Canopy Growth Q4 misses expectations with C$221m loss, revenue down 11%

Canopy Growth Corporation (TSX: WEED; Nasdaq: CGC) reported a net loss of C$221.5 million for the fourth quarter of fiscal 2025, widening sharply from C$94.7 million a year ago, as revenue fell 11% year-over-year to C$65 million. The company’s gross margin contracted to just 16%, while adjusted EBITDA came in at a loss of C$9.2 million. These underwhelming quarterly figures pushed Canopy’s full-year net loss to C$604.1 million on annual revenue of C$268.9 million—down 9% from FY2024. Investors swiftly penalized the stock, which tumbled nearly 19% during intraday trading on May 30, closing at $1.38 on Nasdaq.

The results extend a multi-year trend of operational losses and restructuring cycles across Canada’s cannabis sector, as firms struggle to balance oversupply, regulatory drag, and narrowing margins in adult-use markets. Canopy Growth, once considered a bellwether of the industry, is now doubling down on medical cannabis and global efficiency plays to regain investor trust.

Why Did Canopy Growth’s Q4 Earnings Disappoint?

The Q4 FY2025 loss was driven by declining revenue across key segments and lower-margin product mixes. Total net revenue for the quarter fell 11% year-over-year from C$72.8 million to C$65 million. Notably, Canadian adult-use cannabis revenue dropped 3% to C$20.4 million due to weaker sales of dried flower and pre-rolls, partially offset by growth in infused pre-rolls—a product category led by the company’s Claybourne brand, now holding a top-three position nationally.

Medical cannabis in Canada rose 13% in Q4 to C$20 million, as average order sizes increased. However, international cannabis sales slid 35% year-over-year to C$7.5 million, weighed down by regulatory headwinds in Poland and reduced demand in Australia. Sales from Storz & Bickel, Canopy’s vaporizer subsidiary, fell 23% to C$17.1 million due to softer global consumer demand and tough comparisons against strong Venty device sales in Q4 FY2024.

Adjusted gross margin declined 200 basis points to 19% during the quarter, and reported gross margin plunged to 16%, reflecting higher restructuring costs and operational inefficiencies in adult-use operations. The quarter also included nearly C$2 million in restructuring charges, contributing to a negative free cash flow of C$36.2 million.

How Did Canopy Perform Over the Full Fiscal Year?

For FY2025, Canopy Growth posted revenue of C$268.9 million, down 9% from C$297.1 million in FY2024. Gross margin improved to 30% from 27%, aided by the strategic shift toward medical cannabis and supply chain optimization. Adjusted EBITDA improved dramatically to a loss of C$23.5 million, compared to a C$58.9 million loss in FY2024. Free cash flow also narrowed to a C$176.6 million outflow, an improvement from the C$231.9 million in the prior year, driven by lower interest expenses and reduced capital outlays.

The company also reported a significant reduction in total debt, which fell to C$304 million by March 31, 2025, from C$597 million a year earlier—largely through prepayments on its senior secured term loan. Liquidity stood at C$113.8 million in cash, though down from C$170.3 million in FY2024, reflecting ongoing funding challenges in a capital-constrained cannabis industry.

Why Did Canopy Growth Stock Fall So Sharply?

Canopy Growth shares nosedived on May 30, 2025, reacting to the Q4 earnings miss and deepening net losses. The stock dropped nearly 19% intraday on Nasdaq, settling at $1.38, after closing at $1.71 the previous session. Investors were rattled by the significantly wider-than-expected earnings loss—EPS came in at -$0.76, far below analyst estimates of -$0.09—as well as weaker-than-projected revenue of $45.3 million versus a $50 million consensus.

The earnings miss underscores continued challenges in achieving profitability, especially with ongoing uncertainty surrounding the company’s U.S. footprint via Canopy USA and Acreage Holdings. Canopy also revealed that the fair value of its equity investments in Canopy USA and Acreage declined significantly, with Acreage now in default under its credit agreement and awaiting a lender resolution.

What Are Analysts and Institutions Saying About CGC?

Institutional sentiment remains cautious. As of May 30, 2025, institutional ownership stood at just 3.33% of total shares. Over the past 12 months, institutional inflows totaled approximately $8.62 million, compared to outflows of $1.32 million. However, some large players, including Morgan Stanley, increased holdings by 27.36% during the March quarter, signaling selective optimism.

Analyst sentiment is tepid at best. The consensus rating on CGC stock is “Underperform,” with a median target price around CAD 4.21, suggesting limited upside unless the company delivers a clear path to adjusted EBITDA positivity. The earnings volatility, coupled with execution risks in global markets, makes CGC a high-risk, turnaround candidate rather than a buy-rated growth stock.

What’s the Strategic Focus Going Into FY2026?

Canopy Growth’s FY2026 strategy centers on four key priorities: accelerating its global medical cannabis business, tightening its focus on profitable segments in Canada’s adult-use market, improving operational alignment across geographies, and executing further cost reductions.

The company has consolidated medical cannabis operations in Canada, Germany, Poland, and Australia into a unified global business unit. This integrated structure is expected to improve supply chain agility, ensure better product availability, and deepen patient access, especially through EU-GMP-certified distribution channels.

In adult-use, Canopy is streamlining its portfolio to focus on high-THC flower, vapes, and pre-rolls—formats with stronger margins and consumer demand. It also plans to enhance profitability through better supply-demand alignment and inventory discipline, guided by a newly established global operations function.

Additionally, another C$20 million in annualized cost savings is expected over the next 12–18 months through SG&A cuts, headcount reduction, and optimization of IT and professional service expenses.

How Does the U.S. Strategy Factor Into Canopy’s Outlook?

While Canopy no longer consolidates its U.S. operations financially, its exposure to the U.S. cannabis market remains a critical narrative for long-term valuation. Canopy USA controls Acreage Holdings, Wana Brands, and Jetty Extracts—but with Acreage now in default and revenue falling short of projections, the risk profile has grown considerably.

Regulatory uncertainty in the U.S., particularly the absence of federal legalization or banking reform, continues to cloud visibility. Any upside from this segment will likely be contingent on major legislative progress or a turnaround in Acreage’s balance sheet. Until then, the U.S. strategy remains a speculative lever rather than a core earnings driver.

What Should Investors Expect in FY2026?

Analysts and investors are looking for signs that Canopy Growth can finally pivot to sustained positive adjusted EBITDA, a milestone the company claims is achievable in the near term. The focus on medical cannabis—with stronger margins and growing demand across Europe—could offer a viable growth engine if execution remains tight.

However, the risks are far from trivial. Market oversupply in Canada, macroeconomic softness, U.S. exposure risks, and consumer pullback in discretionary vaporizer spending will all weigh on performance. Execution against its FY2026 playbook will be critical, and investors will expect cleaner quarterly results, margin expansion, and improved free cash flow as proof points.

Until those signals materialize, Canopy Growth remains in “show-me” mode for institutions and retail alike.