Q3 FY2026
Filed Oct 27, 2026SNDL Reports Third Quarter 2026 Financial and Operational Results The Company Makes Significant Strategic Investments While Improving Underlying Financial Performance and Generating Record Quarterly Free Cash Flow of $20 Million
Net revenue and gross profit declined year over year, and the Company recorded a $52 million non-cash goodwill impairment in Cannabis Operations. Adjusted operating income returned to positive territory and free cash flow reached a quarterly record, supported by retail margin expansion and improved Investments results.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 net revenueother | $238.0M | – | -2.5 % |
| Q3 2026 cost of salesother | $180.1M | – | – |
| Q3 2026 gross profitother | $57.89M | – | -9.8 % |
| Q3 2026 gross marginnon-GAAP | 24.3 % | – | -2.0 pp |
| Q3 2026 investment incomeother | $927K | – | – |
| Q3 2026 share of profit (loss) of equity-accounted investeesother | $6.93M | – | – |
| Q3 2026 general and administrative expenseother | $43.28M | – | – |
| Q3 2026 sales and marketing expenseother | $3.46M | – | – |
| Q3 2026 depreciation and amortizationother | $12.66M | – | – |
| Q3 2026 share-based compensationother | $1.77M | – | – |
| Q3 2026 restructuring costsother | $577K | – | – |
| Q3 2026 asset impairment, netother | $52.33M | – | – |
| Q3 2026 operating lossother | −$48.32M | – | -337.3 % |
| Q3 2026 other expenses, netother | −$2.46M | – | – |
| Q3 2026 loss before income taxother | −$50.78M | – | – |
| Q3 2026 income tax expenseother | −$8K | – | – |
| Q3 2026 net lossother | −$50.79M | – | – |
| Q3 2026 comprehensive lossother | −$48.05M | – | – |
| Q3 2026 adjusted operating incomenon-GAAP | $5.25M | – | 155.2 % |
| Q3 2026 free cash flownon-GAAP | $19.95M | – | 19.5 % |
| Q3 2026 adjusted EBITDAnon-GAAP | $15.82M | – | – |
| Q3 2026 net cash provided by operating activitiesother | $18.55M | – | – |
| Q3 2026 net cash used in investing activitiesother | −$61.22M | – | – |
| Q3 2026 net cash used in financing activitiesother | −$8.05M | – | – |
| Q3 2026 change in cash and cash equivalentsother | −$50.73M | – | -256.8 % |
| Nine months ended September 30, 2026 net revenueother | $669.7M | – | -3.5 % |
| Nine months ended September 30, 2026 gross profitother | $167.0M | – | -11.3 % |
| Nine months ended September 30, 2026 gross marginnon-GAAP | 24.9 % | – | -2.2 pp |
| Nine months ended September 30, 2026 operating lossother | −$65.27M | – | -260.6 % |
| Nine months ended September 30, 2026 net lossother | −$68.52M | – | – |
| Nine months ended September 30, 2026 adjusted operating lossnon-GAAP | −$10.68M | – | 16.0 % |
| Nine months ended September 30, 2026 free cash flownon-GAAP | $5.69M | – | -26.4 % |
| Nine months ended September 30, 2026 adjusted EBITDAnon-GAAP | $34.17M | – | – |
| Nine months ended September 30, 2026 net cash provided by operating activitiesother | $25.72M | – | – |
| Nine months ended September 30, 2026 change in cash and cash equivalentsother | −$107.6M | – | -584.3 % |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Liquor Retail, Q3 2026Persistent softness in market demand affected same-store sales, which decreased by -6.0%, while gross margin reached a new quarterly record. | $134.8M | – | -3.3 % |
| Cannabis Retail, Q3 2026Incremental revenue from new stores and Value Buds store conversions partially offset a -3.8% decline in same-store sales in ON and AB; revenue and gross margin reached new quarterly records. | $85.61M | – | 0.7 % |
| Cannabis Operations, Q3 2026Most of the revenue decline was attributed to the exit from the unprofitable domestic dried flower category and increased focus on higher-value products. | $27.04M | – | -27.7 % |
| Total Cannabis, Q3 2026Includes the combined Cannabis Retail and Cannabis Operations results and revenue elimination associated with Cannabis Operations sales to provincial boards expected to be subsequently repurchased by licensed retail subsidiaries. | $103.2M | – | -1.5 % |
| Intersegment Eliminations, Q3 2026Revenue elimination associated with Cannabis Operations sales to provincial boards expected to be subsequently repurchased by the Company's licensed retail subsidiaries. | −$9.43M | – | 46.4 % |
| Investments, Q3 2026The Investments segment generated $7.9 million of operating income, including $6.9 million from SNDL's share of profit from SunStream's equity-accounted investees, primarily reflecting an increase in the valuation of Parallel. | — | – | 0.0 % |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Capital returns
- During the third quarter of 2026, the Company purchased for cancellation 5,431,300 common shares at a weighted average price, excluding commissions, of US$1.31 per share.
