cbdMD's Q3 Earnings Call: OpEx Savings and Break-Even Revenue Claims Clash With Prior Guidance

Date of Call: Aug 13, 2026

Financials Results

• Revenue: $5.6M, up 20% YOY
• EPS: $0.11 net loss per share, compared to $0.21 net loss per share in the prior year quarter
• Gross Margin: 54.7%, compared to 61.5% in the prior year period
• Operating Margin: Operating loss of $1.1M, compared to a loss of $905K in the prior year period

Guidance:

• Implemented cost reduction program targeting $100K-$150K in monthly savings (approx. $1.2M-$1.8M annualized) beginning Q4.
• Expects cost actions to provide meaningful benefit to adjusted EBITDA and contribution margin in Q4.
• Targeting low $6M to mid $6M quarterly revenue run rate for cash break-even.

Business Commentary:

Revenue Growth and Wholesale Expansion:

• cbdMD Inc. reported net sales of $5.6 million for Q3, up 20% year-over-year, with wholesale sales increasing by 61%.
• The growth was primarily driven by momentum in the Oasis brand and the contribution from the Bluebird Botanicals acquisition.

Cost Management and Margin Improvement:

• The company's gross margin declined to 54.7% from 61.5% in the prior year period.
• This was due to the shift towards wholesale and increased costs related to regulatory compliance, but the company is implementing cost reduction measures targeting $100,000-$150,000 in monthly savings.

Regulatory Environment Impact:

• cbdMD is actively engaged in regulatory developments, with significant legislative activity regarding hemp-derived THC products.
• The company is preparing for potential regulatory changes, including increased inventory reserves and evaluating product reformulation to mitigate impacts.

Product Launches and Diversification:

• cbdMD launched the Kava Oasis beverage to capitalize on gaps in the THC beverage market.
• This strategic move aims to maintain shelf space productivity amid regulatory uncertainty by offering a compliant, non-intoxicating alternative.

Sentiment Analysis:

Overall Tone: Positive

• Expressed 'cautious optimism' on regulation, citing 'growing leadership in Washington' and 'bipartisan bills.' Highlighted 'top-line growth,' 'strong momentum in wholesale,' and 'encouraged by the underlying revenue momentum.' Stated the company is positioned to 'accelerate growth meaningfully' if regulation moves in their direction.

Q&A:

• Question from Adam Waldo (Lismore Partners, LLC): Is the $100K-$150K monthly OpEx savings guidance on a cash or accrual basis? Can you provide cash OpEx savings details?
  Response: The savings are cash-related, primarily from operating expenses, with supply chain savings realizing more in September. About 90% expected to be captured by end of the current fiscal Q4.

• Question from Adam Waldo (Lismore Partners, LLC): Will you be cautious on major new marketing initiatives and product launches until federal regulatory clarity improves?
  Response: Yes, they are being cautious on marketing spend and new launches, focusing on leveraging existing channels and customer bases.

• Question from Thomas McGovern (Maxim Group): What is driving the acceleration in Oasis depletions?
  Response: A combination of expanding distribution points and higher sell-through rates at existing doors, driven by sales investments and distributor/retailer alignment.

• Question from Thomas McGovern (Maxim Group): How is the Kava Oasis launch different and what is the go-to-market strategy?
  Response: It was launched on the call day. The strategy focuses on creating a great-tasting, non-intoxicating botanical beverage to fill regulatory-induced shelf space gaps and capture demand for relaxation.

• Question from Thomas McGovern (Maxim Group): What is the expected timeline for developing other botanical products?
  Response: Expect announcements on other botanicals before year-end, with some in development and acquisition discussions ongoing.

• Question from Thomas McGovern (Maxim Group): How will the wholesale vs. DTC revenue mix evolve?
  Response: Regulatory trends, like the Hemp Parity Bill, may push more revenue into a wholesale model, as seen in states like Tennessee.

• Question from Adam Waldo (Lismore Partners, LLC): How are you thinking about structuring M&A amidst regulatory uncertainty?
  Response: Focusing on accretive deals that leverage cbdMD's infrastructure, aiming for short-term cash flow improvements and shareholder value, irrespective of near-term regulation.

