Canopy Growth Q2 FY2027 Earnings Results: Revenue Jumps 22%, but Margins Shrink

Burn After Reading The 30-second intel for operators and investors ⏱ 0:30

Canopy Growth's Q2 FY2027 net revenue rises 22% to C$81.4 million, led by a 141% jump in international cannabis sales to C$12.3 million, but gross margin falls to 29% from 33% and adjusted EBITDA stays negative at C$2.9 million.

• Operators: International medical demand, led by Germany and Poland, is driving growth, while reduced Veterans Affairs reimbursement rates squeeze Canadian medical margins. EU-GMP certification at Smiths Falls supports export supply.
• Investors: Sales growth is not yet reaching the bottom line: adjusted EBITDA is still negative, free cash outflow is C$15.5 million, and the net loss widened on C$35.8 million in Canopy USA-related fair-value charges.
• Do now: Review how much of your revenue depends on reimbursement-based programs, and check whether your medical product line meets the certification standards needed for European export markets.

Short on time? You’re done. Want the numbers?Keep reading ↓

Canopy Growth reported C$81.4 million in quarterly revenue, supported by a 141% surge in international cannabis sales, while gross margins declined and the company remained unprofitable on an adjusted EBITDA basis.

Canopy Growth Corporation (TSX: WEED; Nasdaq: CGC) reported net revenue of C$81.4 million for its second quarter of fiscal 2027, ended September 30, 2026, representing a 22% increase year-over-year.

Cannabis net revenue rose 30% to C$66.2 million, driven by strong international medical cannabis sales and growth in Canada’s medical and adult-use markets.

However, the company’s gross margin contracted to 29% from 33%, while its adjusted EBITDA remained negative at C$2.9 million.

Free cash outflow totaled C$15.5 million, down from C$19.2 million a year earlier, but it shows the company continues to burn cash despite expanding sales.

International Cannabis Revenue Surges 141%

International cannabis revenue reached C$12.3 million, up from C$5.1 million in the prior-year quarter.

The increase was primarily driven by medical cannabis sales in Germany and Poland.

“We have made tremendous progress on our international strategy. Our international business delivered 141% net revenue growth in the second quarter of fiscal year 2027 driven by strong medical cannabis sales in Germany and Poland,” said CEO Luc Mongeau.

Canopy also entered the U.K. market, expanded its product portfolio in Australia and obtained EU-GMP certification for its Smiths Falls facility, strengthening its international supply chain.

In Canada, medical cannabis revenue increased 18% to C$25.8 million, while adult-use cannabis revenue rose 17% to C$28.1 million.

Storz & Bickel, the company’s vaporizer business, reported revenue of C$15.1 million, down 4% year-over-year, reflecting weaker consumer spending in certain markets.

Gross Margins Contract Despite Higher Sales

Canopy’s consolidated gross margin declined four percentage points to 29%, compared with 33% a year earlier.

Cannabis gross margin fell to 26% from 31%, while adjusted cannabis gross margin declined to 29% from 31%.

The company attributed much of the pressure on adjusted cannabis margins to reduced reimbursement rates under Canada’s Veterans Affairs medical cannabis program.

Canopy’s adjusted consolidated gross margin declined to 31% from 33%, excluding C$2.1 million in inventory step-up charges associated with the MTL Cannabis acquisition.

Selling, general and administrative expenses increased 9% year-over-year, reflecting the addition of MTL Cannabis operations, partially offset by workforce reductions and other cost-saving measures.

Adjusted EBITDA Remains Negative, Net Loss Worsens

Canopy reported an adjusted EBITDA loss of C$2.9 million, compared with a C$3.1 million loss in the prior-year quarter.

The improvement of approximately C$200,000 was modest relative to the company’s double-digit revenue growth.

“We are progressing steadily to profitability, quarter after quarter,” said CFO Tom Stewart, adding that the company expects to be within reach of positive adjusted EBITDA during fiscal 2027.

However, the company’s GAAP net loss increased by C$35.7 million compared with the prior-year quarter.

Canopy attributed the increase primarily to C$35.8 million in fair-value charges associated with its Canopy USA-related assets.

These accounting charges help explain the deterioration in reported net earnings, although they should be distinguished from the company’s operating cash expenditures.

Cash Outflow Improves but Remains Significant

Canopy reported negative free cash flow of C$15.5 million, compared with negative C$19.2 million in the same quarter last year.

The improvement reflected lower cash used in operating activities, partially offset by capital expenditures at production facilities.

Management said the investments were intended to improve cultivation consistency and output.

For Canopy, the next test will be whether international expansion, Canadian market gains and investments in cultivation can translate into stronger margins, positive adjusted EBITDA and eventually sustainable free cash flow.

These questions extend across the cannabis industry, where companies are balancing international expansion, profitability and access to capital. IgniteIt’s Cannabis Capital & Policy Summit on November 18 in Washington, D.C., will bring together executives, investors and policymakers to discuss the regulatory and financial developments shaping the sector’s future.