Green Thumb Industries (OTC:GTBIF) (GTI), a leading cannabis company, reported robust financial results for the first quarter of 2024. The company saw an 11% increase in revenue, reaching $276 million, and a GAAP net income of $31 million. GTI's strong performance is attributed to its strategic focus on retail expansion, product quality, and operational efficiency.
The company's optimistic outlook is bolstered by the impending legalization of adult-use cannabis in Ohio, a market where GTI is well-positioned to capitalize on growth opportunities.
Key Takeaways
- Green Thumb Industries reported an 11% revenue increase to $276 million in Q1 2024.
- GAAP net income was $31 million, with over $80 million in cash flow from operations.
- Adjusted EBITDA exceeded $90 million.
- GTI repurchased over 1 million shares for over $13 million, totaling nearly $55 million under the share repurchase program.
- The company plans to invest around $100 million in CapEx in 2024, focusing on retail and wholesale expansions.
- GTI holds a strong cash position with $224 million and working capital of $245 million.
Company Outlook
- GTI is preparing for growth in the cannabis market, particularly in Ohio with the upcoming legalization of adult-use sales.
- The company will invest in retail store build-outs and renovations in key states, including Florida, Nevada, Minnesota, Virginia, and Ohio, as well as wholesale investment in Connecticut.
- Management emphasized the importance of the Florida market and plans to align wholesale capacity with new store openings.
Bearish Highlights
- Some markets experienced pricing erosion in Q4 but saw a slight recovery in Q1.
- The hemp product market is smaller than anticipated, with a constantly changing regulatory landscape.
Bullish Highlights
- CEO Ben Kovler expressed confidence in the company's scaling strategy and operational efficiency.
- Optimism about the Ohio market is high due to its size, low market penetration, and GTI's existing capacity and preparations.
- The company maintains a cautious approach to price compression to sustain profitability.
Misses
- No significant factors were impacting revenue performance negatively, indicating stable company growth.
Q&A Highlights
- A $16 million credit to expenses was clarified as having no impact on previous periods.
- GTI is evaluating capital allocation strategies in anticipation of possible regulatory changes.
- The company is assessing the landscape concerning 280E tax regulations.
- Management addressed the company's share buyback program and its careful approach to capital markets and debt.
- Consumer trends show a shift among younger demographics from alcohol to cannabis.
- GTI is in the discovery phase for hemp-derived products, focusing on transparency and consumer education.
Green Thumb Industries (GTI) ended the quarter in a strong financial position, ready to invest in growth opportunities and navigate the evolving cannabis market. The company's strategic investments in retail and wholesale operations, combined with its cautious yet optimistic approach to market dynamics, position it favorably for future expansion, particularly in the promising Ohio market.
Management's focus on maintaining a robust balance sheet and playing offense suggests a proactive stance in the face of industry challenges. As GTI continues to explore the hemp space and consumer trends, investors and market watchers alike will be keenly observing its next moves in the competitive cannabis landscape.
InvestingPro Insights
Green Thumb Industries (GTI) continues to demonstrate financial resilience and strategic acumen in the expanding cannabis sector. Key metrics from InvestingPro underscore the company's robust financial health and market potential.
With a market capitalization of $3.08 billion, GTI is a significant player in the industry. The company's P/E ratio, while reflective of its growth potential, stands at a high 61.53 on a last twelve months basis as of Q4 2023, indicating a premium that investors are willing to pay for its earnings.
InvestingPro Tips reveal that management's confidence is mirrored in their actions, with aggressive share buybacks signaling a bullish stance on the company's valuation. Moreover, analysts are forecasting net income growth for GTI this year, further reinforcing the optimistic outlook presented in the company's earnings report. These insights suggest that GTI's strategic investments and operational efficiencies are expected to continue yielding positive financial results.
Investors looking for more in-depth analysis and additional InvestingPro Tips, including insights on GTI's earnings multiple and stock price volatility, can explore further with a visit to InvestingPro. Currently, there are 11 more tips available for GTI, which can provide a comprehensive view of the company's financial landscape. To access these valuable insights, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
Full transcript - Green Thumb Industries Inc (GTBIF) Q1 2024:
Operator: Good day, and welcome to the Green Thumb Industries First Quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions] Please also note, today's event is being recorded. At this time, I'd like to turn the floor over to Shannon Weaver, Communications for Green Thumb. Please go ahead, ma'am.
