Tilray Swings to Profit on Reduced Expenses, Revenue Up 4.7%

TL;DR

**Tilray's Q1 profit swing is a green shoot, but watch those operating expenses closely for sustained growth.**

AI Summary

Tilray Brands, Inc. reported a net income of $1.513 million for the three months ended August 31, 2025, a significant improvement from a net loss of $34.652 million in the prior-year period. Revenue increased by 4.7% to $209.501 million from $200.044 million year-over-year. The company's gross profit slightly decreased to $57.469 million from $59.706 million. Operating expenses saw a substantial reduction, falling to $55.377 million from $96.276 million, primarily due to a $15.000 million change in fair value of contingent consideration and a decrease in amortization from $21.804 million to $3.929 million. Cash and cash equivalents rose to $264.828 million as of August 31, 2025, up from $221.666 million on May 31, 2025. The company also saw a decrease in total liabilities to $561.988 million from $584.752 million. Strategic outlook includes continued focus on cost savings initiatives and potential future corporate acquisitions, while risks include macroeconomic trends and regulatory changes in the cannabis industry.

Why It Matters

This turnaround to profitability, driven by significant cost reductions and modest revenue growth, is a critical signal for investors in the volatile cannabis sector. Tilray's ability to manage expenses, particularly the $15 million contingent consideration adjustment and lower amortization, suggests improved operational efficiency. For employees, this could mean greater job security and potential for growth as the company stabilizes. Customers might see continued product innovation and market presence. In a highly competitive and consolidating market, Tilray's positive net income could strengthen its position against rivals and potentially attract further investment, impacting the broader cannabis industry's sentiment.

Risk Assessment

Risk Level: medium — While Tilray reported a net income of $1.513 million, its gross profit decreased to $57.469 million from $59.706 million year-over-year. The significant reduction in operating expenses, particularly the $15.000 million change in fair value of contingent consideration and lower amortization, was a primary driver of profitability, rather than robust top-line growth. This suggests that while cost management is effective, underlying revenue growth needs to accelerate to ensure long-term, sustainable profitability without relying on one-off adjustments.

Analyst Insight

Investors should hold Tilray stock and monitor future filings for sustained revenue growth across its segments, not just cost-cutting measures. Look for continued positive net income and increasing gross profit margins in subsequent quarters to confirm a durable turnaround.

Financial Highlights

debt To Equity

0.37

revenue

$209.501M

operating Margin

N/A

total Assets

$2,082.646M

total Debt

$162.36M

net Income

$1.513M

eps

N/A

gross Margin

27.4%

cash Position

$264.828M

revenue Growth

+4.7%

Revenue Breakdown

Key Numbers

• $1.513M — Net Income (Swung from a $34.652M loss in the prior year, indicating a significant financial turnaround.)
• $209.501M — Net Revenue (Increased by 4.7% from $200.044M year-over-year, showing modest top-line growth.)
• $55.377M — Total Operating Expenses (Decreased significantly from $96.276M, a key driver of profitability.)
• $15.000M — Change in Fair Value of Contingent Consideration (A non-cash operating income item that contributed to the reduced operating expenses.)
• $3.929M — Amortization Expense (Decreased substantially from $21.804M, contributing to lower operating expenses.)
• $264.828M — Cash and Cash Equivalents (Increased from $221.666M, improving liquidity.)
• $561.988M — Total Liabilities (Decreased from $584.752M, indicating improved financial health.)
• 1,118,291,159 — Common Shares Outstanding (Increased from 1,060,678,745, reflecting share issuances including ATM program.)

Key Players & Entities

• Tilray Brands, Inc. (company) — Registrant in 10-Q filing
• $1.513 million (dollar_amount) — Net income for the three months ended August 31, 2025
• $34.652 million (dollar_amount) — Net loss for the three months ended August 31, 2024
• $209.501 million (dollar_amount) — Net revenue for the three months ended August 31, 2025
• $200.044 million (dollar_amount) — Net revenue for the three months ended August 31, 2024
• $55.377 million (dollar_amount) — Total operating expenses for the three months ended August 31, 2025
• $96.276 million (dollar_amount) — Total operating expenses for the three months ended August 31, 2024
• $15.000 million (dollar_amount) — Change in fair value of contingent consideration for the three months ended August 31, 2025
• $264.828 million (dollar_amount) — Cash and cash equivalents as of August 31, 2025
• $221.666 million (dollar_amount) — Cash and cash equivalents as of May 31, 2025

