POSaBIT Systems Corp. Q3 2022 Report: Revenues $10.3M, Up To 62% YoY & 26% Sequentially

POSaBIT Systems Corporation (POSAF) PBIT POSAF, a leading provider of payments infrastructure in the cannabis industry, announced its  financial results on Tuesday afternoon for the three and nine months ended September 30, 2022.

“The third quarter was very strong with a 26% sequential increase in revenue, making it the first time we have had a $10+ million quarter. We continue to expand our commercial footprint and announced several strategic new partnerships this quarter that validates the strength of our platform,” said Ryan Hamlin, CEO and co-founder of POSaBIT.

3Q/2022 Financial Highlights Includes

• Total revenue was $10.3 million, up 62% compared with $6.4 million in the third quarter of 2021
• Transactional sales for payment services totaled $142.6 million, resulting in an annual run-rate of $568 million, up 32% compared with $108 million in the third quarter of 2021
• Gross profit was $2.9 million, or 28.0% of revenue, up 103% on a dollar basis compared with $1.4 million, or 22.5% of revenue, in the third quarter of 2021
• Operating loss was $(7,300), inclusive of a $(0.9) million non-cash change in the fair value of foreign currencies, compared with operating income of $1.1 million, inclusive of a $(1.9) million non-cash change in the fair value of foreign currencies, in the third quarter of 2021
• Net loss was $(1.2) million, inclusive of a $(1.0) million non-cash change in fair value of derivative liabilities, compared with a net loss of $(6.9) million, inclusive of a $(7.9) million non-cash change in fair value of derivative liabilities in the third quarter of 2021
• Adjusted EBITDA was $(290,000), or (2.8)% of revenue, compared with $(439,000), or (6.9)% of revenue, in the third quarter of 2021

Balance Sheet: As of September 30, 2022, the Company had cash and cash equivalents of $8.2 million compared to $4.4 million as of December 31, 2021.
"Contrary to many in our industry and the current economic climate, our business is growing at an increased pace, our sales funnel is full, and our balance sheet is as strong as it's ever been. We are increasingly optimistic about the long-term prospects for our business and are raising our 2022 gross profit guidance to $10.0 - $10.5 million, reiterating our revenue guidance of $37 to $40 million for the year and reiterating our prior statement that we expect positive Adjusted EBITDA in 2023,” Hamlin added.

Recent Operational Highlights:

The company signed a four-year royalty licensing agreement with a large cannabis technology provider, for guaranteed minimum revenue of $20 million at a virtually 100% margin.
“We continued to onboard new merchants at record levels and secured a royalty licensing agreement for our point-of-sale software that will generate recurring guaranteed revenue of at least $20 million at virtually 100% margin over the next four years,” Hamlin said.

Moreover, it announced Vermont as the newest state added and live for POSaBIT.

• On track to exceed the target of entering eight new states in 2022 with the launch of operations in New Jersey, Connecticut, and Ohio, three new states under contract and expected to ‘go live before year-end, bringing POSaBIT to 10 new states in 2022.
• Launched POSaBIT 2.0, a new, fully redesigned version of POSaBIT’s point-of-sale client
• Recently, the company entered into a partnership and product integration with Onfleet, a last-mile delivery management software platform. The integration extends the POSaBIT payments and point-of-sale technologies into the Onfleet platform to streamline processes and improve efficiency for cannabis customers.
• Onboarded over 50 new payment and point-of-sale merchant locations in Q3
• Ongoing discussions with over 200 potential payment and point-of-sale merchant locations, according to a press release.
• Cash and cash equivalents were $8.2 million on September 30, 2022

2022 Outlook: The Company is raising the high end of its gross profit guidance to $10.5 million and reiterating its revenue guidance of $37.0 – $40.0 million for the full year 2022.

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Photo: Courtesy of Joel Muniz On Unsplash