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CULTIVATED: Why investors love Flowhub, cannabis industry layoffs, and more – Business Insider – Business Insider

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Welcome to Cultivated, our weekly newsletter where we’re bringing you an inside look at the deals, trends, and personalities driving the multibillion-dollar global cannabis boom.

Sign up here to get it in your inbox every week.

If you want a discount to BI Prime to read our stories, sign up here!

Happy Valentine’s Day Cultivated readers,

We’ve been very aware that V-Day was around the corner for a while now because of all the themed press releases that have been sent our way. From pre-rolls in the shape of actual flowers to cannabis-based massage oil, there seems to be a lot out there for all the romantics.

Anyhow, let’s get down to it.

We’ve updated our list of ongoing layoffs in the cannabis industry again this week with the addition of Supreme Cannabis, which cut around 15% of its workforce on Tuesday. And with Aurora’s 500 cuts last week, our tally for cannabis layoffs stands at around 2,000.

Read about all the layoffs here.

Canopy Growth and Aurora Cannabis also reported earnings this week. Aurora’s earnings, analysts say, were no surprise after the guidance they released last week.

Both Canopy Growth and its venture capital division Canopy Rivers posted quarterly earnings this morning, which we covered in our article here.

Canopy Growth surprised investors with a 49% jump in net revenue to C$123.8 million in the last three months of 2019. Canopy’s stock soared about 12% in trading and other companies, like Tilray and Aurora, rode the wave as well.

Jeremy’s off skiing in Utah this weekend, so Yeji is on point for earnings coverage. More to come!

-Jeremy and Yeji

Here’s what we wrote about this week:

The buzziest startup in cannabis doesn’t even sell marijuana.

Flowhub, a cannabis-tech company that helps retailers track inventory and process sales, topped Business Insider’s recent list of the hottest startups in the industry. Founded in 2015, Flowhub has raised $27 million from investors and now works with more than 900 dispensaries in the US.

The US cannabis industry is projected to reach $85 billion by 2030, up from $51 billion now, and Flowhub – which already operates across 12 states – is set to benefit as more states legalize cannabis.

Legal cannabis is strenuously tracked, according to Flowhub founder and CEO Kyle Sherman. He said he likes to tell lawmakers on Capitol Hill that the US tracks legal cannabis better than it does uranium.

The once red-hot cannabis industry is coming back down to earth.

In the past few months, cannabis companies – including venture-backed startups like Pax and giants like MedMen – have announced a series of job cuts, amounting to over 2,000 workers in the sector as a whole.

Supreme Cannabis, a Canadian cannabis grower, on Tuesday said it was eliminating 15% of its workforce, including one-third of corporate positions, in an effort to cut costs.

We’re continuing to keep track of layoffs in the industry here. Please get in touch if you have a tip.

Canopy Growth’s latest earnings may just be signaling the end of the long downturn in the cannabis industry.

In its financial results on Friday, the company reported an unexpected 49% jump in net revenue to C$123.8 million in the last three months of 2019. The company also reported a narrower loss than analysts expected, according to estimates collected by Bloomberg News. That sent the stock soaring about 12% in trading on Friday.

The results come as a sign of good news for the industry. Other cannabis firms that have faced a difficult few months also saw their stocks rise.

Capital raises, M&A activity, partnerships, and launches

  • European medical cannabis cultivator Sanity Group closed a $22 million Series A funding round led by Calyx and HV Holtzbrinck Ventures. Other investors include Scooter Braun’s TQ Ventures.
  • Acreage Holdings secured a $100 million credit facility from undisclosed investors, a $50 million private loan partially from CEO Kevin Murphy, and a $30 million private placement.
  • KushCo, a publicly-traded maker of cannabis accessories, raised $16 million through a direct offering.
  • Disruption Labs, the parent company to CBD company Reset Biosciences closed a $3.8 million seed round led by Andrew Garnock/AJR Consulting, a family office that has previously invested in the medical cannabis space.

Executive moves

  • Flowhub hired Craig Gomulka as CFO and Scott Schell as CTO. You can read more about Flowhub in Yeji’s story here.
  • Former Molson Coors marketing executive Greg Butler has joined Cresco Labs as the company’s chief commercial officer.
  • Aaron Keefer, the culinary gardener for the renowned restaurant The French Laundry, has joined Sonoma Hills Farm as VP of Cultivation.

Chart of the week

The legal cannabis industry supports 243,700 full-time jobs in the US. Nearly 40,000 of those are in California, accounting for about 16% of all legal cannabis jobs in the country.

Check out the data from Leafly’s jobs report here:

Foto: sourceRuobing Su/Business Insider

What we’re reading

Instead of releasing this greenhouse gas, beer brewers are selling it to pot growers (Washington Post)

Governors Across U.S. Step Up Push To Legalize Marijuana In Their States (Forbes)

Q&A: The Food Giants Push For „Smart Regulation“ of CBD (Cannabis Wire)

Nepal lawmakers seek to legalize growing, using marijuana (Associated Press)

Did we miss anything? Have a tip? Just want to chat? Send us a note at [email protected] or find Business Insider’s cannabis team on twitter: @jfberke & @jesse_yeji. You can also reach Jeremy on encrypted messaging app Signal on at (646) 376 6002.

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

Companies in this story: (TSX:T)

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.

It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.

The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.

Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.

TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.

The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:TRP)

The Canadian Press. All rights reserved.

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.

The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.

On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.

“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.

“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”

Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.

BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.

The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.

BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.

It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.

The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”

Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.

This report by The Canadian Press was first published Nov. 7, 2024.

Companies in this story: (TSX:BCE)

The Canadian Press. All rights reserved.

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