RYM · RYTHM, Inc.

RYTHM, Inc. delivered strong sequential growth in Q1 2026, with revenue from continuing operations rising 24% to $13.3 million from $10.7 million in the prior quarter, driven by its portfolio of trusted THC brands including RYTHM, Señorita, incredibles, Beboe, and Dogwalkers. Gross margins expanded to 78% from 75%, reflecting improved cost efficiencies with cost of goods sold at $2.9 million. Despite an operating loss of $4.0 million due to $14.4 million in operating expenses, the company reported net income of $19.9 million from continuing operations, primarily propelled by a $25.6 million non-cash income tax benefit. Adjusted EBITDA was approximately breakeven at -$21 thousand, a significant improvement from -$2.8 million in Q1 2025, after adjustments for stock-based compensation and warrant liabilities. Balance sheet remains solid with $33.3 million in cash and 2.1 million shares outstanding at quarter end, alongside 11.0 million warrants and 3.0 million shares issuable from convertible notes. Operating cash flow turned positive at $1.0 million versus a $6.7 million outflow last year. Recent developments include amended licensing agreements with Green Thumb Industries Inc. for fixed annual cash fees of $70 million with inflation adjustments, providing predictable revenue. Product expansions feature new incredibles Peanut Buddah Cups, Strawberry Supernova Comets, and the launch of 1777 by Señorita, a non-alcoholic hemp-derived THC spirit. Management, led by Chairman and Interim CEO Ben Kovler, highlighted brand leadership per BDSA data, with RYTHM #1 in branded flower and Dogwalkers #1 in uninfused pre-rolls nationally. The company guides Q2 revenue to $22 million, implying 65% sequential growth, underscoring momentum in THC beverages amid strong consumer demand despite federal hemp ban risks.