POSaBIT Reports Third Quarter 2024 Financial Results

Rhea-AI Summary

POSaBIT Systems reported Q3 2024 financial results, marking its second consecutive quarter of positive Adjusted EBITDA, which grew 53% quarter-over-quarter. The company achieved $4.08 million in revenue and an Adjusted Gross Profit Margin of 54%. Notable operational highlights include launching eCommerce menu to ~40 merchants, doubling merchant count in Oregon, and migrating all payment merchants to POSaBIT One platform. The company maintained $900,000 in cash and equivalents, with Adjusted Revenue of ~$5 million and Adjusted Gross Profit of ~$2.7 million for the quarter.

Positive

• Second consecutive quarter of positive Adjusted EBITDA with 53% QoQ growth
• 54% Adjusted Gross Profit Margin
• Successful launch of eCommerce menu with 40 new merchants in 90 days
• Doubled merchant base in Oregon, becoming second-largest Point of Sale state

Negative

• Revenue decreased 4% QoQ to $4.08M from $4.26M
• Gross profit margin declined from 51% to 40% QoQ
• Operating loss increased 173% to $1.74M
• Net loss widened 359% to $2.08M
• Cash position slightly decreased QoQ to $900,000

POSaBIT records second straight quarter of positive Adjusted EBITDA

Adjusted Gross Profit Margin of 54%

TORONTO & SEATTLE--(BUSINESS WIRE)-- POSaBIT Systems Corporation (CSE: PBIT, OTC: POSAF) (the “Company” or “POSaBIT”), a leading provider of payments infrastructure in the cannabis industry, today announced its financial results for the three months ended September 30, 2024.

“We are pleased to report another solid performance in the third quarter, highlighted by our continuation of positive adjusted EBITDA, growing adjusted EBITDA quarter over quarter by 53%. Additionally, we are excited to report that POSaBIT’s new eCommerce menu capability for our POS merchants is getting great reviews, with nearly 40 new merchants in the last 90 days. We expect by next year at this time, we will have over 200 merchants using the POSaBIT eCommerce menu,” said Ryan Hamlin, co-founder and CEO of POSaBIT.

Hamlin continued, “As we look ahead to 2025, our primary focus is on growing our cash reserves, increasing our adjusted EBITDA and expanding our Point of Sale and Payments lines of business. It is our belief that rescheduling is in the near future, and we are already prepared to process billions of dollars through our payment solution. Our continued commitment to our investors is to position POSaBIT for long-term success and grow our free cash flow.”

Recent Operational Highlights

• Officially launched POSaBIT’s new eCommerce menu to ~40 merchants
• Doubled the number of new merchants in Oregon over the last 180 days; Oregon is now the second largest Point of Sale state for POSaBIT
• Settled outstanding litigation with previous 3rd party sales agent
• Migrated all payment merchants to the new POSaBIT One platform, a single terminal with multi-payment capabilities
• Rolled out the new Metrc Connect to all our merchants in states that use Metrc as their STS system

Balance Sheet

As of September 30, 2024, the Company had cash on hand and cash equivalents of $900,000, slightly down quarter over quarter.

Financial Results

in US Dollars		Three Months ended
		September 30, 2024		June 30, 2024		% Chg.
Revenue		$4,082,537		$4,264,005		(4)%
Cost of goods sold		$(2,450,646)		$(2,073,398)		18%
Gross profit		$1,631,891		$2,190,607		(26)%
Gross profit margin		40%		51%		(11)%
Operating costs		$(3,374,492)		$(2,829,634)		19%
Operating income (loss)		$(1,742,601)		$(639,027)		173%
Other (expenses) income		$(341,341)		$185,066		(284)%
Income Taxes		$0		$0		NM
Income (loss)		$(2,083,942)		$(453,961)		359%
NM - Not Meaningful

The following table reconciles Adjusted Revenue to Revenue, as reported for the three months ended.

in US Dollars		September 30, 2024
Revenue as reported		$4,082,537
Add: Cash receipts from licensing contracts		$793,145
Add: Contract asset receivable as of the reporting date		$450,000
Deduct: Licensing support revenue		$(341,895)
Adjusted Revenue		$4,983,787

