Canopy Growth Corp. reported better-than-expected second-quarter results on Monday as the pot giant benefited from a sharp increase in recreational cannabis sales in Canada, despite a rise in operating expenses. 

The Smiths Falls, Ont.-based company said it made $135.5 million in its second quarter, an increase of 77 per cent from the same period a year earlier. Canopy also posted an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $85.7 million, an improvement of 43 per cent from last year. 

Analysts polled by Bloomberg expected Canopy to report $119 million in revenue and an adjusted EBITDA loss of $88.9 million.

Canopy's revenue gains come at a time of increased competition in the Canadian recreational cannabis market, notably in the value category, that has led some of its peers to report a decline in quarterly sales despite more licensed stores opening across the country. 

"Our renewed strategy of winning consumer mindshare, along with increased agility and execution, has resulted in record net revenue for the second quarter and momentum across key areas of business," Canopy CEO David Klein said in a statement.

Canopy said its operating expenses in the second quarter rose by about 13 per cent to $310 million, as it incurred a $94.7 million credit loss on certain financial assets, while writing down $46.3 million in asset impairments. 

The company said it identified $150 million to $200 million in additional cost savings tied to various general and administrative expenses and inventory it plans to cut in the future.

Canopy’s share of Canadian recreational cannabis sales grew by 200 basis points to 15.5 per cent in the quarter, notably in Ontario and British Columbia.

The company said much of its market share gains came from its value flower offerings, which saw $63.9 million in revenue, up eight per cent from last year. Meanwhile, sales from its Cannabis 2.0 products – which includes cannabis-infused beverages – came to $8 million.  Canopy said it has shipped more than two million drinks since March.

Canopy also noted several of its businesses exposed to the U.S. market also improved in the quarter, specifically its Storz & Bickel vaporizer subsidiary, as well as its nascent This Works CBD offerings. Revenue associated with those businesses rose 82 per cent to $43 million, the company said.