cbdMD, Inc. (YCBD) Q1 2026 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call reflects mixed signals: a 12% revenue increase and improved liquidity are positive, but declining margins, a net loss, and integration risks weigh negatively. The Q&A reveals uncertainty, particularly around the Herbal Oasis product line, and management's vague responses may concern investors. The lack of market cap data limits assessment of stock reaction magnitude, but overall, the sentiment aligns with a neutral prediction given the balanced positives and negatives.

Key Financial Performance

Revenue $5 million, a 12% increase sequentially from the fourth quarter of fiscal 2025. The increase is attributed to improved execution in the core cbdMD brand and progress with the beverage brand Oasis.

Gross Margin 60%, down from 66% in the prior year. The decline is due to increased warehouse expenses and a shift in revenue mix to more wholesale, reflecting product mix and pricing discipline.

Loss from Operations Approximately $286,000, compared to a loss of $86,000 in the prior year period. The increase in loss is not explicitly explained in the transcript.

Net Loss Attributable to Common Shareholders Approximately $325,000 or $0.04 per share, compared to a net loss of approximately $1 million or $1.73 per share in the prior year quarter. The improvement is primarily driven by the elimination of the Series A preferred dividend and its conversion into common stock.

Adjusted Non-GAAP EBITDA Loss $36,000. The company is focused on generating positive EBITDA.

Cash and Cash Equivalents Increased by approximately $1.1 million to $3.3 million during the quarter, driven by the Series C preferred equity financing.

Working Capital $5.4 million as of December 31, 2025, meaningfully higher than at fiscal end. The increase is attributed to the Series C preferred financing and careful cash management.

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Operating Highlights

Bluebird Botanicals acquisition: Acquired assets of Bluebird Botanicals, a respected CBD brand, to expand wellness portfolio beyond CBD, gain intellectual property, and strengthen regulatory/scientific position.

Revenue growth: Achieved 12% sequential revenue growth, generating over $5 million in revenue for Q1 2026. Wholesale business grew 17% year-over-year.

Direct-to-consumer channel: Remained the largest revenue channel, accounting for 72% of total revenue.

Cost reduction and operational simplification: Focused on reducing fixed costs, simplifying operations, and strengthening the balance sheet.

Integration of Bluebird Botanicals: Efforts underway to consolidate supply chain, marketing, and operations to extract cost and revenue synergies.

Regulatory engagement: Actively engaging with policymakers and industry organizations to support sensible regulation, including the HEMP Act.

Capital structure improvement: Regained NYSE American compliance, completed $2.25 million Series C preferred financing, and structured a $20 million equity line of credit to strengthen liquidity and working capital.

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Risk or Challenges

Regulatory Challenges: The company operates in a challenging regulatory environment, with proposed and newly enacted regulations causing packaging and compliance-related confusion among customers. Additionally, restrictive hemp legislation, such as H.R. 5371, could have industry-wide impacts if left unchanged.

Revenue and Margin Pressures: Revenue remains below historical peaks despite recent improvements. Gross margin declined from 66% to 60% year-over-year, primarily due to increased warehouse expenses and a shift in revenue mix towards wholesale.

Integration Risks: The acquisition of Bluebird Botanicals requires integration efforts, including consolidating supply chain, marketing, and operational areas, which could pose challenges in achieving cost and revenue synergies.

Economic and Financial Risks: The company reported a net loss of $325,000 for the quarter, and cash used in operating activities was approximately $812,000. While liquidity has improved, the company remains focused on managing cash carefully to support operations and strategic initiatives.

Market and Competitive Pressures: The company faces competitive pressures in the CBD market, requiring disciplined acquisition funnels and margin protection to maintain its position.

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Guidance & Outlook

Revenue Growth: The company aims to continue driving sequential revenue improvement in the core business, supported by recent monthly trends and the integration of Bluebird Botanicals.

Bluebird Botanicals Acquisition: The integration of Bluebird Botanicals is expected to unlock cost and revenue synergies, contributing to a step function increase in revenue at attractive contribution margins.

