Auxly Cannabis Group Inc.

Auxly reported record Q2 26 net revenue of $45.8 million, up 18% year over year. Adjusted EBITDA was $14.3 million, up 24% year over year, with a 31% EBITDA margin. Gross margin on finished cannabis inventory sold was 55%, versus 52% in Q2 25. Cash flow from operations before working capital changes was $13.4 million, up 31% year over year and representing 94% conversion from adjusted EBITDA. Net income was $7.7 million, essentially flat versus $8.3 million in Q2 25. Looking ahead, management said its 2026 outlook is unchanged, expects net revenue growth above market rates, and reiterated a longer-term capital program of about $30 million over three years to increase yield at Auxly Leamington by about 30% over 2025 levels, including the previously guided $10 million to $12 million for 2026.

Hugo Alves framed the quarter as evidence that Auxly’s operating model is scaling, citing record revenue, EBITDA, and cash flow. He emphasized that strong demand for core brands, especially Back Forty, is driving growth, and said the company’s margin improvement is structural rather than temporary. He also signaled confidence in the long-term plan, including Leamington expansion, innovation, and continued share repurchases, while saying Auxly will stay focused on “winning at home” in Canada before pushing harder internationally.

Travis Wong said the 31% EBITDA margin is sustainable because it is being supported by three drivers: revenue growth above the market, structural gross margin improvement, and disciplined SG&A growth. He pointed to higher cultivation yields, better manufacturing at Leamington and Charlottetown, and procurement savings, including lower vape API costs. On profitability, he said net income was $7.7 million, but underlying net income would have improved meaningfully after excluding noncash fair value adjustments; he said underlying net income would have improved by $2.2 million year over year and by $8 million year to date. Management also said working capital should remain similar to last year with modest increases to support growth, and that improved cash conversion should benefit from lower interest expense.

Analysts focused on whether the 30% yield improvement at Leamington is realistic, with management explaining it will come from additional post-harvest capabilities, a new grow zone, and related infrastructure, and that yield gains should arrive throughout the three-year buildout through 2028. Questions also centered on whether the 31% EBITDA margin can last; management said it is supported by structural gross margin gains and controlled SG&A, though they acknowledged they will keep investing in sales and marketing as the business grows. On international markets, management said the opportunity is real but still too early and too dynamic to prioritize over Canada, so the company is focused on domestic execution while building relationships for the future. On capital allocation, Hugo Alves said Auxly will keep evaluating its NCIB alongside organic growth and other opportunities, and that at current prices the company views buybacks as attractive because it believes the stock does not reflect intrinsic value.