High Tide Inc. Q1 FY2025 earnings call

Canada Performance - Remain the highest revenue-generating cannabis company in Canada with an annual revenue run rate of ~$570 million. - Same-store sales in Q1 were up 5% year-over-year, with a 142% increase from October 2021 to December 2024. - Cabana Club has over 1.76 million members in Canada, with a long-term target to reach 2.5 million. - ELITE signups exceeded 81,000, up 153% year-over-year. ### Germany Strategy - Committed to entering the German medical cannabis market but changed plans regarding the Purecan deal due to election and telemedicine concerns. - Exploring other partners to enter the German medical cannabis market. ### Store Expansion - Plan to open 20-30 stores in 2025, with three already opened and over a dozen under development. - New stores initially drag on results but are improving over time. ### White Label Strategy - Queen of Bud brand launched, with sales exceeding $0.5 million, and demand high leading to increased order sizes for future batches.

The brick-and-mortar segment was the main driver, with revenue up 17% year-over-year and representing 95% of consolidated revenue. Same-store sales in Q1 were up 5% year-over-year, with a 142% increase from October 2021 to December 2024. The e-commerce segment saw Cabanalytics Business Data and Insights Platform advertising revenue and other revenue reach a record $11.3 million in Q1, up 49% year-over-year. Consolidated gross margins were 25% in Q1, down from prior periods due to illicit market impact and the launch of the Cabana Club loyalty program.

Sales Growth - Revenue for Q1 was $142.5 million, up 11% year-over-year. ### Store Expansion - Target to open 20-30 locations in 2025. ### Cabana Club Members - Increased long-term target for Cabana Club members in Canada to 2.5 million. ### Free Cash Flow - Expect to be free cash flow positive for the fiscal year.

Illicit Market Impact - Resurgence of the illicit market affecting brick-and-mortar business in certain municipalities like Regina, Toronto, and Ottawa. ### Tariffs - 1% of business may be impacted, but minimal as most is domestically sourced. ### Regulatory Uncertainty - Uncertainty in Germany regarding telemedicine and recreational cannabis regulations impacting market entry plans.

Q: Color on Germany changes and telemedicine regulations A: Raj Grover stated that the CDU party in Germany was not happy with the telemedicine platform, which impacted the Purecan deal. High Tide remains committed to entering the German medical cannabis market and is exploring other partners.

Q: Canada consumer behavior and membership estimate A: Raj Grover mentioned that same-store sales growth is due to a strong business model, and High Tide aims for a 15% market share in Canada. The Cabana Club membership target of 2.5 million is achievable with the current growth rate, as the club has grown by 480,000 members year-over-year.

Q: Germany timeline and tariff impact on accessories A: Raj Grover said the timeline for entering the German market is a couple of months. There is minimal tariff impact on accessories as 99% of them are domestically sourced.

Q: E-commerce segment impact and strategy A: Raj Grover noted that the e-commerce segment has short-term headwinds but has strategic value. ELITE signups are up, seasonality is a factor, but long-term opportunities exist with the unified ecosystem and three-tier pricing strategy.