Tilray’s Q1 Results Show a Company Transformed

Tilray Brands, Inc. (NASDAQ:TLRY) opened fiscal 2027 with the strongest first quarter in its history, reporting record revenue of $257.1 million, up 23% from a year ago. Gross profit set a first-quarter record of its own at $77.5 million, up 35%, with gross margin expanding three points to 30%. The details underneath say even more about what this company has become. Beverage revenue grew 82% and now leads the business, while BrewDog reached profitability just seven months after Tilray carried it out of administration. The company also kept strengthening its balance sheet even as it invested in the business, cutting debt by $42 million this fiscal year while holding $221.4 million in cash. Seven years ago, by CEO Irwin Simon’s own telling, Tilray was a $50 million company. He has since rebuilt it, organically and through a steady run of acquisitions, into a pro forma $1.2 billion global consumer business spanning beverages, cannabis, wellness and pharmaceutical distribution. This quarter offers the clearest measure yet of how far that rebuild has gone. Beer now leads the company Beverage revenue reached $101.5 million, up 82% from $55.7 million a year ago. The segment now makes up 39% of total revenue against 27% last year, moving past cannabis and distribution to become Tilray’s largest business. The growth came with better economics rather than at their expense. Beverage gross margin expanded to 41% from 38%, and the segment’s gross profit nearly doubled to $42.0 million, close to twice what cannabis generated. BrewDog drove much of the gain with $55.9 million of contributed revenue, and the more telling detail is that it did so profitably. The brand ended years of operating losses just seven months after Tilray bought it out of administration for about $44 million. Management said on the earnings call that BrewDog required no cash from Tilray during the quarter and financed itself. Its first campaigns under new ownership lifted Punk IPA sales 187% at its top six retail chains over two weeks and added more than 9,000 distribution points. The combined platform now ranks as the #4 craft brewer in the United States and #1 in the UK, with Tilray beer on tap in roughly 28,000 American bars and restaurants. The surge in beverage also shows the diversification strategy doing what it was built to do. A platform that runs across beer, cannabis, wellness and pharmaceutical distribution gives Tilray optionality that few consumer companies can match. That mix is why management reaffirmed its fiscal 2027 adjusted EBITDA guidance of $68 million to $75 million, which would mean double-digit growth over fiscal 2026. Results are weighted toward the seasonally stronger second half of the year. The balance sheet keeps getting cleaner Tilray has reduced outstanding debt by $42 million fiscal year to date and finished the quarter with $221.4 million in cash, restricted cash and marketable securities. The remaining $52 million of convertible notes comes due in June 2027. That trajectory is rare in cannabis, where broken balance sheets have been the industry’s recurring story. It also changes how the rest of the plan gets funded, because brand investment and integration can now run off the company’s own resources rather than new borrowing or dilution. The international engine is compounding The transformation runs through Europe as much as through beer. EMEA revenue across medical cannabis, beverage and pharmaceutical distribution grew 71% in the quarter. International cannabis revenue rose 21% to $16.2 million on patient demand in Germany and the UK. CC Pharma, the company’s pharmaceutical distribution arm reaching more than 16,000 pharmacies, grew 14% to $84.3 million. The underlying volumes tell the same story, with EU-GMP flower shipments up 110% and oil volumes up 150% from a year ago. Cannabis gross margin expanded to 39% from 36% even against price pressure abroad, helped by a Portugal facility that supplies roughly 90% of the company’s international cannabis. Cultivation costs there have come down roughly 40%, and the company expects the facility to produce more than 40 metric tons of flower at full capacity this fiscal year. The remaining work runs through US beverage None of this means the quarter was spotless. The market’s first reaction, a 4.6% slide to $3.55 on the day of the report, showed investors weighing what still needs fixing. Most of that work runs through the legacy American beverage business, which management acknowledged would have declined without BrewDog as the company consolidates brands and breweries in a soft category. Tilray reported a net loss of $40.0 million against net income of $1.5 million a year earlier. The loss was driven predominantly by non-cash charges and by continued reinvestment in the business, including heavier marketing spend behind the brands. On an adjusted basis it came to $3.0 million, or 2 cents a share, against a 3-cent profit last year. Adjusted EBITDA slipped to $9.2 million from $10.2 million, burdened by about $1.7 million of global fuel surcharges and $8.8 million of price compression in international cannabis markets. Canadian adult-use revenue fell to $53.6 million from $64.1 million amid strain rotations, temporary supply constraints and a decision to redirect inventory toward higher-return international markets. The US beverage turnaround is the piece of the story with the most room to improve from here, and the consolidation work already underway is how the company is going after it. The next measure already has a date On January 1, Tilray begins producing, marketing and distributing Carlsberg, Carlsberg Elephant, Kronenbourg 1664 and 1664 Blanc across all US channels under an exclusive multi-year license. The beers will be brewed in facilities Tilray already owns and sold through the national team it already fields. Carlsberg is the third-largest brewer in the world, and Simon noted on the call that its beverage business runs more than 30 times the size of Tilray’s. A partner of that scale choosing Tilray as its American brewing and commercial arm is its own comment on the platform being assembled here. Beyond that, Washington’s pending decision on extending Schedule III to cannabis broadly still hangs over the sector. Simon made the transformation case in the release in a single line, saying "We are no longer dependent on a single market or regulatory catalyst." The first quarter supplied the strongest evidence yet for that claim, and with Carlsberg volumes arriving in January, the evidence now accumulates on a schedule. Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.