After Tilray Brands Inc. reported a loss of US$105.0 million in its latest quarter, with its net revenue rising 30 per cent more than the previous year, one equity researcher says the future could still be bright for the Canadian cannabis company. 

The decline comes after the company said it expected adjusted EBITDA of US$60 million to $63 million for its 2024 financial year ending May 31, a drop from the company’s earlier projection of $68 million to $78 million.

“I think the quarter itself was a little softer than expectation but I think there’s a lot more to be excited about in terms of a setup in this space,” said Matt Bottomley, director of equity research at Canaccord Genuity, in an interview with BNN Bloomberg. 

Bottomley explained that, despite Tilray’s market share dropping “about 100 basis points,” the company is still “number one in the country.”

“I think they’re operating as well as they can considering we’re in a very restrictive environment still, with respect to what these producers could do,” he said. 

Tilray recently reported that it no longer expects positive adjusted free cash flow for its full financial year, largely because of the delays in collecting cash on various sales. 

As the company adjusted its EBITDA financial projections, Bottomley points out that soured sentiment towards this latest quarter is largely because of the removal of cash flow projections. 

“I think a lot of the criticism — of you could call it that — from the quarter would be more or less that the cash flow projections for this year were removed,” he explained. “They’re hoping to get free cash flow on an adjusted basis positive by the end of the year. There’s only one year left now in terms of their fiscal year-end, so that’s clearly not going to happen and I think that’s kind of the big negative headline that’s partially responsible for the sell-off here.”

Tilray also reported that its loss for the quarter amounted to 12 cents per diluted share for the quarter, which ended on Feb. 29. 

Bottomley added that optimism could be found in Tilray’s diversification of products. 

Last summer, Tilray’s shares jumped after the company agreed to buy eight beer and beverage brands from the owner of Budweiser, including Shock Top, Breckenridge Brewery, Blue Point Brewing Company, 10 Barrel Brewing Company, Redhook Brewery, Widmer Brothers Brewing,  Square Mile Cider Company and HiBall Energy from Anheuser-Busch InBev.

Bottomley said that Tilray’s positioning in the beverage industry will depend largely on regulations. 

“I think being diversified, considering no one can control the regulatory environment, isn’t a bad thing,” he told BNN Bloomberg. 

“But in terms of how much overlap there will ultimately be between these craft-brewed brands and whiskey brands that they have relative to cannabis, I think there is a longer-term curve there with respect to what consumer behaviour will ultimately be,” he added. 

“I think right now they’re almost at about a $300 million business on their alcohol and beer — and that’s something that clearly they’ve put a lot of effort into and talk up a lot.”

He said the company’s alcohol “ramp up” is “the main reason that, although the guidance came down a little through the fiscal Q4, we’re expecting a material increase.” 

To watch the rest of Bottomley’s interview with BNN Bloomberg, watch the video above.