Greenlane Holdings Inc.’s (Nasdaq GNLN) financial results from 2024 were released last week. The company informed its investors of a dramatic drop in revenue. In 2023, the company announced major reorganization and its results were shown in the 2024 numbers.
Major revenue decline
Revenues for the year totaled $13.3m, down from $65.4m in 2023. It attributed the drop to the change from gross to commission sales for the packaging and industrial products lines to protect working capital. In addition, the company noted that revenue decreased within its Consumer Brands Group, due in part to restructuring and a change in strategy that focused on their in-house brand portfolios that have a higher profit margin, while rationalizing other third-party offerings that generated high-end revenues with low margins.
General and administrative costs decreased approximately $14.4m, or 59.7% for the 2024 period compared with 2023. This decrease is due to a restructuring to correct the size of the company.
Positively, the operating losses have decreased by about $14.3m to $11.7m compared with an operating loss in the previous year of around $26.1m. In 2023, the company had a loss of $22 million.
Barbara Sher, CEO of the company said: “We believe our financial performance is directly related to our ability manage costs according to revenue performance. The operational discipline we have maintained and the commitment we made to profitability were key to navigating through unique industry challenges. We are now in a position to invest in technology and people.
Capital raise
In cash, the company had $0.9 million at year’s end. Greenlane, however, closed a $25 million private placement in shares back in February. The company announced that the proceeds would be used to pay off existing debts, for general corporate needs and to increase working capital. However, Green Market Report wrote in February that the financing included a “cashless exercise.” This kind of exercise The warrant allows the investor to redeem their investment without having to pay for it in full. The investor will receive a smaller number of shares. According to the American Bar Association, these deals are considered sweeteners to entice buyers. Greenlane did this to signal to investors that they were not interested in buying the product unless an extra incentive was offered.
Greenlane claimed that it would fund Greenlane through to the second quarter in 2026. The stock fell on news of financing, and then again after the report on earnings. Greenlane faced delisting as well from the NASDAQ. Greenlane was in danger of being delisted from the NASDAQ as well.
Sher said, “We’re starting 2025 from a base that is focused on growth in all of our revenue streams. My primary goal over the past two years has been to enhance our strengths, solve key business challenges, and stabilise the business. We have achieved a lot of what we set out to do. Now, with our focus on organic growth, cash flow optimization, and debt reduction, we will continue forward. Our strong cash flow allows us to focus on those initiatives which have the most impact for our company. “With this focus on the future, I’m confident Greenlane will not only retain but also expand its position as a leader.”
Look ahead
The company has shifted its focus from vapes to smoking accessories. Greenlane announced that it has signed a multiyear distribution contract with Safety Strips Tech Corp. to distribute drink spike, xylazine, and fentanyl detection test strips throughout the U.S. Greenlane also signed a long-term distribution contract with Veriteque, a company that manufactures the dry presumptive reagents for single-use tests to detect narcotics and explosives. It also said that it had streamlined the third-party products portfolio, and improved its marketing and sales organizations.
Greenlane announced to investors this week that the company would be joining Mainstem, a B2B marketplace for procurement. Greenlane’s integration into Mainstem allows MSOs, operators of single states and brick-and-mortar stores to customize their Greenlane catalogs for single locations or multiple locations.