Good morning. My name is Ursula and I will be your conference operator today. I would like to welcome everyone to the Cronos Group's twenty twenty Fourth Quarter and Full Year Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Shane Laitlaw, Investor Relations.
Please go ahead.
Thank you, Ursula, and thank you for joining us today to review Cronos Group's twenty twenty fourth quarter and full year financial and business performance. Today, I am joined by our President and CEO, Kirk Schmitt our CFO, Gerry Barbato our Executive Chairman, Mike Gorenstein and our EVP of Legal and Regulatory Affairs, Zhu Ming Shum. Cronos Group issued a news release announcing these financial results this morning, which are filed on our EDGAR and SEDAR profiles. This information as well as the prepared remarks will also be posted on our website under Investor Relations. Before I turn the call over to Curt, I would like to remind you that our discussion during this conference call will include forward looking statements that are based on assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those projected in the forward looking statements, including as a result of the factors described in the cautionary statement and risk factors included in the company's earnings release and regulatory filings, including the company's most recent annual report on Form 10 ks filed today, by which any forward looking statements made during this call are qualified in their entirety.
In addition, during this call, certain financial measures may be discussed that are not recognized under The U. S. Generally Accepted Accounting Principles referred to by the Securities and Exchange Commission as non GAAP measures. We believe these non GAAP measures assist management in planning, forecasting and evaluating business and financial performance, including allocating resources. Reconciliations of these non GAAP measures to their closest reported GAAP measures are included in our earnings press release furnished to the SEC, which is available in the press release section of our website, thecronosgroup.com.
These non GAAP measures may not be comparable to measures used by other issuers. I'd also like to note that we are conducting our call today from our respective remote locations. As such, there may be brief delays, crosstalk, or minor technical issues during this call. We thank you in advance for your patience and understanding. We will now make prepared remarks, and then we'll move to a question and answer session.
With that, I'll pass it over to Cronos Group's President and CEO, Curt Schmitt.
Thank you, Shane. As we turn the page to 2021 and reflect on 2020, the accomplishments the Cronos team achieved, especially given the complex operating environment, were impressive. I'm incredibly excited to see what we can accomplish in 2021 and beyond. I wanna take this moment to recognize and thank our global team for persevering through the challenges the world faced in 2020 and continue to face in 2021. I'm going to start this morning's call by reflecting on a few highlights from 2020 and to discuss our strategy to win in 2021.
Since joining Cronos six months ago, I've made it my focus to help accelerate growth and plan for our future strategy. With the help of Mike and our passionate senior leadership team, we've honed in on the areas we want to concentrate on as an organization. In 2021, we plan to focus on four main pillars to drive business results and growth across the organization. The first pillar is to ensure we're continuing to build a winning team. I plan on supporting our employee base by fostering collaborative, performance focused culture that strives to win.
We know that this burgeoning industry will require talented and driven employees, and I plan to continue to instill a spirit of winning and collaboration to enable our teams to execute as we grow in existing markets, enter new markets, support our brands, and continue our R and D work in 2021. The second pillar is having a keen focus on building disruptive technology and innovation, which has always been a core strategy priority for Cronos. We continue to believe that investing in innovation and breakthrough research will unlock the potential of cannabis and provide us with a long term competitive advantage. The third pillar, as I mentioned on our previous call, is to build great cannabis brands. I'm a marketer at my core.
And in 2021, we plan to continue to innovate with our brands with the goal of meeting the needs and exceeding the expectations of our consumers. I'm incredibly proud of how we are developing our brands across our markets. We'll be focused on robust marketing strategies and new retail partnerships to reach more consumers in 2021. The fourth pillar is to strengthen our ability to compete, which is supported by the first three pillars. We will focus on building competitive advantage through R and D capabilities, strategically placed global infrastructure, and engaging in the legislative process in the markets that matter to us.
