Highlights for the year ended December 31, 2025 compared to the prior year:
Net revenue of $151.5 million, an increase of 24%
Gross Margin on Finished Cannabis Inventory Sold of 54%, compared to 46% in 2024
SG&A of $43.4 million, an increase of 22%
Adjusted EBITDA of $43.8 million, an increase of 64%
Adjusted EBITDA margin of 29%, compared to 22% in 2024
Net income of $41.9 million or $0.03 per basic and diluted share
Cash flow from operations before working capital changes of $38.6 million, representing 88% conversion from Adjusted EBITDA
#3 Canadian Licensed Producer by market share[1]
Back Forty was the #1 cannabis brand in Canada throughout 20251
Highlights for the fourth quarter ended December 31, 2025 ("Q4 2025") compared to the prior year period ("Q4 2024"):
Net revenue of $40.1 million, an increase of 16%
Gross Margin on Finished Cannabis Inventory Sold of 56%, compared to 54% in Q4 2024
SG&A of $11.7 million, an increase of 26%
Adjusted EBITDA of $12.5 million, an increase of 14%
Adjusted EBITDA margin of 31%, compared to 32% in Q4 2024
Net income of $0.9 million or $0.001 per basic and diluted share
Cash flow from operations before working capital changes of $11.9 million, representing 95% conversion from Adjusted EBITDA
Cash at quarter end totalled $32.3 million
Total Debt to Adjusted EBITDA was 1.1x at quarter end
Launched new premium-tier brand, South Point, in Alberta and Ontario
See definitions and reconciliation of non-GAAP measures elsewhere in this release.
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1 HiFyre IQ January 2026
Conference Call
Auxly's management team will host a conference call tomorrow, Friday, March 27, 2026, at 10:00 a.m. EST to discuss its financial results. Participants can access the conference call by telephone by dialing: 1-888-699-1199 (conference ID: 41380) or by audio webcast at: https://app.webinar.net/871ZPZoyxXm. Investors are encouraged to send questions to [email protected] in advance of the call for discussion during the question and answer period. For those unable to participate in the conference call at the scheduled time, it will be available for replay on the Company's website within 24 hours after the conclusion of the call.
Management Commentary
Hugo Alves, CEO of Auxly commented: "Q4 2025 was a strong finish to a milestone year for Auxly. In the fourth quarter we surpassed $40 million in quarterly net revenue while maintaining CPG-style margins, including 56% Gross Margin on Finished Cannabis Inventory Sold and a 31% Adjusted EBITDA margin. For the full year, Auxly delivered 24% net revenue growth and 64% Adjusted EBITDA growth as we continued to scale our business while expanding profitability. Our flagship brand, Back Forty, also strengthened its leadership position and was the #1 cannabis brand in Canada by dollars sold for the entirety of 2025 which is a testament to the strength of our products, innovation, and nation-wide distribution.
Our balance sheet also strengthened materially during the year, ending Q4 with $32 million in cash against $46 million in total debt. With recurring cash flow and a stronger financial foundation, we are in a position to allocate capital proactively and with discipline to drive long-term value. Canada will remain the foundation of Auxly's durability. For us, winning at home means continued innovation, improved distribution, and operational excellence across the organization, from cultivation and manufacturing through to the head office. In January, we announced a $10 to $12 million capital program for 2026 focused on improving quality and throughput at Auxly Leamington and preparing the business for direct international distribution.
Subsequent to quarter end, Auxly opportunistically became the DIP lender and stalking horse bidder for the assets of Ayurcann Inc. The opportunity provides some insight into how our team is thinking about capital allocation. The absolute size of the transaction is conservative relative to our cash position and forecasted free cash flow, which means the financial risk is quite low whether we are successful in our bid or not. At the same time, Ayurcann has established brands and listings in two of our core categories of vapes and pre-rolls, which means the assets align directly with our strategy of winning at home. Finally, in the event of a successful bid for Ayurcann and the full deployment of our 2026 capital program, we still expect to retain excess cash that we believe can be deployed prudently into opportunities capable of generating returns well above our cost of capital. We are excited about the year ahead and remain focused on building a durable company that can continue to grow profitably, generate strong cash flows, and create long-term value for our stakeholders."
Fourth Quarter and Full Year 2025 Financial Overview
Net revenue for the fourth quarter of 2025 was $40.1 million, an increase of $5.5 million, or 16%, compared to the same period in 2024, driven primarily by higher volume and pricing across dried flower, pre-roll and vape products. For the year ended December 31, 2025, net revenue was $151.5 million, compared to $122.3 million in 2024, representing an increase of 24%.
Gross Profit Margin for the fourth quarter of 2025 was 43% (2024, 50%), while Gross Margin on Finished Cannabis Inventory Sold improved to 56% (2024, 54%). Gross profit benefited from higher net revenue, favourable production costs at Auxly Leamington, and operational improvements in cultivation and manufacturing. For the year ended December 31, 2025, Auxly generated $86.7 million of gross profit, representing a 57% Gross Profit Margin, compared to $59.9 million (49%) in 2024. Gross Margin on Finished Cannabis Inventory Sold improved to 54% for 2025, up from 46% in 2024.
