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Charlotte's Web Holdings, Inc. (CWBHF)·Q2 2025 Earnings Summary

Executive Summary

  • Second consecutive YoY revenue growth with continued sequential progress; Q2 2025 revenue rose to $12.8M as innovation (Brightside THC gummies, CBG Focus & Attention, functional mushroom gummies) and omnichannel expansion supported top-line and margin recovery .
  • SG&A down 31.7% YoY; management executed cost actions (MLB amortization elimination, personnel reductions) and post-quarter initiatives targeting ~$9M annualized cost reductions in 2026, plus $3M annualized savings from in-house gummy manufacturing, positioning toward positive cash flow .
  • Gross margin improved to 46.8% (vs 21.0% reported a year ago; 52.2% adjusted baseline YoY), despite insourcing start-up costs and zero-margin DeFloria extract sales that reduced margin by ~3pp .
  • Key catalysts: rapid uptake/sellouts of Brightside hemp-derived THC gummies, Whole Foods rollout of isolate topicals, expanding digital channels (Amazon, TikTok Shop, Walmart.com), and regulatory momentum; DeFloria’s AJA001 advancing to FDA-cleared Phase 2 (Charlotte’s Web holds exclusive commercial manufacturing rights) .

What Went Well and What Went Wrong

What Went Well

  • “Q2 marked another step forward in our turnaround as Charlotte's Web again delivered both sequential and year-over-year growth” — CEO Bill Morachnick; Brightside gummies fully internalized with strong early demand; omnichannel reach expanded .
  • SG&A down 31.7% YoY; CFO Erika Lind emphasized disciplined cost management and trajectory to positive cash flow as in-house production scales margins .
  • Product innovation gained traction: Brightside THC gummies sold out over Memorial Day weekend; minor cannabinoid CBG and functional mushroom gummies broadened portfolio and channels (Amazon, TikTok Shop, Walmart.com, Faire) .

What Went Wrong

  • Gross margin faced insourcing start-up costs and zero-margin DeFloria extract sales (~3pp headwind), plus promotional activity; adjusted margins still below prior-year adjusted levels (46.6% vs 52.2%) .
  • Net loss remains material at $(6.3)M and Adjusted EBITDA negative $(3.6)M; cash fell to $15.3M as operations used cash year-to-date and balance sheet equity compressed .
  • No explicit quantitative revenue/EPS guidance was provided; margin trajectory depends on execution of insourcing and mix shift, with regulatory/legal backdrop still an industry risk factor per filings .

Financial Results

Sequential and Recent Trend (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$12.7 $12.262 $12.806
Gross Profit ($USD Millions)$5.1 $6.230 $5.990
Gross Margin (%)40.2% 50.8% 46.8%
SG&A ($USD Millions)$10.6 $11.578 $10.062
Operating Loss ($USD Millions)$(5.5) $(5.348) $(4.072)
Net Loss ($USD Millions)$(3.4) $(6.212) $(6.288)
EPS (Basic & Diluted, $)$(0.02) $(0.04) $(0.04)
Adjusted EBITDA ($USD Millions)$0.260 $(2.765) $(3.618)
Cash & Equivalents ($USD Millions)$22.618 $19.357 $15.268

Year-over-Year Comparison

MetricQ2 2024Q2 2025
Revenue ($USD Millions)$12.289 $12.806
Gross Profit ($USD Millions)$2.582 $5.990
Gross Margin (%)21.0% 46.8%
Adjusted Gross Profit ($USD Millions)$6.412 $5.973
Adjusted Gross Margin (%)52.2% 46.6%
SG&A ($USD Millions)$14.727 $10.062
Operating Loss ($USD Millions)$(12.145) $(4.072)
Net Loss ($USD Millions)$(11.057) $(6.288)
EPS (Basic & Diluted, $)$(0.07) $(0.04)
Adjusted EBITDA ($USD Millions)$(5.194) $(3.618)

KPIs and Balance Sheet Highlights

KPIQ2 2025
Working Capital ($USD Millions)$29.4
Convertible Debenture ($USD Millions)$48.616
Total Liabilities ($USD Millions)$73.047
Total Assets ($USD Millions)$87.976

Segment Breakdown

  • The company does not disclose segment reporting; operations presented on a consolidated basis .

