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CW

Charlotte's Web Holdings, Inc. (CWBHF)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered Charlotte’s Web’s first year-over-year revenue growth since 2021 ($12.3M, +1.1% YoY), extending the sequential quarterly revenue uptrend from 2024; management credits e-commerce upgrades and broader digital storefronts as the core drivers .
  • Gross margin was 50.8% (vs 57.0% in Q1 2024) due to prior-year temporary favorable items; SG&A fell 24.2% YoY to $11.6M as cost actions flow through the P&L, improving Adjusted EBITDA to $(2.8)M from $(3.9)M .
  • Strategic catalysts ahead include a nationwide Whole Foods rollout in June (>400 stores) and in-house gummy manufacturing ramp beginning Q2 2025 to support margins and innovation speed .
  • The company mutually concluded its MLB promotional rights agreement, eliminating over $18M of cash outlays over the next three years, which supports near-term cash flow while preserving capital for innovation .
  • No Q1 earnings call transcript was provided; management previously announced it will host earnings calls only in March (year-end) and August (Q2), which limits real-time Q&A color in Q1 but streamlines costs .

What Went Well and What Went Wrong

What Went Well

  • “Following three sequential quarters of improvement in 2024, Q1 delivered our first year-over-year revenue growth since 2021 – validating the transformation we initiated 18 months ago,” said CEO Bill Morachnick, highlighting traction from upgraded e-commerce and new digital storefronts (Amazon, TikTok Shop, Faire) .
  • SG&A fell 24.2% YoY to $11.6M as the “reengineered cost structure is now flowing through the P&L”; termination of high-cost promotional sports agreements eliminates >$18M of future cash outlays over three years, supporting cash flow and innovation investment .
  • Retail distribution catalyst: Whole Foods partnership to stock three isolate topical products in >400 stores beginning June 2025, expanding omnichannel reach and brand visibility .

What Went Wrong

  • Gross margin contracted to 50.8% from 57.0% YoY due to temporary favorable items in the prior year; management models forward GM in the low-50s as in-house manufacturing and mix improvements ramp .
  • Net loss remained sizable at $(6.2)M (EPS $(0.04)), though improved from $(9.7)M in Q1 2024; other income swung negative vs prior year, pressuring the bottom line .
  • Cash used in operations was $(2.8)M; cash and cash equivalents declined to $19.4M from $22.6M at YE 2024, reflecting continued investment and seasonal working capital dynamics .

Financial Results

Core P&L, Margins, Cash

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$12.1 $12.7 $12.3
Gross Profit ($USD Millions)$6.9 $5.1 $6.2
Gross Margin %57.0% 40.2% 50.8%
SG&A ($USD Millions)$15.3 $10.6 $11.6
Operating Loss ($USD Millions)$(8.4) $(5.5) $(5.4)
Adjusted EBITDA ($USD Millions)$(3.9) $0.3 $(2.8)
Net Loss ($USD Millions)$(9.7) $(3.4) $(6.2)
EPS (Basic & Diluted, $USD)$(0.06) $(0.02) $(0.04)
Cash And Equivalents ($USD Millions)$38.5 $22.6 $19.4
Cash from Operations ($USD Millions)$(7.2) $(1.8) $(2.8)

Revenue Quarterly Trend

MetricQ1 2024Q2 2024Q3 2024Q4 2024Q1 2025
Total Revenue ($USD Millions)$12.1 $12.3 $12.6 $12.7 $12.3

Segment Breakdown

  • No segment breakout was disclosed for Q1 2025; management emphasized digital channel growth and omnichannel expansion qualitatively .

KPIs and Balance Sheet Highlights

KPIQ1 2024Q4 2024Q1 2025
Working Capital ($USD Millions)—$31.1 $25.5
Other income (expense), net ($USD Millions)$0.6 $2.2 $(0.7)
Change in FV of financial instruments ($USD Millions)$(1.9) $(0.1) $(0.1)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Margin %FY 2025“Return above 50% in 2025” “Model forward GM in the low 50s” Maintained (refined to low-50s)
Cash FlowFY 2025“Reduce cash burn; approach positive cash flow” “Anticipate further improvements to cash flow in 2025” Maintained
Operating Expenses / Marketing2025–2027MLB amended in 2024 cut amortization ~$4.9M YoY Concluded MLB promotional rights; eliminate >$18M cash outlays over 3 yrs Raised savings (material improvement)
Manufacturing (Gummies/Topicals)2025“In-house manufacturing ramp expected in 2025” “Preliminary in-house gummy production in Q2 2025; topicals to follow” Timing specified (execution begun)
Retail Distribution2025Walmart and Chewy expansion Whole Foods nationwide rollout (>400 stores) in June 2025 Expanded distribution footprint

