Tilray Looks Promising After Q2 Results

Summary

• Tilray reported its Q2 financial results Tuesday, showing strong growth in sales.
• The report also disclosed further agreements with regard to the supply of adult-use cannabis to Canadian provinces.
• Global growth is continuing at a compelling rate with deliveries to three new countries in Q2.
• The market's reaction to the strong earnings report was dampened due to profit taking in the cannabis sector.
• I'm expecting to see strong growth ahead.

Tilray (NASDAQ:TLRY) reported its financial results for the second quarter on Tuesday, August 28, 2018. While the report was positive, profit taking in the cannabis sector led to the stock closing the session at a loss of 3.63%. Nonetheless, with strong revenue growth, expansion into three new countries, and the announcement of new agreements in Canada, I believe that Tilray is well positioned for growth ahead.

Tilray Reports Second Quarter Financial Results

On August 28, 2018, Tilray issued a press release announcing its financial results for the second quarter. During the second quarter, the company's revenue climbed 95.2% to come in at $9.7 million. For the second half, the rise came in at 75.2% growth over the same half last year with revenue of $17.6 million.

Unfortunately however, the company also saw growth in losses. In the second quarter of 2017, losses only came to about $2.44 million. However, in the second quarter of 2018, losses came to $12.83 million, working out to $0.17 per share.

While the company is still a bit off from earnings, the report shows that growth in top-line revenue could quickly equate to positive earnings per share. The cost of revenue for the quarter came in at $5.6 million or 57.7% as a percentage of revenue. Therefore, if revenue were to see strong gains, the potential for profitability is there.

Nonetheless, it's not the financial data mentioned in the report that really caught my attention. In fact, there are two factors outside of finances that suggest to me that we're likely to see strong growth ahead.

Activities In Canada

If you follow the cannabis sector to any extent, by now you know that the country has become the second in the world to legalize recreational use of the plant among adults. On October 17, 2018, the

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.