Pineapple Financial Inc. Announces Fiscal 2024 First Quarter Results
- Pineapple Financial showcased its ability to adapt and grow its user base and market share
- The company increased its unrestricted cash and prepaid expenses, and deposits by $1.721 million
- Pineapple Financial achieved a significant milestone in the reduction of selling, general, and administrative expenses by 19.95%
- The company remains optimistic about its future performance, projecting significant top-line growth and profitability in fiscal 2024
- Pineapple Financial experienced a revenue decline of 36.17% in the first quarter of fiscal 2024
- The company reported a net loss of $0.898 million in the first quarter of fiscal 2024
Insights
In evaluating the financial performance of Pineapple Financial Inc., several key metrics stand out. The company's net revenue decline of 36.17% is indicative of the pressures exerted by the high-interest rate environment on the Canadian mortgage market. Despite the adverse conditions, the firm's proactive management of its liquidity position, evident from the increase in unrestricted cash and other receivables, is a positive sign of financial resilience.
Furthermore, the strategic cost management leading to a reduction in operational expenses by 19.95% demonstrates a disciplined approach to maintaining profitability. However, the net loss, increased from the previous year, raises concerns about the company's short-term profitability. The projection of top-line growth and profitability in fiscal 2024 suggests that the management is confident in their strategy, but it remains crucial to monitor whether these projections align with market realities, especially considering the volatile interest rate landscape.
From a market perspective, Pineapple Financial Inc.'s strategic moves, such as the NYSE American listing and expansion into Metro Vancouver and Ottawa, are designed to capture additional market share and drive long-term growth. The company's focus on technology, evidenced by the launch of an online mortgage application system, aligns with broader industry trends towards digitalization.
While these developments are promising, it is important to assess the competitive landscape and the demand for mortgage fintech services in the face of economic uncertainty. The company's ability to attract seasoned professionals and the growth in its broker network by 10% is commendable, yet one must evaluate whether this expansion can translate into sustainable revenue growth, given the current economic headwinds.
The announcement by Pineapple Financial Inc. comes at a time when the Canadian mortgage industry is facing significant challenges due to high-interest rates, which have a direct impact on consumer borrowing behavior. The shift towards shorter-term mortgages can be seen as a strategic response to the current economic climate, allowing borrowers to refinance at potentially lower rates in the future.
However, this shift also reflects a broader economic trend of consumer caution in the face of uncertainty. The company's projection of profitability in fiscal 2024 suggests an anticipation of an economic turnaround, possibly with lower interest rates and improved consumer sentiment. The success of this forecast hinges on macroeconomic factors such as monetary policy and housing market dynamics, which are inherently unpredictable.
Company Projects Profitability in Fiscal 2024
Financial Performance Amidst Market Challenges
In the face of highly challenging market conditions in the Canadian mortgage landscape, including persistently high-interest rates and suppressed consumer sentiment, Pineapple Financial Inc., nevertheless continued to grow its user base and market share. Though experiencing a revenue decline in the first quarter of fiscal 2024, Pineapple Financial showcased its ability to adapt and thrive in a dynamic environment.
Strengthened Liquidity Position:
During Q1 of fiscal 2024, Pineapple increased its unrestricted cash, trade and other receivables, and prepaid expenses and deposits by
Net Revenue:
Facing market headwinds, Pineapple closed this quarter with net revenue of
Net Loss:
Net loss for the fiscal 2024 first quarter period was
Adjusted EBITDA Management:
The company's adjusted EBITDA loss during Q1 of Fiscal 2024 stood at
Streamlined Operational Expenses:
Pineapple Financial achieved a significant milestone in the reduction of selling, general, and administrative expenses by
Employee Cost Optimization:
Salaries, wages, and benefits decreased to
Prudent Mortgage Portfolio Management:
In navigating the intricate mortgage market, Pineapple Financial recorded a total mortgage volume of
"Despite facing adverse economic conditions during our first fiscal quarter, Pineapple has continued to progress by adding market share, continuing to increase our technology presence, expanding our user base, and growing our geographic presence. We believe, based on this progress, as well as decreasing interest rates, and improved consumer sentiment that Pineapple will demonstrate improved top and bottom line performance with each remaining quarter this fiscal year.