Operational Drivers

  • Innovation and omnichannel expansion (Brightside THC gummies, CBG Focus & Attention, functional mushroom gummies; channels include Amazon, TikTok Shop, Walmart.com, Faire) .
  • Insourcing of gummies to in-house production, expected to support margins and speed-to-market over time .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Margin TrajectoryFY 2025“Modeling forward gross margin in the low 50s” (context from Q1 2025) Q2 2025 margin at 46.8% with ~3pp headwind from DeFloria extract sales and insourcing start-up costs; margin expansion expected as in-house production scales Maintained long-term trajectory; near-term margin constrained
Annualized Cost ReductionsFY 2026Concluded high-cost sports agreements, eliminating >$18M cash outlays over next 3 years (MLB) Expect ~$9M annualized cost reduction in 2026 including in-house manufacturing and additional measures Raised specificity toward 2026 run-rate savings
In-house Gummy Manufacturing SavingsOngoingInitiated in-house production (Q1) with anticipated margin benefits over time ~$3M annualized cost savings from gummy internalization; further topical insourcing evaluated for 2026 New quantified savings disclosed
Positive Cash Flow TrajectoryFY 2025–2026Improving Adjusted EBITDA; positive Q4 2024 Adjusted EBITDA; targeting improvements in 2025 CFO: multiple paths to positive cash flow given lower OpEx base and scaling gross margins Reiterated confidence

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
Omnichannel & DigitalNew e-comm platform; improved conversion; retail adds (Walmart, Chewy) DTC growth; Amazon/TikTok Shop/Faire; Walmart.com adds Expanded marketplaces; diversified digital revenue across platforms Improving
Product InnovationFunctional mushroom gummies launched; minor cannabinoid CBN success Expansion of mushroom gummies; cannabinoid isolates Brightside THC gummies rapid uptake/sellouts; CBG Focus & Attention launch; mushrooms across major platforms Accelerating
In-house ManufacturingPrep in Q4; ramp expected in 2025 Commenced initial in-house gummy production Brightside fully internalized; additional SKUs transitioning H2 2025; topical insourcing evaluated Scaling up
Regulatory/MacroState restrictions pressured retail; e-comm offset —Favorable federal momentum anticipated; FDA dietary supplement/food pathways proposed; industry consolidation expected Improving outlook
DeFloria (AJA001)FDA allowed Phase 2; strategic manufacturing rights IND cleared for Phase 2; transformative potential over time First systemically absorbed full-spectrum hemp drug cleared for Phase 2; Charlotte’s Web holds exclusive commercial supply rights Advancing
Retail ExpansionWalmart/chewy traction Whole Foods rollout of isolate topicals starting June 2025 Ongoing omnichannel expansion; added marketplaces Broadening

Management Commentary

  • CEO Bill Morachnick: “Q2 marked another step forward in our turnaround… We successfully commenced in-house production of our new Brightside™ gummies and extended our omnichannel reach while achieving early success with our new product categories.”
  • CFO Erika Lind: “Our revenue growth was accompanied by rigorous SG&A discipline that reduced second quarter expenses 31.7% year-over-year… this disciplined cost management and modest revenue growth positions us to approach positive cash flow.”
  • CFO Erika Lind: “For the first half of 2025, we've reduced our cash burn by 52.0% year-over-year while returning to growth… expanding gross margins as we scale in-house production… creates multiple paths to positive cash flow.”

Q&A Highlights

  • The Q2 2025 earnings call transcript was not available in the document set; the company hosted the call on August 13, 2025 with replay and webcast noted, but no transcript is present for analysis at this time .

Estimates Context

  • S&P Global consensus data for Q2 2025 appears unavailable for EPS and revenue (no estimates returned; only actuals reported); therefore, no beat/miss assessment versus Street can be made at this time. Values checked via S&P Global; consensus not published for this issuer as of report date. Values retrieved from S&P Global.*
MetricQ2 2025 Consensus (S&P Global)Q2 2025 Actual
Revenue ($USD Millions)N/A*$12.806
EPS (Primary) ($)N/A*$(0.04)
EBITDA ($USD Millions)N/A*$(5.324) GAAP EBITDA; Adjusted EBITDA $(3.618)

Key Takeaways for Investors

  • Continued sequential and YoY revenue growth amid portfolio expansion signals early traction in a broader botanical wellness strategy beyond CBD, with Brightside THC, CBG, and mushrooms as drivers .
  • Structural cost reset is material (SG&A down 31.7% YoY; targeted ~$9M 2026 run-rate reductions and ~$3M gummy insourcing savings), increasing the feasibility of near-term cash flow breakeven as margins scale .
  • Margin recovery is underway but sensitive to insourcing start-up costs, promotional cadence, and zero-margin clinical supply; expect improvement as in-house production ramps and product mix normalizes .
  • Regulatory momentum (potential FDA pathways for CBD as dietary supplement/food) is an asymmetric upside catalyst likely to consolidate the market toward quality brands; Charlotte’s Web is positioned to benefit given compliance and brand trust .
  • DeFloria’s AJA001 progressing to FDA-cleared Phase 2 with Charlotte’s Web’s exclusive manufacturing rights offers a longer-dated, potentially transformative revenue stream if successful, diversifying beyond consumer wellness .
  • Omnichannel and marketplace breadth (Amazon, TikTok Shop, Walmart.com, Faire) improves discoverability and category resilience; Whole Foods rollout enhances retail validation .
  • Absent Street coverage limits near-term “beat/miss” trading catalysts; focus on execution KPIs: margin trajectory, SG&A discipline, cash burn reduction, and sell-through of Brightside/mushroom/CBG portfolios .