Hemp extract wellness product company Charlotte’s Web reported financial results for the first quarter of 2022.
“While our e-commerce traffic was lower compared to prior periods, subscriptions more than doubled since Q1-2021. With e-commerce revenue down $3.0 million year-over-year, rebuilding traffic and conversions remain key priorities for us in e-commerce, which is our largest revenue channel,” said Jacques Tortoroli, CEO. “In our retail business, shipping was disrupted in January due to a two-week closure after a local wildfire in Boulder County. Despite the slow start, the overall business improved through the quarter with March being the largest revenue month of the quarter. The quarter did not benefit from our new retail sales organization which was put in place in April.”
Progress continued in key international markets. In the U.K., the company achieved a milestone becoming one of the first companies to receive validation of its Novel Food applications from the UK Food Standards Agency (FSA) for full spectrum hemp extracts in the United Kingdom. The milestone adds Charlotte’s Web to the FSA’s list of products allowed to be sold in the U.K. The company’s Novel Foods applications for the European Union were also validated during the quarter and are now proceeding through the safety evaluation process. In Canada, the company is in discussions for extraction and distribution to bring to market Charlotte’s Web’s first international hemp harvest, which is anticipated for later this year. In Israel, the company believes the regulatory environment for CBD sales in retail outlets continues to move forward. Charlotte’s Web expects to begin filing product registrations in the coming months through its Israeli partner, Intercure, with the company’s first bulk product shipment anticipated in the second half of the year.
“Our December/January reorganization reduced complexity and reduced SG&A expenses by more than $20.0 million on an annualized basis,” said Lindsey Jensen, chief financial officer. “This resulted in improved gross margin percentage, lower operating expenses and improved EBITDA for Q1-2022 compared to the same quarter of 2021. We used $4.7 million in operating cash in the quarter with the majority of this occurring in January. In the quarter we received $0.5 million against our $10.8 million IRS receivable that we started the year with, and an additional $2.7 million has been collected since March 31 through the date of this press release. We continue to steward the use of cash while furthering our product rationalization to lower complexity and costs across our operations.”
Charlotte’s Web Holdings is a Certified B Corporation headquartered in Denver and is a market leader in innovative hemp extract wellness products under a family of brands which includes Charlotte’s Web, CBD Medic, CBD Clinic and Harmony Hemp. Charlotte’s Web branded products start with proprietary hemp genetics that are 100% American farm-grown and manufactured into hemp extracts containing naturally occurring phytocannabinoids including CBD, CBC, CBG, terpenes, flavonoids and other beneficial hemp compounds.