Namaste Technologies Inc.’s (TSXV:N) third-quarter revenue grew 32% year over year
SmallCapPower | July 26, 2018: Namaste Technologies Inc. (TSXV:N) Monday announced its unaudited financial results for the third quarter of fiscal 2018. The Company’s quarterly net revenues came in at $4.1 million, up from $3.1 million in same period last year, which is a 32% growth YoY. The increase in net revenues during the third quarter was primarily on the back of organic growth strategies employed by the Company. The Company’s net revenues for the first nine months were $14.6 million as compared to $7.1 million in during the same period of 2017, indicating an increase of 106% YoY despite the divestment of the Company’s U.S. business in December 2017. The increase in net revenues during the first nine months of 2018 was attributed to revenue growth from EDIT domains and Australian Vaporizers. EDIT domains was acquired in October 2016 and Australian Vaporizers was acquired in March 2017.
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The majority of revenues were generated by the Top 5 markets, which include the United Kingdom, Australia, Brazil, Germany and Canada. These countries generated 90% and 84% of revenues in Q3 2018 and first nine months of 2018, respectively.
The Company’s cost of sales for Q3 2018 were $3.2 million compared to $2.4 million in Q3 2017, which resulted in a gross profit of $0.9 million. The gross profit increased by $0.2 million, or 31%, primarily due to the growth in revenue. The gross profit margin of 21% was comparable to the gross margin of 22% in the same period last year.
The Company is actively engaged with Health Canada in relation to Namaste’s wholly-owned subsidiary and Access to Cannabis for Medical Purposes Regulations (ACMPR) Licensed Producer, Cannmart, which awaits its medical cannabis “sales-only” license.
Namaste Technologies acquired Findify AB during its third quarter. Findify is a leading artificial intelligence software company, which uses machine learning algorithms to track users’ behavior online in real-time and provide a more personalized buying experience. Findify’s technology works to provide better recommendations to consumers and to optimize search results that are customized to the user’s choice patterns. The Company is working with Findify’s management team to develop a marketing and roll-out strategy that will introduce the technology across Namaste’s e-commerce platform and offer it to other companies in the industry.
Namaste Technologies CFO Kenneth Ngo said, “We are pleased to see a 32% increase in quarterly revenue compared to the same period last year, due to organic growth in the Company’s vaporizer business. The Q3 results are very encouraging especially considering that Namaste divested its U.S assets and revenue, which accounted for 14.4% of the total revenue during Q3 of 2017.”
Namaste Technologies President and CEO Sean Dollinger said, “Our Q3 financial results show continuous growth year-on-year, and this quarter also represented major milestones for the Company including the acquisition of Findify, which we believe will drive significant revenue going forward by increasing customer conversion and retention. We are working on several integrations of Findify’s technology in real-world applications of AI within the cannabis industry that will be impactful in understanding patients’ needs and in personalizing their online experience. Namaste will continue to focus and developing innovative technology, which drives revenue and brings long-term value to the company. Our quarterly results are very encouraging and have not factored in any cannabis sales or the sale of CBD products in international markets, which we are highly focused on presently. We’re looking forward to seeing impactful results in these new sales channels in the near future.”
Namaste Technologies trades at a market capitalization of $374.3 million and a price to book multiple of 5.86x.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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