We therefore project significant top-line growth and profitability in fiscal 2024." said Shubha Dasgupta, Co-Founder and Chief Executive Officer.
Business Highlights and Recent Updates
During the first fiscal quarter of 2024, Pineapple Financial achieved several significant milestones and shared important updates:
NYSE American Listing and IPO Success:
On November 1, 2023, Pineapple Financial made history by becoming the first Canadian mortgage fintech company to commence trading on the NYSE American. This landmark event was swiftly followed by the successful closure of its Initial Public Offering, generating gross proceeds of
Broker Expansion:
In this fiscal quarter, Pineapple experienced robust user growth, welcoming 64 new brokers. This increase represents a
Strategic Investor Relations Partnership:
Recognizing the importance of transparent and effective communication with our stakeholders, on November 13, 2023, Pineapple announced a strategic partnership with Skyline Corporate Communications Group, LLC. This collaboration enhances our investor relations and corporate communications activities, ensuring a broader and more compelling narrative within financial and investor communities.
Globe and Mail Recognition:
Pineapple Financial proudly secured the 27th position on the Globe and Mail 2023 Listing of
Strategic Expansion in Metro Vancouver:
Since the end of our fiscal first quarter, Pineapple Financial expanded its geographical reach by opening an office in Metro
Innovative Online Application System:
On December 1, 2023, Pineapple Financial introduced a cutting-edge online application system, revolutionizing the mortgage application process. This innovation empowers borrowers to swiftly determine their affordable mortgage amount and receive pre-qualification within minutes.
Strategic Presence in
Expanding our footprint further, Pineapple Financial opened an office in
Participation in Multiple Small and Micro-Cap Investor Conferences:
Since the end of our first fiscal quarter, PIneapple has presented at several notable industry and investment conferences:
Harvard Investor Club:
- December 1, 2023
- January 11, 2024
Noble Con19:
- December 4-5, 2023
Sidoti Conference:
- December 6-7, 2023
Moneyball Event:
- December 11, 2023
Visit our website to see upcoming conference participation.
These achievements collectively highlight Pineapple Financial's commitment to innovation, strategic expansion, and creating long-term value for our shareholders. We look forward to continued success and growth in the evolving landscape of the Canadian mortgage industry.
(c) | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often |
(d) | they are not adjusted for all non-cash income or expense items reflected in our Consolidated Statements of Cash Flows. |
Pineapple Financial Inc.
Condensed Interim Consolidated Balance Sheets - Unaudited
(Expressed in
30 November, 2023 | August 31 | ||||||||||
As at: | |||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash | $ | 2,341,537 | $ | 720,365 | |||||||
Trade and other receivables | 871,279 | 758,988 | |||||||||
Prepaid expenses and deposits | 206,177 | 218,150 | |||||||||
3,418,993 | 1,697,503 | ||||||||||
Investments | 9,976 | 10,013 | |||||||||
Right-of-use asset | 923,450 | 960,377 | |||||||||
Property and equipment | 220,800 | 242,091 | |||||||||
Intangible assets | 1,851,519 | 1,718,954 | |||||||||
$ | 6,424,738 | $ | 4,628,938 | ||||||||
Liabilities and Shareholders' Equity | |||||||||||
Current liabilities | |||||||||||
Accounts payable and accrued liabilities | $ | 469,552 | $ | 605,319 | |||||||
Loan | 517,467 | 430,098 | |||||||||
Current portion of lease liability | 144,446 | 138,372 | |||||||||
1,131,465 | 1,173,790 | ||||||||||
Deferred government incentive | 710,867 | 699,627 | |||||||||
Lease liability | 928,150 | 969,589 | |||||||||
Warrant liability | 37,848 | - | |||||||||
$ | 2,808,330 | $ | 2,843,005 | ||||||||
Shareholders' Equity | |||||||||||
Common shares, no par value; unlimited authorized; November 30, 2023 and 6,306,979 as at August 31, | 7,606,685 | 4,903,031 | |||||||||
Additional paid-in capital | 2,955,944 | 2,955,944 | |||||||||
Accumulated other comprehensive loss | (393,149) | (417,727) | |||||||||
Accumulated deficit | (6,553,072) | (5,655,315) | |||||||||
3,616,408 | 1,785,933 | ||||||||||
$ | 6,424,738 | $ | 4,628,938 | ||||||||
Pineapple Financial Inc.
