Executive Summary

Q3 2025 set company records for net revenue ($36.34M), gross profit ($18.33M) and Adjusted EBITDA ($5.68M), with margins expanding to 50% on mix shift to Israel and lower purchase accounting drag .
Versus S&P Global consensus, revenue modestly missed ($36.34M vs $36.84M*) while EPS beat ($0.07 vs $0.00*); management highlighted temporary Canadian flower supply constraints and shipment timing ex‑Israel as key dynamics impacting quarterly cadence .
Canada remained pressured in flower but leadership in edibles (SOURZ by Spinach® 19.7% share) and rising vape share (7.0%; 9.5% in cartridges) offset; Israel delivered seventh straight record quarter with PEACE NATURALS® the #1 brand .
Capacity expansion at Cronos GrowCo is complete with sales commencing in fall; management framed a roughly 70% increase in flower capacity as a 2026 growth driver, with near‑term underlying gross margins best represented by a blend of Q2 and Q3 levels .

What Went Well and What Went Wrong

What Went Well

Record revenue, gross profit and Adjusted EBITDA; gross margin expanded to 50% on mix shift to Israel, higher volumes, efficiencies, and favorable inventory dynamics; adjusted margin also 50% as inventory step‑up impact abated .
Sustained brand leadership: Spinach® ended Q3 as #2 brand in Canada (4.5% share), #1 in edibles (19.7%) and #3 in vapes (7.0%; cartridges #2 at 9.5%); several SKUs ranked top‑10 nationally .
Israel strength: seventh consecutive record net revenue; PEACE NATURALS® remained #1 brand with record volumes; new premium strains launched; international brand footprint expanded to seven markets, including a Q3 launch in Switzerland .

“Given this favorability, we would view the blended adjusted gross margins over Q2 and Q3 as more indicative of the current underlying margins of the business.” — CFO, Anna Shlimak .

What Went Wrong

Canadian flower supply constraints weighed on domestic flower revenue growth in the quarter .
International ex‑Israel results were “modest” due to shipment timing pushing revenue recognition into Q4, tempering Q3 contribution from those markets .
Despite top‑line growth, Canada’s lower margin profile versus international mix can dilute consolidated margins when allocation tilts domestically; management cautioned mix could pull margins down absent cost absorption benefits .

Financial Results

P&L and Profitability (USD)

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Net Revenue ($M)	$34.26	$32.26	$33.46	$36.34
Gross Profit ($M)	$3.61	$13.73	$14.50	$18.33
Gross Margin %	11%	43%	43%	50%
Adjusted Gross Margin %	31%	44%	43%	50%
Net Income ($M)	$7.32	$7.72	$(38.48)	$28.32
Diluted EPS ($)	$0.02	$0.02	$(0.10)	$0.07
Adjusted EBITDA ($M)	$(6.02)	$2.29	$1.69	$5.68

Notes: Adjusted metrics per company definitions; see reconciliations in exhibits .

Cash and Liquidity (USD)

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Cash & Cash Equivalents ($M)	$862.03	$797.82	$794.42	$784.17
Short‑term Investments ($M)	$0.00	$40.00	$40.00	$40.00
Total Cash + ST Investments ($M)	$862.03	$837.82	$834.42	$824.17

Revenue Mix — Product Type (As Reported, USD)

Product	Q3 2024	Q3 2025
Cannabis Flower ($M)	$26.33	$26.36
Cannabis Extracts ($M)	$7.79	$9.96
Other ($M)	$0.15	$0.01
Total ($M)	$34.26	$36.34

Revenue Mix — Geography (As Reported, USD)

Geography	Q2 2025	Q3 2025	Q3 2024
Canada ($M)	$19.15	$23.13	$24.07
Israel ($M)	$9.38	$11.35	$7.26
Other Countries ($M)	$4.93	$1.85	$2.94
Total ($M)	$33.46	$36.34	$34.26

KPIs and Market Share

KPI	Value
Spinach®: #2 Canada brand, total market share 4.5% (Q3)
Edibles (SOURZ by Spinach®): #1 with 19.7% share (Q3)
Vapes: 7.0% share (#3 overall); cartridges 9.5% (#2) (Q3)
Lord Jones®: #3 chocolate edibles (10.7% share) (Q3)
Lord Jones®: category leader in hash/live resin pre‑rolls (17.5% share) (Q3)
Israel: PEACE NATURALS® #1 brand; record revenue and volume (Q3)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted gross margin (underlying)	Near‑term (FY25 exit)	Not provided	Blend of Q2 and Q3 viewed as indicative of underlying margins	Qualitative indication
Other international (ex‑Israel) revenue cadence	2H 2025	Not provided	2H 2025 expected similar to 1H due to shipment timing	Qualitative indication
Flower capacity impact (GrowCo)	2026 trajectory	N/A	~70% increase in flower capacity seen as driver into 2026; ramp/optimization expected	New qualitative framework
Quantitative revenue/EPS/EBITDA guidance	N/A	None	None	Maintained (no formal guidance)

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025 and Q2 2025)	Current Period (Q3 2025)	Trend
Canada flower supply	Q1: supply limits constrained growth ; Q2: constraints persisted	Constraints continued in Q3; GrowCo expansion to alleviate	Improving over 2026 as capacity ramps
Gross margins	Q1: 43–44%; inventory step‑up still present ; Q2: 43% with mix to Israel	50% in Q3; CFO points to Q2/Q3 blend as best indicator	Up on mix; normalize toward blended levels
International (ex‑Israel)	Q1: expanding to Australia/Malta; EU traction ; Q2: record international; anti‑dumping veto update	Lighter in Q3 due to shipment timing; expect 2H ≈ 1H	Timing, not demand driven
Israel	Q1: record revenue/volume; #1 brand ; Q2: record with leading strains	Seventh straight record; #1 brand maintained	Strengthening
Product performance	Q1: SOURZ #1 edibles; vapes growing ; Q2: edibles 19.9% share; vapes rising	Edibles 19.7% share; vapes 7.0%; new multipacks/seasonals	Sustained leadership/innovation
Capacity/GrowCo	Q1: expansion on track; H2 sales ; Q2: expansion complete, fall sales expected	Sales commenced in fall; ~70% flower capacity uplift cited	Ramping
Regulatory/legal (Israel)	Q1: anti‑dumping duty vetoed; process ongoing	Ongoing Anti‑Dumping Investigation referenced in FLS	Monitoring risk

