At the end of the 2019 holiday season, Choom Holdings Inc. (Choom), reported revenue of $1.4 million and an adjusted EBITDA of -$1.8 million, but one year later things are starting to look up.
Choom released its financial report for the second quarter of 2021 and reported a revenue increase of 350% and a positive adjusted EBITDA of $0.2 million. The impressive increase amounts to revenue of $6.1 million, and after optimizing its budget, Choom’s gross margin increased from 27.92% in the second quarter of 2020 to 36.37% in the second quarter of 2021.
Road to Profitability
According to the report, in Q2 2020, 95.25% of revenue, or $1.3 million, went to general and administrative costs, with even more going towards salary and wages. After working hard to attract and keep top talent in the industry, bringing key roles and functions in-house, and earning a higher revenue, only 14.09% of the total was spent on general and administrative costs in Q2 2021, which works out to $0.9 million, and when it comes to wages and salaries, spending increased to $1.1 million from $0.7 million while the percentage of the total decreased from 49.41% to 18.22%.
“Coming off the busy Q1 summer season, traditionally the highest-grossing period for cannabis retail, we were happy to see such strong results for the second quarter,” says Corey Gillon, Choom’s CEO. “We continue to execute on our mission of providing the best retail cannabis experience across every market we serve.”
Proprietary E-Commerce Platform
During this time, Choom re-opened its Camrose location after closing due to COVID-19 and continued to deal with pandemic-related hiccups as parts of Ontario went back into lockdown. Choom has primarily been busy working on its proprietary e-commerce platform. Having recently acquired an in-house digital team, the company is looking forward to taking full advantage of the team’s talents to take the values that won Choom a 98.7% customer satisfaction rating and translate them into an e-commerce platform that creates a “truly unique, omnichannel ecosystem for the brand and its clients”. The company is planning to launch the site mid-March, but Choom hopes to continue to grow the platform to be “turnkey ready with a full e-commerce offering including delivery, through in-store fulfilment.”
Choom currently operates 19 stores in Alberta, British Columbia, and Ontario, with four set to open in Ontario and another coming soon in British Columbia. With four stores in Alberta closed temporarily due to COVID-19, Choom’s revenue will likely continue to grow as the pandemic (hopefully) winds down. If it can keep up its cost reduction strategies and continue to play it smart with expansion, Choom could see huge gains this year.