Executive Summary

Q2 FY2026 delivered net revenue of $66.7MM CAD (+6% YoY), consolidated gross margin 33% (+800 bps QoQ), and adjusted EBITDA loss of $3.0MM CAD, reflecting disciplined cost control and sequential margin expansion .
Canada adult-use and medical cannabis segments were strong (+30% and +17% YoY, respectively), while international declined (-39% YoY) due to European supply chain challenges; Storz & Bickel revenue decreased 10% YoY but margins improved to 38% .
Balance sheet strengthened: cash and equivalents of $298.1MM CAD exceed total debt by ~$70MM, and US$50MM of term loan prepayments in Q2; management stated going-concern doubts have been resolved .
Against S&P Global consensus, Q2 FY2026 EPS beat (actual ~$0.00 USD vs est -$0.13 USD) while revenue missed (actual ~$47.9MM USD vs est ~$51.6MM USD); expect estimate revisions focused on margins and Canada momentum rather than international [Values retrieved from S&P Global]*.
Near-term stock catalysts: resolution of going-concern, positive EPS surprise, ongoing Canada mix/innovation, and clarity on Canada veteran medical reimbursement proposals; watch international stabilization and tariff impacts on Storz & Bickel .

What Went Well and What Went Wrong

What Went Well

Canada adult-use net revenue rose 30% YoY to $23.94MM CAD, driven by Claybourne-infused pre-rolls and new Tweed/7ACRES all‑in‑one vapes; CEO: “continued momentum in Canada adult‑use cannabis... and a disciplined approach to strengthening our balance sheet” .
Canada medical net revenue grew 17% YoY to $21.82MM CAD, supported by insured patient growth and expanded assortments; DOJA facility dedicated to medical craft supply under Spectrum reinforces strategy .
Gross margin expanded QoQ to 33% consolidated (from 25% in Q1), with cannabis margin up to 31% (from 24%); CFO cited price increases, mix, and cost improvements as drivers .

What Went Wrong

International cannabis net revenue fell 39% YoY to $5.09MM CAD due to European supply issues and internal process gaps; management expressed disappointment and outlined a daily-oversight plan to fix GMP supply and logistics .
Consolidated gross margin decreased 200 bps YoY to 33%, pressured by lower-margin international sales and inventory provisions despite Canada strength .
Storz & Bickel revenue decreased 10% YoY to $15.83MM CAD as prior-year device momentum faded and macro uncertainty persisted; tariffs continue to pressure profitability despite cost actions .

Financial Results

Metric	Q4 FY2025	Q1 FY2026	Q2 FY2026
Net Revenue (CAD)	$65.031MM	$72.134MM	$66.683MM
Gross Margin % (Consolidated)	16%	25%	33%
Operating Loss from Continuing Ops (CAD)	$(18.270)MM	$(22.624)MM	$(16.894)MM
GAAP EPS – Continuing Ops (CAD)	$(1.43)	$(0.22)	$(0.01)
Adjusted EBITDA (CAD)	$(9.248)MM	$(7.916)MM	$(3.049)MM
Free Cash Flow (CAD, quarterly)	$(36.241)MM	$(11.643)MM	$(19.205)MM
Cash & Equivalents (CAD)	$113.811MM	$126.202MM	$298.058MM

Segment breakdown and margins:

Segment / Sub-Segment	Q4 FY2025	Q1 FY2026	Q2 FY2026
Canada Adult-Use Net Revenue (CAD)	$20.400MM	$27.000MM	$23.940MM
Canada Medical Net Revenue (CAD)	$20.000MM	$21.200MM	$21.821MM
International Markets Net Revenue (CAD)	$7.568MM	$8.800MM	$5.091MM
Storz & Bickel Net Revenue (CAD)	$17.086MM	$15.152MM	$15.831MM
Cannabis Gross Margin % (Consolidated)	n/a (reported by sub-segment)	24%	31%
Storz & Bickel Gross Margin %	37%	29%	38%

KPIs and cost discipline:

KPI	Q4 FY2025	Q1 FY2026	Q2 FY2026
SG&A Expenses (CAD)	$38.452MM	$38.108MM	$36.296MM
YoY SG&A Change	n/a	-21% vs Q1 FY2025	-13% vs Q2 FY2025
Year-to-date FCF Outflow (CAD)	n/a	n/a	$31MM
Debt Prepayments in Quarter	n/a	n/a	US$50MM
Cash > Debt Surplus (CAD)	n/a	n/a	~$70MM

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Cannabis Gross Margin	H2 FY2026	Sequential improvement expected (Q1 commentary)	Expect sequential improvement; drivers include top-line growth, production efficiencies, cost savings	Maintained
Storz & Bickel Gross Margin	H2 FY2026	Focus on margin improvement and new device launch in CY2025	Expect sequential improvement driven by VZ launch and holiday season; tariffs remain a headwind	Maintained
Canada Adult-Use Revenue	H2 FY2026	Expand distribution, execute in high-demand formats	Improved performance expected on innovation pipeline, tighter alignment with boards/retailers	Maintained/Enhanced execution focus
Canada Medical Revenue	H2 FY2026	Steady performance, insured patient growth	Continue top-line growth excluding potential veteran reimbursement changes	Maintained (with risk caveat)
International Revenue (Europe)	H2 FY2026	Supply improvements expected in H2	Remain consistent with Q2 levels, growth as FY exits; daily oversight to fix GMP/logistics	Lower near-term trajectory, delayed ramp
Free Cash Flow	FY2026	Improvement vs prior year	Significant improvement expected via lower cash interest, tighter working capital, better performance	Maintained/Strengthened