Management Commentary

Strategic focus: “Our third quarter results reflect continued progress… record levels of net revenue, gross profit and adjusted EBITDA… driven by the seventh consecutive quarter of record net revenue at Cronos Israel… [and] continued cost discipline.” — Mike Gorenstein, CEO .
Canada outlook: “Despite temporary flower supply constraints… Spinach® brand retain[ed] its position as the #2 brand… With the completion of the expansion at Cronos GrowCo… we are well‑positioned for growth in 2026.” — CEO .
Margin framing: “We would view the blended adjusted gross margins over Q2 and Q3 as more indicative of the current underlying margins of the business.” — CFO .
Capacity ramp: “The 70% capacity increase on flower is a good way to think about how that can start to impact revenue… magnitude will really increase into 2026.” — CEO (Q&A) .
Mix and margin caution: “The more allocated to Canada versus international markets would pull down… margin… Going forward, you’ll see costs… better with expansion and fixed cost absorption from Groco.” — CEO (Q&A) .

Q&A Highlights

GrowCo impact and timing: Management expects limited impact in Q3 with ramp through 2026; ~70% flower capacity uplift is the planning anchor, subject to market allocation and pricing .
Margin trajectory: Underlying margins to be viewed as a blend of Q2 and Q3; further improvement possible with fixed cost absorption as GrowCo optimizes .
Quarterly dynamics: Canada flower constraints weighed on Q3; international ex‑Israel timing shifts should normalize, with 2H ex‑Israel revenue similar to 1H .

Estimates Context

Revenue: Q3 2025 actual $36.34M vs S&P consensus $36.84M* (slight miss); Q4 2025 consensus $41.26M*; Q2 2025 actual $33.46M vs consensus $33.53M* .
EPS (diluted): Q3 2025 actual $0.07 vs S&P consensus $0.00*; Q4 2025 consensus $0.01*; Q2 2025 actual $(0.10) vs consensus $(0.021)* .
EBITDA: Company reported Adjusted EBITDA $5.68M in Q3; S&P “EBITDA consensus” was $5.53M* with S&P’s “actual” field showing $(1.49)M*, reflecting definitional differences versus company’s non‑GAAP Adjusted EBITDA reconciliation .
Values retrieved from S&P Global.*

Implications: Expect upward EPS estimate revisions given the beat, while revenue likely sees modest tweaks; investors should align EBITDA comparisons to consistent definitions (company Adjusted EBITDA vs S&P EBITDA).

Key Takeaways for Investors

Quality‑mix and Israel momentum drove a step‑up in margins (50%) and record profitability; near‑term gross margins should normalize toward the Q2/Q3 blend as one‑time favorability abates .
Canada’s profit mix is dilutive relative to international; GrowCo’s ramp (sales began in fall) should progressively relieve flower constraints and improve fixed cost absorption into 2026 .
Category leadership in edibles and rising vape share underpin resilient Canada performance despite flower constraints; continued product innovation (multipacks, seasonal SKUs) supports share defense .
Quarterly cadence ex‑Israel is timing‑driven; shipment shifts to Q4 likely bolster 2H results vs Q3, consistent with management’s 2H≈1H commentary .
Balance sheet remains a strategic asset ($824M cash/STI, no debt), enabling opportunistic investment (e.g., High Tide loan/warrant) and cushioning volatility .
Trading setup: Slight revenue miss but clear EPS beat vs S&P*; narrative catalysts include evidence of GrowCo ramp, sustained Israel leadership, and domestic flower supply recovery — watch for Q4 shipment catch‑up and early‑2026 run‑rate updates .

Appendix: Additional Product and Brand Updates

SOURZ by Spinach® Fully Blasted multipacks launched nationally (5‑ and 10‑packs) in top flavors, enhancing value/variety .
Seasonal SKUs: Return of SOURZ Caramel Green Apple 5‑pack; new 10mg fully blasted gummy and Sweet Green Apple 1g vape .

Estimate Comparison Table (S&P Global)

Metric	Q2 2025	Q3 2025	Q4 2025
Revenue Consensus Mean ($M)	33.53*	36.84*	41.26*
Revenue Actual ($M)	33.46	36.34	N/A
Primary EPS Consensus Mean ($)	(0.021)*	0.00*	0.010*
Diluted EPS Actual ($)	(0.10)	0.07	N/A
EBITDA Consensus Mean ($M)	(3.16)*	5.53*	3.91*
Adjusted EBITDA (Company) ($M)	1.69	5.68	N/A

Values retrieved from S&P Global.* Definitions for EBITDA may differ from company “Adjusted EBITDA.”

Cross‑References (Selected)

Q3 2025 press release and financial tables (Form 8‑K, EX‑99.1): records, mix insights, non‑GAAP reconciliations, constant currency .
Q3 2025 call transcript: margin commentary, GrowCo capacity and timing, mix implications .
Q2 and Q1 2025 8‑Ks: prior quarter trends, margin levels, brand positions, anti‑dumping updates .

Cronos Group Inc. (CRON)·Q3 2025 Earnings Summary