Charlotte-based cbdMD Inc. (NYSE American: YCBD) saw annual revenue drop 19%, but the company significantly reduced its losses as it pushes toward profitability, according to financial results released Wednesday after U.S. markets closed.
Net sales fell to $19.5 million for fiscal year 2024, which ended Sept. 30, from $24.2 million the previous year. However, the company narrowed its net loss to $3.7 million versus $22.9 million in fiscal 2023.
Fourth quarter results were affected by continued market pressure, with revenue declining 20% to $4.6 million versus $5.7 million in the same period last year. The company reported a quarterly net loss of $1.2 million, a significant improvement from the $16.9 million loss in the prior year’s quarter.
CEO Ronan Kennedy said in a statement that while fourth-quarter revenue faced “temporary headwinds,” the company made progress on key initiatives including cost reductions.
Technical issues with email deliverability cost more than $200,000 in direct-to-consumer revenue during the quarter, while new regulatory requirements slowed the company’s international wholesale business for about 100 days, according to filings. The quarter also included a one-time $588,160 inventory write-down related to regulatory changes affecting labels and expired products.
However, management projects first quarter fiscal 2025 revenue will approach $5 million as those challenges resolve, noting that unaudited October and November revenues have already rebounded above fourth quarter levels.
The company has worked to cut costs, including terminating its headquarters lease to save $1.2 million annually. CbdMD also reduced operating expenses by $8.9 million through a variety of measures that included reduced marketing and payroll spending.
But challenges remain, including maintaining its NYSE American stock listing. The exchange requires companies to maintain at least $4 million in stockholders’ equity when reporting losses in three of four recent fiscal years. CbdMD reported $2 million in stockholders’ equity as of Sept. 30.
The company cited “substantial doubt” about its ability to continue as a going concern in regulatory filings, pointing to its history of losses. It held $2.45 million in cash at the end of September.
Kennedy said the company remains focused on achieving positive adjusted EBITDA in fiscal 2025.
About 80% of cbdMD’s sales come through e-commerce channels, with wholesale business accounting for the remainder, according to filings.
A lack of clear federal regulations “has a negative impact and limits the opportunity for CBD companies that act with integrity and invest in responsible quality and safety standards,” the company stated.
[[{“value”:”The CBD company said unaudited October and November revenues have already rebounded above fourth quarter levels.
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