FAQ

Risk Factors

• Cannabis Industry Regulations [high — regulatory]: Changes in laws and regulations in the cannabis industry, including but not limited to, the United States, Canada, and other international markets, could adversely affect the Company's business, financial condition, and results of operations. This includes potential changes in licensing, product standards, and taxation.
• Macroeconomic Trends [medium — market]: The Company's financial performance is subject to general economic conditions, including inflation, interest rates, and consumer spending. Adverse macroeconomic trends could reduce demand for the Company's products and impact profitability.
• Supply Chain and Production [medium — operational]: Disruptions in the supply chain, production issues, or inability to scale operations to meet demand could negatively impact revenue and profitability. The company relies on various suppliers and manufacturing processes.
• Access to Capital [medium — financial]: The Company's ability to fund its operations, capital expenditures, and strategic initiatives depends on its access to capital markets and financing. Changes in market conditions or credit availability could affect its financial flexibility.
• Litigation and Legal Proceedings [low — legal]: The Company is subject to various legal proceedings and claims. Adverse outcomes in litigation could result in significant financial liabilities and reputational damage.

Industry Context

The cannabis industry continues to navigate a complex regulatory landscape across various jurisdictions, impacting market access and operational strategies. Competition remains intense, with companies focusing on brand differentiation, product innovation, and cost management to gain market share. The ongoing evolution of legal frameworks, particularly in the U.S., presents both opportunities and significant uncertainties for established players like Tilray Brands.

Regulatory Implications

Tilray Brands operates under a dynamic regulatory environment, particularly concerning cannabis. Changes in U.S. federal or state laws, or international regulations, could materially impact its business operations, product development, and market expansion strategies. Compliance with evolving regulations is a critical ongoing challenge.

What Investors Should Do

1. Monitor cost-saving initiatives and their impact on margins.
2. Assess the impact of share issuances on EPS.
3. Evaluate the company's strategy for potential future acquisitions.
4. Analyze the company's liquidity and debt levels.

Glossary

Contingent Consideration

An obligation to transfer additional assets or equity interests to an acquiree that is contingent upon the occurrence of a future event specified in the business combination agreement. (A $15.000M change in fair value of contingent consideration was a significant factor in reducing operating expenses for the period.)

Amortization

The process of expensing the cost of an intangible asset over its useful life. (A substantial decrease in amortization expense from $21.804M to $3.929M significantly contributed to the improved net income.)

Goodwill

An intangible asset that arises when a company acquires another company for a price greater than the fair value of its net assets. (Tilray Brands holds $752.350M in goodwill, indicating past acquisitions where the purchase price exceeded the fair value of net identifiable assets.)

Accumulated Deficit

The total cumulative net losses of a company since its inception that have not been offset by net income. (The company has a significant accumulated deficit of $4,847.548M, reflecting its history of net losses, though current period net income shows improvement.)

Non-controlling interests

The portion of equity in a subsidiary that is not attributable to the parent company. (The company reports non-controlling interests of $(20.085)M, representing the equity share of subsidiaries not owned by Tilray Brands.)

Year-Over-Year Comparison

Compared to the prior year, Tilray Brands has demonstrated a significant financial turnaround, swinging from a net loss of $34.652M to a net income of $1.513M. Revenue saw a modest increase of 4.7% to $209.501M. A substantial reduction in operating expenses, driven by a $15.000M change in fair value of contingent consideration and a sharp decrease in amortization from $21.804M to $3.929M, was the primary catalyst for improved profitability. New risks include ongoing macroeconomic trends and evolving regulatory changes in the cannabis sector.

Key Financial Figures

• $0.0001 — nge on which registered Common Stock, $0.0001 par value per share TLRY The Nasdaq

Filing Documents

• tlry20250730_10q.htm (10-Q) — 2093KB
• ex_866869.htm (EX-10.2) — 11KB
• ex_867341.htm (EX-10.3) — 6KB
• ex_846001.htm (EX-31.1) — 13KB
• ex_846002.htm (EX-31.2) — 13KB
• ex_846003.htm (EX-32.1) — 5KB
• ex_846004.htm (EX-32.2) — 6KB
• 0001437749-25-030797.txt ( ) — 10862KB
• tlry-20250831.xsd (EX-101.SCH) — 104KB
• tlry-20250831_cal.xml (EX-101.CAL) — 93KB
• tlry-20250831_def.xml (EX-101.DEF) — 667KB
• tlry-20250831_lab.xml (EX-101.LAB) — 512KB
• tlry-20250831_pre.xml (EX-101.PRE) — 714KB
• tlry20250730_10q_htm.xml (XML) — 1916KB

Financial Statements (Unaudited)

Financial Statements (Unaudited) 1 Consolidated Statements of Financial Position (Unaudited) 1 Consolidated Statements of Loss and Comprehensive Loss (Unaudited) 2 Consolidated Statements of Stockholders' Equity (Unaudited) 3 Consolidated Statements of Cash Flows (Unaudited) 4 Notes to Condensed Interim Consolidated Financial Statements (Unaudited) 5 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 25 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 46 Item 4.

