cbdMD Earnings Call: Losses Narrow, Growth Still Elusive

Cbdmd INc ((YCBD)) has held its Q4 earnings call. Read on for the main highlights of the call.

cbdMD Narrows Losses and Fortifies Balance Sheet Amid Mixed Revenue Trends

cbdMD’s latest earnings call struck a cautiously optimistic tone, emphasizing steady progress in reducing losses, strengthening the balance sheet, and expanding its Oasis beverage footprint, even as overall sales slipped and core e-commerce trends softened. Management framed the year as a transition period: financial discipline and capital structure cleanup are clearly working, but higher operating costs and weaker online demand still weigh on the growth story. The evolving federal cannabis policy backdrop added an element of long-term opportunity, though executives stressed that regulatory benefits remain speculative at this stage.

Improved Operating Loss Shows Ongoing Discipline

The company underscored another year of operational improvement, with operating loss reduced by $1.2 million to about $2.1 million. This marks the third straight year of better operating results, signaling that cost-cutting and efficiency efforts are sticking rather than being one-off measures. For investors, this trend suggests cbdMD is moving closer to a sustainable business model, even without top-line growth, by tightening operations and focusing on more profitable channels.

Adjusted EBITDA Moves Closer to Break-Even

Adjusted non-GAAP EBITDA improved meaningfully, narrowing from a $1.7 million loss in 2024 to a $900,000 loss in 2025. Management attributed the shift to disciplined cost control and supply chain optimization. While still negative, the trajectory is encouraging for shareholders who focus on cash-generation potential: the company is progressively reducing the drag from its core operations and positioning itself for potential break-even or better if revenue stabilizes or grows.

Oasis Beverage Expansion Builds a Second Growth Engine

A key strategic highlight was the expansion of the Oasis functional beverage brand, now distributed across nine states. Management reported improving case sell-through and rising distributor engagement, suggesting that shelf presence is translating into actual consumption rather than just pipeline fill. For a company historically rooted in CBD wellness products, Oasis represents a diversification play into a faster-moving beverage category that could drive incremental growth and brand visibility if the momentum continues.

Balance Sheet Transformation Boosts Financial Flexibility

cbdMD has materially strengthened its balance sheet, lifting net book value from under $2 million to over $7 million. A major driver was eliminating more than $7 million in annual accrued preferred dividend obligations, significantly simplifying the capital structure. This cleanup reduces ongoing financial burdens and potential overhangs for common shareholders, improving the company’s financial flexibility to invest selectively in growth initiatives like Oasis and marketing, while also enhancing its standing with the NYSE American.

Exchange Compliance Restored, Signaling Stabilization

The company confirmed that it has fully resolved prior compliance deficiencies with the NYSE American exchange. Regaining and maintaining listing compliance is an important signal of stability and governance for institutional and retail investors alike. It reduces delisting risk, supports liquidity in the stock, and reflects management’s focus on aligning financial metrics and structure with exchange requirements.

Federal Cannabis Policy Shift Opens Long-Term Optionality

Management highlighted a recent executive order aimed at modernizing federal cannabis policy as a potentially significant long-term catalyst. One area of particular interest to cbdMD is the prospect that regulatory changes could eventually open pathways to Medicare reimbursement or broader healthcare acceptance for CBD products. While the company emphasized that the ultimate impact is uncertain and dependent on future regulatory moves, it views this policy backdrop as supportive of its positioning in the CBD wellness market over the long run.

Wholesale Segment Delivers Solid Growth

The wholesale channel was a bright spot, generating $1.2 million in revenue in the fourth quarter of 2025, up 25% from the prior year’s period. This growth shows cbdMD is gaining traction with retail partners and distributors, offsetting some of the pressure in its direct-to-consumer business. Stronger wholesale performance also diversifies the company’s revenue mix, potentially making overall sales less vulnerable to shifts in digital marketing costs and online customer acquisition dynamics.

Gross Margins Improve Despite Top-Line Pressure

Even with modestly lower sales, cbdMD expanded its gross profit margin to 59% of net sales in Q4 2025, up from 54% a year earlier. The margin improvement underscores the benefits of supply chain optimization, product mix management, and possibly better pricing discipline. For investors, healthier gross margins are critical: they indicate the underlying profitability of each dollar of revenue is improving, giving the company more room to absorb operating expenses and invest in growth.

E-Commerce Weakness Highlights Demand and Acquisition Challenges

E-commerce remains cbdMD’s largest channel, but it contracted, with direct-to-consumer online sales down 6% year over year in the fourth quarter. With e-commerce representing roughly three-quarters of annual net sales, this decline is a key concern. It suggests that customer acquisition, retention, or digital traffic dynamics are under pressure, forcing the company to spend more to maintain volumes. Investors will be watching closely to see whether this is cyclical softness or a structural challenge in the online CBD market.

Higher SG&A and Marketing Spend Weigh on Profitability

Operating costs moved in the opposite direction of margins, with SG&A expenses rising to $3.4 million in Q4 2025 from $2.7 million a year earlier. At the same time, the marketing spend to direct-to-consumer revenue ratio increased to 30% from 27%. Taken together, these figures show cbdMD is spending more to support its brands and drive sales, but those investments are not yet translating into top-line growth. The balance between funding growth initiatives and maintaining a path toward profitability remains a central tension in the story.

Overall Sales Drift Lower Despite Channel Bright Spots

Total net sales for fiscal 2025 slipped to $19.1 million from $19.5 million in the prior year, reflecting modest but notable pressure on the top line. The decline came despite wholesale growth and Oasis distribution gains, indicating that softness in core CBD product demand—especially online—more than offset these positives. For investors, this flat-to-down revenue profile highlights that cbdMD is still in a rebuilding phase, relying more on efficiency and strategic repositioning than on pure growth.

Forward-Looking Outlook: Cautious Optimism Tied to Execution

While the company did not issue detailed numerical guidance, management framed its outlook around continued loss reduction, disciplined cost management, and selective growth investments. They expect ongoing benefits from supply chain optimization and the simplified balance sheet, which together aim to push operating results closer to break-even. Strategic priorities include expanding Oasis distribution, leveraging the new equity line of credit to support growth as needed, and navigating the evolving federal cannabis policy environment. The message to investors was one of cautious optimism: cbdMD believes it has the financial runway and operational foundation to benefit if demand stabilizes and regulatory trends become more favorable, but execution on sales growth and expense control will be crucial.

In summary, cbdMD’s earnings call presented a mixed but improving picture: shrinking losses, stronger margins, and a much healthier balance sheet offset by declining e-commerce revenue, higher operating costs, and flat overall sales. The Oasis beverage rollout and wholesale growth provide tangible avenues for future expansion, while regulatory shifts in cannabis policy offer longer-term upside optionality. For market participants, cbdMD now looks more financially stable but still needs to prove it can reignite consistent top-line growth in a competitive and evolving CBD landscape.