Executive Summary / Key Takeaways

• High Tide Inc. has cemented its leadership in Canadian cannabis retail through its innovative Canna Cabana discount club model, achieving a 12% market share in its operating provinces despite representing only 6% of the store count.
• The company's proprietary Cabana Club loyalty program, with 1.9 million members in Canada and 5.66 million globally, is a core technological differentiator, driving industry-leading same-store sales growth and providing valuable customer data.
• High Tide reported strong financial performance in Q3 2025, with record revenue of $131.7 million, adjusted EBITDA of $9.6 million, and positive net income of $832 thousand, alongside robust free cash flow of $7.7 million.
• Strategic international expansion into the German medical cannabis market, through the acquisition of a majority stake in Remexian Pharma GmbH, positions High Tide for significant global growth by leveraging its Canadian procurement expertise.
• The company's disciplined organic growth strategy, targeting 20-30 new Canadian stores annually, coupled with a growing high-margin White Label product portfolio, underpins its outlook for continued market share gains and enhanced profitability.

The Ascent of a Cannabis Retail Powerhouse

High Tide Inc., founded in 2009 in Calgary, Canada, has evolved into a formidable force in the global cannabis industry, primarily through its dominant Canna Cabana retail banner. The company's journey began with modest revenues of $5 million in Q1 2019, but a pivotal strategic shift in October 2021—the launch of its "disruptive and innovative discount club concept," the Cabana Club—catapulted it to market leadership. This model has been instrumental in driving a cumulative 132% increase in same-store sales from its inception to March 2025, significantly outpacing the average operator's 10% decline during the same period.

High Tide's success is deeply rooted in its differentiated approach to a highly competitive market. While many competitors have "fell by the wayside" or struggled, High Tide has relentlessly pursued an organic growth strategy, meticulously selecting "Tier 1" locations and building stores efficiently. This contrasts sharply with peers who often rely on acquisitions, allowing High Tide to maintain superior unit economics. The company's retail footprint has steadily expanded, reaching a significant milestone with the opening of its 200th Canna Cabana location in Sherwood Park, Alberta, in May 2025, and further growing to 207 locations across Canada by August 2025.

Technological Edge: The Cabana Club Ecosystem

At the heart of High Tide's competitive moat is its innovative Cabana Club loyalty program, which functions as a powerful technological differentiator. This program, described as the "largest of its kind in all of cannabis," has amassed 1.9 million members across Canada and a massive 5.66 million members globally. The Cabana Club offers a multi-tiered pricing model, including a paid "ELITE" membership, which has grown to 97,000 members in Canada, representing the fastest pace of onboarding paid members since its inception.

The tangible benefits of this technology are quantifiable and significant. The Cabana Club directly fuels High Tide's industry-leading same-store sales growth, which accelerated to 7.4% year-over-year in Q3 2025, marking its fastest rate in two years. This loyalty program not only drives repeat business and customer retention but also generates a rich trove of consumer data. This data is leveraged through the Cabanalytics Business Data and Insights platform, which provides valuable advertising revenue and insights. In Q2 2025, Cabanalytics and other revenue streams totaled $11.3 million, demonstrating the financial impact of this data-driven ecosystem. For investors, the Cabana Club represents a sustainable competitive advantage, fostering deep customer loyalty, enabling targeted marketing, and providing a high-margin revenue stream from ELITE membership fees.

Financial Performance and Operational Excellence

High Tide's strategic execution is clearly reflected in its robust financial performance. For the third fiscal quarter ended July 31, 2025, the company reported record revenue of $131.7 million, a 6% increase year-over-year and sequentially. This top-line growth was primarily driven by the bricks-and-mortar segment, which represents 97% of consolidated revenue and saw an impressive 16% year-over-year increase in Q2 2025.

Profitability metrics also show a positive trend. Adjusted EBITDA reached $9.6 million in Q3 2025, up 24% year-over-year (excluding a one-time social responsibility fee impact) and marking a significant achievement given the accelerated pace of new store openings. The company also achieved positive net income of $832 thousand in Q3 2025, a "meaningful reversal" from a sequential net loss. High Tide's gross margins stood at 26% in Q2 2025, with management anticipating further sequential gains in Q3 2025 as competitor store closures allow for strategic margin increases in certain markets.

