Marijuana stocks continue to take the investing world by storm, with most cannabis companies having seen impressive share-price advances during 2019. However, Tilray (NASDAQ:TLRY) has been among the weaker performers in the space, as investors have increasingly questioned whether the company has what it takes to sustain a leadership role in the extremely competitive marijuana industry. Tilray knows that growth is an essential component of its success, but it's had to play catch-up with some of its larger rivals.

Coming into last week's first-quarter financial report, Tilray investors were looking to see whether the budding cannabis company would show new signs of accelerating growth. Solid top-line numbers showed that Tilray appears to be on the right path, but it'll take a lot more effort to put concerns among skeptical investors to rest and to mount a full-blown recovery that includes turning a profit.

Aiming for the top of the cannabis industry

Tilray's first-quarter results were mixed. Revenue of $23 million almost tripled from year-ago levels and was up by more than 50% just since the previous quarter three months ago. However, adjusted net losses came in at $25.2 million, or $0.27 per share. That wasn't quite as bad as the $0.33-per-share loss that Tilray posted three months ago, but it was quite a bit wider than the year-earlier period.

From a fundamental standpoint, the legalization of Canadian recreational cannabis played a major role in Tilray's results. Revenue from adult-use cannabis became the largest segment of Tilray's business, passing up medical marijuana product sales. Sales for the cannabis company were split roughly equally between adult-use, medical, and the combination of food products and international sales.

Tilray also did a reasonable job of boosting volume and improving efficiency. The company sold more than 3,000 kilos of cannabis on an equivalent basis, up from just 1,300 kilos a year ago. That represents almost 1,000 kilos of capacity growth just since its last-quarter report in March. Gross margin picked up about 3 percentage points over the past three months to 23%.

However, not everything went well for the company. Average selling prices per gram fell to $5.60, down $0.34 per gram from the prior-year period, as the company saw a weaker sales mix with fewer sales of high-margin cannabis oil extracts in favor of dried flower products. Tilray's expenses also grew considerably, but the company argued that those increases stemmed largely from acquisitions and other growth initiatives. Nevertheless, regular overhead expenses as well as marketing costs posted steep increases from levels 12 months ago, as Tilray now has to sell in a competitive environment that includes many rivals in key markets.

How Tilray intends to win

CEO Brendan Kennedy was happy with the start to 2019. "We are pleased with our first quarter results," Kennedy said, "and the ongoing, substantial progress our team has made to position Tilray as a global leader in the cannabis industry." The CEO pointed to the purchase of hemp food specialist Manitoba Harvest and cultivation company Natura Naturals Holdings in helping to bolster growth for Tilray.

Yet that's only the beginning of the moves that Tilray intends to make to foster even further growth. Earlier this month, the cannabis company said that it would invest more than $32 million toward boosting production and manufacturing within the Canadian market by more than 200,000 square feet. With three facilities, including two in Ontario and one in the company's corporate hometown of Nanaimo on Vancouver Island in British Columbia, the additions will take Tilray's total footprint to around 1.3 million square feet.

Since the report, Tilray shares have lost almost 10% of their value as broader questions about the cannabis industry more generally have weighed on investor sentiment about the industry. Tilray in particular has been an underperformer lately, and it'll take more encouraging news for the stock to break out of its funk and join some of its peers in generating more attractive results.