Charlotte's Web Reports 2024 Fourth Quarter and Year-End Financial Results
2024 Delivered Quarterly Growth and Large Scale Cost Optimization
LOUISVILLE, Colo., March 19, 2025 /PRNewswire/ - (TSX:CWEB) (OTCQX:CWBHF), Charlotte's Web Holdings, Inc. ("Charlotte's Web" or the "Company"), a market leader in full spectrum hemp extract wellness products, today reported financial results for the fourth quarter and year-ended December 31, 2024.
2024 Business Highlights
Achieved sequential quarterly revenue growth throughout 2024
Reduced operating expenses by over $22.4 million while strengthening operational performance
Successfully launched a new e-commerce platform with significantly enhanced capabilities
Expanded retail distribution, including 847 Walmart stores and now with a presence on Walmart.com, as well as Chewy.com, America's largest online pet retailer
Introduced new product innovations, including functional mushroom gummies and CBD gel caps
Reduced operating expenses by over $22.4 million while strengthening operational performance
"2024 marked a turning point for Charlotte's Web operationally as we delivered consecutive quarterly revenue growth, strengthened operations, and positioned the Company for sustained growth in 2025," said Bill Morachnick, Chief Executive Officer of Charlotte's Web. "With the successful launch of new product innovations, expanded retail partnerships, and transition underway to in-house manufacturing, we have laid the foundation for further strengthening the business in 2025. We're particularly excited to announce that we will soon be offering our functional mushroom gummies on Amazon.com, representing our first meaningful presence on Amazon and introducing the Charlotte's Web brand to millions of potential new customers. This not only diversifies our revenue streams but also reflects our commitment to access, including where consumers increasingly purchase health and wellness products. We are committed to delivering shareholder value through disciplined execution and continued expansion, evolving as a broader botanical wellness leader, beyond CBD."
"Disciplined expense and cash flow management were top priorities throughout 2024," added Erika Lind, Chief Financial Officer. "Our omnichannel strategy and operational optimization have been instrumental in navigating a complex regulatory environment while improving our cost structure. We executed significant expense reductions, reduced cash burn, and improved efficiencies across the business. The substantial improvement in our fourth quarter Adjusted EBITDA1 performance reflects the effectiveness of these measures, positioning us to continue reducing cash burn as we approach positive cash flow. We anticipate further improvements in 2025."
2024 Business Review
Charlotte's Web made significant strides in 2024, stabilizing its business and advancing strategic initiatives across product innovation, retail expansion, and operational efficiency.
Omnichannel Expansion and E-Commerce GrowthThe Company's new e-commerce platform, launched in mid-2024, improved site performance, enhanced the shopping experience and drove higher customer engagement. Advanced customer tools and marketing automation have increased conversion rates and sales volumes. New retail partnerships were added, including Walmart for topicals and Chewy.com for pet wellness products, further strengthening Charlotte's Web's national footprint. The transition toward an omnichannel model allows Charlotte's Web to leverage direct-to-consumer (DTC), retail, and third-party platforms, streamlining distribution while broadening consumer accessibility.
New Product InnovationsNew product innovations and categories included a successful expansion into minor cannabinoid CBN with the launch of Stay Asleep CBN Gummies, demonstrating strong demand for targeted botanical solutions and reinforcing Charlotte's Web's position in sleep wellness. In addition, launched in Q4 2024, Charlotte's Web expanded into botanical wellness beyond CBD with functional mushroom gummies for focus, stress support, and energy.
Operational Efficiencies and Cost ManagementPreparation for in-house manufacturing of gummies for full commercial production progressed in Q4 2024, with production ramp-up expected in 2025, improving margins and enhancing speed-to-market for future innovations. Expense reductions initiated in early 2024 materially lowered operating costs by $22.4 million, with similar spending continuing in 2025. The Company ended 2024 with $22.6 million in cash reserves, and the discipline of stringent expense management supports a strategic roadmap toward positive cash flow.
"With deeper retail penetration, new product categories, and improved operational efficiencies, we enter 2025 with momentum," added Morachnick. "Charlotte's Web is positioned to lead the next growth phase in botanical wellness while creating lasting value for shareholders."
DeFloria MilestoneOn February 24, 2025, the Company announced that the U.S. Food and Drug Administration ("FDA") completed its review of the Phase 1 data and Investigational New Drug ("IND") application submitted by DeFloria, Inc., an entity in which the Company is a stakeholder. The FDA has concluded that DeFloria may now proceed with the Phase 2 clinical trial for its botanical pharmaceutical candidate, AJA001 Oral Solution, a treatment for symptoms of autism spectrum disorder ("ASD").
