While Canadian producer Decibel Cannabis Company Inc. (TSXV: DB) (OTCQB: DBCCF) is posting incremental revenue growth, other important items on its income statement aren’t improving.
On Thursday, the company released its earnings results for the three months ended Sept. 30.
In that period, net revenue rose 8 per cent to $13.4 million, from $12.4 million last quarter.
Decibel sold 492 kilograms of weed in the third quarter, up 10 per cent over the second quarter. But its average wholesale net price per gram dropped 4 per cent to $7.65. The firm says the price drop was due to more Qwest products being sold over its super-premium Qwest Reserve brand.
As a percentage of net sales, vapes and concentrates grew 16 per cent in the quarter, for a total of $6.6 million. It said the increase was due to high demand for category products launched in the third quarter, and store re-openings in Ontario.
Gross profit before fair value adjustments fell 20 per cent to $4.1 million. Decibel says gross profit was impacted by $922,000 in plant inventory write downs.
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While the firm made its fifth consecutive quarter of positive earnings before intertest, taxes, depreciation and amortization (EBITDA), the reported $1.8 million was a 17-per-cent drop from $2.1 million last quarter.
Net loss increased 49 per cent to negative $926,000, from negative $620,000.
In September, Decibel improved its cash position via a $10-million bought deal unit offering. At the end of the quarter, the firm had $11.3 million in net cash.
Via HiFyre data, the firm said it was Canada’s ninth-largest LP with over 3 per cent of the recreational market in September. It also said it’s the number-two brand in premium flower sales with 9-per-cent market share, number two in concentrate sales with almost 13-per-cent market share and number three in vape sales with almost 13-per-cent market share.
The company’s continued growth is a testament to its consumer focused approach, the strength of its brands and its dedication towards producing high quality products, CEO Paul Wilson said in a statement.
“We are closing out 2021 with strong momentum as we launch 40 new products, elevate the experience our products create for consumers, and innovate to meet cannabis consumers’ evolving preferences.”
In the quarter, Decibel launched six new product SKUs. It says another 40 new SKUs are coming by January including 12 new flower and pre-roll products that will replace existing cultivars at market, as well as 28 “incremental” new flower and derivative products.
Company stock fell almost 7 per cent Thursday to $0.20 on the TSX Venture Exchange.