical team execution, expecting continuation. Judy Hong noted gaining market share despite stagnant overall market by offering best-in-class service and broad product assortment.

Q: Michael Lavery asked about EU supply dynamics and Canada supply.

A: David Klein said in Canada, supply constraints from third-party suppliers were addressed, making supply chain robust. In Europe, product available from end market producers, and using EU suppliers would free up Canadian supply for higher margins.