Decibel Cannabis Reports 22% YoY Decrease In Q2 Net Revenue, Plans To Benefit With New Product Launches

Decibel Cannabis Company Inc. (TSXV:DB) (OTCQB:DBCCF) reported on Wednesday its unaudited interim financial results for the second quarter ending June 30, 2024.

“Decibel has shown good discipline in reducing our current liabilities by ~5mm this quarter,” said Benjamin Sze, Decibel’s CEO. “Market share has been challenged but early indications from Qwest relaunch suggest we will regain market share in flower.  A continued focus on execution and capital efficiency will serve as the platform for future growth.”

The company reported net revenue of CA$22.1 million ($16.1 million), down from CA$28.5 million in the prior year’s period, representing a 22% year-over-year drop. Its first quarter report published this past April revealed a 16% year-over-year revenue drop to CA$21 million and an adjusted net loss of CA$3.5 million.

In his recent analysis senior analyst Pablo Zuanic of Zuanic & Associates said Decibel’s management acknowledges the competitive pressures in the vape and pre-roll categories, particularly from competitors like Jeeter and Organigram.

“The company was slow to react to the rise of larger 510 cartridge formats and higher potency extracts,” as highlighted in a recent recap of Zuanic’s analysis by Beniznga’s Nicolás Jose Rodriguez. “However, Zuanic shared new product launches in 2Q24 aim to address these gaps. Decibel is expanding distribution for infused pre-rolls and innovating around the Vox brand. Additionally, flower production at the company’s craft facilities is set to ramp up.”

Read Also: This Undervalued Cannabis Stock Has Another Year Of Growth: Reports Record 2023 Revenue And Adjusted EBITDA

Q2 2024 Financial Highlights

• Gross profit before fair value adjustments was CA$9.3 million, down from CA$12.3 million in the prior year’s period.
• Gross margin before fair value adjustments was 42% in the second quarter of 2024, compared to 43% in the second quarter of 2023.
• Adjusted EBITDA came in positive at CA$3.9 million, down from CA$7.3 million adjusted EBITDA gain in the prior year’s quarter.
• Net income and comprehensive income was CA$122 000, compared to a net loss and comprehensive loss of CA$423 000 in the second quarter of fiscal 2023.
• Cash flow from operations was CA$985 000, compared to CA$768 000 in the prior year’s period.
• Free cash flow was CA$895 000, up from CA$304 000 in the prior year’s period.

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DBCCF Price Action

Decibel’s shares traded 4.29% higher at $0.0365 per share at the time of writing on Wednesday.