The following table reconciles Adjusted Gross Profit to Gross Profit, as reported for the three months ended.

in US Dollars		September 30, 2024
Gross Profit as reported		$1,631,891
Add: Cash Receipts from Licensing contracts		$793,145
Add: Contract asset receivable as of reporting date		$450,000
Add: Channel Partner revenue-sharing payments applicable to prior periods		$178,000
Deduct: Licensing Support Revenue as reported		$(341,895)
Adjusted Gross Profit		$2,711,141
Adjusted Gross Profit Margin		54%

The following table reconciles Adjusted EBITDA to Loss, as reported for the three months ended.

in US Dollars		September 30, 2024
Loss, as reported		$(2,083,942)
Add: Foreign exchange gains, as reported		$304,120
Add: Share-based comp, as reported		$239,349
Add: Amortization and depreciation, as reported		$38,010
Add: Change in expected credit losses, as reported		$69,247
Add: Finance costs, as reported		$119,183
Add: Litigation settlements, as reported		$350,000
Add: Interest accretion, as reported		$4,099
Add: Transaction costs, as reported		$19,381
EBITDA		$(940,553)
Deduct: Licensing support revenue, as reported		$(341,895)
Deduct: Licensing revenue interest income, as reported		$(220,569)
Add: Cash receipts from licensing agreement, as reported		$793,145
Add: Contract asset receivable as at the reporting date, as reported		$450,000
Add: Channel Partner revenue-sharing payments applicable to prior periods		$178,000
Add: Employee bonuses applicable to prior periods		$230,000
Adjusted EBITDA		$148,128

Run Rate Guidance

For the quarter ending September 30, 2024, POSaBIT generated Adjusted Revenue of ~$5 million and Adjusted Gross Profit of ~$2.7 million, implying ~$20 million and ~$11 million of annualized Adjusted Revenue and Adjusted Gross Profit, respectively. As we continue to execute on our business plan, we expect these run rates to increase and will be updated as part of our quarterly earnings release.

Conference Call Information

Date: November 26, 2024
Time: 4:30 PM Eastern Time
Toll Free: 888-506-0062
International: 973-528-0011
Participant Access Code: 733402
Webcast URL: https://www.webcaster4.com/Webcast/Page/2708/51691

Conference Call Replay Information:

The replay will be available approximately 1 hour after the completion of the live event.

Toll Free: 877-481-4010
International: 919-882-2331
Replay Passcode: 51691
Webcast Replay URL: https://www.webcaster4.com/Webcast/Page/2708/51691

Financial Reports

Full details of the financial and operating results are described in the Company’s consolidated financial statements for the period ended September 30, 2024 with accompanying notes. The consolidated financial statements and additional information about POSaBIT are available on the Company’s website at www.posabit.com/investor-relations or on SEDAR+ at www.sedarplus.ca.

Non-IFRS Measures

Adjusted Revenue, Adjusted Gross Profit and Adjusted EBITDA are non-IFRS measures used by management that do not have any prescribed meaning by IFRS and may not be comparable to similar measures presented by other companies. The Company defines Adjusted Revenue as gross revenue, minus license support revenue, plus actual licensing cash received as part of POSaBIT’s licensing deals. The Company defines Adjusted Gross Profit as Adjusted Revenue less company cost of goods sold. The Company defines Adjusted EBITDA as net income or loss generated for the period as reported, before interest, taxes, depreciation and amortization and further adjusted in accordance with the reconciliation table set out in this press release. The Company believes these non-IFRS measures are useful metrics to evaluate its core operating performance and uses these measures to provide shareholders and others with supplemental measures of its operating performance. The Company also believes that securities analysts, investors and other interested parties, frequently use these non-IFRS measures in the evaluation of companies, many of which present similar metrics when reporting their results. We caution readers that Adjusted Revenue, Adjusted Gross Profit and Adjusted EBITDA are not substitutes for gross revenue, gross profit or profit/loss, respectively.