Selling, general and administrative expenses were $11.7 million in the fourth quarter of 2025, an increase of $2.4 million from the same period in 2024. For the full year, SG&A totaled $43.4 million, an increase of $7.7 million compared to 2024, primarily reflecting investments to support higher sales.
Net income for the three months ended December 31, 2025 was $0.9 million, compared to $4.4 million in the fourth quarter of 2024, primarily reflecting realized fair value losses on inventory. Excluding realized and unrealized fair value gains and losses, net income improved due to stronger gross profits and lower interest and accretion expenses following the conversion of the debenture held by Imperial Brands PLC and other debt repayments.
For the year ended December 31, 2025, net income was $41.9 million, an improvement of $58.2 million compared to 2024. Results for 2025 included an $8.1 million deferred tax recovery related to a change in the estimated useful life of intangible assets and an $8.1 million after-tax gain on the settlement of the Imperial Debenture. In comparison, 2024 results included a $16.0 million deferred tax expense related to the conversion of the Imperial Debenture into shares. Excluding these items, year-over-year improvement was primarily driven by stronger gross profits and lower interest and accretion expenses following the Imperial Brands PLC debenture conversion and other debt repayments.
Adjusted EBITDA was $12.5 million for the fourth quarter of 2025, an increase of $1.5 million, or 14%, compared to $11.0 million in the fourth quarter of 2024, driven by improved gross profits partially offset by higher selling expenses and wages to support growth. For the year ended December 31, 2025, Adjusted EBITDA was $43.8 million, an increase of $17.1 million, or 64%, compared to $26.7 million in 2024, reflecting improved gross profits partially offset by higher selling expenses and wages to support higher sales.
Outlook
Auxly remains focused on delivering sustainable, profitable growth by building on its leadership in the Canadian cannabis market. Auxly continues to advance its strategy through focused innovation, operational excellence, and prudent financial management. With a strengthened balance sheet, we are well-positioned to drive long-term shareholder value.
We expect the Canadian recreational cannabis market will continue to benefit from the tailwinds of increasing social acceptability, capture of market share from the illicit market, the divergence of existing supply to international markets and limited capital availability to the cannabis sector. We believe many of these trends could persist over the long-term.
Auxly continues to see long-term potential in international markets and is actively evaluating export opportunities. We are well-positioned to succeed internationally, supported by our strong brands, scalable production, and a strategic partnership with Imperial Brands. Auxly intends to invest in its international export capabilities over the course of 2026 to prepare and position us for long-term international growth. Our deliberations towards international sales are purposefully rigorous and measured to ensure that international cannabis activities are accretive to profitability and that our focus on winning at home is not compromised.
Auxly believes it can continue to grow net revenue above market rates through product innovation, further investment in distribution and increased capacity at Auxly Leamington. Both innovation and output increases are expected to be funded from operating cash flow for the foreseeable future. Auxly plans to maintain profitability through focused innovation, investment in efficiency and quality, and rigorous cost control. Furthermore, the conversion of profitability to free cash flow is expected to improve through the reduction of interest expense and stabilization of working capital.
Auxly expects to allocate between $10 million to $12 million of cash flow from operations towards capital projects at Auxly Leamington in 2026. In combination with previous capital investments, these investments are expected to increase capacity and efficiency throughout cultivation and processing and add capabilities that will allow for direct international shipments.
Over the long-term, Auxly remains confident in its ability to deepen its leadership position in Canada and make meaningful advances towards our vision of global leadership while maintaining profitability. With its consumer-trusted brands, best-in-class operating assets, national distribution, and data-driven approach to innovation, Auxly is well-positioned to meet evolving consumer preferences and deliver strong financial performance.
Non- GAAP Measures
EBITDA and Adjusted EBITDA are non-GAAP financial measures used in the cannabis industry and by the Company to assess operating performance removing the impacts and volatility of non-cash and other adjustments. The definition may differ by issuer. EBITDA and Adjusted EBITDA used by the Company are reconciled with net income or loss from continuing operations of the Company, an IFRS measure, in the section "Results of Operations" in the MD&A dated March 25, 2026.
"Gross Margin on Finished Cannabis Inventory Sold" is a supplementary financial measure and is defined as net revenue less cost of finished cannabis inventory sold divided by net revenue. "Gross Profit Margin" is defined as gross profit divided by net revenue. Gross Profit Margin is a supplementary financial measure. "Debt" is defined as current and long-term debt and is a supplementary financial measure. It is a useful measure in managing the Company's capital structure and financing requirements.
ON BEHALF OF THE BOARD
"Hugo Alves" CEO
About Auxly Cannabis Group Inc. (TSX:XLY)
Auxly is a leading Canadian consumer packaged goods company in the cannabis products market, headquartered in Toronto, Canada. Our mission is to help consumers live happier lives through quality cannabis products that they trust and love. Our vision is to be a leader in branded cannabis products that deliver on our consumer promise of quality, safety and efficacy.
Learn more at www.auxly.com and stay up to date at Twitter: @AuxlyGroup; Instagram: @auxlygroup; Facebook: @auxlygroup; LinkedIn: company/auxlygroup/.
Financial Highlights and Key Performance Indicators
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