DeFloria is a collaboration between Charlotte's Web, Ajna Biosciences, and British American Tobacco to develop AJA001 as a treatment for irritability associated with autism spectrum disorder. AJA001 employs the Company's proprietary full-spectrum cannabidiol hemp extract derived from one of its patented cultivars. Charlotte's Web has rights related to manufacturing for any eventual commercialization of AJA001 as an FDA-regulated botanical drug. Being the manufacturer of this product could represent a substantial long-term revenue opportunity for Charlotte's Web upon potential FDA approval.
Financial Review
The following table sets forth selected financial information for the periods indicated:
Three months ended
Year ended
December 31,
December 31,
U.S. $ millions, except per share data
2024
2023
2024
2023
Revenue
$ 12.7
$ 15.9
$ 49.7
$ 63.2
Cost of goods sold
$ 7.6
$ 7.0
$ 28.4
$ 27.6
Gross profit
5.1
8.9
21.3
35.6
Selling, general and administrative expenses
10.6
18.6
53.3
75.6
Goodwill and asset impairments
-
0.6
-
0.6
Operating loss
(5.5)
(10.3)
(32.0)
(40.6)
Gain on initial investment in unconsolidated entity
-
-
-
10.7
Change in fair value of financial instruments and other
(0.1)
3.7
0.6
9.3
Other income (expense) , net
2.2
(1.4)
1.6
(2.7)
Income tax expense
-
(0.5)
-
(0.5)
Net loss
$ (3.4)
$ (8.5)
$ (29.8)
$ (23.8)
EPS basic and diluted
$ (0.02)
$ (0.06)
$ (0.19)
$ (0.16)
Adjusted EBITDA
$ 0.3
$ (6.5)
$ (12.6)
$ (22.7)
Assets:
Dec 31, 2024
Dec 31, 2023
Cash and cash equivalents
$ 22.6
$ 47.8
Total assets
$ 113.4
$ 152.5
Liabilities:
Long-term liabilities
$ 70.4
$ 73.3
Total liabilities
$ 86.4
$ 97.0
Fourth Quarter 2024 Financial Review
Consolidated net revenue for the fourth quarter ended December 31, 2024, was $12.7 million, compared to $15.9 million in the fourth quarter of 2023. Revenue increased modestly on a quarter-over-quarter basis versus Q3 2024 revenue of $12.6 million.
Quarterly revenue trend for 2024:
Q1
Q2
Q3
Q4
U.S. $ millions
2024
2024
2024
2024
Total revenue
$ 12.1
$ 12.3
$ 12.6
$ 12.7
In the fourth quarter, some retailers were negatively impacted by state regulations restricting the sale of certain CBD products, despite meeting federal requirements. However, e-commerce revenue increased quarter-over-quarter following the launch of the Company's new e-commerce platform.
Gross Profit in Q4 2024 was $5.1 million, or 40.2% of revenue, compared to Gross Profit of $8.9 million, or 56.0% of revenue, in Q4 2023. The reduction in gross margin reflected holiday promotional investments, temporary shipping inefficiencies, and reduced fixed cost absorption on lower-than-expected revenue. The Company models gross margin to return above 50% in 2025.
Total selling, general, and administrative ("SG&A") expenses in the quarter were $10.6 million, a 43% improvement from $18.6 million in Q4 2023. Stringent expense controls were implemented during the year to better align with current revenue levels.
Net loss for the fourth quarter of 2024 was $3.4 million, or ($0.02) per share basic and diluted, compared to a net loss of $8.5 million, or ($0.06) per share basic and diluted, for the fourth quarter of 2023.
Excluding depreciation, amortization and other non-cash items, Charlotte's Web reported positive Adjusted EBITDA1 for the fourth quarter of 2024 of $0.3 million, a $6.8 million improvement compared to negative Adjusted EBITDA of $6.5 million in the fourth quarter of 2023.
Fiscal Year 2024 Financial Review On a year-over-year basis, consolidated net revenue for the twelve months ended December 31, 2024, was $49.7 million, a decrease of 21.4% from $63.2 million in 2023. Revenue was negatively impacted by inflationary impacts on consumer spending and reduced retailer shelf allocations to the CBD category. The Company adopted a new e-commerce platform mid-year that has resulted in improving marketing, customer management, and sales volumes.
Gross profit for the year ended December 31, 2024, was $21.3 million, compared to $35.6 million for the year ended December 31, 2023. Gross profit was negatively impacted by a $4.1 million increase in inventory provision for 2024 due to the revaluation of aged hemp based on current market conditions. The increase was partially offset by lower inventory expenses and other variable costs associated with lower revenue in 2024. Gross profit before inventory provision was $25.4 million, or 51.1%, and $36.6 million, or 58.0%, in 2024 and 2023, respectively.
Total SG&A expense for 2024 was $53.3 million, compared to $75.6 million in the prior year. The $22.4 million or 29.6% decrease resulted ...
