Aphria (NYSE:APHA) reported its second-quarter results earlier this month, which failed to impress investors because the company was back in the red. It also reduced its guidance for the year.

Although the results didn't do enough to get investors excited about the stock, there were three positive numbers that we can take away from the company's Q2.

1. Revenue above 120 million Canadian dollars for third consecutive quarter

Aphria's revenue declined 4.4% from its first-quarter tally of CA$126 million but it continued to show strong year-over-year sales growth with its top line up 457% from the prior-year quarter. 

The results have been remarkably stable and while investors may be disappointed that they aren't higher than prior quarters, it shouldn't come as a big surprise, given the industry's challenges with legal pot prices being more expensive than the black market and the retail market remaining sluggish.

Cannabis plant.

Image source: Getty Images.

In October, Aphria initially expected net revenue for this fiscal year to come in between CA$650 million and CA$700 million. It has revised that and now projects that number to fall between CA$575 million and CA$625 million. The company also slashed its expected adjusted EBITDA figure from as high as CA$95 million to no more than CA$42 million. 

Aphria's CEO Irwin Simon points to the disappointing retail rollout in Ontario, stating, "We had expected 40 additional stores in late fall 2019, but that was postponed to March, even late April, 2020."

2. Operating expenses just 41% of revenue

A potentially more important development for the company is that its operating expenses, as a percentage of revenue, are stabilizing. Operating expenses totaled CA$49.2 million in Q2 and, while that's up 78% from the CA$27.5 million that the company incurred in the prior-year quarter, the numbers aren't spiraling out of control. They're a smaller percentage of revenue, coming in at 41% this quarter compared to 127% a year ago.

While operating expenses are up 19% from Q1, those increases are primarily the result of higher selling, marketing, and promotion expenses, which rose from CA$7.8 million to CA$12.3 million. General and administrative expenses of CA$22.1 million were down slightly from CA$22.3 million. It's a good sign, as it suggests the expenses are more controllable given that investors aren't seeing significant increases across the board.

3. Net loss of CA$7.9 million not far from breakeven

Although Aphria reported a loss in Q2, its results weren't a big drop off from where the company was when it was profitable. In Q1, the company benefited from CA$20.3 million in non-operating income, significantly higher than the CA$4.6 million that it recorded this past quarter. If Aphria received a similar boost this quarter, its bottom line would have finished in the black as well.

It's one of the challenges with marijuana earnings reports, as there can often be significant fluctuations from gains and losses that can impact a company's bottom line. The difficulty is that for investors, it can be impossible to predict. Gains and losses can make a bad quarter profitable while a good quarter can finish in the red.

What does this mean for investors?

Aphria's Q2 results were uninspiring, but investors need to remember the Canadian market is still far from optimal. Future quarters should get stronger, not only as more pot shops come online, but as edible and ingestible products help add to Aphria's sales.

However, trading at over four times its sales, Aphria is still a better buy than many of its peers that trade at more than 10 times their revenue. And while Q2 wasn't as strong as investors were hoping for, there are still many positives that can be taken from these results. The marijuana stock could be a good buy in 2020 as the cannabis industry continues to strengthen and evolve in Canada.