Tilray Earnings: Strategic Moves Offer Some Help to Challenged Cannabis, but Alcohol Struggles

Key Morningstar Metrics for Tilray Brands

• Fair Value Estimate: $1.50
• Morningstar Rating: ★★★★★
• Morningstar Economic Moat Rating: None
• Morningstar Uncertainty Rating: Very High

What We Thought of Tilray Brands’ Earnings

Tilray Brands TLRY reported fiscal fourth-quarter 2025 results, with net revenue declining 2% year over year to $224.5 million. Cannabis revenue declined by 6%, while alcoholic beverages plunged 14%. Adjusted EBITDA margins declined about 50 basis points to 12.3%.

Why it matters: Tilray made meaningful acquisitions in alcoholic beverages over the past few years, making the segment now nearly equal in size to its cannabis business. However, both segments continue to face their own headwinds, leading to ongoing revenue declines.

• Tilray’s strategic decisions in cannabis to direct volume internationally and exit lower profit categories added some benefit. International cannabis revenue was up more than 70%, and total segment gross margin was up 3.6 percentage points to 43.7%.
• Meanwhile, Tilray’s foray into alcohol has struggled amid broader industry headwinds. It’s now the fourth-largest craft brewer in the United States, but the category has been declining in sales and popularity. Gross margin in the segment fell a significant 15.4 percentage points to 38.1%.

The bottom line: We expect to reduce our $1.50 fair value estimate for no-moat Tilray by a high-single-digit percentage, due to a weaker near-term outlook. Our forecast for fiscal 2026 adjusted EBITDA of $86 million fell short of guidance of $62 million-$72 million.

• Despite our expected cut, shares look undervalued. We continue to think that Tilray is well-positioned in the very challenging Canadian cannabis industry and expect continued profit growth as the legal market expands and competitors consolidate.
• However, we reiterate our Very High Uncertainty Rating, as cannabis is still a young and volatile industry, leading to dramatic potential valuation outcomes. For example, timing on profit growth and regulatory progress is uncertain, with many factors outside of Tilray’s control.