KushCo Holdings Q2 Revenue Jumped 240 Percent


Another closely watched cannabis company has reported its financial metrics on Thursday, boasting significant revenue gains. KushCo Holdings Inc (OTCQB: KSHB) announced today it’s earnings figures for its second fiscal quarter of 2019 ending in February 28th.

Net revenue increased 240 percent year-over-year to $35.2 million in comparison to last years figures. However, gross profit was lower this year at 12.9 percent in contrast to last years 28.1 percent, while KushCo’s net loss was approximately $8.9 million. This has increased from $7.6 million during the second quarter of 2018.

Revenue for the second fiscal quarter of 2019 saw record growth of 240% year-over-year, reaching $35.2 million, compared with $10.4 million in the second fiscal quarter of 2018 and $25.3 million in the first fiscal quarter of 2019. This strong performance was attributable to our growing customer base and increased sales across our key markets as we successfully leveraged our diverse business units to cross sell product classes and gain market share. We now have customers in every U.S. state where cannabis is legal and in 25 countries,” said CEO and Chairman Nick Kovacevich. “We continued to execute a number of strategic initiatives that have improved our cash flow during the quarter, including the elimination of free shipping, renegotiated terms from vendors and new inventory management systems that are improving operational efficiencies as we scale the business. We have introduced a number of measures to additionally enhance our gross margins. Improving gross margins will continue to be a priority as we execute on our growth plan.”

Many cannabis companies have seen their net losses grow despite strong increases in revenue. While many companies have pursued strategies of aggressive expansion at the expense of profitability, markets have reacted negatively to many of these companies as share prices have dropped for many of these cannabis companies.

“We continue to invest in the growth of the business by adding new product and service offerings and driving customer development and retention. As the industry further matures and large multi-state operators scale and prepare for additional market legalization, we expect to see demand for our core offerings, including vaping products, packaging, supplies and labeling solutions increase across our most important markets,” added Kovacevich. “Our focus remains the build out of a scalable, sustainable business, as we cement our presence as the primary supply chain partner to the cannabis, CBD and related industries. As a result of a strong first half of the year, including the signing of a number of long-term supply arrangements-in-principle with several new large, well-known customers, we are raising our revenue guidance from between $­110 million and $120 million for fiscal year 2019 to between $140 million and $150 million.”

Shares of KushCo increased a modest 3.4 percent in response to today’s news. Unlike many other cannabis companies, KushCo’s shares have fluctuated wildly over the past few months, staying relatively the same overall but wildly rising and falling in the short term. With a market cap of just under $500 million, KushCo still has plenty of room to grow. Investors should keep their eyes out for a potential listing on a major exchange in the future, which seems likely in the future.