High Tide Q3 2026 Earnings Call Transcript

High Tide (NASDAQ: HITI ) reported third-quarter financial results on Tuesday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

The full earnings call is available at Summary High Tide Inc. reported its best quarter in company history with revenue hitting an all-time high of $199 million, up 33% year-over-year. 2 million, marking a 52% increase year-over-year. 73 million members, and aims for further growth in Canada with plans to add 118 more stores.

2 tons of medical cannabis, contributing to a 21% sequential revenue increase. The company maintains a robust financial position with $25 million available on its revolver and no significant debt maturities for three years. Management emphasized strategic discipline, focusing on organic growth and cautious international expansion, particularly in the UK and other markets. Despite competitive pressures and economic challenges, same-store sales remained consistent with a slight increase in transactions.

Full Transcript Ina, Operator Good morning. My name is Ina, and I will be your conference operator today. 's third fiscal quarter 2026 unaudited financial and operational results conference call. All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question-and-answer session. Instructions will be provided at that time for you to queue up for the question-and-answer session. I'll now turn the call over to your host. Please proceed.

Carter, Investor Relations Thank you, operator. Good morning everyone, and welcome to High Tide's quarterly earnings call. Joining me on the call today are Mr. Raj Grover, President and Chief Executive Officer, and Mr.

Mayank Mahajan, Chief Financial Officer. On September 14, 2026, the company released financial and operational results for the fiscal quarter that ended July 31, 2026. Before we begin, please let me remind you that during the course of this conference call, High Tide's management may make statements, including with respect to management's expectations or estimates of future performance. All such statements, other than statements of historical facts, constitute forward-looking information or forward-looking statements within the meaning of the applicable securities laws and are based on assumptions, expectations, estimates, and projections as of the date hereof.

Specific forward-looking statements include, without limitation, all disclosures regarding future results of operations, economic conditions, and anticipated courses of action. ca or on EDGAR at or on the company's website at and which are hereby incorporated by reference herein. Although these forward-looking statements reflect management's current beliefs and reasonable assumptions based on the currently available information in management as of the date hereof, we cannot be certain that will be consistent with the forward-looking statements in the future. There can be no assurance that actual outcomes will not differ materially from these results.

Accordingly, we caution you not to place undue reliance upon such forward-looking results. For any reconciliation of non-IFRS measures discussed, please consult our latest management discussion and analysis filed on SEDAR+ and EDGAR. It is now my pleasure to introduce Mr. Raj Grover, President and Chief Executive Officer of High Tide.

Thank you, Mr. Grover. You may begin. Raj Grover, CEO Thank you, Carter.

And good morning everyone. 's financial results conference call for the third fiscal quarter that ended July 31, 2026, which I'm extremely proud to say was the best quarter in our company's history. In fact, our financial performance was so strong we felt it necessary to release guidance one business day after the quarter ended, with even the low end of our initial forecast exceeding even the most aggressive analyst estimates. Yesterday we released our full results, which were closer to the high end of the guidance ranges we provided and included many other new positive highlights.

Investors can see from these results that not only are we growing our top line, but this growth is now clearly showing up in our bottom line. 5 times faster than our operating expenses. As a result, 60% of the increase in gross margin flowed down to operating income, which was up 43% sequentially and 133% year over year. 7 million was more than we generated during the first two quarters of the fiscal year combined.

Talk about positive momentum. This growth could continue all the way to the bottom of the income statement. 2 million, up 186% sequentially and 157% year over year. More and more is showing up in the bottom line, which is what we want to see and what we have been promising our investors.

This progress didn't just happen because we pulled the switch in Q3. It is a result of what we've been doing for years. It is a result of the hard work we have been putting in quarter after quarter and year after year. I'll point to three things specifically.

73 million loyal members of Canna Cabana Club across the country, we are up over 11 times from when we launched the discount club model in October 2021. Second, growing revenue from $8 million of sales per our first annual report in 2018 to an annual run rate of approximately $800 million today and third, finding ways to increase the profitability of our sales and having very tight cost controls as evidenced by us setting an all-time low this quarter in both trailing G&A as a percentage of revenue and trailing salaries and wages as a percentage of revenue. We are a product of our environment regarding the competitive dynamics within the Canadian cannabis market.

All we can do is try to be proactive and make bold yet calculated moves to try to stay ahead of the curve. Others can struggle to play copycat and try to catch up from behind. But our amazing team is always plotting our next big move and exploiting our competitive advantages in new ways. Particularly after our Q3 results, I believe that investors can see where this ship is heading.

Similarly, we can't always control what the capital markets are doing. All we can do is run our operations tightly and make sure we are disciplined in terms of capital deployment to maximize value for our shareholders. And again, I think the data shows that we are succeeding even adjusting for the portion of Remexion that we don't currently own. 4 times the EBITDA we just reported annualized.

We see the current setup as more of an opportunity than a risk. We've always been prudent in managing our affairs and operations to insulate us from being reliant on our share price for survival. That is why we are still here. While so many of our peers have disappeared over the years, we have demonstrated for a few years now that we can increase our store count and grow our business organically, including investing in working capital all from our internally generated free cash flow and not rely on external equity injections.

6 million during the quarter. Similarly, we have managed our balance sheet extremely carefully. We have no meaningful debt maturities for three years and we still have $25 million available to be drawn on our revolver with Bank of Montreal. So the way we see it, we have no issues regarding fueling our operations or addressing debt that would have to require raising equity near these levels.

We have built something truly special and totally unique at High Tide, a global leader in cannabis. In Canada, we have the preeminent model and brand with 232 stores and revenue on an annual run rate of approximately $650 million. In Germany, our volumes are still ramping and we continue to set new records a year into our transaction. Two engines of growth, both running with power, making High Tide the undisputed leader in the two largest federally regulated cannabis markets on earth.

