- Revenue Growth: Urban-Gro Inc. reported a significant year-over-year increase in revenue, reaching $20.9 million in Q3 2023, marking a 69% rise.
- Sequential Revenue Increase: There was an 11% sequential revenue growth from Q2 2023, mainly due to increased construction design-build revenue.
- Stable Gross Profit: Despite a change in revenue composition, gross profit remained stable at $2.9 million.
- Reduced Operating Expenses: Operating expenses decreased to $6.0 million, reflecting effective cost management.
- Improved Net Loss: The net loss showed improvement, decreasing to $3.4 million from the previous year.
- Adjusted EBITDA: There was a notable improvement in Adjusted EBITDA, with a reduction in loss to negative $1.3 million.
- Strong Backlog: The company reported a robust backlog of approximately $84 million, indicating a healthy pipeline for future revenue.
- Positive Q4 Guidance: Urban-Gro anticipates a consolidated revenue of approximately $30 million and breakeven to slightly positive Adjusted EBITDA for Q4 2023.
Urban-Gro Inc. has demonstrated a robust financial performance in the third quarter of 2023, with revenues soaring to $20.9 million, a 69% increase from the $12.4 million reported in the same period last year. This growth is mainly due to a $9.4 million boost in construction design-build revenues, which has more than compensated for the decrease in equipment systems revenue caused by regulatory delays in the U.S. cannabis market.
The company’s gross profit has remained consistent at $2.9 million, or 14% of revenue, compared to $2.9 million, or 15% of revenue, in the second quarter. Despite a shift from higher-margin equipment revenue to lower-margin construction design-build revenue, this stability in gross profit indicates a balanced approach to revenue generation.
Urban-gro’s operating expenses have decreased to $6.0 million, down from $6.8 million in the previous quarter. This reduction is primarily due to decreased general and administrative expenses, showcasing the company’s commitment to optimizing resources and managing costs effectively.
Net Loss and Earnings
The net loss for the quarter has improved to $3.4 million, or $0.29 loss per share, a significant improvement from the $8.7 million, or $0.81 loss per share, reported in the prior year. The adjusted net loss also reduced, indicating a positive trend in the company’s profitability.
Backlog and Future Outlook
Urban-gro is well-positioned for future revenue growth with a substantial backlog of approximately $84 million contracts. This backlog is a mix of construction design-build, professional services, and equipment systems, reflecting the company’s diversified business model.
Guidance for Q4 2023
Looking ahead to the fourth quarter of 2023, Urban Goro is projecting a consolidated revenue of approximately $30 million, representing a 43% sequential improvement and a 73% increase compared to the prior year. Additionally, the company expects to break even to slightly positive Adjusted EBITDA, signaling a continued trajectory toward profitability.
Image provided by Urban-Gro