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    YCBD
    Earnings call· Jun 2026(Q3 FY26)

    cbdMD Q3 FY26 earnings call YCBD

    Aug 13, 2026 Source

    Executive summary

    cbdMD, Inc. Q3 FY26 — Top-line Growth Amidst Regulatory Headwinds and Strategic Investments

    cbdMD achieved significant top-line growth in Q3 FY26, driven by its wholesale channel and the Bluebird acquisition, despite a challenging regulatory landscape. The company made strategic investments and incurred one-time costs, leading to a wider operating loss, but adjusted EBITDA narrowed. Management is proactively addressing regulatory uncertainty with new product launches and cost reductions, aiming for improved profitability and market share in a dynamic environment.

    Highlights

    5

    • Net sales grew 20% year-over-year to $5.6 million in Q3 FY26.

    • Wholesale channel sales increased 61% year-over-year, now representing 30% of total sales.

    • Bluebird Botanicals contributed over $500,000 in revenue in its first full quarter post-acquisition.

    • Oasis brand depletions hit a record in July, up 35% over Q3 average, with August on pace to more than double.

    • Implemented a cost reduction program targeting $100,000 to $150,000 in monthly cash savings starting Q4 FY26.

    Concerns

    5

    • Operating loss widened to $1.1 million in Q3 FY26 from $905,000 in prior year due to deliberate investments and one-time costs.

    • Gross margin declined to 54.7% in Q3 FY26 from 61.5% in prior year due to wholesale shift and higher warehouse labor.

    • Incurred $187,000 increase in inventory reserves in Q3 FY26 due to pending regulatory changes.

    • Incurred $200,000 of additional professional fees in Q3 FY26 for M&A, GRAS report, and other activities.

    • State-level shipping restrictions impacted $150,000 of direct-to-consumer revenue in Q3 FY26.

    Guidance & targets

    3
    CategoryTargetConfidence
    Monthly cost savings
    $100,000 to $150,000
    high materiality
    High
    Annualized cost savings
    $1.2 million to $1.8 million
    high materiality
    High
    Quarterly revenue for cash flow break-even
    low six millions to mid six millions
    high materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Wholesale Channel
    Led overall revenue growth, reflecting continued momentum and distribution expansion.
    Sales increase: $629,000Percentage of total sales: 30% (Q3 FY26)Percentage of total sales: 22% (Q3 FY25)Percentage of total sales (9M FY26): 30%Percentage of total sales (9M FY25): 23%
    		—61%—lower margins
    Direct-to-Consumer
    Revenues impacted by state-level shipping restrictions and label changes.
    Impacted by state-level shipping restrictions: $150,000
    		————

    Operational metrics

    29
    Net sales
    $5.6 millionup 20% YoY
    Q3 FY26

    Net sales grew 20% year over year to 5.6 million.

    Net sales
    $4.6 million
    Q3 FY25

    compared to $4.6 million in the prior year period.

    Net sales
    $16.2 millionup 12% YoY
    9M FY26

    For the first nine months of fiscal year, the revenue is up 12% to 16.2 million.

    Net sales
    $14.5 million
    9M FY25

    up 12% compared to $14.5 million in the prior year period.

    Organic revenue growth
    approximately 10%YoY
    Q3 FY26

    Excluding revenue from Bluebird, our business grew approximately 10% year-over-year during the third quarter

    Bluebird Botanicals revenue
    more than $500,000
    Q3 FY26

    this was Bluebird's first quarter, full quarter as part of CVDMD, and it contributed more than a half a million in revenue.

    Gross margin
    54.7%vs 61.5% in prior year
    Q3 FY26

    Gross margin was 54.7% for the quarter compared to 61.5% in the prior year period.

    Gross margin
    57.3%vs 63.5% in prior year
    9M FY26

    And for the first nine months, gross margin was 57.3 compared to 63.5 last year.

    Inventory reserves increase
    $187,000increase
    Q3 FY26

    We also recorded an additional 187,000 increase in inventory reserves during the quarter as we prepare for pending regulatory changes.

    Operating expenses
    $4.2 millionincrease of $432,000 or 12% from prior year
    Q3 FY26

    Operating expenses were approximately $4.2 million for the quarter, an increase of approximately $432,000, or 12% from the prior year period.

    Professional fees
    $200,000additional
    Q3 FY26

    We also incurred approximately $200,000 of additional professional fees during the quarter associated with the Medicare initiative, Bluebird valuation work, settlements, other M&A activity, and our gross report.

