Decibel Cannabis Co Inc (OTCQB:DBCCF) reported its financial results for the third quarter of 2023, revealing a net revenue of CA$30.2 million ($21.95 million), marking a 65% year-over-year growth.
This revenue boost is attributed to increased demand for vapes and cannabis-infused products, expanded manufacturing capacity, successful international sales, and the launch of new brands.
Q3 2023 Financial Highlights
- Net revenue of CA$30.2 million in Q3 2023, a 65% increase from Q3 2022.
- Net income of CA$413 thousand in Q3 2023, a sharp decline from CA$5.2 million in Q3 2022.
- Adjusted EBITDA reached CA$6.7 million, a 57% increase compared to the same period last year.
- Gross profit was not announced in Decibel's earnings report.
Company Outlook
"With continued success in our ready-to-consume product strategy, our recent launches including General Admission Blinker, General Admission edibles, and our new brand Vox Popz crushable pre-rolls are expected to further cement our ready-to-consume position and meaningful growth in the coming year," said Decibel CEO Paul Wilson. "Alongside these top-line growth initiatives, we are pleased to have concluded the expansion of our manufacturing capacity, which will expand gross margin and support our new wave of product launches."
Challenges Amidst Growth
Despite the revenue increase, Decibel experienced a gross margin before fair value adjustments of 43%, slightly down from 52% in the same quarter last year. This decline was influenced by a CA$368,000 write-off of aged products and a CA$566,000 increase in temporary labor costs to meet market demands.
Operational Results And Future Expectations
The company also reported a positive free cash flow of CA$1.2 million, a significant sequential increase of 152% but a 50% decrease compared to the previous year.
Decibel completed significant operational investments, including expanding its manufacturing capacity, which is expected to generate approximately CA$10 million in cash-flow savings at full production rate.
DBCCF Price Action
DBCCF's shares were trading 3.02% lower at $0.1042 per share at the time of this writing around noon ET Thursday.
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