TLRY Q2 Deep Dive: Regulatory Delays, Margin Focus, and International Momentum Shape Results

August 12, 2025 at 23:35 PM EDT

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Cannabis company Tilray Brands (NASDAQ: TLRY) fell short of the market’s revenue expectations in Q2 CY2025, with sales falling 2.3% year on year to $224.5 million. Its GAAP loss of $1.30 per share was significantly below analysts’ consensus estimates.

Is now the time to buy TLRY? Find out in our full research report (it’s free).

Tilray (TLRY) Q2 CY2025 Highlights:

Revenue: $224.5 million vs analyst estimates of $229.2 million (2.3% year-on-year decline, 2% miss)
EPS (GAAP): -$1.30 vs analyst estimates of -$0.03 (significant miss)
Adjusted EBITDA: $27.64 million vs analyst estimates of $23.69 million (12.3% margin, 16.7% beat)
EBITDA guidance for the upcoming financial year 2026 is $67 million at the midpoint, below analyst estimates of $71.84 million
Operating Margin: -643%, down from -7.2% in the same quarter last year
Market Capitalization: $1.04 billion

StockStory’s Take

Tilray’s second quarter was met with a significant negative market reaction, as the company missed Wall Street’s revenue and earnings expectations. Management attributed the underperformance primarily to delayed export permits in Europe, ongoing consumer softness in its beverage division, and strategic SKU rationalization efforts across its portfolio. CEO Irwin Simon noted that “approximately $8 million” in international cannabis sales were delayed due to regulatory challenges in Portugal and Spain, and the beverage segment saw lower volumes as it completed integration of recent acquisitions. Strategic choices to prioritize higher-margin products and cost efficiencies also led to lower near-term sales, reflecting a cautious tone from leadership regarding current market conditions.

Looking ahead, management’s guidance reflects cautious optimism, with a focus on international cannabis growth, margin expansion through cost control, and continued innovation in beverages and wellness. CFO Carl Merton highlighted that cost savings from Project 420 and a larger contribution from higher-margin segments are expected to gradually improve profitability. However, management acknowledged ongoing headwinds, including regulatory uncertainty in major markets and continued weakness in consumer demand for craft beverages. Simon emphasized, “as we take costs out, as we get efficiencies, as we consolidate facilities...we feel good about scalability,” but cautioned that execution on these initiatives remains critical.

Key Insights from Management’s Remarks

Management cited regulatory delays in Europe, margin-driven SKU reductions, and beverage integration challenges as the main factors shaping quarterly performance and outlook.

European regulatory bottlenecks: Delays in export permits from Portugal and Spain prevented over $8 million in international cannabis sales from being recognized in the quarter, with management now seeing resolution and expecting this revenue in the upcoming periods.
SKU rationalization impacts: Strategic reduction of lower-margin SKUs in both cannabis and beverage divisions temporarily weighed on sales, as the company exited categories such as vape and infused pre-rolls in Canada and eliminated slower-moving beverage products.
Beverage segment transition: The beer business, affected by integration of recent acquisitions and a broader decline in craft beer demand, saw revenue softness. Leadership changes and cost initiatives under Project 420 are being implemented to restore growth and profitability.
International cannabis momentum: Despite near-term disruptions, international cannabis revenue grew strongly, particularly in Germany, driven by expanded cultivation and improved distribution infrastructure. Management expects Europe to remain a primary growth engine.
Wellness and innovation pipeline: The wellness division reported margin improvements and new product success, including the relaunch of HiBall Energy and hemp-based foods. Continued category innovation is seen as central to future expansion.

Drivers of Future Performance

Tilray’s near-term outlook is driven by international cannabis growth opportunities, cost reduction initiatives, and ongoing innovation, but management remains cautious on regulatory risk and beverage market trends.

International expansion and regulatory shifts: Management expects continued growth from medical cannabis in Europe, particularly Germany, and is closely monitoring evolving regulations that could enable new product categories and accelerate market access. However, uncertainty around proposed legislative changes remains a key risk.
Margin enhancement and cost discipline: Project 420 is expected to deliver further cost savings and operational efficiencies, with additional benefits from facility consolidation and supply chain optimization. Management believes these measures will offset recent revenue headwinds and drive adjusted EBITDA improvement.
Beverage and wellness innovation: New product launches in non-alcoholic beverages, energy drinks, and functional foods are intended to diversify revenues and capture consumer trends. The success of these initiatives is critical to offsetting softness in traditional craft beer sales.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will watch for (1) resolution of European export permit challenges and recovery in international cannabis sales, (2) measurable progress on Project 420 cost savings and facility integration, and (3) successful rollout and traction of new beverage and wellness innovations. We will also monitor regulatory developments in Germany and the U.S. cannabis landscape, both of which could significantly impact Tilray’s addressable market and strategic direction.

Tilray currently trades at $0.93, up from $0.70 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).

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