STMH - Driven By Stem (STMH)(STEM:CA) - Record Fiscal Second Quarter Revenues; Business Update

Management Call. We had the opportunity to speak with management following the Company's release of second quarter results for fiscal 2021. This quarter was the first combined quarter following the Driven merger. While integration is ongoing, management continues to move forward with expansion, most recently highlighted into Michigan. We believe the Company is poised for greater growth through its expanded footprint of retail, delivery, and branded products.2Q2021 Results. Gross revenue of $12.4 million compared to $2.7 million. Net revenue, after deducting for discounts and returns, of $10.5 million versus $2.3 million. Gross profit increased to $2.7 million from $0.7 million. Adjusted EBITDA grew to $1.7 million compared to negative $5.8 million last year. Stem reported a net loss of $8.6 million, or $0.06 per share, compared to a net loss of $4.8 million, or $0.08 per share. A $6.3 million charge for change in fair value of warrant liability drove the higher net loss.Updated Projections. We continue to expect to see some normal integration and growing pains in the fiscal third quarter but the trajectory for revenue and operating margins will be upward, in our view. For the fiscal third quarter, we are projecting net revenue of $12.8 million and a net loss of $0.01 per share. For the full year, we are now at net revenue of $44.0 million and a net loss of $0.09 per share. Maintaining Outperform. We are maintaining our Outperform rating and a $2.00 12-month price target. We believe the Company's recent merger with Driven Deliveries has established Stem as the first cannabis cultivator and technology omnichannel retailer with e-commerce ordering and express and next-day delivery. Read More >>