This includes sharpening our strategic focus in Canada, Israel, and The US to ensure we're driving long term value and preparing the company for new opportunities as they arise in 2021 and beyond. It was a busy year, but we're excited to continue delivering our strategy and drive long term value for shareholders. And 2021 is also shaping up to be an important time for US cannabis legislation. I wanna share a few thoughts on legalization efforts and how Cronos is taking part to ensure that we have a seat at the table. Legalization in various forms continues to spread across US, with the vast majority of Americans now living in states where cannabis has been legalized in some form, whether medical or adult use or both.
As many Americans express support for cannabis legalization in some form this past election, momentum continues to build at both the state and federal level. We believe cannabis should be legal at the federal level and that a comprehensive and reasonable federal regulatory framework should be put in place for the industry. We think the framework should create product and safety standards for the industry and address critical societal considerations, such as youth access prevention and social justice issues. Part of our focus and our participation in these efforts, it was announced a few weeks ago that Cronos is joining industry colleagues as a founding member of the US Cannabis Council or USCC. With representation from leading cannabis and social justice organizations in North America, the USCC will be the premier trade association for cannabis thought leadership, innovation, and social responsibility in US.
We look forward to partnering with our industry peers to advance cannabis legalization in The US. As previously discussed, Mike Goranstein's priority in his role as executive chairman is looking at US opportunities and the best way for us to participate. He has commissioned a team internally to analyze the various opportunities in the market and different potential strategies for us to enter. We are confident that our balance sheet, existing CBD infrastructure, and our strategic investor, we will be a best in class cannabis company in The U. S.
Jerry will focus on the fourth quarter results, but I wanted to take a moment to highlight the annual performance. In fiscal year twenty twenty, on a consolidated basis, we increased revenue 97% year over year to $46,700,000 with strong performance across all regions. Our Rest of World segment recorded net revenue in fiscal year twenty twenty of $37,200,000 representing an 83% increase year over year. And lastly, The United States segment in its first full year of operations under the Cronos umbrella recorded net revenue fiscal year twenty twenty of $9,500,000 After a modest third quarter, The U. S.
Team came back strong in the fourth quarter and executed. Although our U. S. CBD business continues to navigate turbulent times due to retail closures and other impacts due to the COVID-nineteen pandemic, we are confident the team will continue to successfully operate in this environment. A critical component to our US CBD business results was a successful launch of Happy Dance, our new skincare and personal care brand in partnership with Kristen Bell.
Today, we announced an exciting expansion for Happy Days by securing its first major US retailer, Ulta Beauty, making the brand's first brick and mortar retail rollout. Happy Dan features an easy to use line of clean and cruelty free hemp derived CBD bath and body products. The full collection expected to launch in the coming weeks on ulta.com followed shortly thereafter in store at over 550 Ulta locations across The US. We're incredibly excited to be partnering with Ulta and look forward to bringing the brand to a broad audience through Ulta's retail network. Broadening our distribution capability is an important next step in the evolution of this brand, which will be followed by additional product launches to expand variety for our consumers.
In q four, Lord Jones, our prestige position US CBD brand, launched a new whole plant formula CBD lip balm, which has been well received by consumers. Introducing entry level products to the Lord Jones portfolio improves the accessibility of the brand and increases trial. The Lord Jones acid mantle repair cream was awarded the prestigious Refinery '29 Beauty Award in q four twenty twenty. The self care and beauty segment offers a respite from daily stressors, and we are fortunate to be able to continue to bring high quality products to consumers in The US during this time. We plan to continue to expand our innovative product portfolio in 2021.
In Canada, we continue to broaden our distribution across the retail landscape. We let consumer insights drive our decision making while leveraging our robust R and D and innovation teams to bring products to market that consumers desire. Our innovation funnel is vast at the top, but it's our consumer insights that enable us to focus on what the consumers want today while keeping an eye on what they may want in the future. To that point, as segments of the industry have grown and consumer adoption increases, we are excited to tackle these additional opportunities with innovative products in 2021. Our spinach brand continues to perform well.
