Cronos Earnings: Surprising Progress on Narrowing Losses, but Small Size Still a Challenge

No-moat Cronos reported decent first-quarter results, with net revenue of $25 million, up 6% sequentially, and an adjusted EBITDA loss of about $11 million. We were surprised by the progress on narrowing its loss, which was half that of the preceding quarter. Impressively, this improvement came through a combination of higher gross profit (reflecting some operational improvement) and lower overhead expenses. The results put the company on track to beat our preprint full-year estimates for revenue of $98 million and an adjusted EBITDA loss of $55 million. We expect to tick up our fair value estimates of $2 and CAD 2.80 by mid to high-single-digit percentages, expecting better near-term performance.