Controls and Procedures

Controls and Procedures 46 PART II. OTHER INFORMATION 47 Item 1.

Legal Proceedings

Legal Proceedings 47 Item 1A.

Risk Factors

Risk Factors 48 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 49 Item 3. Defaults Upon Senior Securities 49 Item 4. Mine Safety Disclosures 49 Item 5. Other Information 49 Item 6. Exhibits 50

Signatures

Signatures 52 Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q for the fiscal quarter ended August 31, 2025 (the "Form 10-Q") contains forward-looking statements under Canadian securities laws and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be subject to the "safe harbor" created by those sections and other applicable laws. Such statements involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements under the Canadian securities laws and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be subject to the "safe harbor" created by those sections and other applicable laws. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "project," "will," "would," "seek," or "should," or the negative or plural of these words or similar expressions or variations are intended to identify such forward-looking statements. Forward-looking statements include, among other things, our beliefs or expectations relating to our future performance, results of operations and financial condition; our intentions regarding our cost savings initiatives; our strategic initiatives, business strategy, supply chain, brand portfolio, product performance and expansion efforts; our intentions regarding the use of net proceeds from our ATM Program; our intentions regarding our capital structure and TLRY 27 Notes; current or future macroeconomic trends; current or future macroeconomic trends and industry or regulatory trends; our statements regarding the consolidation of the Canadian cannabis industry; our

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited). TILRAY BRANDS, INC. Consolidated Statements of Financial Position (in thousands of United States dollars, unaudited) August 31, May 31, 2025 2025 Assets Current assets Cash and cash equivalents $ 264,828 $ 221,666 Marketable securities — 34,697 Accounts receivable, net 107,075 121,489 Inventory 282,787 270,882 Prepaids and other current assets 40,650 34,092 Assets held for sale 5,800 5,800 Total current assets 701,140 688,626 Capital assets 560,157 568,433 Operating lease, right-of-use assets 21,003 22,279 Digital assets 992 — Intangible assets 25,173 21,423 Goodwill 752,350 752,350 Long-term investments 10,172 10,132 Other assets 11,659 11,084 Total assets $ 2,082,646 $ 2,074,327 Liabilities Current liabilities Bank indebtedness $ 8,185 $ 7,181 Accounts payable and accrued liabilities 230,913 235,322 Contingent consideration — 15,000 Warrant liability 4,762 1,092 Current portion of lease liabilities 7,477 6,941 Current portion of long-term debt 16,295 14,767 Total current liabilities 267,632 280,303 Long - term liabilities Lease liabilities 63,345 64,925 Long-term debt 144,175 148,493 Convertible debentures payable 84,267 86,428 Deferred tax liabilities, net 1,943 3,748 Other liabilities 626 855 Total liabilities 561,988 584,752 Commitments and contingencies (refer to Note 19) Stockholders' equity Common stock ($ 0.0001 par value; 1,416,000,000 common shares authorized; 1,118,291,159 and 1,060,678,745 common shares issued and outstanding, respectively) 111 106 Treasury Stock ( 3,213,914 and 2,004,218 treasury shares issued and outstanding, respectively) — — Preferred shares ($ 0.0001 par value; 10,000,000 preferred shares authorized; nil and nil preferred shares issued and outstanding, respectively) — — Additional paid-in capital 6,431,410 6,401,657 Accumulated other comprehensive loss ( 43,230

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements Note 1. Basis of presentation and summary of significant accounting policies The accompanying unaudited interim consolidated financial statements reflect the accounts of the Company for the quarterly period ended August 31, 2025 (the "Financial Statements"). The Financial Statements were prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC") for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP and should be read in conjunction with the audited consolidated financial statements (the "Annual Financial Statements") included in the Company's Annual Report on Form 10 -K for the fiscal year ended May 31, 2025 (the "Annual Report"). These Financial Statements reflect all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full fiscal year. These Financial Statements have been prepared on a going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due, under the historical cost convention except for certain financial instruments that are measured at fair value, as detailed in the Company's accounting policies. All amounts in the Financial Statements, and the accompanying notes and tables have been rounded to the nearest thousand, except par values and per share amounts, and unless otherwise indicated. Basis of consolidation Subsidiaries are entities controlled by the Company. Control exists when the Company either has a controlling vo

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