Shannon Weaver: Thank you, Jamie. Good afternoon, and welcome to Green Thumb's First Quarter 2024 Earnings Call. I'm here today with Founder and CEO, Ben Kovler; President, Anthony Georgiadis; and Chief Financial Officer, Mat Faulkner. Today's discussion and responses to questions may include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. These risks and uncertainties are detailed in the earnings press release issued today, along with the reports filed with the United States Securities and Exchange Commission and Canadian securities regulators, including our most recent annual report filed on Form 10-K. This report, along with today's earnings release, can be found under the Investors section of our website. Green Thumb assumes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. Throughout the discussion, Green Thumb will refer to non-GAAP financial measures, including EBITDA and adjusted EBITDA. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is included in our earnings press release and SEC and SEDAR+ filings. Please note that all financial information is provided in U.S. dollars, unless otherwise indicated. Thanks, everyone, and now here's Ben.
Benjamin Kovler: Thank you, Shannon. Good afternoon, everyone, and thank you for joining our first quarter 2024 conference call. We will keep our remarks short this quarter, given there has not been a lot of substantial updates since our 2023 year-end call. I am pleased to report that our team once again delivered an outstanding quarter, particularly on the cash flow from operations line. First quarter revenue increased 11% over the prior year to $276 million, with $31 million or $0.13 per basic and diluted share of GAAP net income. Cash flow from operations was over $80 million and adjusted EBITDA was over $90 million. Additionally, during the first quarter, we repurchased more than 1 million shares, spending over $13 million, bringing the aggregate spend under the share repurchase program to almost $55 million. We continue to believe in the value-creating nature of share buybacks done at attractive prices. Remember, as the share count goes down, everyone's interest in the business goes up. From an industry perspective, there is still pricing pressure in some markets as well as pockets of inflation. Even so, according to the most recent commerce department data, consumers continue to show strength. And we believe that for many Americans, well-being through cannabis is becoming more essential than ever. We see RYTHM and Dogwalkers playing a role in America's choice for well-being and stronger mental health. So for Green Thumb, we will keep doing what we said we will do, scale our business through retail store expansion, invest in quality products and premium brand experiences, build out and scale our production facilities, operate efficiently and with common sense and finally, as always, carefully manage our balance sheet. As I've said before, we love our portfolio today, we love the states we're in, and we believe we have a tremendous embedded growth opportunity both near and long term. With adult-use sales on the horizon in Ohio, we are well positioned to reap the benefits of long-term planning just like we did in New Jersey in 2022 and Maryland last year. Over the past few years, we have invested in Ohio to prepare for eventual adult-use, with 5 rising dispensaries across the state. We expanded our cultivation and manufacturing capacity to meet new demand and have an experienced team in place to ensure a smooth rollout. We believe Ohio should be a nice market. We see opportunity across our portfolio in Florida to Minnesota and lots of places in between. In 2024, we will be mining, diving in our only backyard. As you know, thoughtful and meticulous allocation of capital resources has been our touchstone. Our CapEx spend has been differentiated over the last few years, and we should start to see some of those results. Recall, we have referred to this as quote, internal M&A, where every day we are essentially investing in or buying our own business based on those returns. As we round out year 10 as a company, it's still day 1 for us. There is a massive opportunity in front of us, and we plan to continue growing our market share by investing in our brand identity, introducing new product innovations and deepening our relationship with customers. We now have the infrastructure, experience and cash to optimize our portfolio of award-winning brands and find new ways to engage and incite consumers. Going forward, we have a clear vision, a long runway for growth and hands down the best team in the business to execute the next decade of the Green Thumb story. And now Anthony will give you some more color on our current initiatives. Anthony?