While we are continuing to eye other markets and evaluate partners, we are prioritizing discipline in our approach. We won't feel compelled to make a deal just to say we did or to meet a date on a calendar. There are multiple conversations currently ongoing with players of different sizes, but we won't pull the trigger until we are sure that it's the right opportunity at the right time and right price for our shareholders.

Having already demonstrated how our procurement prowess can directly drive market leadership in a short amount of time in Germany, we are seeing prudent operators recognize the value and wisdom in wanting to partner with High Tide rather than compete with us. With 118 stores we are still planning to add in Canada and Germany, scaling so impressively, we have a lot of future growth lined up based on what we already have in hand, so we don't feel the itch to rush into the next transaction too quickly. While we are evaluating opportunities and are engaged in negotiations and market due diligence every day, the strength of our current business positions us well.

We aren't desperate to make a risky move and just hope it works. As highlighted in our press release, Q3 was a milestone quarter with almost every key consolidated metric hitting a new all-time high. Specifically, revenue of $199 million was an all-time high and up 33% year over year, representing the fastest growth rate in 13 quarters. Each of our bricks and mortar and medical cannabis distribution segments posted new records.

7 million, up 32% year over year. Each of our bricks and mortar and medical cannabis distribution segments posted new records. 2 million was an all-time high and up 52% year over year. 2% marked the highest level in 12 quarters.

7 million and up 133% year over year. Each of our bricks and mortar and medical cannabis distribution segments posted new records. 9 million and up 44% year over year. I'll now give an overview of our two segments, following which Mayank will dive deeper into the financials.

In Canada, Canna Cabana continues to lead the way fueled by the continued expansion of our loyalty program, the Cabana Club. 73 million Cabana Club members across Canada, up 27% year over year. We continue to move forward towards a long-term goal of 3 million members. In Canada, Elite also continued to post gains up 62% over the past year and now exceeding 186,000 members that pay US$35 a year to shop in our stores.

They say imitation is the highest form of flattery and we are definitely seeing that in the Canadian cannabis landscape. Competitors are seemingly panicking and increasingly starting to copy pieces of our model which has created tighter conditions in many areas. We are the originators of the discount club model that continues to take market share and we have scale accordingly. We believe we will come out of this period even stronger, but with the disruptions in the market, smaller operators are likely to suffer and possibly be wiped out.

At the same time, even without illicit operators, the number of stores in key markets such as Ontario and Alberta have increased by 5% over the past 12 months, reversing the trends of flattening or retrenching that we were seeing a year or so ago. Meanwhile, consumers are being tighter with their wallets given macroeconomic uncertainty and creeping inflation. Putting all this together, it isn't easy times out there which we have seen translate to negative same store sales among our public and private peers.

While we see a few more months of touch and go conditions ahead, we were pleased to see our same store sales be consistent with the prior year for the full quarter and that June and July each posted gains. The key is we are not losing any customers on a same store basis. 1% which is being offset by slightly thinner baskets as well as some price compression at the wholesale level. Customers are continuing to see us as their go-to destination for cannabis.

Again, we are a product of our environment and all we can do is aim to outperform the market and our longer-term trend of outperformance is clear. Chaining our monthly same store sales increases since October 2021, Canna Cabana was up 171% to June 2026. In contrast, as the increase in total sales in the five provinces where we operate has not kept pace with the increase in the number of the average operator has experienced a 1% sales decline during this period.

Excluding British Columbia where we have been at the regulatory cap of eight stores for years, our market share within the other four provinces where we operate was 14% during May and June which was up versus 13% a year ago. Looking ahead, we see a 15% market share as a milestone, not a ceiling. Excluding stores open less than six months which are still ramping up, our annualized revenue per square foot in Q3 was $1,721, once again above many leading blue chip retailers. 4 million.

In Ontario, the largest province and our focus for future growth, our outperformance was even more pronounced. 2 million. For the 12 months ended June 2026, total industry sales in the five provinces where we operate were up 3% year over year. In contrast, total Canna Cabana sales were up 10% during this period, with 14 already completed.

We believe we can achieve our goal of adding 20 cabanas during this calendar year and reiterate our long-term target to reach 350 locations across the country. This growth, combined with Remexion's current trajectory makes us more confident than ever that we will breach the $1 billion revenue mark in the not too distant future. Speaking of Remexion, let's turn to Germany, where we demonstrated significant strength and growth in Q3. 2 tons of medical cannabis in this quarter, up 35% sequentially and 165% higher than the pace Remexion was on when the transaction closed a year ago.

Remexion's financial metrics also posted impressive growth driven by the increased volumes. 4 million, representing a record 12% adjusted EBITDA margin. Looking at the broader German market, we see incredible appetite for medical cannabis and Canadian medical cannabis products in particular. 4 million in July.

Looking at the three-month average, we are now at a $517 million annual run rate, up 62% versus a year ago for us. This shows that we have even more room to continue ramping volumes up to a higher absolute tonnage level. Given our superb team on the ground in Germany and unparalleled ability to procure cannabis at best-in-class scale and free agent status. However, with the market growing so quickly, it may be challenging to ramp our market share as fast as we had previously thought.

5%. While Remexion has experienced impressive growth since March, it will be interesting to see where the industry was for the three months ended June and where our market share shakes out. In conclusion, Q3 was once again the best quarter in our company's history with new all-time records set across the board. With $25 million of dry powder available for growth from our revolver with Bank of Montreal, we have the resources to keep growing without relying on external equity.

I am so grateful to each and every one of our team members globally.