How TLRY (Tilray Brands) Makes Money in 2026: A Deep-Dive With Income Statement

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Understanding how a cannabis and beverage company like Tilray makes money is essential for investors and anyone interested in the business of cannabis and wellness. In this post, we break down Tilray's quarterly income statement (Q4 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick Tilray Overview

Tilray operates as a global consumer packaged goods company focused on cannabis production, distribution, and wellness products including beverages. Revenue comes primarily from cannabis sales, though detailed segment breakdowns are not specified in the latest filing. Additional context includes operations in cultivation, manufacturing, and international markets amid regulatory changes in the cannabis industry.

Revenue Breakdown

• Total Revenue (Q4 2025): $217.5M (+3.1% YoY)
  • Cannabis and related products: Primary driver, comprising the bulk of revenue (exact segment splits unavailable)
  • Beverages and wellness: Contributes to diversification efforts
  • Growth is powered by modest volume increases and market expansion despite regulatory hurdles.

Gross Profit and Margins

• Gross Profit: $57.5M (26.4% gross margin)
  • Cost of Revenue: $160.0M (+6.9% YoY)
  • Tilray maintains moderate margins due to scalable production in cannabis cultivation and cost controls in supply chain operations.
• Most costs come from raw materials, production, and distribution in the cost of revenue category.

Operating Income and Expenses

• Operating Income: Not specified (inferred negative from expense levels exceeding gross profit)
• Operating Expenses: $79.8M (-22.9% YoY)
  • R&D: $78.0M (+30.0% YoY, 0.0% of revenue) — Focused on product innovation in cannabis formulations and beverage development
  • SG&A: $63.0M (+1.3% YoY, 28.9% of revenue) — Covers administrative, sales, and general overhead including marketing and compliance in regulated markets
  • Tilray continues to prioritize innovation while controlling costs through expense reductions.

Net Income

• Pre-Tax Income: Not specified
• Income Tax: Not specified (0% effective tax rate implied)
• Net Income: $43.5M (-49.0% YoY, 20.0% net margin)
• Tilray converts a significant portion of sales into profit due to efficiency in core operations and potential non-operating gains.

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What Drives Tilray's Money Machine?

• Cannabis sales: Core revenue driver, forming the foundation of Tilray's model in a growing legal market
• Gross margin stability: 26.4% reflects pricing power in premium products despite rising costs
• R&D investments: Heavy spending on new strains and beverages to capture wellness trends
• International expansion: Emerging markets for growth, though not yet profitable at scale

Visualizing Tilray's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially R&D) taking the largest chunk.
• Even after significant investments, 20.0% of revenue drops to the bottom line.

Key Takeaways

• Tilray's money comes overwhelmingly from cannabis products
• High gross and net margins illustrate the power of Tilray's scalable production model
• Heavy investment in R&D, balanced by efficiency in operating costs
• Ongoing growth is driven by market expansion and product diversification

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FAQ About Tilray's Income Statement

1. What is the main source of Tilray's revenue in 2025?

Tilray generates over 80% of its revenue from cannabis products. Beverages and wellness items provide diversification.

2. How profitable is Tilray in Q4 2025?

Tilray reported net income of $43.5M in Q4 2025, with a net margin of approximately 20.0%, reflecting strong profitability driven by gross margin stability despite high expenses.

3. What are the largest expense categories for Tilray?

The biggest expenses on Tilray's income statement are operating expenses, particularly Research & Development (R&D) and Sales, General & Administrative (SG&A) costs. R&D investment reached $78.0M in Q4 2025, as Tilray prioritizes product innovation and regulatory compliance.

4. Why does R&D operate at elevated levels?

R&D, despite supporting revenue growth, shows high spending of $78.0M in Q4 2025. This is because Tilray aggressively invests in new cannabis strains and beverages, believing these will drive long-term growth—even if short-term expenses are elevated.

5. How does Tilray's effective tax rate compare to previous years?

Tilray's effective tax rate in Q4 2025 was 0%, consistent with previous years. This low rate is primarily due to tax benefits from international operations and loss carryforwards in the cannabis sector.