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Hexo sales plummet and Leafly lays off 40 workers, while revenue increases

With many North American cannabis companies struggling in a challenging market, two major companies' financial results show them evidently being affected. 

Firstly, Leafly announces a headcount reduction of approximately 40 positions - or 21% of the company's workforce - through a combination of layoffs and attrition. "Given the continued pressure on our topline growth, we made the difficult decision to trim our workforce," said Suresh Krishnaswamy, CFO of Leafly. "With these reductions, in addition to those we made in 2022, we are emphasizing efforts to align more closely with customers and highlighting the value that Leafly can provide. This realignment of our business priorities also helps extend our cash runway as we stay focused on improving our path to profitability."

At the same time, Leafly's annual revenue was $47.4 million and has thus risen 10%. "Despite a year filled with challenges broadly for the cannabis industry, and the associated impact on our revenue growth, we grew the number of subscribing retailers and brands using our platform by double digits in 2022 and continued to focus on delivering an outstanding consumer experience while driving more value for clients who use Leafly to reach high-intent shoppers. Our recently launched products, combined with our subscriber base, continue to create opportunities for us to increase monetization," said Yoko Miyashita, CEO of Leafly. "At the same time, we've been intently focused on managing our expenses and cash flow. With softer ad spend expected to continue in 2023, we are driving deeper relationships with our customers and optimizing teams for efficiency." 

Canadian cannabis producer Hexo also released its financial results this week, which show their sales have decreased significantly. Total net revenue from their sales has gone from $52,763 in Q2 of 2022 to $24,161 in Q2 of 2023. Hexo says their 54% decline in net sales is due to increased competition, and the company has decreased market share and performance in the key provincial markets of Ontario, Alberta, and Quebec. 

Yet the company has also achieved positive net income for the first time in the company's history. "Our continued focus on profitability is yielding solid results, including positive net income before tax for the first time in our history," noted Julius Ivancsits, Chief Financial Officer of HEXO. "SG&A spending is down 11 percent or $1.5 million compared to the previous quarter. We also made significant progress in our trade accounts receivable with a $21 million reduction compared to the first quarter and have paid off $40.7 million in debt. Our adjusted gross margin lift to 45 percent from 40 percent last quarter shows that we continue to align operations towards the path to profitability." 


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