Charlotte's Web Reports Year-Over-Year Growth For Q1 2025

PR Newswire

LOUISVILLE, Colo., May 14, 2025

Early proof points confirm transformation strategy traction

LOUISVILLE, Colo., May 14, 2025 /PRNewswire/ - (TSX: CWEB) (OTCQX: CWBHF), Charlotte's Web Holdings, Inc. ("Charlotte's Web" or the "Company"), a botanical wellness innovation company, today announced results for the quarter ended March 31, 2025, reporting its first year-over-year revenue increase in more than three years, building on the sequential quarterly growth trend achieved in 2024.

"Following three sequential quarters of improvement in 2024, Q1 delivered our first year-over-year revenue growth since 2021 -- validating the transformation we initiated 18 months ago," said Bill Morachnick, Chief Executive Officer. "Our upgraded e-commerce platform is converting more visitors, and new digital storefronts on Amazon, TikTok Shop, and Faire are widening our reach. An upcoming nationwide rollout with Whole Foods Market will strengthen our retail footprint. Operationally, we commenced initial in--house gummy production and, as part of our disciplined cost agenda, we mutually concluded our promotional rights agreement with MLB and associated costs. Coupled with robust innovation -- including cannabinoid isolates and our new functional mushroom gummy line -- we believe these initiatives position the Company to deliver top and bottom-line growth for 2025 and beyond."

Erika Lind, Chief Financial Officer, added, "Our reengineered cost structure is now flowing through the P&L. Building on the positive traction from the prior quarters, we are structuring for further improvements in cost efficiency and cash flow. As a part of this effort, we have concluded some high-cost promotional sports agreements, thereby eliminating sizeable future cash outlays of more than $18 million over the next three years. This supports near-term cash flow and preserves long-term cash for further investment in innovation. Combined with our transitioning to in-house manufacturing and disciplined SG&A control, we anticipate further improvements to cash flow in 2025."

First Quarter Business Review

Expansion of Mushroom Wellness Gummy Innovations

Following the successful Q4 2024 launch of its functional mushroom gummies targeting focus, stress, and energy, Charlotte's Web will continue expanding its botanical wellness portfolio in 2025. The Company's strategic diversification beyond CBD is gaining market traction with mushroom wellness products now available through multiple distribution channels, including Walmart.com, Amazon.com, and the Company's direct-to-consumer platform.

E-Commerce Growth and Omnichannel Expansion

Building on the sequential gains recorded in 2024, Charlotte's Web's digital channels delivered year-over-year growth in Q1 2025. Order volume growth, stabilized average order values, new subscriber increases, and lower churn rates drove meaningful digital revenue growth and underscored brand loyalty. This performance reflects the past year's technology and go-to-market enhancements: a unified brand architecture, an expanded product portfolio, data-driven segmentation, an upgraded e-commerce stack, and improved engagement tools such as SMS outreach and an influencer network that now reaches more than one million consumers.

The Company has widened its omnichannel footprint. Walmart.com added Charlotte's Web's new mushroom wellness gummies during the quarter, while strategic launches on Amazon, TikTok Shop, and Faire have dramatically broadened online reach. With additional categories and channels slated for launch in the coming quarters, the Company is well-positioned to meet consumers wherever they shop, diversifying revenue streams, and capturing incremental market share through improved digital discoverability.

Whole Foods Market Retail Distribution Launch

In a significant advancement of its retail expansion, the Company achieved a major milestone finalizing an agreement with Whole Foods Market to roll out products to more than 400 store locations nationwide. As part of this partnership, three isolate topical products will be available on shelves starting June 2025. This launch marks a significant step forward in making botanical wellness solutions more accessible to health-conscious consumers seeking trusted, plant-based alternatives.

Operational Efficiencies and Cost Management

Expense reductions initiated in 2024 continued to benefit operating performance, with year-over-year operating costs down 24.2%. Strengthening operations, Charlotte's Web began preliminary in-house commercial production of gummies in Q2 2025, supporting gross margins and speed-to-market for new products. This production shift will enable the rapid development of new gummy blends.

