Aurora Cannabis, Inc. Q3 FY2025 earnings call

• Pivoted to a medical cannabis first growth strategy, focusing on high-margin opportunities outside North America. • Record third quarter for medical cannabis revenue, net income, adjusted EBITDA, and free cash flow. • Overall net revenue grew 37%, driven by 51% YoY growth in global medical cannabis; international revenue grew 112% and comprised 60% of global medical cannabis net revenue. • Medical cannabis segment accounted for 77% of total net revenue and 90% of adjusted gross profit. • Bevo segment saw 22% YoY revenue growth. • Record consolidated adjusted gross margin at 65%, adjusted EBITDA at $23.1M (9th consecutive quarter positive), net income at $31.2M. • Cash and cash equivalents totaled $180.2M with no cannabis business debt.

Medical Cannabis: Generated 77% of total net revenue and 90% of adjusted gross profit. Global medical cannabis net revenue grew 51% year-over-year, with 6% growth in Canada and 112% growth internationally. International revenue comprised 60% of global medical cannabis net revenue, up 300 basis points sequentially. Bevo: Generated a 22% year-over-year revenue increase through organic growth and enhanced facility utilization.

• Continued revenue growth in cannabis business supported by Europe and Australia growth. • Seasonally higher revenues for Bevo in plant propagation. • Margins expected to hold strong, positive adjusted EBITDA to continue. • Positive free cash flow anticipated due to global medical cannabis growth, strong margins, and disciplined working capital management, including full recognition of revenue in Australia and growth in key European markets.

• Regulatory challenges in international markets related to certifications, registration, and testing. • Competition in international medical cannabis markets, though it's a more consolidated space. • Seasonal variability in Bevo's plant propagation segment.

Q: Given the inflection in sales, any supply constraints?

A: Supply is good, but international markets have regulatory complexities like certifications, registration, and testing.

Q: Competition in international medical markets?

A: Competition is present but more consolidated; Aurora has advantages with investments in product innovation and infrastructure.

Q: Capital allocation with free cash flow positive?

A: Strong balance sheet allows for opportunistic capital allocation, being patient but ready to act on favorable opportunities.

Q: Margin sustainability and Bevo growth?

A: Higher margins in medical, especially international markets; Bevo growth due to increased production capacity.

Q: Germany descheduling and cost savings?

A: Patient growth in Germany, but some efficiency from local production offset by higher energy and COGS costs.

Q: Consumer cannabis segment?

A: Not core to strategy; Canada's REC challenges make it difficult to extract value from high-quality products there.

Q: M&A potential?

A: Opportunistic, focusing on profitable global medical cannabis growth, with past acquisitions like MedReleaf Australia as an example.

Q: MedReleaf Australia contribution?

A: Full revenue recognition in recent quarters contributed to growth, but specific numerical breakout not provided.