- Repurchase of common shares was $(10,042) thousand during the three months ended September 30, 2026 and $(43,113) thousand during the nine months ended September 30, 2026.
- Year-to-date through October 22, 2026, the Company had purchased for cancellation 23,088,153 common shares, resulting in 243,320,644 common shares outstanding.
- The Board directed management to pursue a possible substantial issuer bid for an aggregate purchase price of up to C$50 million and at a price per share not exceeding C$1.92 (US$1.35).
- If completed and fully subscribed at the maximum price, the SIB could reduce common shares outstanding by more than an additional 10%.
- The Company expects to proceed with renewal of the share repurchase program upon its expiration on November 20, 2026, subject to Board approval.
What drove it
- Cannabis Retail gross profit was $23,118 thousand and gross margin was 27.0 %, both supported by gross margin expansion.
- Liquor Retail gross margin was 27.0 %, an increase of 0.7 pp, reaching a new quarterly record.
- Investments operating income was $7,861 thousand, versus $1,543 thousand in the prior-year quarter.
- Free cash flow was $19,954 thousand, including a $10.6 million benefit associated with the initial unwinding of the Company's captive insurance arrangement.
- Parallel's restructuring was completed on July 27, 2026. SNDL's indirect equity interest increased from approximately 67% to approximately 92% following the rights offering.
- SunStream's debt ownership of Parallel increased from 39.4% to 69.4% after financing the purchase of an additional portion of Parallel's takeback debt at 75% of face value.
Concerns
- Cannabis Operations net revenue declined -27.7 % to $27,040 thousand, gross profit was $(1,622) thousand, and gross margin was -6.0 %.
- Cannabis Operations recorded operating loss of $(64,693) thousand, including a $52 million non-cash goodwill impairment and $6 million in other impacts, mostly driven by inventory adjustments related to the dried flower exit and Jeeter cost variances.
- Total Company gross profit declined -9.8 % and gross margin declined 2.0 pp to 24.3 %.
- Liquor Retail net revenue declined -3.3 %, with same-store sales declining -6.0%.
- Cannabis Retail same-store sales declined -3.8% amid market contraction in ON and AB.
- The Skymint restructuring process continues, and timing and outcomes remain uncertain and subject to court process and other factors.
- The Company stated that final determination on broader U.S. cannabis rescheduling remains pending.
What to watch
- Whether the Cannabis Operations cost reductions, including a reduction of more than 30% of the workforce at the Kelowna manufacturing facility, begin contributing to results in the fourth quarter.
- Results of the strategic review of Cannabis Operations, including potential asset divestitures and larger productivity initiatives.
- Completion of definitive documentation and payment of the $200,000 monetary penalty connected to the anticipated AGCO regulatory resolution.
- The anticipated deconsolidation of Ontario retail operations and whether commercial arrangements substantially preserve SNDL's net economics for those franchise locations.
- Structure and timing of a potential transition to direct ownership and consolidation of qualifying U.S. medical cannabis operations of Parallel, subject to legal, regulatory, accounting and Nasdaq requirements.
- Completion, price and participation level of the possible substantial issuer bid of up to C$50 million.
- Potential renewal of the share repurchase program after November 20, 2026, subject to Board approval.
Balance sheet and cash flow
- Cash and cash equivalents were $132,479 thousand as at September 30, 2026, versus $252,243 thousand as at December 31, 2025.
- Restricted cash was $8,162 thousand as at September 30, 2026.
- Marketable securities were $139 thousand as at September 30, 2026.
- Inventory was $128,721 thousand as at September 30, 2026.
- Equity-accounted investees were $467,730 thousand as at September 30, 2026, versus $385,534 thousand as at December 31, 2025.