Anthony Georgiadis: Thanks, Ben. As you just heard, despite continued industry inflationary headwinds, our consistent head down focused on the fundamentals mindset, allowed us to achieve record first quarter results. Let's look at some of the highlights. First, we invested approximately $15 million in CapEx as we continue to expand our Florida retail footprint and our Connecticut wholesale facility. All of our new Florida locations are outfitted with our retail rebrand, which should continue to elevate our overall buy and store efficiency in the Sunshine State. Second, we launched a number of new products across our RYTHM brand, including our solventless base and concentrate line, RYTHM Artist series and our RYTHM pre-roll line, remix. For those fortunate to have RYTHM products in their state, we encourage you to give them a try and see what all the buzz is about. Third, we continue to improve our utilization, scale and efficiency of our wholesale platform. During the quarter, we fully operationalized our [indiscernible] New Jersey facility and continue to grow into our newly expanded wholesale facilities in New York, Virginia and Minnesota, where we've invested significant CapEx dollars and advance future market expansion. As we look ahead to the rest of the year, our team is focused on achieving the following: First, driving operating efficiencies to combat continued pricing erosion and competitive dynamics. In wholesale, this means lining up our supply as closely as we can to estimated demand, along with taking advantage of automation in a few select areas. In retail, it's closely monitoring our discount rates, throughput and staffing levels and customer feedback. Second, taking our learnings from previous adult-use conversions to optimize our opportunity in Ohio. Kudos on the Buckeye state for going around of Maryland versus New York, and quickly establishing a framework that provides consumers with access to high-quality, lab-tested products with the state's existing medical program. Last, continuing to allocate our resources and capital to markets and activities that optimize the current environment along with our long-term company objectives. For the year, we expect to invest approximately $100 million in CapEx, a significant reduction from the $220 million we invested in the business last year. Our 2024 CapEx plan focuses on 10 to 15 retail store build-outs and renovations in Florida, Nevada, Minnesota, Virginia and Ohio, and continued wholesale investment in Connecticut and potentially elsewhere. Continued strong financial performance, combined with a reduction in CapEx, should provide us with substantial business optionality, including with our senior debt facility that comes due in the second quarter of 2025. In closing, I'd like to leave you with a quote in the late Charlie Munger. Those who know us well would have known Charlie have influenced how we run Green Thumb in many ways. "Recognize reality even when you don't like it, especially when you don't like it." We'll miss you, Charlie. With that, I'll turn the call over to Matt to review our financial results.
Matt Faulkner: Thanks, Anthony, and hello, everyone. We're pleased that we started out the year with strong results and record cash flow generation. In the first quarter, we delivered over $275 million in revenue, an 11% increase compared to the prior year period. Revenue during the quarter benefited from 15 incremental retail stores and the legalization of adult-use sales in Maryland. While price compression was still a factor year-over-year, the sequential impact showed improvement. Overall, retail revenue increased 8% versus the prior year period. First quarter comparable sales increased 1.8% compared to the first quarter last year on a base of 76 stores. Consumer Packaged Goods gross revenue increased 19% versus the prior year quarter. Looking forward, we expect to see second quarter sequential revenue to be flat. Gross profit for the first quarter was $145 million or 52.5% of revenue compared to $125 million or 15.2% of revenue for the first quarter of last year. The increase in gross margin was primarily driven by improved CPG utilization along with retail acquisition costs. Turning to OpEx. Selling, general and administrative expenses for the first quarter were $74 million or 27% of revenue compared to $81 million or 32% of revenue last year, where the current year benefited from a onetime $16 million noncash credit. SG&A, excluding depreciation and amortization, onetime transaction costs and stock-based comp, which we refer to as normalized operating costs, approximated $64 million compared to $56 million in the first quarter of last year. The increase year-over-year is mainly attributed to the 15 incremental retail stores. First quarter net income was $31 million or $0.13 per basic and diluted share during the quarter. This compares to net income of $9 million or $0.04 per basic and diluted share reported last year. Adjusted EBITDA, which excludes noncash stock-based compensation and other nonoperating costs, was $91 million or 32.8% of revenue for the quarter as compared to $76 million or 30.7% of revenue for the first quarter of last year. We end the first quarter with a strong balance sheet, including cash of $224 million and working capital of $245 million, all while repurchasing almost $14 million in shares during the quarter. Cash flow from operations came in at a record $84 million compared to $75 million last year. In closing, I'm very proud of our team for all their hard work and execution in the first quarter. I'm confident in our ability to continue to execute our strategic plan to deliver high-quality candidates to our patients and customers, all while generating strong returns for our shareholders. With that, I'll open the call to your questions. Operator?
