What happened

Shares of Canadian cannabis company HEXO (NASDAQ:HEXO) jumped 10% on Monday morning after the company reported its first-quarter fiscal 2021 earnings. Shares settled back, and remain about 4% higher as of 10:10 a.m. EST.

So what 

Though the company continued to report a net loss, its 41.3 million Canadian dollar gross revenue is a quarterly record, and a 114% increase from the previous-year period. HEXO continues to slowly advance toward profitability as its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved for the sixth straight quarter. 

marijuana buds in a dark blue glass bowl

Image source: Getty Images.

HEXO said it maintained its top market share position for adult-use marijuana in Quebec, and it is also No. 1 overall in cannabis beverages, with a 54% jump in sales compared to the prior quarter. 

Now what

This was the second full quarter for the company's Truss beverage joint venture with Molson Coors (NYSE:TAP). Truss supplies non-alcohol cannabis-infused beverages for the Canadian market. 

"We made extraordinary gains toward profitability this quarter," HEXO CEO and co-founder Sebastien St-Louis said in a statement. This included operating expenses that were down by almost half versus the year-ago period. The result was a net loss of CA$4.2 million for the quarter compared to CA$66 million for the 2019 period ended Oct. 31. 

Investors have been anticipating the improved results, with shares up almost 50% in the past three months. But year to date, the stock is still down 35%. The company is on the right path, but there is competition in the space and still a long way to overall profitability. Investors should monitor the progress on costs and EBITDA closely to see if the path to positive earnings per share continues. 

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