Planet 13 Holdings, Inc. ((TSE:PLTH)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Planet 13 Holdings, Inc. Faces Challenges but Eyes Recovery in Strategic Markets
The latest earnings call for Planet 13 Holdings, Inc. painted a mixed picture of the company’s financial health. While the quarter was marked by revenue declines and strategic setbacks, particularly in Nevada and California, there are promising signs of recovery and strategic adjustments in Florida and Illinois, suggesting potential for future improvement.
Improved Local Traffic and Tourist Recovery
Efforts to attract more local traffic in Las Vegas have shown progress, with local sales doubling in Q3. October revenue increased by 5% month-over-month, indicating early signs of tourism recovery. This suggests that Planet 13’s strategies to bolster local engagement are beginning to pay off.
Florida Operations Improvement
Florida operations have seen a significant boost, with an 8% increase in October sales compared to the Q3 monthly average. This improvement is attributed to better flower quality and successful customer reacquisition efforts, highlighting the potential for growth in this market.
Positive Performance in Illinois
The Illinois operations contributed positively to the overall performance, with a 9% sequential revenue increase from Q2. This growth underscores the importance of Illinois as a key market for Planet 13.
Operational Efficiency and Cost Reduction
Planet 13 has made strides in enhancing operational efficiency, with sales and marketing expenses decreasing by 24% sequentially and G&A expenses declining by 14%. These cost reduction efforts are crucial for improving the company’s financial health.
Completion of BHO Lab in Florida
The completion of the BHO lab in Florida by year-end is expected to expand the product portfolio and drive further revenue growth in the state. This development is a strategic move to capitalize on the growing demand for cannabis products.
Revenue Decline in Core Markets
The company faced a revenue decline from $26.6 million in Q2 to $23.3 million in Q3, primarily due to reduced tourist volumes in Nevada and flower quality issues in Florida. This highlights the challenges in maintaining revenue streams in core markets.
Wholesale Revenue Decline
Wholesale revenue dropped from $2.7 million in Q2 to $2.2 million in Q3, influenced by the winding down of California operations and Nevada’s softer retail performance. This decline reflects the broader challenges in the wholesale segment.
Gross Margin Impacted by Onetime Charges
Gross profit was negatively affected by a $1.1 million impact from California inventory sales below cost and a $3.5 million inventory reserve in Florida. These onetime charges significantly impacted the gross margin.
Adjusted EBITDA Loss
The company reported an adjusted EBITDA loss of $4.1 million in Q3, exacerbated by lower revenues and onetime gross margin charges. This loss underscores the financial challenges faced by Planet 13 during the quarter.
Challenges in Nevada Tourism
Significant headwinds in Nevada, due to a 10% decline in visitor volume, impacted the performance of the Las Vegas SuperStore. This decline in tourism is a major challenge for the company, affecting its largest market.
Forward-Looking Guidance
Planet 13 provided guidance on its strategic repositioning and financial performance. The company expects stronger performance in Q4, driven by higher quality products in Florida and the operational BHO lab by year-end. The exit from California is also anticipated to benefit the company. With $17.2 million in cash and $10.6 million in short-term debt as of September 30, 2025, Planet 13 aims to focus on profitability, operational efficiency, and capital efficiency moving forward.
In summary, while Planet 13 Holdings, Inc. faced a challenging quarter with revenue declines and strategic setbacks, there are clear signs of recovery and strategic adjustments, particularly in Florida and Illinois. The company’s focus on operational efficiency and strategic market shifts provides a foundation for potential future growth.