Operator: [Operator Instructions] Our first question today comes from Matt Bottomley from Canaccord Genuity.
Matt Bottomley: Congrats on the strong quarter here. I guess my first one is a little bit administrative, but I'm just curious on -- if we can get a little more context on the $16 million credit to expenses? Is this something that would have understated your margins last -- in previous quarters and maybe overstate them this quarter? I'm just trying to get an idea of we removed it all together, depending on the nature of it, where EBITDA margin would have came in for the quarter?
Matt Faulkner: Thanks for the question there, Matt. So that $16 million credit had no impact on previous periods P&L. It was a settlement with contingent consideration. So at this point in time, once that credit net settlement of the digit consideration is not clear of the balance sheet with [indiscernible] more contingent consideration there.
Benjamin Kovler: And your second question is out of the adjusted EBITDA already.
Matt Bottomley: It is. Okay. That's the more important part of it. Okay. I appreciate that. And then if I could just put in one general question, if that's all right. Just on Florida. So you had opened up a dispensary in the quarter and on a year-over-year basis, it looks like you've doubled there. So not asking you to crystal ball what might happen in November, but from a capital allocation point, how important is that market considering that some of your peer groups just in that market, particularly, are well ahead in terms of their retail rollout?
Anthony Georgiadis: Yes. Sure, Matt, Anthony here. I mean, look, [indiscernible] important for us. We've got -- we've opened up 2 stores since January 1 in the first quarter, one subsequent. We have a number of additional stores set to open between now and the end of the year, and we're mostly kind of looking at our capacity as well, at the newly constructed facility in total. So we've got a lot of eyes on for at this point, and we're cautiously optimistic come November.
Operator: Our next question comes from Matt McGinley from Needham.
Matt McGinley: So this quarter, you had your best gross margin and EBITDA margin since '21. So great work with managing that. I think last year, you called out on one of the calls that the underutilization of some of your cultivation facilities was a drag on your gross margin. How much of that pressure has gone away -- states like New York have turned on for you? And do you think that, that 52% that you did this quarter is kind of a sustainable gross margin rate for the year? Or was this quarter just unusually good?
Matt Faulkner: Yes. Thanks, Matt, for the question. So yes, it's fair to say there was a ramp-up period for those investments we made. And by the time you get those going and you start to increase your revenue come out of there, the absorption improves as you're improving the utilization and output of those facilities. So that -- some of that tailwind benefited us in the current period. But looking forward, as price compression is still there, it's hard to count on a repeat of that margin. And effectively, we're still focused on the goal of adjusted EBITDA of 30% and less concerned about the individual components of how to get there.
Operator: Our next question comes from Eric Des Lauriers from Craig-Hallum Capital Group.
Eric Des Lauriers: Congrats again on another very strong quarter here. So my just a high-level capital allocation strategy question with respect to potential rescheduling and potential 280E going away. So obviously, as you mentioned in the prepared remarks, your CapEx for the past year or 2 is significantly higher than peers. That's been trailing off. You're returning cash to shareholders via buybacks. I'm just wondering how your investment into your retail and wholesale facilities may change if we do indeed get rescheduling? Would you anticipate sort of stepping on the gas again if you expect others to do the same? Or is it kind of as simple as you're sort of running out of CapEx projects to do here as you've executed them over the past couple of years, and that change in taxes wouldn't really impact that CapEx outlook? Just wondering how you're thinking about that.