And this past quarter, spinach's dancehall strength was awarded best hydrodry flower of the year by Kind Magazine. This award is especially appreciated as budtenders across our Canadian retail network nominated us. Although COVID nineteen limits our ability to engage face to face, retail marketing opportunities will be an area of focus for our adult use brands, and we are excited to meet more consumers in retail spaces in 2021 as our marketing strategies are expected to focus heavily on this channel. Moving to the Israeli medical market, we are excited to see the market continue to expand now with roughly 80,000 medical patients in the country. In q four, Cronos Israel began selling PEACE Naturals branded oil along with the previous launched flower products to the medical patients.
These successful launches have enabled Cronos Israel to quickly build their distribution network and brand awareness through a growing network of pharmacies. In February 2021, Cronos Israel signed a distribution agreement with the largest pharmacy chain in Israel, SuperPharm, which has over 250 branches in Israel. As we grow our share, the size of the pie is also expanding with the number of pharmacies in Israel wanting to carry medical cannabis products increasing, which presents a great growth opportunity for the industry. The PEACE Natural brand has already been recognized by the Israeli Marketing Association for its successful marketing strategy at launch in 2020 to generate exposure for the Peace Natural brand to patients as well as for differentiating and highlighting the brand's high quality amongst its competitors. We're incredibly pleased to see the sales volume and resonance amongst patients in this region.
A critical component to our r and d and innovation initiatives continues to be our biosynthesis work taking place at Cronos Fermentation in Winnipeg in partnership with Geeko BioWorks. Following the successful fermentation of CBG and our Winnipeg R And D Labs at research scale in the second quarter of twenty twenty, the team has continued to optimize for scale and downstream processing and preparation for commercialization. Kronos is prioritizing rare cannabinoids such as CBG over common ones such as THC and CBD and plans to sequence commercial production and subsequent product launches based off this approach. Canada is an important platform for us to develop innovative products to be ready for other markets such as The US and Israel as regulations allow. We look forward to leveraging our r and d, innovation, and consumer insights to drive the creation of differentiated products through consumer learnings as part of the commercialization plan.
On the innovation side, we believe providing rare cannabinoids at a meaningful scale could elevate and differentiate the consumer experience. We look forward to leveraging current insights and building future ones on consumer acceptance of these innovative products over time. In short, this past quarter is a summation of the hard work our teams have put into the past year plus. As we look to 2021, I'm incredibly excited about the teams we have supporting our brands and all the r and d, innovation and exciting plans we have in store. With that, I'll turn the call over to our CFO, Gerry Barbato.
Gerry?
Thanks, Kurt, and good morning, everyone. Before discussing our financial performance, allow me to briefly touch on a change in the metrics we are reporting on. We are shifting away from reporting segment level operating income results in favor of reporting adjusted EBITDA at the segment level. We believe this is a more representative view of our business and aids in management's review of performance and capital allocation. We also hope it further helps the investment community evaluate our business performance.
We review these results on an adjusted basis, which excludes certain noncash items that may be highly variable, unusual or infrequent that can distort underlying business trends and results. For more details regarding our calculation of adjusted EBITDA, please refer to our earnings press release, which is available on our website, thecronosgroup.com on the Investors page. Turning to our financial results, the company reported consolidated net revenue in the fourth quarter of twenty twenty of $17,000,000 a 133% increase from the prior year period. Revenue growth year over year was primarily driven by the growth in the adult use Canadian cannabis market, sales in the Israeli medical market and growth in our U. S.
Hemp derived CBD business, partially offset by nonrecurring wholesale revenue in the Canadian market in the fourth quarter of twenty nineteen and strategic price reductions on various adult use cannabis products in Canada in the fourth quarter of twenty twenty. Consolidated gross loss for the fourth quarter of twenty twenty was $14,900,000 a $5,200,000 decrease in losses from the fourth quarter of twenty nineteen. The improvement versus prior year was primarily driven by lower inventory write downs and increased gross profit contribution from The U. S. Segment.
This was offset by an increase in cost of sales primarily driven by third party purchased flower and a decline in wholesale sales in the Canadian market. We may incur further inventory write downs due to pricing pressures in the marketplace. Adjusted EBITDA loss for the fourth quarter of twenty twenty was $53,100,000 representing a $1,500,000 increase in losses from the fourth quarter of twenty nineteen. The increase in losses year over year was primarily driven by increased general and administrative expenses and an increase in R and D spending. Turning to our reporting segments.