Cash flow generation remains a core strength, with High Tide reporting $7.7 million in free cash flow for Q3 2025, a substantial 148% increase year-over-year and 57% sequentially. This consistent free cash flow generation, totaling $21.8 million over the trailing four quarters, has enabled the company to self-fund its aggressive organic expansion.

High Tide maintains a healthy balance sheet, with total debt at $25.4 million as of Q2 2025, representing a low 0.8x trailing adjusted EBITDA, and $34.7 million in cash and cash equivalents, with no significant debt maturities for over two years.

Competitive Landscape and Strategic Positioning

High Tide operates in the "most competitive landscape in cannabis in the universe," yet it has consistently outperformed its peers. The company's market share climbed to 12% in the provinces where it operates in February and March 2025, a notable achievement considering Canna Cabana represents only 6% of the total store count. This efficiency is further highlighted by its average store revenue run rate of $2.6 million annually in March 2025, which is "2.3x the average annualized peer revenue of $1.1 million." In Ontario, a key growth market, Canna Cabana stores (excluding newer ones) achieve an impressive $3.2 million annual revenue run rate, "triple the average of our peers" at $1.1 million.

High Tide's competitive advantage stems from its disciplined organic growth, focusing on "cherry-picked strategic locations" rather than inheriting underperforming assets through acquisitions, a common pitfall for many rivals. While competitors like Canopy Growth (CGC), Tilray Brands (TLRY), Aurora Cannabis (ACB), and Cronos Group (CRON) pursue broader strategies in production or diversification, High Tide's specialization in retail execution and its data-driven Cabana Club model offer a distinct edge in customer engagement and operational efficiency. The company actively leverages its scale and market position, with management stating they "hold the line of gross margins because it's frustrating many of our competitors" who are "hanging by the thread." This strategy has contributed to numerous competitor bankruptcies, including Fire & Flower, Kiaro, Trees, and Tokyo Smoke, further solidifying High Tide's market dominance.

Outlook, Strategic Initiatives, and Risks

High Tide's outlook is characterized by continued aggressive organic growth and strategic international expansion. The company aims to add another 20 to 30 locations in calendar year 2025, primarily through organic builds costing approximately $400,000 all-in per store, which yields superior ROI. The long-term ambition is to "surpass 300 stores across Canada" and achieve at least a 15% market share. The Cabana Club is projected to reach 2.5 million members across Canada, further strengthening its loyalty ecosystem.

A significant strategic initiative is the entry into the German medical cannabis market. High Tide closed the acquisition of a 51% interest in Remexian Pharma GmbH for an estimated €26.4 million on September 2, 2025. Remexian generated €65 million in revenue in the last 12 months and sold 7 tonnes of cannabis flower in Q2 2025, representing 16% of Germany's total imports. This move leverages High Tide's Canadian procurement expertise, with "dozens of LPs" eager to export through its German partner. Germany is viewed as a "doorstep or gateway" to other European markets and Australia, positioning High Tide for global leadership.

The company is also expanding its White Label product portfolio, including brands like Queen of Bud and Cabana Cannabis Co. These products, which can achieve "upwards of 6% additional margin up to 8% additional margin," are expected to grow to 20-25% of total sales in the long term.

Despite this positive outlook, High Tide faces several risks. The "illicit market resurgence" in Canada, particularly in cities like Regina, Ottawa, and Toronto, has led to localized margin pressures. While the e-commerce segment holds "strategic value" for future international leverage, achieving EBITDA neutrality is "proving to be a challenge." Furthermore, regulatory uncertainty in Germany, particularly regarding adult-use cannabis laws and e-prescribing rules, could impact the pace of international expansion, though a reclassification of medical cannabis as a narcotic is deemed unlikely.

Conclusion

High Tide Inc. stands as a compelling investment opportunity, distinguished by its unwavering leadership in Canadian cannabis retail and its calculated expansion into lucrative international markets. The company's innovative Cabana Club loyalty program, a core technological advantage, continues to drive exceptional same-store sales growth and foster deep customer engagement, providing a robust foundation for sustained profitability. With a disciplined organic growth strategy, a burgeoning high-margin White Label portfolio, and the strategic acquisition of Remexian Pharma GmbH in Germany, High Tide is well-positioned to capitalize on global cannabis market opportunities. While challenges such as illicit market competition and e-commerce profitability persist, High Tide's proven operational excellence, strong financial health, and clear strategic roadmap underscore its potential for continued market share gains and long-term value creation for investors.