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Tilray Brands, Inc. (TLRY)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 net revenue was $224.5M, down 2% YoY; gross margin was 30%. Adjusted EBITDA was $27.6M (second-highest in company history), adjusted EPS was $0.02; GAAP diluted EPS was -$1.30 due to a $1.3969B non‑cash impairment .
  • Versus Wall Street consensus (S&P Global): TLRY beat EPS (actual $0.02 vs est -$0.0267*) but missed revenue (actual $224.5M vs est $233.3M*). Prior quarters: Q3 EPS met (0.00 vs -0.04* est) and revenue missed ($185.8M vs $209.8M*); Q2 EPS met (-$0.0026 vs -$0.04*) and revenue missed ($211.0M vs $216.3M*). Values retrieved from S&P Global.
  • FY2026 guidance introduced: Adjusted EBITDA of $62–$72M, +13% to +31% YoY; FY2025 revenue came in at $821.3M (+4% YoY; +6% cc), below revised Q3 guidance of $850–$900M due to beverage softness and export permit delays .
  • Segment mix in Q4: Cannabis $67.8M (+44% margin), Beverage $65.6M (38% margin), Distribution $74.1M (10% margin), Wellness $17.0M (33% margin). International cannabis revenue rose 71% YoY in Q4; Canada remained #1 by revenue for the year .

What Went Well and What Went Wrong

What Went Well

  • International cannabis acceleration: Q4 international cannabis revenue +71% YoY; Germany highlighted with strong growth and Aphria RX in-country cultivation capacity .
  • Margin discipline in cannabis: Q4 cannabis gross margin expanded to 44% (from 40% prior-year Q4) by prioritizing higher-margin SKUs and redirecting supply to international markets .
  • Cost actions and cash/liquidity: Annualized beverage synergies realized reached $24M toward a $33M target; cash and marketable securities were $256M; ~$100M total debt repayments to date; net debt/TTM adj. EBITDA ~0.3x .

Selected management quotes:

  • “We achieved our second‑highest ever quarterly consolidated adjusted EBITDA of almost $28 million.”
  • “Global cannabis gross margin increased by 700 basis points in fiscal 2025.”
  • “Our $256 million cash balance…provides Tilray with great flexibility for strategic opportunities.”

What Went Wrong

  • Beverage revenue softness and margin compression: Q4 beverage net revenue fell to $65.6M (from $76.7M YoY) and gross margin to 38% (from 53%) due to SKU rationalization, integration timing, and industry demand weakness .
  • GAAP loss driven by impairment: Q4 GAAP net loss of -$1.268B, GAAP EPS -$1.30, primarily due to a $1.3969B non‑cash impairment of goodwill/intangibles tied to the 2021 combination and lower market cap/discount rate changes .
  • FY2025 revenue below guidance: Actual $821.3M missed Q3‑revised guidance of $850–$900M as beverage volumes and export permit delays weighed on Q4; management cited ~$35M revenue impact from strategic decisions (vape/pre‑roll pauses and beer SKU rationalization) .

Financial Results

Consolidated performance vs prior quarters and estimates

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$210.95 $185.78 $224.54
Gross Margin %29% 28% 30%
Adjusted EBITDA ($USD Millions)$9.02 $9.04 $27.64
GAAP Diluted EPS ($USD)-$0.10 -$0.87 -$1.30
Primary EPS (S&P actual, $USD)-0.0026*0.00*0.02*
Revenue Consensus Mean (S&P, $USD Millions)216.33*209.77*233.29*
Primary EPS Consensus Mean (S&P, $USD)-0.04*-0.04*-0.0267*
Primary EPS – # Estimates (S&P)4*3*3*
Revenue – # Estimates (S&P)9*8*7*

Values retrieved from S&P Global.

Segment net revenue

Segment Net Revenue ($USD Millions)Q2 2025Q3 2025Q4 2025
Beverage$63.08 $55.92 $65.62
Cannabis$65.65 $54.27 $67.83
Distribution$67.61 $61.49 $74.05
Wellness$14.61 $14.09 $17.04
Total$210.95 $185.78 $224.54

Segment gross margin %

Segment Gross Margin %Q2 2025Q3 2025Q4 2025
Beverage40% 36% 38%
Cannabis35% 41% 44%
Distribution12% 9% 10%
Wellness31% 32% 33%
Total29% 28% 30%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueFY2025$950M–$1,000M (Q2) $850M–$900M (Q3) Lowered
Net Revenue (Actual)FY2025—$821.3M Below revised range
Adjusted EBITDAFY2026—$62M–$72M New