In the Rest of World segment, we reported net revenue in the fourth quarter of twenty twenty of $13,500,000 a 193 percent increase from the prior year period. Revenue growth year over year was primarily driven by the continued growth in the adult use Canadian cannabis market and growth in the Israeli medical cannabis market, partially offset by non recurring wholesale revenue in the Canadian market in the fourth quarter of twenty nineteen and strategic price reductions on various adult use products in Canada in the fourth quarter of twenty twenty. Gross loss for the Rest of World segment for the fourth quarter of twenty twenty was $16,700,000 a $4,800,000 decrease in losses from the fourth quarter of twenty nineteen. The improvement year over year was primarily driven by lower inventory write downs, offset by an increase in cost of sales, primarily driven by third party flower purchases and a decline in wholesale sales in the Canadian market. As we work to create an efficient global supply chain through 2021 and beyond for our Rest of World segment, we anticipate that gross margins will continue to fluctuate as price and mix change from quarter to quarter.
Adjusted EBITDA loss in the Rest of World segment for the fourth quarter of twenty twenty was $36,400,000 representing an $11,000,000 decrease in losses from the fourth quarter of twenty nineteen. The improvement was primarily driven by a decline in gross loss, reduced sales and marketing costs and a decline in general and administrative expenses. Turning to The U. S. Segment, we reported net revenue in the fourth quarter of twenty twenty of $3,500,000 a 30% increase from the prior year period.
Revenue growth year over year was primarily driven by the growth in existing product lines, introduction of new hemp derived CBD products and strength in our direct to consumer business driven by holiday promotions. Gross profit for The U. S. Segment for the fourth quarter of twenty twenty was $1,800,000 a $400,000 increase from the fourth quarter twenty nineteen. Adjusted EBITDA loss in The U.
S. Segment for the fourth quarter of twenty twenty was $11,800,000 representing a $10,600,000 increase in losses from the fourth quarter of twenty nineteen. The increase in losses was primarily driven by increased sales and marketing costs in relation to brand development and increased general and administrative expenses. Overall, Cronos Group reported a decrease in net income versus the prior year period, primarily due to the change in fair value of the financial derivative liability associated with Altria's investment, which is described in more detail in the 10 ks. In the fourth quarter of twenty twenty, the company recorded a non cash loss of $53,500,000 related to the change in fair value of these financial derivative liabilities.
Cronos continues to expect there may be significant reported earnings volatility, primarily driven by the fair value quarterly adjustments related to the movement of Cronos Group stock price. Turning to the balance sheet, the company ended the quarter with approximately $1,300,000,000 in cash and short term investments, which held relatively flat from the third quarter of twenty twenty. Capital expenditures for the quarter were $11,000,000 This spending includes investments related to Cronos Fermentation, the Peace Naturals campus, our Israeli facility and our new ERP system. We remain committed to deploying capital in a disciplined manner and only in ways that align with our strategic priorities. I continue to be encouraged by the work our teams are doing globally.
With that, I'll turn it over to Kurt for closing remarks before Q and A.
Thank you, Gary. What's clear is that our products are winning with consumers and our brands continue to resonate in the markets we operate. This past year has offered opportunities to grow despite the unprecedented effects of the pandemic, and we're incredibly motivated to continue that growth in 2021. With a focus on continuing to build successful teams, perfecting regional strategies, supporting our breakthrough technologies and r and d projects, and building leading brands, I know we can continue to win as an organization and lead the global cannabis industry into its next phase of growth. With our strong balance sheet, a best in class strategic partner, and the team that is built to win, I'm excited about the opportunity to lead Cronos in the next chapter.
With that, let's now open it up for the line of questions.
Your first question comes from Andrew Carter with Stifel.
Hey, thanks. Good morning. I wanted to start off with asking about the gross margin. On the gross margin side, I understand the expected continued fluctuations, but excluding the charge, the margin would have showed progress. So first off, kind of where do you think your inventory levels are?
