Cresco Labs (CL) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $166 million, with strong brand performance, retail productivity, and operating cash flow of $30 million; free cash flow was $25 million.

• Adjusted EBITDA was $36 million (22% margin), with a net loss of $15 million for the quarter.

• Ended Q1 2025 with $162 million in cash, the highest balance in three years.

• Maintained #1 market share in several billion-dollar cannabis markets and operated 72 retail stores.

• Focused on disciplined capital allocation, cash generation, and long-term value creation.

Financial highlights

• Q1 2025 adjusted gross profit was $82 million (49% margin), with gross profit of $79 million.

• Adjusted EBITDA was $36.2 million (22% margin), down from $53.2 million (29%) in Q1 2024.

• Free cash flow for Q1 2025 was $24.7 million; operating cash flow was $30 million.

• SG&A expenses were $58 million, or 35% of revenue; adjusted SG&A margin was 32%.

• Revenue declined from $184.3 million in Q1 2024 to $166 million in Q1 2025.

Outlook and guidance

• Q2 revenue expected to be down slightly due to Illinois' mandatory seed-to-sale system conversion, with normalization anticipated in future quarters.

• Margin pressure expected in Q2, with a couple hundred basis point impact, and modest margin pressure for the remainder of the year.

• Strategic priorities include maximizing core and new market opportunities, expanding retail network and efficiency, and entering new growth platforms.

• New dispensaries and increased capacity in key states, plus product innovation, expected to offset price compression and competition in H2 2025.

• Committed to profitable sales that convert to cash, rather than chasing topline revenue.