urban-gro recorded revenue of USD 16.8 million in Q1 2023, down 20% YoY, but beating the consensus revenue estimate of USD 15.7 million. The decrease in revenue was predominantly due to the decrease in equipment systems (including indoor cultivation facilities) revenue (-83% YoY) affected by reduced equipment demand in the US cannabis market caused by ongoing state-level regulatory delays in the license-awarding process and the lack of movement on passing key legislation impacting the industry. This decrease was partially offset by construction design-build revenue growth (+100% YoY) related to the acquisition of Emerald C.M. in 2Q 2022.

Gross profit was USD 2.8 million in Q1 2023, down 42% YoY, due to the net effects of a decrease in higher-margin equipment revenue offset by an increase in lower margin construction design-build revenue. The company’s net loss stood at USD 5.1 million, which worsened by 639% YoY.

The company maintains its FY2023 consolidated revenue guidance, which is projected to fall between USD 100 million and USD 120 million, while its adjusted EBITDA is anticipated to be between a loss of USD 3 million and a slightly positive value. The company expects sequential quarterly improvements for the remainder of the year, with a preference for the second half of the year due to timing shifts for client projects in the broader macroeconomic environment.