Canopy Growth's Latest Earnings Call: Navigating Contradictions in Supply Chain, U.S. Market Strategy, and Gross Margins

Cannabis Segment Revenue Growth:
- Canopy Growth reported a 24% year-over-year increase in its cannabis net revenue to $57 million in the first quarter of fiscal 2026.
- The growth was driven by strong performance in Canada Medical (13% growth) and international markets (4% growth), particularly in Germany, where sales grew by triple digits.

Cost Reduction Initiatives:
- The company has achieved $17 million in annualized cost savings, reaching 85% of its targeted $20 million in cost reductions.
- This success is attributed to structural changes, including a 15% reduction in SG&A headcount and streamlining of operations.

Gross Margin Improvement Plan:
- Canopy Growth plans to improve its gross margin in the cannabis segment to the low to mid-30s by year-end.
- The improvement is expected through increased production capacity, reduced temporary labor costs, and better market segmentation.

Storz & Bickel's Performance and Recovery Strategy:
- Storz & Bickel's revenue fell by 25% year-over-year to $15 million in the first quarter.
- The decline was due to lapping strong sales from the previous year and weaker consumer demand. Recovery is anticipated with a new device launch in the coming weeks.

Canopy USA and International Market Strategies:
- Canopy USA focused on reducing operating expenses and divesting non-core assets, securing $20 million in funding after the quarter end.
- Internationally, the company is enhancing operational infrastructure and strengthening routes to market, particularly in Europe, to support future growth and leadership.