The Toronto-based company reported a 13% slump in revenue, dropping to $12.4 million from $14.2 million in the same quarter the previous year. The decline was partly due to adverse currency fluctuations, which contributed 6.4% to the revenue decline.
Despite the fall in revenue, IM Cannabis says it became more efficient during the period. The company’s gross margin rose to 22%, up from 20% in the same quarter last year, reflecting a stronger focus on high-margin products and cost-cutting strategies. The efforts were part of a broader restructuring initiative that also led to a 34% decrease in total operating expenses.
“We continued towards our goal of sustainable profitability,” CEO Oren Shuster said in a statement. “Our focus (is) on premium and premium plus in the Israeli market, where we are market leaders. On the flip side, we had to adjust our portfolio accordingly, to clean out the slow-moving mid and low range stock, which increased our sales volumes, but affected both our revenue and gross margin this quarter.”
The company sold approximately 2,558 kilograms of dried flower in the quarter, a meaningful rise from 1,453 kilograms in the previous year. However, the average selling price per gram fell due to heightened competition and discounted mid-range stock.
IM Cannabis’ net loss from continuing operations was $2.1 million, an improvement from the $4.5 million loss posted in the same period a year ago. The improvement was attributed to higher gross margins and a reduction in operating expenses.
The company ended the quarter with $1.3 million in cash and cash equivalents, down from $2.4 million at the end of 2022. Total assets fell to $52.4 million, a 14% reduction from the previous year, while total liabilities also saw a decrease of 12%.
Operational highlights included the integration of operations between Israel and Germany, as the firm looks to “further drive efficiencies” in both markets.
“From supply to marketing and sales we are sharing information and working together as one team,” IM Cannabis said on Monday.