"With successful expansion into new product categories, improving cash flow metrics, and enhanced operational efficiencies, Charlotte's Web has a good start to 2025," added Mr. Morachnick. "Our disciplined execution of strategic initiatives -- from platform expansion to manufacturing optimization -- positions us to build on this throughout 2025 and beyond, delivering value for shareholders and continued innovation for consumers."

DeFloria Milestone

In the first quarter, DeFloria, Inc. -- a joint entity established between Charlotte's Web and Ajna BioSciences, with British American Tobacco as lead investor -- received U.S. Food and Drug Administration (FDA) clearance to initiate Phase 2 clinical trials for its botanical pharmaceutical candidate, AJA001 Oral Solution, intended to treat irritability associated with autism spectrum disorder ("ASD"). AJA001 is formulated using Charlotte's Web proprietary full-spectrum CBD extract derived from its patented cultivars. The FDA's acceptance of DeFloria's IND for AJA001 marks a significant milestone. In addition, Charlotte's Web holds manufacturing rights for commercial supply when the drug is ultimately approved by the FDA, representing a potential opportunity that could be transformative for Charlotte's Web over time.

On June 9, 2025, Charlotte's Web and Ajna BioSciences will host an executive panel session at the Benzinga Cannabis Capital Conference in Chicago. As part of the panel discussion, Charlotte's Web will showcase its partnership with DeFloria and AJA001's clinical progress and therapeutic potential. For attendance information, contact IR@defloira.bio.

First Quarter 2025 Financial Review

The following table sets forth selected financial information for the periods indicated:

 
                                                    Three months ended 
                                                        March 31, 
U.S. $ millions, except per share data                2025        2024 
-----------------------------------------------   ------------  -------- 
 
Revenue                                            $      12.3  $   12.1 
Cost of goods sold                                 $       6.1  $    5.2 
                                                      --------   ------- 
Gross profit                                               6.2       6.9 
 
Selling, general and administrative expenses              11.6      15.3 
 
Operating loss                                           (5.4)     (8.4) 
 
 
Change in fair value of financial instruments 
 and other                                               (0.1)     (1.9) 
Other income (expense) , net                             (0.7)       0.6 
 
 
Net loss                                           $     (6.2)  $  (9.7) 
                                                      ========   ======= 
EPS basic and diluted                              $    (0.04)  $ (0.06) 
                                                      --------   ------- 
Adjusted EBITDA(1)                                 $     (2.8)  $  (3.9) 
                                                      --------   ------- 
 
Assets: 
Cash and cash equivalents                          $      19.4 
Total assets                                       $     108.0 
                                                      -------- 
Liabilities: 
Long-term liabilities                              $      68.5 
Total liabilities                                  $      87.0 
                                                      -------- 
 

Quarterly revenue trend:

 
                     Q1         Q2          Q3          Q4         Q1 
U.S. $ millions     2024       2024        2024        2024       2025 
                  --------  ----------  ----------  ----------  --------- 
Total revenue     $   12.1  $     12.3  $     12.6  $     12.7  $    12.3 
----------------  --------  ----------  ----------  ----------  --------- 
 

Consolidated net revenue for the first quarter ended March 31, 2025, was $12.3 million, a year-over-year increase of 1.1% compared to $12.1 million in the first quarter of 2024. Propelled by the continued performance of the Company's upgraded e-commerce platform, this represents the first period of year-over-year growth reported since Q2 2021 and builds upon a consecutive quarterly growth trend established in 2024. Introduced in mid-2024, the new platform has delivered measurable improvements in marketing effectiveness, customer engagement, and sales volumes. The Company also continues to generally outperform its peers in retail category benchmarks, reflecting the strength of its recent product innovations and the effectiveness of its strategic retail partnerships.

Gross profit in Q1 2025 was $6.2 million, or 50.8% of revenue, compared to gross profit of $6.9 million, or 57.0% of revenue, in Q1 2024. The prior year included temporary items favorable to gross margin. The Company models forward gross margin percentages to continue in the low 50s, supported partly by the transition to in-house production of gummies, followed by topical products over time.

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