    Loss from operations
    $1.1 millionvs $905,000 in prior year
    Q3 FY26

    The loss from operations was approximately $1.1 million compared with a loss of approximately $905,000 in the prior year period.

    Adjusted non-GAAP EBITDA loss
    $507,000vs $624,000 in prior year
    Q3 FY26

    adjusted non-GAAP EBITDA loss for the quarter was approximately $507,000 compared with approximately $624,000 in the prior year quarter.

    Adjusted non-GAAP EBITDA loss
    $764,000
    9M FY26

    For the In the first nine months of fiscal 2026, adjusted EBITDA loss was approximately $764,000.

    Inventory reserve expense (adjusted EBITDA)
    $120,000additional
    Q3 FY26

    The order included approximately $120,000 of additional inventory reserve expense

    Regulatory and legal matter expense (adjusted EBITDA)
    $53,000
    Q3 FY26

    $53,000 of regulatory and legal matter

    M&A and financing related expenses (adjusted EBITDA)
    $126,000
    Q3 FY26

    $126,000 of M&A and financing related expenses

    Employee and director stock compensation (adjusted EBITDA)
    $65,000
    Q3 FY26

    and $65,000 of an employee and director stock compensation.

    Net loss attributable to common shareholders
    $1.2 millionvs $1.2 million in prior year
    Q3 FY26

    Net loss attributable to common shareholders was approximately 1.2 million or 11 cents per share compared to a net loss of approximately 1.2 million or 21 cents per share in the prior year quarter.

    Net loss per share
    $0.11vs $0.21 in prior year
    Q3 FY26

    Net loss attributable to common shareholders was approximately 1.2 million or 11 cents per share compared to a net loss of approximately 1.2 million or 21 cents per share in the prior year quarter. While the absolute net loss remained relatively consistent, the improvement in the per share result reflects the significant increase in our weighted average common share count following the conversion of our former Series A preferred stock and other equity activity.

    Cash used in operating activities
    $2 millionvs $1.2 million in prior year
    9M FY26

    cash used in operating activities was approximately $2 million for the first nine months compared with $1.2 million in the prior year period.

    Accounts receivable increase
    $691,000
    9M FY26

    Accounts receivable increased approximately 691,000

    Inventory increase
    $283,000
    9M FY26

    and inventory increased approximately 283,000 during the nine months.

    Cash balance
    $2.1 millionvs $2.3 million at Sep 30, 2025
    as of 2026-06-30

    By June 30, we had approximately $2.1 million in cash

    Working capital
    $4.7 millionvs $3.4 million at Sep 30, 2025
    as of 2026-06-30

    and $4.7 million of working capital, compared with $2.3 million of cash and $3.4 million of working capital at September 30, 2025.

    Financing cash generated
    $2 million
    9M FY26

    We also generated approximately $2 million of financing cash during the nine months, primarily from the issuance of preferred stock earlier in the year.

    Oasis depletions
    35%over Q3 average
    July

    Depletions from distributors, which is unit sales from our distribution, hit record in July, up 35% over the third quarter average.

    Oasis depletions
    more than double
    August

    And August is on pace to more than double.

    Voter support for sensible hemp regulation
    more than 70%
    recent

    The growing body of polling included national surveys of likely voters and more recent statewide polls in Louisiana show that more than 70% of voters favor sensible regulation of Hemp derived THC rather than an outright ban.

    Industry KPIs

    3
    MetricValueDetails
    EPS revenue guidanceLow to mid $6 millionUSD
    Pricing policy impact—
    Business development capacity deal appetite—

    Product announcements

    1
    ProductTypeDetails
    Zero-proof Kava Oasis beveragelaunch

    Deals & partnerships

    1
    Bluebird BotanicalsAcquisition of a complementary brand with a loyal customer base and self-GRAS status on full spectrum products.

    Validates M&A thesis by leveraging cbdMD's infrastructure, marketing engine, and NYSE American Listing to unlock value.

    Risks & headwinds

    5
    Regulatory Headwinds (Section 781 of H.R. 5371)Near-term (November 2026)

    Scheduled to take effect November 12, 2026

    Mitigation: Advocating for legislative solutions (e.g., Senate Stock Gap Appropriations Proposal, Lawful Hemp Protection Act, Bipartisan Beverage Regulatory Parity Act); product reformulation, channel diversification.

