Shares of High Tide Inc. (HITI) got a nice lift after the bell Tuesday. The cannabis retailer posted first-quarter results that showed the business isn't just growing sales—it's starting to generate real cash.

The headline numbers were solid. Revenue came in at $127.9 million, which topped the Street's expectation of $127.15 million. More importantly, that figure represents a 27.5% jump from the $100.3 million it reported in the same quarter last year. Earnings per share landed at one cent, right in line with what analysts were expecting.

But the real story might be on the cash flow statement. For the three months ended January 31, High Tide generated $2.9 million in free cash flow. That's a notable turnaround from a loss of $1.9 million a year ago and also an improvement from the $1.3 million it generated in the prior quarter. Over the last four quarters, the company has now produced $16.8 million in free cash flow. For a company in a capital-intensive and competitive industry, that's a sign of a business model starting to work efficiently.

"We delivered another quarter of solid results, highlighted by record revenue, record gross profit, and positive free cash flow," said CEO Raj Grover.

Grover pointed to the company's strategy as the key driver. "Our innovative discount club model, built around customer loyalty, continues to be the backbone of our success," he added. It's a playbook that seems to be paying off, focusing on retaining customers rather than just chasing one-time sales.

Investors liked what they saw. The stock gained 7.63% in after-hours trading, moving to $2.68.