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HPCO Nasdaq· Hempacco Co. Inc.
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HPCO Nasdaq· Hempacco Co. Inc.
Earnings report Q3 2023

HPCO Reports Strong Revenue Growth in Latest Quarter

Segments of Revenue

HPCO's revenue for the three months ended September 30, 2023, showed a significant increase compared to the same period in 2022. The breakdown of revenue segments is as follows:

  • Product sales: $1.31 billion, representing a substantial growth of 132% from the previous year's quarter.
  • Product sales, related parties: $11.7 million, experiencing a decline of 31% compared to the same period last year.
  • Manufacturing service revenue: $9.05 million, reflecting a growth of 36% from the previous year's quarter.
  • Kiosk revenue: No revenue reported in the current quarter, resulting in a 100% decline from the previous year's quarter.
  • Total Revenues: $1.33 billion, indicating a remarkable increase of 124% compared to the same period in 2022.

Strengths

HPCO's strong revenue growth in the latest quarter can be attributed to several factors. Firstly, the company's first shipments of CBD gummies under the "Dogg lbs" brand, a product of their joint venture with Snoop Dogg, contributed significantly to the increase in product sales. Additionally, HPCO's sales by Hempacco also played a role in driving revenue growth. These factors demonstrate the company's ability to leverage strategic partnerships and capitalize on emerging market trends.

Challenges

Despite the impressive revenue growth in the latest quarter, HPCO faced challenges in the nine months ended September 30, 2023. The company experienced a significant decline in product sales, related parties, and manufacturing service revenue compared to the same period in 2022. This decline can be attributed to a temporary decline in orders from one of HPCO's largest customers due to a legal dispute. Furthermore, the passing of AB 45 by the State of California, which banned the sale of smokable hemp products, also impacted revenue negatively.

Noteworthy

It is noteworthy that HPCO's revenue growth in the latest quarter was primarily driven by the successful launch of CBD gummies under the "Dogg lbs" brand, in collaboration with Snoop Dogg. This highlights the company's ability to innovate and tap into new product categories to drive revenue growth. Additionally, the impact of legal disputes and regulatory changes on HPCO's revenue performance should be closely monitored in the coming quarters.

Summary

HPCO delivered a strong performance in terms of revenue growth in the latest quarter. The company experienced a remarkable increase in total revenues, primarily driven by the successful launch of CBD gummies and increasing sales by Hempacco. However, challenges in the form of a temporary decline in orders from a major customer and regulatory changes impacted HPCO's revenue in the nine months ended September 30, 2023. Moving forward, the company's ability to navigate legal disputes and adapt to regulatory changes will be crucial for sustaining revenue growth.

Source documents

Form 10-Q  filed on Nov 20, 2023
10 pages scanned

Reference data

Company financials Q3 revenue 1.3M
Analyst estimates Q3 EPS missed by NaN%
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