Adam Jackson
After experiencing a consistent upward trajectory over the past several periods, Nova Cannabis Inc. (OTC: NVACF) continued to deliver solid results for the second quarter ending June 30, hitting record revenue numbers and marking its first quarter of positive net earnings since its inception.
Late after the markets closed on Wednesday, the company posted a record-adjusted EBITDA of $5.5 million, marking a 161% increase. Coupled with this, the company reported a gross margin growth for seven successive quarters. The company’s stock jumped 8% on Wednesday ahead of earnings to lately sell at 32 cents per share, off its 52-week low of 29 cents.
The company’s all-time high revenue of $64 million marked a 13.7% increase from the previous year’s second quarter, while same-store sales surged 38% from the same period last year. The record gross margin stood at $14.6 million (22.8% of revenue), an increase of 37.9%. With net earnings of $1 million, the quarter marked Nova’s first positive net earnings.
Nova’s revenue from proprietary data licensing agreements saw a notable 73% increase sequentially, reaching $2.7 million for the second quarter. Cash provided by operating activities rose to $2.55 million, a $2.53 million increase from the same period last year.
Marcie Kiziak, CEO of Nova, attributed the all-around growth to “disciplined pricing strategy combined with expanding proprietary data licensing agreements and private label sales.”
“This quarter’s results demonstrate Nova’s effective execution in positioning the company for long-term profitable growth,” Kiziak said. “We have been disciplined in our strategy and maintained a sharp focus on our key objectives, and our resolute dedication solidifies our promise to deliver tangible shareholder value.
With the added financial and operational scale from the upcoming Nova Reorganization, we are tremendously excited for the future as we expand our strategy and retail offerings to serve Canadians coast to coast.”
The strategic partnership between Nova and SNDL Inc. known as the “Nova Reorganization” was approved by Nova’s minority shareholders on May 5, 2023, and is expected to be completed by August 25, 2023.
The deal represents a major step in Nova’s growth strategy to become one of Canada’s leading cannabis retailers. Nova said it aims to disrupt the retail market with best-value pricing and a broad range of cannabis products, pushing for a transition from the illicit cannabis market to legal channels.
Nova’s collaboration with SNDL has enabled a successful launch of Value Buds’ private label strategy in Alberta and Ontario. The approach has allowed Nova to build higher gross margins, customer loyalty, and long-term brand awareness.
The company has also opened Firesale Cannabis, a new deep discount retail banner in Edmonton, targeting value-conscious consumers, with more locations expected to launch in Alberta and Ontario.
Additionally, Nova is set to acquire 29 more stores from SNDL’s retail network upon completion of the Nova Reorganization, increasing its store footprint by more than 33%.