    State-level Regulatory ChangesOngoing

    Impacted $150,000 of direct-to-consumer revenue in Q3 FY26

    Mitigation: Managing through it, evaluating product reformulation, channel diversification.

    Inventory Reserves IncreaseQ3 FY26 (one-time cost)

    $187,000 increase in Q3 FY26

    Mitigation: Proactive approach to changing regulatory environment, evaluating product reformulation.

    Professional Fees for M&A/RegulatoryQ3 FY26 (one-time cost)

    $200,000 in Q3 FY26

    Mitigation: These were deliberate investments, now implementing cost reduction program.

    Gross Margin CompressionOngoing

    54.7% in Q3 FY26 vs 61.5% in Q3 FY25

    Mitigation: Evaluating pricing, product mix, manufacturing, and supply chain opportunities; implementing cost reduction program.

    What to watch in Q4 FY26

    5

    Monthly cash cost savings realization

    Q4 FY26
    Current$100,000 to $150,000 target
    TargetFull realization of targeted monthly savings

    Why it matters

    Critical for improving profitability and adjusted EBITDA, and achieving cash flow break-even.

    Beginning in the fourth fiscal quarter, we implemented a cost reduction program targeting $100,000 to $150,000 in monthly savings through payroll reductions, renegotiation of warehouse leases, negotiating exit vendor contracts, and we've identified additional supply chain savings, which we expect to begin to realize later this quarter.

    Q&A highlights

    8

    Clarification on whether the $100k-$150k monthly savings are cash-based and the timing of their full realization, and the current cash flow break-even revenue run rate.

    The savings are cash-based, mostly realized by end of August, with a small portion of lease savings bleeding into October. The cash flow break-even revenue run rate is now estimated in the low to mid $6 million per quarter.

    “Yes, those numbers were cash related, Adam. [...] Correct, low six millions to mid six millions? That is how we are modeling this out right now.”

    asked by Adam Waldo · answered by Ronan Kennedy

    2 min read5 chapters

    Detailed Narrative

    01

    Regulatory Environment and Advocacy

    The company is navigating a dynamic regulatory landscape, particularly concerning Section 781 of H.R. 5371, which is set to narrow the federal definition of hemp and impose strict THC limits from November 12, 2026. Management is actively engaged in Washington D.C., supporting bipartisan bills like the Lawful Hemp Protection Act and the Bipartisan Beverage Regulatory Parity Act, which would regulate hemp-derived beverages similarly to alcohol. The company believes a ban on full-spectrum hemp would drive consumers to unregulated black markets.

    02

    Strategic Investments and Cost Actions

    cbdMD made deliberate investments in Q3 FY26, including legal and due diligence for M&A, new product development (Kava beverage), supply chain compliance, and clinical healthcare initiatives (GRAS for broad-spectrum CBD). These investments contributed to a wider operating loss. However, the company implemented a cost reduction program in Q4 FY26, targeting $100,000 to $150,000 in monthly cash savings through payroll reductions, renegotiating leases, and vendor contracts, aiming for improved EBITDA and contribution margins.

    03

    Oasis Brand Momentum and Diversification

    The hemp-derived THC brand, Oasis, continues to accelerate, with distribution recently added in South Carolina and a new distribution partner in Texas, quadrupling store access. Depletions from distributors hit a record in July, up 35% over the Q3 average, with August on pace to more than double. The company launched a zero-proof Kava Oasis beverage to capture shelf space with compliant products, mitigating regulatory uncertainty🌐 and building revenue visibility into 2027.

    04

    Bluebird Botanicals Integration and M&A Strategy

    Bluebird Botanicals contributed over $500,000 in revenue in its first full quarter as part of cbdMD, validating the company's M&A thesis of leveraging infrastructure, marketing, and NYSE American Listing to unlock value. The company continues to evaluate disciplined acquisitions that diversify revenue, grow customer bases, and reduce regulatory exposure, focusing on short-term cash flow accretion.

    05

    Gross Margin Pressures and Mitigation

    Gross margin declined to 54.7% in Q3 FY26, primarily due to a shift towards lower-margin wholesale sales and higher warehouse labor costs for product repacking due to changing state regulations. An additional $187,000 increase in inventory reserves was recorded. Management is evaluating pricing, product mix, manufacturing, and supply chain opportunities to improve gross margin and streamline responses to regulatory requirements.

    AI-generated summary of the company’s earnings call. Not investment advice.