Not so long ago, cannabis company KushCo Holdings, Inc. announced a new strategy to achieve a positive adjusted EBITDA and sustain its operations in the long term. Now, the premier producer of ancillary products and services to the legal cannabis industry has just presented its financial report for the second quarter of the 2020 fiscal year that ended on February 29, 2020. The company has reported a year-over-year increase in its revenue coming from core customers by up to 227%, reporting a total of $24.6 million. Overall, KushCo’s net revenue decreased by 14% compared to the same period last year – that total was $30.1 million.
As the company has implemented a strategy to focus more on financially stable and creditworthy customers who are more established, the revenue coming from these customers – multi-state operators and leading brand customers – increased by more than double. It now represents 83% of the company’s total revenue. Also, part of the strategy was to resize the company, so it has the right-size according to the company’s cost structure, which has been successful. This includes a reduction in the inventory, consolidating warehouses and having a better approach toward smaller customers so it can be more automated and profitable for the company. Costs were reduced in the customer service area, which won’t be as personalized as it was before.
“Despite a challenging market backdrop, we are pleased with how we executed according to our plan. Net revenue of $30.1 million was down 14% year-over-year and quarter-over-quarter due to a myriad of factors, namely a slower-than-anticipated rebound in demand for our vape hardware products, following the illicit market vape crisis; a slower-than-anticipated start to our hemp trading business; and continued weakness in the California market, which has been exacerbated by the recent COVID-19 pandemic,” said Nick Kovacevich, KushCo’s co-founder, chairman and CEO.