Hightide (HITI) Q4 2025: Bricks-and-Mortar EBITDA Jumps 51%, Loyalty Flywheel Drives Outperformance
Canna Cabana, Hightide’s discount retail brand, continues to widen its lead in Canada’s cannabis market, with a 51% jump in core bricks-and-mortar EBITDA and accelerating loyalty member growth fueling record profitability. Strategic moves in Germany and a disciplined approach to U.S. optionality set the stage for further international expansion, while operational leverage and disciplined capital allocation support continued free cash flow generation.
Summary
- Loyalty Engine Accelerates: Cabana Club membership surged, deepening customer stickiness and driving sales outperformance.
- Margin Expansion Amid Shakeout: Operational leverage and disciplined location selection boosted EBITDA even as new stores mature more slowly.
- International Platform Set: Early integration of Remexian and U.S. regulatory tailwinds position Hightide for multi-market growth.
Performance Analysis
Hightide delivered record Q4 revenue of $164 million, up 19% year-over-year, with the bricks-and-mortar segment accounting for 92% of total sales and driving a 51% jump in adjusted EBITDA. Same-store sales rose 5.5%, and the company added 27 new stores organically, reaching the high end of its annual target. The adjusted EBITDA margin hit a new high of 9.4%, reflecting both higher gross margins and disciplined cost control, especially in labor as incremental head office expenses did not scale with store growth.
Cabana Club, Hightide’s proprietary loyalty program, reached 2.5 million members in Canada, up 45% year-over-year, with elite tier membership doubling. This loyalty flywheel continues to underpin both sales velocity and market share gains, especially among daily cannabis users, where Canna Cabana now captures nearly half of all spend. Remexian, the recently acquired German distributor, contributed nearly $10 million in revenue despite temporary margin headwinds from legacy inventory issues in Portugal. While working capital needs led to a sequential dip in free cash flow, the company still generated $12 million for the year, funding all expansion internally.
- Bricks-and-Mortar Margin Strength: Four consecutive quarters of margin expansion, led by elite member sales, white label products, and operational focus.
- Loyalty Penetration Drives Revenue: Elite members (up 107%) shop more frequently and with larger baskets, mirroring Amazon Prime or Costco membership economics.
- Remexian Integration Underway: Short-term margin drag from legacy biomass expected to clear by Q2, with new supply routes and procurement advantages to follow.
Hightide’s ability to grow revenue and margin in a mature, competitive market signals a robust business model, while international and regulatory catalysts provide optionality for future upside.
Executive Commentary
"Our new store pipeline remains robust with 15 Tier 1 locations currently under development, particularly in Ontario, but we are also in talks with operators of various sizes regarding M&A possibilities. The other thing I would like to highlight is how for our second straight year, our impressive organic growth of store build-outs was financed entirely by our internally generated free cash flow."
Raj Grover, President and Chief Executive Officer
"The star of the show here was, once again, our core bricks and mortar segment, highlighting our strong cost controls, the 0.7% sequential increase in gross margin, followed by all the way down to a 0.7% sequential increase in adjusted EBITDA margin. Our adjusted EBITDA margins hit a new record of 9.4% this quarter."
Mayank Mahajan, Chief Financial Officer
Strategic Positioning
1. Loyalty and Brand Power as Moat
Cabana Club, Hightide’s membership program, acts as a high-retention flywheel, underpinning both top-line growth and margin expansion. With 2.5 million members and elite penetration rising, the company’s ability to drive repeat visits and larger baskets is outpacing the broader market. This network effect is particularly pronounced among daily cannabis users, where Canna Cabana’s share is twice that of the next competitor.
2. Disciplined Organic and Inorganic Expansion
Hightide’s organic store growth remains disciplined and ROI-focused, with 27 new stores added in 2025 and a 20 to 30 store target for 2026. The company is also positioned for opportunistic M&A, with active discussions for larger portfolios as weaker competitors exit. Management’s focus on high-quality locations, even as new stores take longer to mature, ensures brand and margin resilience.
