Shares of Tilray Brands (TLRY) are down 26.9% this week as of Thursday's close, according to data provided by S&P Global Market Intelligence, after the cannabis lifestyle and consumer packaged goods specialist announced mixed quarterly results and reduced its full-year outlook.

Tilray's growth was driven by acquisitions

For its fiscal third quarter ended Feb. 29, Tilray's revenue grew 30% year over year to $188.3 million, falling just short of consensus estimates for $198.3 million. On the bottom line, that translated to breakeven non-GAAP (adjusted) earnings, above estimates for an adjusted $0.05-per-share net loss.

Note Tilray's top-line growth was driven almost entirely by acquisitions. Beverage-alcohol segment revenue nearly tripled year over year to $54.7 million, thanks largely to its acquisitions of several big beer brands from AB InBev late last year. Cannabis segment sales jumped 33% year over year to $63.4 million, helped by Tilray's takeovers of Canadian cannabis peers HEXO and Truss last year. That growth was partially offset by a 13% decline in distribution revenue, to $56.8 million, due to a combination of changing regulations surrounding rebates as well as weather and IT infrastructure outages.

"Over the past several years, our playbook of expanding our cannabis business to complementary markets such as beverages and hemp-based consumer products has positioned us well to navigate the current environment and to benefit from future growth opportunities," Tilray chairman and CEO Irwin Simon said.

Why Tilray lowered its outlook

Perhaps more concerning to Wall Street was Tilray's reduced outlook for the full fiscal year ending May 31, 2024. Tilray now sees adjusted earnings before interest, taxes, depreciaition, and amortization (EBITDA) of $60 million to $63 million (versus previous guidance for $68 million to $78 million), and management no longer expects to achieve positive free cash flow this year as previously anticipated. On the latter, however, Tilray primarily blamed the impact of delayed timing for collecting cash on various asset sales -- so investors can take solace knowing it's not reflective of a fundamental negative change in Tilray's underlying profitability or cash-flow-generating capabilities.

In any case, I think Tilray's long-term thesis remains intact, particularly given the mid-term prospect of cannabis legalization on a federal level in the United States (where Tilray currently generates no revenue from cannabis operations). Keeping in mind shares rallied nearly 80% in the four weeks leading up to this week's earnings release, I think this pullback isn't as severe as it seems at first glance. And I believe long-term investors would do well to stay the course.