Leef Brands (LEEF) Q4 2025 earnings summary

Executive summary

• 2025 marked a pivotal year with the first successful cultivation of nearly 65 acres, growing close to 2 million plants and significantly improving core extraction business economics.

• Achieved significant margin expansion and cash flow improvement in Q4 and H2 2025, driven by vertical integration and operational efficiencies at Salisbury Canyon Ranch.

• Revenue grew 22% year-over-year, and gross margins doubled in the last two quarters, driven by the integration of Salisbury Canyon Ranch.

• The company processed over 200 acres of raw cannabis annually, focusing on medical-grade, concentrated ingredients for major brands.

• Secured a $4.5 million investment from Mindset Capital to accelerate expansion of cultivation capacity.

Financial highlights

• FY 2025 revenue totaled $34.8 million, up 22.1% year-over-year; Q4 revenue was $8.3 million, up 39% from Q4 2024.

• Q4 2025 gross margin rose to 45.5%, up 23.5 percentage points year-over-year; gross profit was $3.8 million, up 188.2%.

• Gross margins expanded from 27%-30% to 41.4% in the second half, with gross profit doubling from $3.6 million to $6.9 million despite lower revenue.

• Positive operating cash flow of $1.3 million and free cash flow of $1.2 million achieved in Q4.

• FY 2025 adjusted EBITDA was $(0.4) million, a $2.0 million improvement; free cash flow improved to $(1.1) million from $(7.3) million.

Outlook and guidance

• Main focus in 2026 is completing the California farm, with plans to add 15 acres in spring and more in fall.

• Expects continued strong performance, with temporary margin decline in Q2 2026 due to harvest cycle transition, followed by margin recovery in H2 2026.

• Expectation of running out of 2025-grown material in Q2 2026, with new harvests starting late June and full supply resuming into 2027.

• Anticipated improvements in margin and output as more supply is sourced internally and product mix is optimized.

• Anticipates margin and cash flow stability as internal supply increases with full buildout of Salisbury Canyon Ranch.