Organigram Global Inc (OGI) Q2 2025 Earnings Call Highlights: Record Revenue and Strategic Expansion

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Tue, May 13, 2025, 1:02 AM 4 min read

Gross Sales: Increased 79% year-over-year, surpassing $100 million for the first time in a quarter.
Net Revenue: Up 74% year-over-year to $65.6 million.
International Sales: Increased 177% to $6.1 million from $2.2 million in the prior-year period.
Adjusted Gross Margin: $21.9 million or 33%, compared to $11.6 million or 31% in the prior-year period.
Adjusted EBITDA: $4.9 million compared to negative $1 million in the prior-year period.
Net Income: $42.5 million compared to a net loss of $27.1 million in Q2 fiscal 2024.
Cash Position: Total cash of $83.4 million as of March 31, including both restricted and unrestricted cash.
SG&A Costs: Total SG&A costs were $22.4 million, a 10% increase versus the prior period last year.
Capital Expenditures: Planned investment of $8 million to $10 million in sustaining capital expenditures during fiscal 2025.

Warning! GuruFocus has detected 2 Warning Signs with OGI.

Release Date: May 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Organigram Global Inc (NASDAQ:OGI) reported a record-breaking quarter by revenue, with gross sales up 79% year-over-year, surpassing $100 million for the first time.
The company achieved a leading market share in Canada, particularly in the vape category with a 21.7% share, and maintained strong positions in flower and pre-rolls.
International sales increased by 177% year-over-year, driven by strong demand in markets like Germany and Australia.
The integration of the Motif acquisition is progressing well, with expected synergies now estimated at $15 million annually, up from the previous $10 million.
Organigram Global Inc (NASDAQ:OGI) is expanding its presence in the US hemp-derived THC beverage market, with products now distributed in 10 states and carried by major retailers.

Negative Points

Despite the record revenue, the company experienced negative cash flow this quarter, primarily due to working capital investments and the Collective Project acquisition.
Margins from the Motif acquisition were lower than the core business, impacting overall adjusted gross margin.
The company faces a fragmented and competitive market in Canada, with the top three LPs holding only 27% of total market share.
There is potential for price compression in international markets, as value flower is starting to appear in Germany.
The US hemp-derived THC beverage market is highly competitive, with many brands and the need for significant investment to drive growth and consumer adoption.

Q & A Highlights

Q: Can you provide more details on your international growth outlook for 2025, especially regarding the EU-GMP certification and its impact on capacity allocation between international and domestic markets? A: Beena Goldenberg, CEO: We are balancing demands between domestic and international sales. International sales have higher margins due to the absence of excise taxes, but we aim to maintain our domestic market leadership. We anticipate price compression in international markets, so it's crucial to balance both. We are increasing capacity with projects like the LED upgrade, adding 14,000 kilos of capacity. We expect higher international sales in the latter half of the year, driven by demand in Germany and other markets.

Q: What are your expectations for EBITDA margins in the medium term, and what are the key drivers for margin improvement? A: Greg Guyatt, CFO: We have realized about $1.5 million of the $5 million in targeted synergies for this year, mainly in COGS. EBITDA growth will be driven by margin growth, targeting a 40% gross margin in the second half of fiscal 2026, and cost management. As revenue grows, SG&A is not expected to increase materially, allowing for better leverage on the P&L and improved EBITDA margins.

Q: Can you explain the negative cash flow this quarter and your cash flow expectations for the rest of the year? A: Greg Guyatt, CFO: The negative cash flow was mainly due to a $6 million investment in the Collective Project acquisition and intentional working capital investment to prepare for strong growth in Q3 and Q4. We expect to be cash flow positive for the full year, with significant cash flow improvements starting in the third quarter.

Q: What is your strategy for the US hemp-derived THC market, and when do you expect it to be accretive to margins? A: Beena Goldenberg, CEO: We are in the early stages of expanding the Collective Project brand in the US, focusing on building distribution and consumer awareness. We expect to expand distribution to more states and launch a direct-to-consumer website soon. While we are investing in growth, we anticipate the US market to become more accretive as we scale and gain consumer adoption.

Q: What drove the significant increase in international sales, and was it due to new customers or expanded orders from existing partners? A: Beena Goldenberg, CEO: The growth was driven by meeting increased demand from existing customers, not new ones. There is strong demand for high-quality Canadian cannabis, and once a cultivar is established in medical markets, it leads to repeat purchases. We expect further growth with the upcoming EU-GMP certification, which will streamline fulfillment and potentially increase pricing.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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