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
E-commerce & OmnichannelNew platform launched mid-2024; sequential QoQ revenue growth; retail adds (Walmart, Chewy) Digital channels delivered YoY growth; expanded storefronts (Amazon, TikTok Shop, Faire); improved engagement and subscriber metrics Improving
Product Innovation (Mushrooms, CBN, Capsules)Functional mushroom gummies launched; CBN ‘Stay Asleep’ traction; soft gel capsules Functional mushroom line expanded online (Walmart.com, Amazon.com, DTC); new cannabinoid isolates referenced Improving
Manufacturing In-houseRamp-up expected in 2025 to support margins Preliminary in-house gummy production begins Q2 2025; topicals over time Improving
Cost ManagementSG&A down materially; MLB amortization reduced; adjusted EBITDA improved in Q4 SG&A down 24.2% YoY; MLB promotional rights concluded (>$18M cash outlays removed) Improving
Regulatory/Medical (DeFloria)Q3: IND prep; Q4: FDA review underway FDA clearance to proceed to Phase 2 for AJA001 (ASD); CW holds manufacturing rights upon approval Improving (pipeline progress)
Retail PartnershipsWalmart rollout; Chewy pet Whole Foods June rollout (>400 stores) Improving
Earnings Call CadenceQ3: shift to two calls per year (March, August) No Q1 call transcript provided Stable (cost-focused cadence)

Management Commentary

  • CEO Bill Morachnick: “Q1 delivered our first year-over-year revenue growth since 2021 – validating the transformation we initiated 18 months ago… upgraded e-commerce… new digital storefronts… upcoming nationwide rollout with Whole Foods… initial in-house gummy production… concluded promotional rights agreement with MLB… initiatives position the Company to deliver top and bottom-line growth for 2025 and beyond” .
  • CFO Erika Lind: “Our reengineered cost structure is now flowing through the P&L… concluded high-cost promotional sports agreements, thereby eliminating sizeable future cash outlays of more than $18 million over the next three years… transitioning to in-house manufacturing and disciplined SG&A control… anticipate further improvements to cash flow in 2025” .
  • On margins: “Prior year included temporary items favorable to gross margin; forward GM modeled in the low 50s, supported partly by transition to in-house production” .

Q&A Highlights

  • Management did not host a Q1 earnings call; the company previously communicated a cadence of two calls per year (March for year-end, August for Q2) to streamline costs .
  • Press release clarifications: Whole Foods rollout (>400 stores) in June; preliminary in-house gummy production starting Q2 2025; MLB promotional rights agreement concluded (> $18M cash savings over 3 years) .

Estimates Context

  • Consensus (S&P Global) for Q1 2025 was unavailable for EPS and revenue; actual results are shown below and compared against “N/A” consensus.
  • Implication: With estimates unavailable, the narrative hinges on operational progress and sequential/YoY trends rather than beat/miss constructs.
MetricActual Q1 2025Consensus Q1 2025
Revenue ($USD Millions)$12.3 N/A*
EPS (Basic & Diluted, $USD)$(0.04) N/A*

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Early validation of transformation: first YoY revenue growth since 2021, driven by e-commerce upgrades and expanded digital storefronts; watch for sustained DTC momentum and retail adds to extend the trend .
  • Margin rebuild underway: forward GM modeled in low-50s; in-house gummy production starting Q2 and topicals later should improve fixed-cost absorption and speed-to-market through 2H 2025 .
  • Cost discipline is meaningful: SG&A down 24.2% YoY; MLB promotional rights termination removes >$18M of cash outlays over 3 years, tightening cash burn and preserving capital for innovation .
  • Retail catalysts: Whole Foods (>400 stores) rollout in June expands brand reach in natural/health channel; monitor sell-through and category placement to gauge traction .
  • Pipeline optionality: FDA Phase 2 clearance for AJA001 (ASD) via DeFloria and CW’s manufacturing rights offer medium-term upside if pivotal trials succeed; risk remains around clinical and regulatory timelines .
  • Cash profile: $19.4M cash and $(2.8)M operating cash outflow in Q1; expense actions and insourcing support improving 2025 cash flow, but execution on revenue mix and margin lift is critical .
  • Trading lens: Near-term sentiment should track retail expansion and tangible margin improvement from in-house production; medium-term thesis hinges on proving sustained top-line growth in a challenged CBD category and advancing medical pipeline milestones .