If Aurora doesn't take any action soon, it may miss out on the early opportunities of this evolving segment. cannabis beverage market could be worth $2.8 billion by 2025, according to Grand View Research. The market for cannabis beverages is expected to generate CA$529 million annually in Canada, according to Deloitte. Meanwhile, peers HEXO and Canopy Growth are ramping up to become market leaders in the cannabis beverage segment. At the end of Q2, it had CA$565 million cash on hand but also CA$493.3 million in total debt. Having failed to raise the necessary amount of capital through other means, Aurora has chosen to dilute its shares. As a result, it has not been able to focus on the production of any new derivatives. Since last year, Aurora's focus has mostly been on reducing costs to achieve positive EBITDA. Its selling, general, and administrative (SG&A) expenses dipped by 53% to CA$44.4 million from the year-ago period. Management achieved that by cutting costs, which has been its focus all through 2020. However, losses of CA$16.8 million were an improvement from the CA$69.8 million loss in the year-ago quarter. The Q2 revenue increase wasn't enough to help it achieve positive earnings before interest, tax, depreciation, and amortization (EBITDA), either. It also launched a few edible products, such as gummies, chocolates, baked goods, and mints, but nothing new since then. Peer HEXO also saw 11% sequential growth in the cannabis-infused beverages segment in its fiscal Q2 2021.Īurora launched a few derivatives in December 2019, including a range of cannabidiol (or CBD) products, tetrahydrocannabinol (or THC) products, and vape products. The company has already captured 34% of the cannabis-infused beverage market share in Canada. Rival Canopy Growth, for example, earned CA$10.5 million in revenue from derivative products alone in its third quarter of fiscal 2021. They include vapes, edibles, concentrates, beverages, and more. Derivatives are additional recreational products that Canada legalized in October 2019. The company won't see a drastic jump until it invests in new, high-margin products - cannabis derivatives, in particular. But in Aurora's case, its failure to launch innovative products is what stunted its growth. Regulatory hurdles affected the opening of legal stores in Canada, hampering revenue growth for many companies. 31), revenue was up just 23% year over year to 67.6 million Canadian dollars. In its fiscal 2021 second quarter (ended Dec. cannabis companies are reporting threefold revenue growth, Aurora's numbers are disappointing. Image source: Getty Images Revenue growth is not enough to turn a profit
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