Forward-Looking Statements

This press release contains forward-looking statements, including statements regarding our business strategy, product development, timing of product development, events and courses of action. Statements which are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, outlook, expectations or intentions regarding the future including words or phrases such as “anticipate,” “objective,” “may,” “will,” “might,” “should,” “could,” “can,” “intend,” “expect,” “believe,” “estimate,” “predict,” “potential,” “plan,” “is designed to” or similar expressions suggesting future outcomes or the negative thereof or similar variations. Forward-looking statements may include, among other things, statements about: our expectations regarding margin improvements and annualized Adjusted Revenue and Adjusted Gross Profit; our future growth strategy and growth rate; our future intellectual property; and our anticipated trends and challenges in the markets in which we operate. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which POSaBIT will operate in the future, including the demand for our products, anticipated costs and ability to achieve goals. Although we believe that the assumptions underlying these statements are reasonable, they may prove to be incorrect. Given these risks, uncertainties and assumptions, you should not unduly rely on these forward-looking statements.

Forward-looking statements are subject to known and unknown risks, uncertainties and other important factors that may cause the actual results to be materially different from those expressed or implied by such forward-looking statements, including but not limited to, business, economic and capital market conditions; the ability to manage our operating expenses, which may adversely affect our financial condition; our ability to remain competitive as other better financed competitors develop and release competitive products; regulatory uncertainties; market conditions and the demand and pricing for our products; our relationships with our customers, distributors and business partners; our ability to successfully define, design and release new products in a timely manner that meet our customers’ needs; our ability to attract, retain and motivate qualified personnel; competition in our industry; our ability to maintain technological leadership; our ability to manage risks inherent in foreign operations; the impact of technology changes on our products and industry; our failure to develop new and innovative products; our ability to successfully maintain and enforce our intellectual property rights and defend third-party claims of infringement of their intellectual property rights; the impact of intellectual property litigation that could materially and adversely affect our business; our ability to manage working capital; and our dependence on key personnel. POSaBIT is an early-stage company with a short operating history; it may not achieve profitability; and it may not actually achieve its plans, projections, or expectations.

Important factors that could cause actual results to differ materially from POSaBIT’s expectations include consumer sentiment towards POSaBIT’s products, litigation, global economic climate, loss of key employees and consultants, additional funding requirements, changes in laws, technology failures, competition, and failure of counterparties to perform their contractual obligations.

Neither we nor any of our representatives make any representation or warranty, express or implied, as to the accuracy, sufficiency or completeness of the information in this news release. Neither we nor any of our representatives shall have any liability whatsoever, under contract, tort, trust or otherwise resulting from the use of the information in this news release or for omissions from the information in this news release.

ABOUT POSABIT

POSaBIT (CSE: PBIT, OTC: POSAF) is a FinTech, working exclusively within the cannabis industry. We provide a best-in-class Point-of-Sale solution and are the leading cashless payment provider for cannabis retailers. We work tirelessly to build better financial services and transaction methods for merchants. We bring cutting-edge software and technology to the cannabis industry so that all merchants can have a safe and compliant set of services to solve the problems of a cash-only industry. For additional information, visit www.posabit.com.

Neither the Canadian Securities Exchange nor the Canadian Investment Regulatory Organization accepts responsibility for the adequacy or accuracy of this release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241126957117/en/

Investor Relations:

investors@posabit.com



Media Relations:

Oscar Dahl

855-767-2248

hello@posabit.com



Management:

Ryan Hamlin

Co-founder and CEO of POSaBIT

855-767-2248

investors@posabit.com

Source: POSaBIT Systems Corporation

FAQ

What was POSaBIT's (POSAF) revenue in Q3 2024?

POSaBIT reported revenue of $4.08 million in Q3 2024, representing a 4% decrease from Q2 2024.

What was POSaBIT's (POSAF) Adjusted EBITDA growth in Q3 2024?

POSaBIT's Adjusted EBITDA grew 53% quarter-over-quarter in Q3 2024, marking its second consecutive quarter of positive Adjusted EBITDA.

How many new merchants adopted POSaBIT's (POSAF) eCommerce menu in Q3 2024?

POSaBIT added approximately 40 new merchants to its eCommerce menu platform in the last 90 days of Q3 2024.

What was POSaBIT's (POSAF) cash position as of September 30, 2024?

POSaBIT had $900,000 in cash and cash equivalents as of September 30, 2024, showing a slight decrease from the previous quarter.