Colorado-based urban-gro (Nasdaq: UGRO) posted a 32% year-over-year drop in revenue and a net loss of $8.7 million for the third quarter, the company reported, which CEO Brad Nattrass blamed on “headwinds within the cannabis sector.”
The tough quarter pushed year-to-date losses up to $11.1 million, an enormous shift from the first three quarters of 2021, when urban-gro lost just $300,000.
Despite the losses, the company emphasized that revenues actually outperformed expectations, with $12.4 million in revenue compared to guidance expectations of just $10 million-$11 million. That’s down from $18.3 million in revenue from last year’s third quarter, however.
Year-to-date revenue, by contrast, increased to $49.7 million for the first nine months of 2022, compared with $43.2 million in 2021.
The year-over-year third-quarter revenue dip “was driven by a decrease in cultivation equipment systems revenue of $12.6 million, primarily reflecting significantly reduced equipment demand in the U.S. cannabis market as a result of ongoing state-level regulatory delays in the license-awarding process,” the company reported.
In addition, urban-gro is still dealing with an immense backlog of contracted projects, worth $67 million, which Nattrass said has the company “encouraged” for the coming months.
“We believe this is a clear indication that the services delivery model we’ve established over the last 18 months is working as intended,” Nattrass said.
“We expect to see material sequential improvements in our fourth quarter top and bottom-line performance and for the momentum to continue in 2023. We have been investing in scaling to meet this demand.”