Aurora Cannabis stock price surged more than 14% after topping third-quarter revenue and earnings estimates on Thursday and jumped another 68% on Friday amid robust improvement in cash flows. Its net revenue of $75m grew 34% from the past year period, exceeding analysts’ expectations by $28.5m.
The revenue growth is driven by a 24% year over year increase in consumer cannabis revenue while medical cannabis net revenue grew 13.5% from the year-ago period.
The Alberta-based weed company says they experienced robust growth in cannabis sales amid the pandemic. The recent launch of a new brand called “Daily Special” also helped in expanding the sales growth.
“I am also pleased that our third quarter 2020 financial results were in-line with our expectations and that we remain firmly on track with the cost-savings and capex goals we detailed during our business transformation plan in February 2020,” Michael Singer, Executive Chairman and Interim CEO of Aurora stated.
The company has been aggressively working on cost reduction measures to strengthen margins and turn to profitability. Its third-quarter net loss stood around C$137.4m from C$160.2m in the past year period.
The company says they are on track to lower its selling, general and administrative expenses to $C40m in the next quarter, with a plan of slashing capital expenditures below C$100m during the second half of 2020.
“These steps are designed to strengthen Aurora’s balance sheet and reduce go-forward costs, as the company works to achieve profitability and positive cash flow,” Michael Singer added.
The company expects to generate positive adjusted EBITDA in the first quarter of the next year amid its strategy of improving the SG&A run rate. The company also plans to generate cash through stock offering at market price to enhance its balance sheet.