No formal numerical ranges were provided. Management reiterated qualitative guidance across margins, segment performance, and cash flow trajectory .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q4 FY2025; Q-1: Q1 FY2026)	Current Period (Q2 FY2026)	Trend
Canada Adult-Use execution	Refocus on pre-rolls, vapes, high-THC flower; portfolio streamlining	30% YoY growth on infused PRJs and all-in-one vapes; distribution gains	Improving momentum
Canada Medical strategy	Unified global medical, insured patient growth; steady performance	+17% YoY; DOJA dedicated facility for Spectrum patients	Strengthening
International (Europe) supply chain	H2 supply consistency expected	Underperformed; daily oversight, retooling GMP supply from Canada; stabilization expected by FY end	Near-term challenged; remediation underway
Cost reductions/SG&A	$20MM annualized savings targeted; initiatives launched	$21MM annualized savings achieved; continued efficiencies	Ahead of plan
Storz & Bickel innovation/margins	New device launch planned CY2025; margin focus	VEAZY launched; margins 38%; holiday strength expected; tariffs pressure profitability	Mixed: margin up, macro/tariffs headwinds
Capital structure/liquidity	Debt reduced; cash building	Cash $298MM; US$50MM prepay; ATM optionality; no major maturities until Sept 2027	Strengthened
Regulatory (Canada veterans)	n/a	Monitoring proposed veteran reimbursement changes; advocating for access	Policy risk emerging

Management Commentary

CEO: “We’re building a stronger, more competitive company defined by continued momentum in Canada adult-use cannabis, consistent growth in Canada medical cannabis, and a disciplined approach to strengthening our balance sheet.”
CFO: “Our financial discipline continues to improve our path to profitability… margin expansion, and balance sheet strength… we’re building a more resilient company poised for long term success.”
CEO on Europe: “We have already mobilized a dedicated effort to improve supply chain execution… We expect operations to stabilize and begin improving as we exit the fiscal year.”
CFO on margins: “Cannabis gross margin… up sequentially from 24% in Q1… reflects price increases, mix, and improvements to flower and fulfillment costs.”
CFO on liquidity: “CAD 298 million of cash… exceeded debt balances by CAD 70 million. During Q2, we prepaid $50 million… capturing roughly $6.5 million in annualized interest savings.”

Q&A Highlights

International remediation: Management detailed daily oversight and retooling to supply Europe from Canadian GMP facilities; do not expect higher flower costs, aiming for superior margins post-fix .
Capital raising/ATM: CFO emphasized optionality and prudence in ATM usage; no specific forward issuance guidance given .
Capacity/capex: Existing footprint (e.g., Kincardine) sufficient; focus is on yield and quality with limited incremental investment .
Path to profitability: Positive adjusted EBITDA remains priority; management refrained from timeline but highlighted strongest quarter in recent memory and ongoing cost actions .
U.S. exposure: Canopy USA operates independently; no guarantees or new funding from Canopy Growth; focus on execution across acquired U.S. brands .
Product roadmap: Strong early reception of all-in-one vapes (Tweed, 7ACRES; Claybourne to follow), with accretive margins; broader spectrum formats anticipated .

Estimates Context

S&P Global consensus vs actuals (USD):

Metric (USD)	Q4 2025	Q1 2026	Q2 2026
Primary EPS Consensus Mean	-0.381*	-0.144*	-0.126*
Primary EPS Actual	-0.921*	-0.142*	0.002*
Primary EPS – # of Estimates	4*	3*	2*
Revenue Consensus Mean	$49.10MM*	$47.33MM*	$51.56MM*
Revenue Actual	$45.24MM*	$52.89MM*	$47.87MM*

Values retrieved from S&P Global.*

Implications:

Q2 FY2026 EPS beat and revenue miss vs consensus; Q1 FY2026 had a revenue beat and narrow EPS beat; Q4 FY2025 missed both. Expect analysts to raise margin and Canada segment assumptions while trimming international revenue near term given management’s outlook .

Key Takeaways for Investors

Canada is the growth engine: sustained adult-use and medical momentum with innovation and distribution gains; expect continued margin support from mix and pricing .
Watch European execution: remediation plan is specific and active; stabilization targeted by fiscal year-end—stock likely sensitive to evidence of resumed shipments and GMP cadence .
Balance sheet inflection: cash exceeds debt and major maturities pushed out; deleveraging and interest savings improve FCF trajectory—supportive for valuation and downside protection .
Storz & Bickel: margin recovery underway with new device (VEAZY) and holiday seasonality; tariffs and U.S. consumer backdrop remain key variables .
Non-GAAP progress: adjusted EBITDA loss narrowed to $(3.0)MM CAD; further SG&A and COGS actions should support sequential improvement into H2 FY2026 .
Regulatory monitor: Canada veteran medical reimbursement proposals present potential headwind; management engagement suggests proactive mitigation .
Trading setup: Near-term catalysts include confirmation of international stabilization, continued Canada growth, and incremental margin expansion; risks centered on international execution and macro/tariff impacts.

Supporting Data References

Q2 FY2026 press release and schedules: net revenue, margins, segments, SG&A, EBITDA, FCF, cash/debt .
Q1 FY2026 press release: segment revenue, margins, SG&A, EBITDA, FCF .
Q4 FY2025 press release: revenue/margins/segments, adjusted EBITDA, FCF, debt reduction .
Call transcript Q&A and outlook: remediation, margins, liquidity, capex, ATM, U.S. exposure .
Additional press releases: DOJA medical facility dedication; JP Brand Advisors partnership with Canopy USA .

Canopy Growth Corp (CGC)·Q2 2026 Earnings Summary