Tilray’s Mixed Quarter: Record Revenue Overshadowed by Widening Losses

Tilray US88688T1007

Tilray Brands, Inc. reported financial results that presented a stark contrast: record-breaking sales paired with a net loss that significantly missed analyst targets. The divergence has prompted a sell-off in its shares and a more cautious stance from market observers, raising fundamental questions about the company's path to sustainable profitability.

While the top-line figure showed strength, bottom-line performance was decidedly weak. For its second quarter of fiscal 2026, Tilray posted a GAAP loss per share of -$0.41, nearly triple the -$0.14 loss that Wall Street had anticipated. The net loss for the period amounted to $43.5 million. Although this marks a 49% improvement from the net loss of $85.3 million in the prior-year quarter, it remains a deep deficit. On an adjusted basis, the loss per share was -$0.02.

Key Q2 FY 2026 Financial Metrics:

• Revenue: $217.5 million (+3% Year-over-Year, a company record)
• GAAP Loss Per Share: -$0.41 (Estimate: -$0.14)
• Adjusted Loss Per Share: -$0.02
• Net Loss: $43.5 million (Prior Year: $85.3 million)
• Adjusted EBITDA: $8.4 million
• Cash & Short-Term Investments: $291.6 million
• Net Cash Position: Approximately $30 million

Segment Performance: A Tale of Divergence

The company's revenue achievement was driven by specific segments, while others acted as a drag. The international cannabis business emerged as the standout growth engine, with revenue surging 36% year-over-year. Revenue from the Canadian recreational cannabis market also grew, increasing by 6%.

Tilray's distribution business, which includes its pharmaceutical activities, set a new quarterly record with revenue of $85.3 million, representing 26% growth. Management stated it intentionally reduced offerings in the Canadian wholesale market to redirect inventory toward higher-margin international opportunities, a strategy it plans to continue through FY 2026.

In contrast, the beverage alcohol segment underperformed. Segment revenue declined to $50.1 million from $63.1 million a year ago, while gross margin contracted from 40% to 31%. The company cited industry-wide headwinds in craft beer and portfolio rationalization under its "Project 420" optimization program. New hemp-based THC cocktails and non-alcoholic spirits launched to capitalize on trends like "Dry January" have yet to prove they can drive a sustained segment recovery.

Market Reaction and Technical Outlook

The earnings miss triggered immediate reactions. Analysts at Zacks Investment Research downgraded the stock from "Hold" to "Strong Sell." The current consensus rating sits at "Reduce," with an average price target of $15.00. Analyst sentiment is now distributed as follows:

• Buy: 1
• Hold: 4
• Sell: 2

From a technical perspective, the stock's position has weakened. Shares are trading below both the 50-day moving average of $9.91 and the 200-day moving average of $10.70. Since hitting a 52-week high of $23.20 in October 2025, the share price has retreated more than 59%. Recent trading saw the stock close at $9.46 on volume well below its average daily volume of approximately 7 million shares. A relatively low institutional float of 9.35% may contribute to heightened price volatility.

Balance Sheet Strength and Forward Guidance

Amid operational challenges, Tilray's balance sheet provides a measure of stability. The company has shifted to a net cash position of about $30 million, compared to net debt of $3.8 million in the prior quarter. Its debt-to-equity ratio is a conservative 0.19, and a current ratio of 2.81 indicates solid short-term liquidity. Management reaffirmed its full-year fiscal 2026 guidance, expecting adjusted EBITDA to remain in the range of $62 to $72 million.

The U.S. Market and Growth Trajectory

The potential of the U.S. market remains a key variable. The executive order signed by President Trump in December 2025 to reschedule cannabis to Schedule III initially fueled investor optimism. CEO Irwin Simon has positioned the company to benefit from further U.S. market liberalization.

However, analyst projections for Tilray's growth are muted. Average estimates forecast annual revenue growth of just 4.7% over the next three years. This figure sits far below the projected 32% growth rate for the broader cannabis industry, highlighting a central challenge for Tilray as it moves through the remainder of the fiscal year.