How Did Tilray Stack Up to the Competition?

In the market for licensed Cannabis, Tilray (NASDAQ:TLRY) only has three larger competitors. Aurora Cannabis (NYSE:ACB), is much larger than Tilray, and Cronos Group (NASDAQ:CRON) is nearly the same size. Canopy Growth‘s $15.4 billion market cap is more than three times Tilray’s size, and since Canopy hasn’t reported yet, it’s going to sit this round out.

Tilray, Aurora, and Cronos recently reported first-quarter earnings that were not inspiring. Adult-use sales began last October, which made the three-month period that ended in March the first full quarter since adult-use sales began disappointing everyone last October.

Is Tilray executing its plan as well as its potential competitors? Let’s look at some raw numbers from their first-quarter reports to see how they measure up to each other.

Most improved top line

In terms of revenue, Tilray’s sales increased at a faster rate than its larger peers. During the first three months of 2019, Tilray reported CA$30.9 million in total revenue, which was 48% more revenue than during the last three months of 2018.

Over the same time frame, top-line revenue at Aurora Cannabis grew 20% to CA$65.1 million, and Cronos Group came in last, with revenue that rose just 16% to a meager CA$6.5 million.

Cost of sales

Top-line revenue growth is a good place to start, but it doesn’t tell us much about how well these businesses are executing their game plans. Unfortunately, Tilray isn’t looking like an efficient cannabis producer right now. During the first quarter, Tilray’s cost of goods sold was so high that the company produced a gross profit of just CA$7.2 million, or around 23% of revenue.

Aurora was far more efficient than Tilray in the first quarter, with a gross profit that reached 66% of revenue. Cronos Group couldn’t outperform its larger competitor, but a 54% gross margin in the first quarter still beats Tilray’s performance by a mile.

Investors should know that Tilray had to source 26% of the cannabis it sold in the first quarter from third parties, which drove up costs. In February, Tilray acquired Natura Holdings, a large licensed cultivator that could help the company’s gross margin catch up to its peers…

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