High Tide Posts Record Q3 Revenue and EBITDA Growth

High Tide Inc (NASDAQ:HITI) reported record third-quarter revenue of $198.8 million, a 33% year-over-year increase that marks the fastest growth rate in 13 quarters. The company also posted record adjusted EBITDA of $16.2 million, up 52% year-over-year, with a margin of 8.2% representing the highest level in the past 12 quarters. According to the earnings report from GN markets, operating income surged 133% to $8.7 million, while net income reached a record $12.7 million.

Operational efficiency improved as salaries and wages dropped to 11.4% of revenue, the lowest share in 12 quarters, and general administrative costs fell to 3.9%. These cost controls contributed to a $10.6 million increase in cash balance during the quarter. High Tide generated $7 million in free cash flow, the highest in four quarters, supporting its strategy of avoiding external equity raises.

Retail performance drives volume growth

The bricks-and-mortar segment maintained a 27% gross margin, consistent with prior periods. High Tide now operates 232 stores in Canada, having added 14 locations year-to-date toward a calendar year target of 20. While same-store sales were flat for the full quarter, June and July posted gains, with transaction counts up 1.1% year-over-year.

Customer retention remains a key driver, with Cabana Club membership reaching 2.73 million, up 27% year-over-year. ELITE tier members exceeded 186,000, a 62% increase. The company reports an annualized revenue per square foot of $1,721, excluding newer stores, which is significantly higher than peer averages.

Medical distribution expands margins

The medical cannabis distribution arm, Remexian, generated $38.2 million in revenue, a 21% sequential increase. Adjusted EBITDA for this segment rose 38% sequentially to $4.4 million, achieving a record 12% margin. Volume sold reached 10.2 tonnes, up 35% sequentially and 165% higher than the pace at the time of the transaction close.

Market headwinds and quota risks

Management cited competitive pressure as a challenge, noting a 5% increase in store counts in key Canadian provinces and macroeconomic factors leading to thinner customer baskets. In Germany, import quota issues could cause short-term disruptions of four to six weeks, similar to patterns seen in the previous year. These constraints may affect sales timing despite strong underlying volume growth.

High Tide remains cautious regarding international expansion, with potential delays in entering new markets such as the UK. The company holds $60 million in total debt at the parent level, with no meaningful maturities for three years and $25 million undrawn on its BMO revolver, providing financial flexibility amid these operational challenges.