RYTHM Posts 24% Quarterly Revenue Growth and $70M Annual Licensing Fee
RHYTHM, Inc. reported 24% sequential revenue growth to $13.3 million and a 78% gross margin in Q1 2026, driving net income of $19.9 million from a $25.6 million non-cash tax benefit and breakeven adjusted EBITDA. The company ended Q1 with $33.3 million in cash and expects Q2 revenue of approximately $22 million, up 65% sequentially.
1. Q1 Financial Results
RHYTHM reported revenue from continuing operations of $13.3 million in Q1 2026, up 24% sequentially, with gross profit of $10.4 million (78% margin). Net income from continuing operations was $19.9 million, boosted by a $25.6 million non-cash income tax benefit, while adjusted EBITDA was approximately breakeven.
2. Licensing Agreement Amendment
The company amended its brand licensing agreements with Green Thumb Industries to establish fixed annual cash fees of $70 million, indexed to inflation, providing predictable licensing revenue and supporting long-term margin stability.
3. Product Launches and Q2 Outlook
RYTHM expanded its product portfolio with Peanut Buddah Cups, Strawberry Supernova Comets and launched 1777 by Señorita, its first non-alcoholic hemp-derived THC spirit. Management projects Q2 2026 revenues of approximately $22 million, representing 65% sequential growth.
4. Balance Sheet and Capital Structure
The company ended the quarter with $33.3 million in cash, approximately 2.1 million shares outstanding, 11 million warrants, and convertible notes convertible into 3 million shares, ensuring financial flexibility for growth initiatives.