- The portfolio of cannabis-related investments had a carrying value of $485.2 million as of September 30, 2026, including $467.7 million to SunStream Bancorp Inc.
- The Company reported $617.8 million of unrestricted cash, marketable securities and investments, including investments in equity-accounted investees, and no outstanding debt at September 30, 2026.
- Total liabilities were $216,975 thousand and total shareholders' equity was $1,007,195 thousand as at September 30, 2026.
- Net cash provided by operating activities was $18,550 thousand in Q3 2026.
- Capital contributions to equity-accounted investees were $(60,762) thousand in Q3 2026.
- Net cash used in investing activities was $(61,224) thousand in Q3 2026.
- Net cash used in financing activities was $(8,055) thousand in Q3 2026.
Analysis
SNDL reported a mixed third quarter. IFRS net revenue was $237,994 thousand, down -2.5 %, and gross profit was $57,886 thousand, down -9.8 %. Gross margin declined to 24.3 % from 26.3 %. The reported operating loss widened to $(48,317) thousand from $(11,050) thousand, while net loss was $(50,789) thousand. The principal reported driver was a $52 million non-cash goodwill impairment related to Cannabis Operations.
Underlying operating measures improved despite the impairment. Adjusted operating income was $5,249 thousand, compared with adjusted operating loss of $(9,512) thousand in the prior-year quarter. Free cash flow reached $19,954 thousand, up 19.5 %, and included a $10.6 million benefit from the initial unwinding of the captive insurance arrangement. Adjusted EBITDA, however, declined to $15,816 thousand from $18,075 thousand, while operating cash flow declined to $18,550 thousand from $31,701 thousand.
The retail businesses delivered better margin performance but uneven demand. Cannabis Retail revenue increased 0.7 % to $85,605 thousand, as new stores and Value Buds conversions partly offset a -3.8% same-store-sales decline. Its gross margin reached 27.0 %. Liquor Retail revenue declined -3.3 % to $134,774 thousand amid a -6.0% same-store-sales decline, but gross margin improved 0.7 pp to a record 27.0 %. Investments operating income increased to $7,861 thousand from $1,543 thousand, supported by profit from SunStream equity-accounted investees and a higher Parallel valuation.
Cannabis Operations remains the principal drag. Revenue declined -27.7 % to $27,040 thousand following the exit from unprofitable domestic dried flower and greater focus on higher-value products. Gross profit was $(1,622) thousand, gross margin was -6.0 %, and adjusted operating loss widened to $(11,391) thousand. Management cited inventory adjustments and Jeeter cost variances, reduced more than 30% of the Kelowna facility workforce, and expects the resulting cost reductions to begin contributing in the fourth quarter. The Company has also initiated a strategic review that may consider divestitures and productivity initiatives.
Capital allocation was active. The Company directed $60,762 thousand of capital contributions to equity-accounted investees during the quarter, including investments associated with Parallel and the Gainesville cultivation facility, while cash and cash equivalents ended at $132,479 thousand. It repurchased $10,042 thousand of common shares during the quarter and outlined a possible substantial issuer bid of up to C$50 million. The filing provides no quantified financial outlook, leaving execution in Cannabis Operations, the potential AGCO resolution, Parallel's prospective consolidation structure, and the proposed SIB as the major disclosed items to monitor.
Management, verbatim
Our third quarter results demonstrate improvement in SNDL’s underlying financial performance, including positive adjusted operating income and record quarterly free cash flow generation.
Zach George, Chief Executive Officer of SNDL
Cannabis Operations remained below expectations and recorded a non-cash impairment. While the quarter was impacted by inventory issues arising from the first half, we are taking decisive action to simplify the portfolio, reduce costs and concentrate resources on product categories where SNDL’s manufacturing capabilities, distribution reach and retail insights can support sustainable returns.
Zach George, Chief Executive Officer of SNDL
The recently announced potential $50 million substantial issuer bid (“SIB”) is a further step toward accelerating capital returns and reducing our outstanding share count.
Zach George, Chief Executive Officer of SNDL
Not in the filing
stated, not guessed- GAAP or IFRS earnings per share, diluted earnings per share, and adjusted earnings per share were not reported.
- Quarterly dividend amount was not reported.
- Quantified forward revenue, gross margin, operating expense, tax rate, or earnings guidance was not reported.
- Prior-quarter comparisons for reported metrics were not reported.
- A previous outlook section was not provided.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.