Benjamin Kovler: Sure. It's Ben, Eric. I'll take it. I mean I wouldn't say it's running out. I would say risk reward and it's constantly measuring where should we invest and what can we gain out of it? So we're analyzing the market. We're understanding what the demand looks like. And we've built an unbelievable foundation of a business that is producing in the last year, over $300 million of EBITDA. So we're really comfortable with what we have there. So the risk/reward calculations are just different now than they were 5 years ago. So running the math of 5 years ago is like yesterday's game. So we're trying to think out of ways we're thinking about capital allocation sort of futuristically and that's where we're setting up the business for shareholders, for ourselves, and we're really excited about where that's going. So we like what we're up to. We're really proud of the balance sheet we've got. It allows us to play aggressive offense.
Operator: Our next question comes from Gerald Pascarelli from Wedbush Securities.
Gerald Pascarelli: Great. Just wanted to go back to Florida and maybe ask a question in a slightly different way. As you think about what potentially lies ahead in November, I guess, how do you think about the need to invest heavily behind that market to, on one hand, ensure that you can adequately service the robust demand if the state goes legal versus the prospects of the ballot initiative not passing. It's obviously a very transformative catalyst, but just one where the outcome is completely binary. So would just love to get your thoughts on how you plan and operate around something like that a few months out here.
Anthony Georgiadis: Sure, Gerald, Anthony here. I mean, look, the calculation in Florida is different than the other markets, right? We've got the vertical nature of the market itself. It's really -- it's us against ourselves. So as we open up stores, we have to make sure that we have enough wholesale capacity to service those stores, right? So we've seen some nice growth within the Florida market within our store base itself. And so as we look ahead and think about, okay, what kind of increase could we expect to see with an adult-use flip? And then we have to figure out do we have enough product coming out of our wholesale facilities to match it? So that's really the calculation that we're doing. It's not as if we're in a race to catch up with X, Y or Z. It's really about how much capital we feel comfortable deploying into the state relative to the other places we could deploy that capital, and that's how we're going to look at it. So look, we're taking the steps to be prepared to kind of revisit some of the decisions, if and when things go our way in November, and so we'll do what we can to get prepared. But until we actually know what's going to happen and we can really make the right move. And I'll just say one of the ways we've been able to differentiate within the market is when we built our purpose-built facility in [indiscernible], we did it with the focus of high-end indoor flower. And so that's really kind of the basis of what we're looking to kind of build our business around, and that's what we've been focused on doing since the start of the year.
Operator: Our next question comes from Pablo Zuanic from Zuanic & Associates.
Pablo Zuanic: Two questions. Something that keeps coming up from investors, they ask about insider buying despite the rescaling news and all the positive news you had in the last few months, we haven't seen really insider buying and speaking on average in general. I don't know if you can comment from the Green Thumb point of view. And then the second point, I'm sorry, this came up before, but I don't think I heard it. In terms of 280E, are you changing your tax planning in any way? Are you going to start provisioning in a different way? Are you going to still looking for tax refunds? What are you thinking of that in the short term regarding 280E?
Matt Faulkner: Thanks, Pablo. I'll take the 280E piece. So at this time, we continue to assess the landscape and watch what's happening in the marketplace, while we make a determination of what we're going to do next. So we continue to toe the line at this junction while it evolves to be able to determine what ultimately our next steps are.
Benjamin Kovler: I can hit the first one, Pablo, it's Ben. Thanks to your interesting question. I think for the first time was that we were able to talk about how bullish we are on the equity, right? We have a share buyback and we're out there buying the stock because we think the equity is too cheap. We're backing that up by allocating and I think, I don't know this, but I think we're the largest allocator of stock to the team, which respectively having the team by the stock because we all want to own a piece of the boat that we're building. We have massive management that owns the -- management is a massive shareholder, a large shareholder in the business. And lastly, we have a share buyback in here. So we're sort of letting the company come in and buy stock. As you know and everybody knows, this has been, this is a very, very thin market in Canada and a unique opportunity. The people can understand the balance sheet and see the future trajectory of the business. There's a lot of office getting going on in balance sheet land and we're trying to keep it just as clean and tight as possible. So we love the share buyback. We sort of put it in the annual letter, people had read the letter, I heard you read the letter, but reduce the denominator has become sort of a mantra here. We like the share buyback. We are happy to be able to buy over 1 million shares, and we'll see what the future holds.
Operator: Our next question comes from Howard Penney from Hedgeye.