Condensed Interim Consolidated Statements of Operations and Comprehensive Loss - Unaudited
(Expressed in
Three Months Ended | |||||||||||
For the period ended: | November 30, | November 30, | |||||||||
Net Revenue | $ | 569,355 | $ | 892,024 | |||||||
Expenses | |||||||||||
Selling, general and administrative | 560,151 | 699,724 | |||||||||
Advertising and marketing | 133,470 | 121,567 | |||||||||
Salaries, wages and benefits | 644,273 | 657,317 | |||||||||
Interest expense and bank charges | 21,407 | 21,448 | |||||||||
Depreciation | 137,427 | 88,368 | |||||||||
Government based incentive | (51,047) | - | |||||||||
Share-based compensation | - | 65,674 | |||||||||
Total expenses | $ | 1,445,681 | $ | 1,654,098 | |||||||
Loss from operations | |||||||||||
Foreign exchange gain (loss) | (10,691) | - | |||||||||
Change in fair value of warrant liability | (10,740) | - | |||||||||
Loss before income taxes | $ | (897,757) | $ | (762,073) | |||||||
Income taxes (recovery) expense | - | - | |||||||||
Net loss | (897,757) | (762,073) | |||||||||
Foreign currency translation adjustment | 24,578 | (73,232) | |||||||||
Net loss and comprehensive loss | $ | (873,179) | $ | (835,305) | |||||||
Loss per share - basic and diluted ($) | (0.14) | (0.12) | |||||||||
Weighted average number of common shares | 6,566,594 | 6,306,979 | |||||||||
Pineapple Financial Inc.
Condensed Interim Consolidated Statements of Changes in Shareholders' Equity - Unaudited
(Expressed in
Additional | Accumulated | |||||||||||||||||||
Common | Paid in | other | Accumulated | Total | ||||||||||||||||
Shares | Capital | comprehensive | (deficit) | shareholders' | ||||||||||||||||
loss | earnings | equity | ||||||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||
Balance, August 31 August, 2022 | 4,903,031 | 2,922,853 | (353,218) | (2,846,278) | 4,626,388 | |||||||||||||||
Share-based compensation | - | 65,674 | - | - | 65,674 | |||||||||||||||
Foreign exchange translation | - | - | (73,232) | - | (73,232) | |||||||||||||||
Net loss | - | - | - | (762,073) | (762,073) | |||||||||||||||
Balance, November 30, 2022 | 4,903,031 | 2,988,527 | (426,450) | (3,608,351) | 3,856,757 | |||||||||||||||
Balance, August 31, 2023 | 4,903,031 | 2,955,944 | (417,727) | (5,655,315) | 1,785,933 | |||||||||||||||
Shares issued on Initial Public Offering | 2,751,937 | 2,751,937 | ||||||||||||||||||
Warrants issued related to Initial Public | (48,283) | - | - | - | (48,283) | |||||||||||||||
Foreign exchange translation | - | - | 24,578 | - | 24,578 | |||||||||||||||
Net loss | - | - | (897,757) | (897,757) | ||||||||||||||||
Balance, November 30, 2023 | 7,606,685 | 2,955,944 | (393,149) | (6,553,072) | 3,616,408 | |||||||||||||||
Pineapple Financial Inc.