But then also throughout the year, you do have internal supply for GrowCo coming online and you have Israel domestic coming online. So should we see in Rest of World like significant gross margin expansion at least on an underlying basis throughout 2021? Thanks.
Yes. Good morning, Andrew. Thanks for the question. I think you're still going to see some fluctuation in that gross margin, as price and mix change from quarter to quarter. And to really touch on that, that mix change is not only the products that we have in the Canadian market, but as you point out, the change in the Israeli market when you think about the ROW segment.
And we're in the early innings in Israel. It's just ramping up. So I think as that becomes a bigger portion, you'll also have some mix changes as we launch oil in that category. And as you know, we took some price decreases over the second half of twenty twenty. Different products have different margin profiles in different provinces in Canada, which also leads to some of that mix change.
And while we are buying third party flower, every quarter, the prices continue to come down. You need to play through that inventory that you bought in previous quarters. So we expect that our cost per gram on the flower side of the business now, depending how mix changes, will have an impact to that. So I think it's hard to predict what it will be in the future, but we definitely see some volatility in margin going forward.
Understood. Thanks. I'll pass it on.
Your next question comes from Vivien Azar with Cowen.
Hi. Good morning. I kind of want to follow-up on that line of questioning, please, if you don't mind. Just trying to get a better sense of, you know, the the output that you guys are producing now plus plus your inventory because I feel like we're hearing, like, slightly mixed messages around price deflation. I think net for the entire category on a weighted average basis, yes, it's deflationary because you and and many other competitors have introduced value and deep value, but but I'm not hearing as much price compression at premium segments.
So I'm just trying to understand what you guys are producing now. Is that at risk of price deflation too? And then what's the incremental risk that's still sitting on your balance sheet? Thanks.
Yes. Sure, Vivienne. Thanks for the question. I still think the Canadian market is deflationary across all price points, whether it be premium, the mid tier or the value play. You're seeing that across all categories.
And so as we've looked at our brand offerings of both Cove and Spinach and tried to make sure that we're at a price point that's competitive, you've seen that we've taken some of these price changes across the second half of the year, and I don't know when that ends. As for the inventory, I think our inventory is at a reasonable place. I mean we're only slightly higher than we were at the end of twenty nineteen. And we have, as Kurt alluded to in his prepared remarks, almost 100% growth on that revenue channel. So I feel comfortable that the amount of inventory on hand is appropriate for the size of our business.
Okay. Thank you.
Your next question comes from Raul Sarugasort with Raymond James.
Good morning, Kurt, Mike, Jerry. Thanks so much for taking my question. So one of the bright lights you saw was essentially the doubling of revenue in The U. S. CBD channel.
Kurt, you referred to sort of challenges around retail in The U. S. Of course, without having a big crystal ball as to what happened post COVID, can
you
maybe talk about how you see that trajectory? Do you look at are you looking at a continuing doubling quarter over quarter? And and, you know, any more color on on expansion in that channel?
Yeah. Well, you know, I I think, you know, the COVID impact of, store you know, restricted store openings, you know, and other related things. The pandemic has certainly hurt. But, as the vaccination rolls out, we believe, you know, things are gonna start turning. Right?
And we're already seeing green shoots in that area. It really comes down to the brand strength and investment. And for, in The US for Happy Dance, we're very pleased. We just announced the Ulta, partnership, which is certainly going to be an accelerant to that business. And you're going to see investment in marketing, on both our Lord Jones and Ulta brands.
So, again, our focus is on growth. And as we get through this pandemic, when it comes to The U. S, I think that, you know, the second half of the year, everybody is feeling fairly confident that we'll be, you know, fairly well with the vaccine fairly well penetrated. So we should see the retail sector, continuing to open up, and that's a good sign, obviously a good sign for us.
Terrific. Terrific. Thank you very much. And then just as a follow-up, you know, one area, as you know, that we're quite interested in is is the partnership with with Ginkgo and and the biasing initiative. You talked about focusing on CBG.
Might get previously referred to September being the timeline target timeline for having first products from fermentation starting to hit shelves. Is that still the timeline that we're looking at? And and and what can we think about in terms of, you know, product formats and potentially broadening, of fermentation based cannabinoids in in into your products?