Contradiction Point 1

Financial Forecast Clarity

Contradiction on the specifics of operational savings and break-even revenue, affecting investor understanding of financial targets.

Adam Waldo (Lismore Partners, LLC) - Adam Waldo (Lismore Partners, LLC)

2026Q3: The savings figure is cash-related, primarily from operating expenses... - Ronan Kennedy(CEO and CFO)

Is the $100k-$150k monthly OpEx reduction guidance based on cash or accrual accounting, and what are the expected cash OpEx savings? - Adam Waldo (Lismore Partners)

2026Q2: The company expects to improve cash burn and EBITDA going forward with more efficient inventory management... - Ronan Kennedy(CEO and CFO)

Contradiction Point 2

Break-Even Quarterly Revenue Run Rate

Contradiction in the specific revenue threshold cited for cash break-even, impacting expectations for financial performance.

Adam Waldo (Lismore Partners, LLC) - Adam Waldo (Lismore Partners, LLC)

2026Q3: the company is modeling a cash break-even point at a quarterly revenue run rate in the low $6 million range... - Ronan Kennedy(CEO and CFO)

Regarding the $100k-$150k/month OpEx reduction guidance, is it on a cash or accrual basis, what are the cash OpEx savings expectations, and is the break-even quarterly revenue run rate now in the low $6 million range? - Adam Waldo (Lismore Partners)

2026Q2: The company's modeling indicates a breakeven top line at a quarterly revenue well below $7 million**. - Ronan Kennedy(CEO and CFO)

Contradiction Point 3

Supply Chain and Inventory Strategy

Contradiction in describing the company's approach to inventory and regulatory agility, affecting perceptions of operational flexibility.

Adam Waldo (Lismore Partners, LLC) - Adam Waldo (Lismore Partners, LLC)

2026Q3: The savings will be fully realized by the end of the current fiscal Q4 (October), with a small bleed-over into fiscal Q1 2027. - Ronan Kennedy(CEO and CFO)

Is the $100k-$150k monthly OpEx reduction guidance on a cash or accrual basis, and what are the expected cash OpEx savings? - Thomas McGovern (Maxim Group)

2026Q2: The company is positioning itself to stay agile by maintaining a nimble supply chain and inventory** to react quickly to label changes, repacking requirements, or market restrictions. - Ronan Kennedy(CEO and CFO)

Contradiction Point 4

Contribution and Disclosure of Oasis Seltzer Line

Inconsistent statements on whether Oasis is contributing and if sales data will be disclosed, creating uncertainty around product performance.

Thomas McGovern (Maxim Group) - Thomas McGovern (Maxim Group)

2026Q3: The depletion growth is due to both expanding distribution and higher sell-through, driven by focused sales investments with distributors. - Ronan Kennedy(CEO and CFO)

What is driving the acceleration in Oasis depletions—expanding distribution or higher sell-through at existing doors—and can you comment on the new Texas distribution partner and sell-through trends? - Thomas McGovern (Maxim Group)

20260218-2026 Q1: Oasis is starting to contribute but is still small relative to the core CBD brand. The expectation is for it to continue improving throughout the year, with the company reassessing what it is willing to disclose as gains are seen. - T. Kennedy(CEO)

Contradiction Point 5

Impact of Regulatory Environment on Strategy

Contradiction on the company's approach to regulatory uncertainty regarding Medicare coverage, influencing strategic decision-making.

Adam Waldo (Lismore Partners, LLC) - Adam Waldo (Lismore Partners, LLC)

2026Q3: The approach is to be flexible and opportunistic... irrespective of near-term regulatory changes. - Ronan Kennedy(CEO and CFO)

How do you approach structuring acquisitions amid regulatory uncertainty and accelerating revenue/cash cost reductions, and do you prioritize regulatory clarity before proceeding or structure deals to maximize shareholder upside? - Thomas McGovern (Maxim Group)

20251220-2025 Q4: cbdMD is operating carefully, has contingency plans, and believes regulations will be resolved, focusing on building a strong core THC business in the meantime. - T. Kennedy(CEO and CFO)