Regulatory Landscape: The company is actively engaging with policymakers and industry organizations to support sensible regulation, including the HEMP Act, which could provide more reasonable per-serving limits and stronger consumer protections.

Capital Structure and Liquidity: The company has structured a $20 million equity line of credit to strengthen the balance sheet opportunistically under favorable market conditions while minimizing costs and dilution.

EBITDA Focus: The company is focused on generating positive EBITDA and anticipates reduced working capital requirements in the next quarter, excluding the Bluebird acquisition.

Regulatory Clarity Advantage: The company believes its investment in cGMP manufacturing, rigorous safety standards, and proven formulations will provide a competitive advantage as regulatory clarity increases.

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Shareholder Return Plan

Series A preferred dividend: The elimination of the Series A preferred dividend during fiscal 2025 and the resulting conversion of the Series A into common stock was mentioned as a factor in the improvement of net loss attributable to common shareholders.

Series C preferred financing: In December, the company completed an approximate $2.25 million in Series C preferred financing, strengthening liquidity and working capital.

Equity line of credit (ELOC): A $20 million equity line of credit was structured to provide greater flexibility to strengthen the balance sheet opportunistically under favorable market conditions while minimizing costs and dilution.

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Key Q&A

Q:What are the expectations and plans for the integration of Bluebird Botanicals?

A:The company has brought over several team members from Bluebird Botanicals. The acquisition provides access to a new customer base and opportunities to optimize the supply chain and SKU mix. They aim to address gaps in Bluebird's portfolio and leverage their expertise in building acquisition funnels. Growth opportunities include improving marketing activities and aligning some of their SKUs under the Bluebird label to meet customer needs.

Q:Will the e-commerce capabilities of Bluebird Botanicals be integrated with the company's existing platform, or will they remain separate?

A:The company plans to maintain Bluebird Botanicals as a separate brand due to its distinct customer base. They see opportunities to grow and build on Bluebird's unique customer base, which differs from the cbdMD customer base.

Q:What is the contribution of the Herbal Oasis line of seltzers to the company's sales, and when might it start contributing materially to the top line?

A:The company has not published specific data on the Herbal Oasis line of seltzers. It is starting to contribute to sales but remains small relative to the core CBD brand. They expect improvements throughout the year and will reassess what they are willing to disclose as gains are realized.

Q:Review of Unclear Management Responses

A:The management avoided providing specific data or clear timelines regarding the contribution of the Herbal Oasis line of seltzers to the company's sales. They used vague language and did not disclose exact figures or material impact.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

YCBD Transcript

cbdMD, Inc. (YCBD) Q1 2026 Earnings Call Transcript

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cbdMD, Inc. (YCBD) Q4 2025 Earnings Call Transcript

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The earnings call presents a mixed picture: improved operating results and gross margin are positive, but declining e-commerce sales and marketing inefficiencies are concerning. The Q&A section reveals cautious optimism about regulatory developments but lacks clarity on strategic plans. While the elimination of preferred dividend obligations and growth in wholesale sales are positives, the company's reliance on equity financing and potential dilution remain concerns. Overall, the sentiment is neutral due to balanced positive and negative aspects, with no clear catalyst for a strong stock price movement in either direction.

cbdMD, Inc. (AMEX:YCBD) Q2 2025 Earnings Call Transcript

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The earnings call reveals mixed signals: a slight revenue increase and improved cost structure are positive, but regulatory challenges and liquidity risks temper optimism. The new product expansion and capital structure improvements could yield future benefits, yet current financial constraints and market competition pose challenges. Analysts' cautious sentiment in the Q&A further supports a neutral outlook.

Earnings call transcript: cbdMD’s Q2 2025 revenue rises, net loss narrows

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The earnings call presents a mixed picture. Financial performance shows improvement with a revenue increase and reduced losses, but there are concerns like competitive pressures, supply chain issues, and a working capital deficit. The Q&A section reveals optimism about future growth, particularly with Herbal Oasis, and improved capital structure. However, management's vague responses on specific metrics and the working capital deficit pose risks. Considering these factors, the stock price is likely to remain neutral in the short term.

YCBD Report

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