Management notes FY2026 guidance excludes specified non‑GAAP items and cannot be reconciled to GAAP without unreasonable effort .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
AI/technology initiativesImplementing AI/horticulture automation; Microsoft AI partnership (Q2) Continued AI deployment to optimize cultivation, operations Steady execution
Supply chain/export permitsTrapped inventory; export permit delays impacting revenue (Q3) ~$8M shipments delayed in Portugal/Spain; improving line of sight to resume in Q1/Q2 Easing
Tariffs/macro“No current impact of tariffs” (Q3) Reiterated focus on domestic manufacturing; minimal impact discussed Neutral
Cannabis product mix/marginsPaused vapes/infused pre‑rolls to protect margins (Q2/Q3) Margin expansion to 44% in Q4; plan to re‑enter categories post cost improvements Improving margins; selective re‑entry
Beverages performance/integrationProject 420; SKU/geography rationalization; synergies plan updated to $33M (Q3) Q4 softness from rationalization/weak demand; late‑Q4 innovation gaining traction Transition; recovery expected
Regional trends (Germany)Post‑MedCanG: strong flower/extract growth; in‑country cultivation (Q2/Q3) Germany highlighted as growth/ margin driver; leadership in reimbursed market Accelerating
Regulatory/legal (Germany)Telemedicine/mail‑order debate; industry engagement (Q3) Proposed restrictions acknowledged; active advocacy; changes not imminent Watchlist
R&D/clinicalSydney CINV study; glioblastoma study in Spain (Q3) Ongoing; using studies to educate physicians Building evidence
U.S. reschedulingPotential benefits via medical entry; broader capital access (Q3) Management constructive; diversified positioning via beverages/wellness Optionality maintained

Management Commentary

  • Strategy and scale: “We have transformed Tilray Brands into a company generating nearly $1 billion in annual revenue… the fourth largest craft beer producer in the U.S.” .
  • Impairment context: “Despite recording this non‑cash accounting charge, it does not change how we feel about the future of our business… intrinsic value of our tangible assets.” .
  • International outlook: “We maintained our number one leadership position in the reimbursed [German] market… revenue growth of 134% over the prior year quarter.” .
  • Beverage plans: “SKU rationalization behind us, we are well‑positioned to recapture revenue… refreshed innovation pipeline.” .
  • FY2026 drivers: “Bigger portions of [guidance increase] expected from our international business… Project 420 cost savings flow through.” .

Q&A Highlights

  • Permits/export timing: ~$8M of trapped shipments in Portugal/Spain; management expects pickup in Q1/Q2 as issues ease .
  • Beverage softness root causes: SKU rationalization lag, missed resets pre‑acquisitions, on‑premise shifts; leadership/sales force restructuring underway; innovation gaining traction (e.g., SweetWater Daytrip IPA) .
  • FY2026 EBITDA composition/seasonality: Stronger Q4 expected (beverages seasonality), incremental international/cost savings benefits .
  • Germany regulatory risk: Proposed telemedicine/mail order limits seen as early; industry engagement to avoid pushing patients to illicit market .
  • U.S. rescheduling impact: Would open financing and institutional participation; optional medical entry; broader beverage/wellness opportunities .

Estimates Context

  • Q4 FY2025: EPS beat (actual $0.02 vs est -$0.0267*); revenue miss ($224.5M vs $233.3M*). Values retrieved from S&P Global.
  • Q3 FY2025: EPS met (0.00 vs -$0.04*); revenue missed ($185.8M vs $209.8M*). Values retrieved from S&P Global.
  • Q2 FY2025: EPS met (-$0.0026 vs -$0.04*); revenue missed ($211.0M vs $216.3M*). Values retrieved from S&P Global.

Management attributes variance to beverage reset timing/industry demand and export permit delays; margin‑protective product decisions reduced revenue by ~$35M for FY2025 .

Key Takeaways for Investors

  • International cannabis is a core growth/margin engine (Germany leadership; 71% Q4 international growth); expect continued expansion as permit issues ease and in‑country cultivation scales .
  • Cannabis margin discipline is delivering: Q4 cannabis gross margin at 44%; selective re‑entry into vapes/infused pre‑rolls after cost improvements should support revenue while preserving profitability .
  • Beverage transition nearing inflection: SKU rationalization and integration weighed on Q4, but synergies ($24M realized toward $33M) and initial innovation traction point to recovery potential into FY2026 seasonally strong quarters .
  • Balance sheet flexibility: $256M cash/marketable securities and ~0.3x net debt/TTM adjusted EBITDA provide optionality for strategic moves and cushion against integration/timing volatility .
  • FY2026 setup: New adjusted EBITDA guidance ($62–$72M) anchored by international growth, cost savings, and wellness; watch beverage sell‑through and export permit normalization as catalysts .
  • Risk monitor: Beverage demand softness and craft beer consolidation, regulatory changes in Germany (telemedicine/mail order), and pace of innovation adoption remain key variables .
  • Trading lens: Near‑term stock narrative likely hinges on evidence of beverage recovery in Q4 seasonality, sustained cannabis margin strength, and international revenue execution; watch quarterly updates for permit resolution and innovation velocity .