After the markets close Sept. 21, Aurora Cannabis (ACB 1.33%) will release results for its fiscal fourth quarter, which ended June 30. The troubled Canadian pot company's stock is already down by about 20% year to date -- a sharp contrast to the sector benchmark Horizons Marijuana Life Sciences ETF, which is up 5% -- and the upcoming report could be pivotal in determining whether the share price gets out of the red for 2021.

Investors aren't expecting to see Aurora turn a profit in the final quarter of its fiscal year, but there are other ways that the company can show it is making progress. Here are the three main areas you should keep a close eye on when the company reports next week.

Two people working at a greenhouse.

Image source: Getty Images.

1. Write-downs

Write-downs are common in the cannabis industry -- estimated plant values can change over time, and if some of a company's products aren't selling or have declined in quality, they may need to be written off. Although these are non-cash expenses that investors may be quick to dismiss, write-downs offer an important insight into how well a company's business is operating and how accurately it is valuing its assets. 

Normally, companies like to do some financial housecleaning and adjust inflated valuations as the fiscal year comes to an end. In 2020, when Aurora reported its year-end numbers, it wrote down its goodwill and intangible assets by a staggering 1.6 billion Canadian dollars, bringing its total write-downs for the fiscal year to more than CA$1.8 billion. Sure, those numbers get backed out when calculating the company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), but that doesn't mean investors should ignore them.

Big write-downs aren't supposed to be recurring or common, and investors shouldn't let companies off the hook for them just because they aren't cash expenses. Another big write-down this time around could lead to a sharp and sudden sell-off of Aurora's shares.

2. Operating expenses

Aurora has been slashing expenses left and right over the past year. From shutting down facilities to laying off employees, management has been making the business leaner in an effort to shore up its financials and get it closer to positive adjusted EBITDA. 

As those spending cuts flow through the income statement, investors should expect to see some sort of progress toward adjusted profitability. In its fiscal third quarter, which ended March 31, the company's selling, general, and administrative (SG&A) expenses of CA$42 million were down 42% from the prior-year period. Its adjusted EBITDA loss of CA$24 million was also less than half of the CA$50 million loss it reported a year earlier.

However, Aurora still has more work to do if it wants to catch up to its more profitable cannabis sector peers. And when the company reported its fiscal Q3 numbers in May, management stated that there was another CA$60 million to CA$80 million in annual cost savings that it could achieve within 18 months.

3. Revenue

One of the reasons Aurora has fallen out of favor with growth investors is that the business has struggled to grow. In its fiscal Q3, sales of CA$55 million were down 25% year over year and down 18% from the fiscal second quarter. To make matters worse, there have been challenges in the consumer cannabis market, where Aurora has been seeing sales decline due to COVID-19 lockdowns, particularly in Ontario, Canada's largest province. And Ontario only began coming out of its third-wave lockdown in June, meaning we can expect to hear thatAurora was still feeling those headwinds in its Q4. (The Canadian government put new stay-at-home orders into effect on April 7.)

Given all this, it could prove tough for the company to even match last quarter's revenue figure. But investors may not buy that as an excuse, as the Canadian pot market is coming off another record month in June, during which sales topped CA$318.7 million -- up 1.7% from May's tally of CA$313.2 million.

Investors should hope for the best, but expect the worst

If Aurora avoids write-downs and makes substantial progress in improving its adjusted EBITDA number, that could be enough to offset investors' bearishness about a further decline in revenue. However, investors have probably learned all too well by now not to expect too much from this company on earnings day.