Troubled cannabis company Namaste Technologies Inc. (OTCMKTS: NXTTF) continues its hard journey on the road to recovery as the company reported a 16% increase in net revenues to $5.3 million for the first quarter ending February 29, 2020. Namaste said it was its highest quarterly revenue in two years.
The company also reported that its net losses had been trimmed to $7.4 million from last year’s $10.3 million for the same time period. Namaste said that the improvement reflected the restructuring efforts in 2019 and general business improvements in 2020.
“The changes in strategy and corporate structure made during 2019 are starting to reflect a positive impact in our financial results,” said Meni Morim, CEO of Namaste. “Namaste’s revenues jumped this quarter to the highest level since the first quarter of 2018 with a significant contribution from CannMart, an impressive feat taking into account some exits from non-core businesses during 2019. We are gaining traction in the B2B segment with one early customer, with whom we passed the Proof of Concept stage, driving the majority of CannMart’s revenue growth. These are initial, yet strong signals of traction, as CannMart generated in this quarter alone, 164% of the revenue generated by CannMart in the entire year of 2019. CannMart is seeing significant growth in its operations as we enter new markets with new and well-known brands and a growing number of distribution channels.”
The company’s ‘everything cannabis store’, CannMart.com, provides customers with a diverse selection of hand-picked products from a multitude of federally-licensed cultivators, all on one site. CannMart’s net segment revenue increased by approximately 798% to $1.3 million, excluding excise tax, over the comparable period in 2019. On a sequential basis, CannMart’s revenue increased 258% from Q4 2019 to Q1 2020.
The site also signed a new supply agreement with Alberta Gaming, Liquor & Cannabis (AGLC), representing the fifth provincial government customer for Namaste. According to the AGLC there are 465 retail locations in the province, more licensed retailers than in any other province. The company said that CannMart continues to increase the number and variety of products carried on the CannMart website and available through its B2B channels such as
- Premium craft cannabis brand Kief, a pure craft cannabis company in which Namaste holds a minority position and certain product purchasing rights, and
- Award winning Phyto Extractions, an established legacy brand in the Canadian marketplace offering unique products such as cannabis vaporizing pen cartridges and batteries; cannabis capsules; and cannabis tincture bottles and jars.
Morim added, “The Cannabis 2.0 market is still in its infancy. However, we expect this market to gain momentum as new and innovative products and brands are introduced. This market features higher gross margins and a larger addressable customer base than leaf-based products and is an important addition to our product offerings. Major brands understand the value that we offer and trust us to represent them.”
Namaste has worked hard to overcome its struggles of 2019. The company parted ways with its founder Sean Dollinger and then embarked on a path that included selling non-core assets, investing in new business segments, settlement of outstanding class actions, replacement of executive-level positions with top talent, and restructuring legacy businesses to reposition the business.