Yeah. We're yeah. We currently expect to achieve commercialization by the third quarter of twenty twenty one. And as you said, as I said in my opening remarks, really are prioritizing the rare cannabinoids because we believe that's going to be a greater ability to innovate and provide consumers with differentiated products. And so we're really excited about that.
I don't want go on the exact products right now. But we're well on our way. So again, we are on track and we're feeling very good about it. And obviously the rare cannabinoids offer some really unique differentiated consumer products and benefits that, we obviously want to focus on.
Indeed. Thanks for taking my questions.
Your next question comes from John Zamparo with CIBC.
Hi, good morning everyone. I wanted to ask about the creation of the internal team looking at The U. S. Markets. And specifically, do you have levers you can pull today to deploy capital into The U.
S. Without a full scale legalization, whether it's optionality deals or arrangements with CBD brands or potentially partnerships with retailers? Just any thoughts or observations on that front would be helpful.
Yes. This is Kurt. I'm going to kick it off, but, I think this is important to hear from Mike. So Mike will comment on this as well. As you guys know, when it comes to active or really direct investments in The U.
S, it's important that we get federal action, right, that removes cannabis or THC as a controlled substance. Also on that is the operation side. And there's a number of targeted bills that allow for really streamlining and making an effective industry. And again, Mike is looking at a range of entry strategies besides these active investments. So it'd be great that Mike comments on that at this point.
Sure. Thanks, Kurt. Hey, John. So when we think of The U. S, there's really three phases that we try to think of.
The first would be the phase that we are in now where the legal regime as Curt noted means that we can't directly and actively enter. But, you know, I think there are certain, you know, levers that can still be pulled. The next phase is really what you hear talked about on the government right now where cannabis prohibition in The U. S. Ends.
And that would allow us to actively and directly participate in states that have put in place responsible cannabis frameworks. And then, you know, finally a responsible and comprehensive framework that at the federal level that provides for interstate commerce and high product standards. And when we think about that third phase that's really where our strategy is focused on positioning ourselves right now so that we can eventually deliver value there. And we still believe it's going to be authentic brands that are built on technology that differentiate the products, and that's what's going to ultimately drive terminal value. So any levers or anything that we're looking to pull now is really thinking in the future how are we best set up to win, that's really where our focus is.
Okay, that's helpful. Thanks. And if I could follow-up on that subject, on the formation of the USCC, I would have thought maybe at first that, you know, the goals of those parties might the parties involved might differ a little bit. So what does that say about the fact that there's American and Canadian participants coming together to work together on this? And I guess what are the priorities near term at The
Is getting something done like the Safe Banking Act? Or is it maybe more of a transformative goal and longer term goal?
Yes. This is Kurt. Good question. Our view is it really needs to be a comprehensive approach, right? And that includes a bunch of areas, you know, such as addressing historic injustice for communities of color which have disproportionately faced in this area.
It could include executive orders that we believe should be coordinated between the various departments which will be very important such as the DOJ, Treasury, FDA and HHS. And legislative action would provide additional clarity, right? And there are several directions Congress can take. And through the council and through our partnership with Altria, we are very much focused on being having a seat at the table and being able to deliver on that. But in essence we do need a comprehensive approach in order to really create the right environment for the market and for the various issues that are happening right now in The U.
S. And we're reasonably confident that it's starting to move in the right direction.
All right. That's helpful. Thank you very much.
Your next question comes from Michael Lavarit with Piper Sandler.
Thank you. Good morning.
Good morning. Just curious if you
can elaborate a little bit on CBG. And it sounds like you've got the biosynthesis part down. But as far as the consumer, how much education do you have to do on the benefits of that? And how do you plan to go to market with it?
Good question. We have tremendous capability in our consumer insights group. So in parallel to, developing these rare cannabinoids, we are looking at, you know, the product innovation side and how we're going to talk about it, what products we're going put that in. I don't want to get into what exactly we're going to do. But, all that is well on its way.