Condensed Interim Consolidated Statements of Cash Flow - Unaudited
(Expressed in
Three Months Ended | |||||||||||
For the period ended: | November 30, | November 30, | |||||||||
$ | $ | ||||||||||
Cash provided by (used for) the following activities | |||||||||||
Operating activities | |||||||||||
Net (loss) income and comprehensive (loss) income | (897,757) | (762,073) | |||||||||
Adjustments for the following non-cash items: | |||||||||||
Depreciation of property and equipment | 15,067 | 15,556 | |||||||||
Depreciation of intangible assets | 89,483 | 40,851 | |||||||||
Depreciation on right of use asset | 32,877 | 26,446 | |||||||||
Interest expense on lease liability | (16,179) | (14,687) | |||||||||
Share-based compensation | - | 65,674 | |||||||||
Foreign exchange gain (loss) | (10,691) | ||||||||||
Change in fair value of warrant liability | (10,740) | - | |||||||||
Net changes in non-cash working capital balances: | |||||||||||
Trade and other receivables | (112,290) | (11,500) | |||||||||
Prepaid expenses and deposits | 11,974 | 4,306 | |||||||||
Accounts payable and accrued liabilities | (124,526) | (595,480) | |||||||||
Income taxes receivable | - | 71,078 | |||||||||
(1,022,782) | (1,159,829) | ||||||||||
Financing activities | |||||||||||
Advances received from related parties Proceeds | 87,369 | - | |||||||||
Share capital issuance | 2,731,658 | - | |||||||||
Lease payments Repayment of lease obligations | (40,633) | (15,008) | |||||||||
2,778,394 | (15,008) | ||||||||||
Investing activities | |||||||||||
Additions to intangible assets | (266,825) | (284,589) | |||||||||
Additions to property and equipment | (2,032) | (39,678) | |||||||||
(268,857) | (324,267) | ||||||||||
The net change in cash | 1,486,756 | (1,499,104) | |||||||||
Effect of changes in foreign exchange rates | 134,417 | (15,869) | |||||||||
Cash, beginning of period | 720,365 | 3,896,839 | |||||||||
Cash, end of period | 2,341,537 | 2,381,866 | |||||||||
Reconciliation of Adjusted Revenue to Total Revenue, net
Three months ended November 30, | ||||||||
2023 | 2022 | |||||||
Total Revenue, net | 569,355 | 892,024 | ||||||
Commission expense | 3,600,073 | 3,654,284 | ||||||
Gross Revenue | 4,169,428 | 4,546,308 | ||||||
Reconciliation of Adjusted Net (Loss) Income to Net Income Attributable to Pineapple Financial Inc.
Three months ended November 30, | ||||||||
2023 | 2022 | |||||||
Net Income attributable to Pineapple Financial | (897,757) | (762,073) | ||||||
Share-based compensation | - | 65,674 | ||||||
Salesforce expenses | 89,968 | 91,098 | ||||||
Government based incentive | 51,047 | - | ||||||
Depreciation | 137,427 | 88,368 | ||||||
Change in fair value of warrant liability | 10,740 | - | ||||||
Adjusted EBITDA | (608,575) | (516,933) | ||||||
About Pineapple Financial Inc.
Pineapple Financial Inc. is an award-winning fintech and leading Canadian mortgage brokerage network, focusing on both the long-term success of agents and brokerages, as well as the overall experience of homeowners. With approximately 700 brokers within the network, Pineapple creates cutting-edge cloud-based tools and AI-driven systems to enable its brokers to help Canadians realize their dream of owning a home. Pineapple is active within the community and is proud to sponsor charities across
Forward-Looking Statements
Certain statements in this announcement are forward-looking statements, including, but not limited to, the Company's proposed Offering. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company's current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs, including the expectation that the Offering will be successfully completed. Investors can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "is/are likely to," "potential," "continue" or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations that arise after the date hereof, except as may be required by law. These statements are subject to uncertainties and risks including, but not limited to, the uncertainties related to market conditions and the completion of the initial public offering on the anticipated terms or at all, and other factors discussed in the "Risk Factors" section of the registration statement filed with the SEC. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the SEC. Additional factors are discussed in the Company's filings with the SEC, which are available for review at www.sec.gov.
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Related Links:
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SOURCE Pineapple Financial Inc.
FAQ
What was Pineapple Financial's net loss in the first quarter of fiscal 2024?
How much did Pineapple Financial increase its unrestricted cash and prepaid expenses by in the first quarter of fiscal 2024?
What was the percentage of reduction in selling, general, and administrative expenses achieved by Pineapple Financial in the first quarter of fiscal 2024?
What is Pineapple Financial's projection for fiscal 2024?