Howard Penney: What are the characteristics of the Ohio market that you see that will make it such a strong adult-use? And what specifically are you going to take advantage of that?
Anthony Georgiadis: Howard, Anthony here. Good question. I think I -- you cut off a little bit at the end, but I think the question is on Ohio. Look, here's what we like about Ohio. We've got 13 million people, you have a medical -- I don't want to say anemic, but you have a very small medical market with certainly not the penetration levels that we've seen in many other states around it. And at the same time, you've got a healthy amount of capacity that has been built up within the market itself. So that all really sets up for when the flip happens for a vibrant, robust market in day 1. And so that's really -- given kind of the size of the state and knowing that you've got a healthy chunk of sales that are heading north up to Michigan, we're pretty bullish. We've got -- we have 5 stores there in the state today. We've got a cultivation facility that's matched out, at least under the medical canopy. And we're doing everything we can to get ready for the events come late summer, early fall.
Howard Penney: Is it a rinse and repeat new market for you? Or is there anything unique to Ohio that you're doing when it opens up?
Anthony Georgiadis: I mean, there is an element of rinse and repeat. But as you know, given the adult-use market is at least initially going to be launched off the medical regs, there's some nuance in the Ohio market, right? Pre-rolls are not allowed. We've got 10s instead of 8, so unit measure is just a little bit different. And then also, I think, for the most part, given kind of the heavy pharmaceutical nature of the market itself, the infrastructure in Ohio is probably a little bit different than what we've seen in other markets, but it's generally the same with a little bit of nuance that we just have to manage around.
Operator: Our next question comes from Aaron Grey from Alliance Global Partners (NYSE:GLP).
Aaron Grey: Just want to speak to the kind of overall consumer trends that you're seeing somewhat towards consumer health. Obviously, the category has seen pricing pressure and down trading for some time. But curious if you're seeing any benefit from the lower pricing within cannabis versus some of the higher prices you see in other categories, and then seeing consumers increasingly shift into cannabis versus some other social lubricants just from those dynamics?
Benjamin Kovler: Aaron, it's Ben. I can take that. The core of your question is, yes, the consumer is strong. There continues to be mix shift, age matters, and we're starting to see that in the data. I think the pricing and the lower prices continue the cost per buzz in cannabis is far lower than alcohol where how much it cost you for one drink or one shot, you have on-prem versus off-prem and things like that. But we continue to see strength in the consumer and what's happened is category blowout where there's now 3, 4, 5, 6 segments within flower, flowers about 50% of the category, and you have real segmentation there for real different consumer taste preferences, branding, premium exist, value, things like that. And if you're under 35, you don't drink like you used to. If you're 40 to 60, like some people on this call, you know a drinking culture. And if you're under, you're 35 and under, you're 25 and under, things are different. So encourage those on the call, that's new news to get out there and see what's going on. But we're not close years to what's happening in the alcohol space with the biggest spirits companies, the biggest beer companies and why that's happening on the ground and then, frankly, what the consumer wants. Same thing we said the whole time. The North Star is the consumer, we want to make things better for the consumer. If we add well-being, we add mental health, wow, things get really good. But it's going to take a while. And as we see, that's a typical opinion, a non-consensus opinion, and it takes a while to change peoples thoughts. So strength on the ground, strength in the youth and we like where we sit.
Operator: Our next question comes from Scott Fortune from ROTH Capital.
Scott Fortune: Even though over 35 or not, I don't drink as much. But just an update on capital markets here around rescheduling the momentum there. Just kind of an update if you're kind of from the exchange side of things, are you hearing inquiries from them as far as changing that? And just wondering if you're seeing, obviously, some debts coming up here due. In your discussions with lenders, your creditors and the capital markets in general, are you seeing better terms or debt now that are they starting to factor in rescheduling at all? Just kind of your sense on the debt side of things as far as the lenders are concerned from there? What are you hearing?