I will say another thing that's interesting about these rare cannabinoids is you can Google these products on THCB and CBN and CBG. And you're going to get a wealth of knowledge and a wealth of how people are talking about these and the benefits of these products. So in some ways, consumers are really focused on these and they understand some of the benefits in these things. That's sort of built in right now. But again, it's very difficult.
They're called rare cannabinoids because they're very difficult to get and scale. And that's what we believe we can deliver. And we could use our innovation and consumer insights and our innovation teams to develop some really unique products to deliver on those, consumer promises.
Okay. That's helpful. And then just on, GrowCo and adding capacity, you're somewhat unique in the industry doing that these days. Can you just give a sense of the industry landscape and how you see capacity broadly? Has it been right sized, or or is there still excess capacity?
And is your initiative primarily just to ensure quality products? What's some of your thinking on just bringing that online?
Well, you can think of it kind of a hybrid model. So, there's there's we can source from Groco. We can source from other third party biomasses. So we want that flexibility on it. You know, Groco received their license in 2020, cultivation license.
So we expect that facility to become operational, in phases, beginning in the first half of twenty one. And what they benefit for us is just partnering with an expert, which, you know you know, they're an expert in the field, and they can provide high quality biomass at a low cost. But it really is managing this hybrid model, in in the Canadian market at this point. And it's kind of an approach we've taken to taken to Israel as well.
Okay. That's helpful. Thank you.
Your next question comes from Matt Bondly with Canaccord.
Hey guys, good morning. Thanks for taking the question. Just curious if you can provide any more color on any of the dynamics you're seeing in the adult use market with respect to your brand penetration, whether that's the sequential, I guess, movement in how many orders the province has been buying from you? And then if you have further data on how your products are selling to any consumers this quarter relative to last out of the retail touchpoint directly?
Well, we don't give revenue guidance yes, Jerry, you want to take that?
Sure. Yes, we don't give forward looking revenue guidance. But I think some of the impacts of COVID that you've seen, especially in Ontario, where they had store closures and go to curbside pickup, I think you saw that early on in COVID when it first happened that you saw the growth slow a little bit. And so you saw that in December and January across the categories. We think our brand penetration has been quite good.
I mean you saw the growth sequentially every quarter in 2020. I think we're making great strides in that area.
Perfect. And do you have any estimate? I know you don't provide it, potentially not, but any sort of goal posting of where you think your market share is in Canada right now on a branded level and how that's moved in the last year or so?
Yes. There's not a lot of good data in Canada to try to really get that. So in normal CPG, there's Nielsen data or some other quantitative metric. I mean we try to monitor ourselves internally, but it's difficult. And it's also difficult to look at because of all these big value players and larger formats coming into the market.
It's a bit challenging for us to look at it that way. So we're really focused on growth of those brands and revenue growth.
Okay, understood. Thank you.
Your final question comes from Thea Wang with Jefferies.
Hi, good morning. I'm asking a question, on behalf of my analyst, Owen Bennett. So I just wanna briefly touch on the product mix because currently, the majority of the sales are still from the cannabis flowers, and, you know, there's very limited increase sequentially from the extract. So I wonder what's your outlook on the product mix? And do you expect that to kind of stay at the current like proportion level going forward?
Thank you.
Yes, good question. This is Kurt. Well, one of the things we're seeing is the trend during COVID, right? And Jerry just talked about that. We have consumers on lockdown and generally less mobile.
And so we definitely have seen that preferences have shifted towards to buying more volume in the flower category over vapes or even pre rolls because it's a better to go solution. And since and since, unfortunately, in the last three months, no one's really been going anywhere. So this has driven our sales as well in Canadian, the Canadian market to be more heavy oriented towards flower categories. However, as things start to get better and we start opening up retail and people have more mobility, we don't expect this to persist long term. So again, we look forward to launching new and innovative products across the two point zero spectrum over the course of 2021.
So we do have plans. And, again, I'm very hopeful as the vaccination starts rolling out and we start getting back to normal, we'll start seeing the market develop, as we saw pre COVID.
Okay. Thanks a lot. That's very helpful.
Ladies and gentlemen, thank you for participating in today's conference. This concludes today's call. You may now disconnect.