3. International Leverage and Optionality
Remexian, the German medical cannabis distributor, offers a platform for European expansion. Legacy supply chain headwinds are being addressed through new procurement channels and diversification away from Portugal, with management expecting margin normalization and UK market entry in the second half. In the U.S., regulatory changes around cannabis rescheduling and potential Medicare CBD programs provide upside for Hightide’s New Leaf and FabCBD brands, prompting a pause on e-commerce divestiture plans.
4. Operational Resilience and Capital Allocation
Hightide’s ability to generate free cash flow and fund expansion internally, even as working capital fluctuates, demonstrates capital discipline. Labor leverage and centralized procurement underpin margin gains, while the company’s centralized product assortment process insulates against supplier influence at the store level.
Key Considerations
Hightide’s Q4 results highlight a business model gaining share in a consolidating market, with loyalty economics, operational leverage, and international optionality as key drivers. The company’s approach to capital allocation, disciplined store placement, and readiness for regulatory changes position it well for the next phase of growth.
Key Considerations:
- Store Maturation and Competition: New locations are taking longer to ramp due to market saturation, but Hightide’s brand strength and real estate discipline offset the impact.
- Margin Expansion Sustainability: Four consecutive quarters of gross margin gains signal operational strength, but continued elite member growth and white label mix will be needed to maintain trajectory.
- Remexian Integration Risks: Legacy inventory in Portugal will pressure margins through Q1, but new supply routes and procurement advantages should drive improvement by Q3.
- U.S. Regulatory Upside: Potential CBD reimbursement under Medicare and rescheduling could unlock new revenue streams for Hightide’s U.S. brands, though timing remains uncertain.
Risks
Hightide faces short-term margin risk from Remexian’s legacy inventory and supply chain bottlenecks, with Q1 and early Q2 likely to remain pressured. Continued market consolidation in Canada may limit growth opportunities, while regulatory delays or reversals in the U.S. could stall optionality for CBD and broader cannabis expansion. Currency volatility and working capital swings also introduce forecasting uncertainty.
Forward Outlook
For Q1 2026, Hightide expects:
- Continued margin pressure in Remexian until legacy biomass clears, with improvement anticipated by Q2/Q3.
- Organic store expansion of 20 to 30 new locations for the year, with potential for incremental M&A.
For full-year 2026, management reiterated guidance for:
- Free cash flow positivity and internally funded expansion.
- Continued Cabana Club and elite member growth, targeting 3 million members.
Management highlighted several factors that will shape the year ahead:
- Acceleration of Remexian’s margin recovery and entry into the UK market.
- Potential regulatory changes in the U.S. that could impact CBD and broader cannabis operations.
Takeaways
Hightide’s Q4 demonstrates a business model with durable competitive advantages, operational leverage, and international growth levers, even as near-term headwinds persist in Europe and new store maturation slows in Canada.
- Loyalty and Brand Power: The Cabana Club ecosystem is driving higher frequency, larger basket sizes, and deepening market share, especially among daily users.
- Margin and Cash Flow Discipline: Four straight quarters of margin gains and internally funded growth point to robust operational execution and capital allocation.
- International and Regulatory Optionality: Remexian’s integration and U.S. regulatory shifts provide meaningful upside, though execution and timing remain critical watchpoints.
Conclusion
Hightide exits 2025 with record profitability, growing brand equity, and a clear path to further market share gains in Canada and abroad. While near-term headwinds in Germany and slower new store ramping temper the outlook, operational discipline and strategic positioning offer investors a defensible growth story with embedded optionality.
Industry Read-Through
Hightide’s results signal that scale, loyalty programs, and disciplined capital allocation are decisive advantages in a consolidating cannabis retail landscape. The shakeout among smaller Canadian operators is accelerating, with brand-driven chains capturing share. Internationally, the German medical market remains attractive but operationally complex, with supply chain resilience and procurement muscle emerging as key differentiators. U.S. regulatory changes around cannabis rescheduling and CBD reimbursement could catalyze a new wave of cross-border partnerships and business model innovation, but timing and execution risk remain high for all players.