Benjamin Kovler: Sure. Thanks, Scott. It's Ben. I can start. Well, I'd summarize the listing and the exchanges, which I think was the first part of your question is, I would say, very open dialogue, good communication channels and summarize no change. I would summarize the rescheduling situation as massive confusion, which then to your last part of your question on the debt, there's not new pricing in 8 days. And that's not really how we're focused at all. We're thinking about a very strong balance sheet and how we're positioned extremely well to play offense and figure out what we'll do about the debt in 12 months. I mean it's not that hard to see what would happen with the free cash flow generation of the business if you just run it out. But that's not really our style either. We'd rather extend the duration and be able to be in a very comfortable position to sleep well, with a great balance sheet and be able to play offense and we'll continue to answer the phone, continue to be a way for what's happening. We continue to think the landscape of strategic deals increases, especially for strength, especially for the leaders, especially for those that have done and been able to do it with strategic partners in several different correlated industries that are really complementary to the cannabis user and who that consumer is. So I think that's the summary there.
Operator: Our next question comes from [indiscernible].
Unidentified Analyst: Just going back to your performance this quarter. I wanted to ask about your revenue performance. And just curious if there was anything on the pricing side or I guess, in terms of consumer behavior or any specific market here that you think that performed better and maybe surprised you during the quarter to help drive the revenue beat compared to your guidance.
Anthony Georgiadis: Enrico, Anthony here. Look, there was nothing that was -- that had a material impact on the business, right? Now when we pull back the covers a little bit and take a look at what's happening at the state level, but there are some markets where pricing stabilized and actually improved. Merrill [ph] is a good example of that. But since we don't use [indiscernible] supply, with the increase in demand, that differential from supply and demand kind of resulted in slightly higher pricing. But overall, what we're seeing, and it's not consistent, right? So we look back in some of the markets where we saw some erosion in Q4, we saw a slight bounce back in Q1, once where we saw kind of strength in Q4, maybe a little bit erosion in Q1. So it continues to kind of be a game that's market to market. And as you zoom out for us, again, what we're focused on is high-quality product where we can hold price and we can really drive our brand. So -- but on a net basis, there was no material kind of shift that we saw that had a fundamental kind of impact on the top line of the business.
Operator: Our next question comes from Mike Regan from Excelsior Equities.
Mike Regan: Congrats on a great quarter. Quick question. It's not sort of significant yet, but the 10-Q or 10-K noted about selling farm bill compliant, I guess, hemp-derived products. And we saw Goodness just launched low-dose beverages in Minnesota for sale in bars and liquor stores. Is that something that, I guess, can you give us more detail on your plans and the product innovation in that area and where you're selling it and typically what you're doing around that?
Anthony Georgiadis: Yes, sure, Mike here -- Mike, Anthony here. Great question. So let's take a step back. So we got into the hemp space first in Minnesota. That's really where we dipped our toe in water, and we're still really still in the discovery phase. But when we take a step back, here are the things that we're focused on. First is the consumer. So first and foremost, when we look at the landscape, what we saw was effectively packaging and communication to the consumer that didn't make a lot of sense. And so for us, one of the things we've really tried to do is to kind of open up the transparency with the consumer on the product testing, what's actually in the product, the cannabis and the ratios and whatnot. So that's first. Secondly, what we've also seen is that the market seems to be smaller, at least than what anecdotally, we've heard from others, quotes we've heard of $15 billion to $20 billion. I'll just tell you that we're not seeing the market of that size just yet. And third, you've got a regulatory landscape where the ground is shifting literally underneath us, market to market. So for us, what we're going to continue to do is we're going to continue to kind of study the market, focus on the consumer, taking it one step at a time.
Mike Regan: So still setting only in Minnesota. But I guess is it possible you could do that in other markets as well or even ones beyond your core marijuana markets more broadly across the country?
Benjamin Kovler: Sure. I mean everything is on the table to make sense, but I just sort of a little look behind all the work we've done there is this looks a little smaller than we thought and maybe not quite as exciting, but we'll see.
Operator: And with that, we'll be ending today's question-and-answer session. I'd like to turn the floor back over to management for any closing remarks.
Benjamin Kovler: Thanks, everybody, for joining us. Look forward to the next update next quarter. Have a good start to summer.
Operator: And with that, ladies and gentlemen, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.
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