Aurora Cannabis (ACB -0.15%) really, really needed some good news. Shares of the Canadian cannabis producer plunged 83% last year. And that decline came on top of a 35% drop in 2021 and a 68% plummet in 2020.

The company announced its fiscal 2023 second-quarter results on Thursday. Did Aurora get some of that sorely needed good news? Actually, yes. However, there was some more bad news, too. Here are two green flags and one red flag from the company's Q2 update.

Green flag No. 1: Positive adjusted EBITDA

Aurora's management said that the company would generate positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the fiscal second quarter. And it lived up to that promise.

The cannabis producer reported Q2 adjusted EBITDA of 1.4 million Canadian dollars. That's a big improvement from the loss of CA$7.4 million in the previous quarter and the CA$7.1 million adjusted EBITDA loss in the prior-year period.

Even better, CEO Miguel Martin stated in the quarterly conference call, "We are confident that we can deliver positive adjusted EBITDA on annualized basis going forward." To be clear, Martin didn't commit to generating positive adjusted EBITDA every quarter. He acknowledged that there could be "some quarter-to-quarter variability due to the dynamic nature of the cannabis industry." 

However, the company's previous management predicted positive adjusted EBITDA several years ago and failed to deliver. Martin has built at least a little credibility with investors now that Aurora will truly be able to keep the positive adjusted EBITDA coming more often than not.

Green flag No. 2: Germany 

Another green flag for Aurora comes from Germany (although, technically, the country's flag features black, red, and gold). The company remained the No. 2 producer of flower for the German medical cannabis market. It's also one of only three license holders to grow medical marijuana inside the country. There are two reasons to be especially optimistic about Aurora's prospects in Germany.

First, Germany could launch a recreational cannabis market as soon as 2025. Martin said that Aurora expects that the German government will provide more clarity about the next steps in the legalization process this spring. The company's current position in the medical cannabis market could give it a leg up in whatever regulatory framework emerges.

Germany's moves could pave the way for other European countries to follow in its footsteps. Martin noted in the fiscal Q2 conference call that Aurora has spoken with regulators in Poland and the Czech Republic and that they're waiting to see what Germany does.

Second, Germany has a major initiative underway to reduce red tape. Martin mentioned that currently only around 30% of German patients successfully navigate the qualification process to receive medical cannabis products. He expects improvements to this process that could provide a boost to Aurora's medical marijuana sales in the country.

Red flag: Still losing money

Now for the bright and blaring red flag for Aurora Cannabis: It's still losing money. Lots of money.

The company posted a net loss in fiscal Q2 of CA$67.2 million. That was worse than the CA$51.9 million loss in fiscal Q1. However, it reflected improvement from the CA$75.1 million loss in the prior-year period.

Fortunately, Aurora has a big cash stockpile of around CA$310 million. CFO Glen Ibott said that should be enough to fund operations until the company is able to generate positive cash flow. However, don't be surprised if more dilution is on the way due to the issuance of new shares.

Ibott noted that Aurora has access to around CA$180 million under its current at-the-market (ATM) program. Its current shelf offering expires in April. Ibott said that the company will likely refile a new shelf prospectus for another ATM program.

What's required for a rebound?

Aurora's latest update wasn't enough to light a fire beneath the cannabis stock. So what will be required for the stock to rebound?

Achieving positive cash flow and true profitability would be a big step. That could entice more investors into reevaluating their views about Aurora. Significant improvement in the Canadian market could also provide a catalyst.

I wouldn't rule out good news from Germany spurring a rebound, either. The market opportunity could be huge for Aurora if Germany legalizes recreational cannabis and streamlines its qualification process for medical marijuana. 

Is the stock a smart pick to buy right now? I wouldn't go that far. However, there are reasons for some cautious optimism about the future.