XS Financial Touts 140% YoY Increase In Revenue Despite Cannabis Industry Slowdown

XS Financial Inc. XSF XSHLF released earnings for the fourth quarter and fiscal year ended December 31, 2022.

The specialty finance company, which is dedicated to U.S.-based cannabis companies, had "a transformational year," according to CEO David Kivitz.

"We had continued revenue growth and operational performance with particular emphasis on expanded funding relationships with several existing customers and new customer additions,” Kivitz said.

Q4/22 And Full Year 2022 Financial Highlights

• XS Financial reported:
• A 140% year-over-year increase in annual revenue from $3.2 million in 2021 to $7.6 million in 2022
• A 115% year-over-year increase in Q4 revenue from $1.2 million to $2.5 million.
• A 156% year-over-year increase in gross lease receivables from $43.5 million in Q4 2021 to $111.4 million in Q4 2022
• And a 197% year-over-year improvement in net income from a loss of $1.5 million in Q4 2021 to $1.4 million in Q4 2022.

XS Financial also closed lease transactions totaling approximately $68 million with several companies, including Ascend Wellness AAWH, Ayr Wellness (CSE: AYR) AYRWF, Columbia Care CCHWF, Connected Cannabis, Curaleaf CURA CURLF, PharmaCann, Green Dragon/Eaze, Jushi JUSHF, Temescal Wellness and others.

The fourth quarter jump of 115% is mainly due to revenue from financing income recognized from 111 new financing leases over the course of 12 months.

Operating expenses increased by 20% to more than $1.7 million, primarily due to an increase in personnel costs associated with incentive compensation.

Net income for the quarter was roughly $1.42 million, compared to a net loss of $1.47 million for the same quarter in 2021.

“Our business is hitting its stride, and our focus as a better alternative for non-dilutive CAPEX and equipment financing has seen positive reinforcement throughout the year,” Kivitz added.

In the second half of 2022 and into 2023, XS Financial "witnessed a slowdown" in the cannabis industry. As a result, the firm expanded its origination efforts to include other industries, Kivitz explained.

"We are in the preliminary stages of evaluating these opportunities and look forward to providing updates throughout the year," he said, calling the expansion "a significant growth driver."

On Tuesday evening, XSHLF closed at $0.0595 per share and was neutral at 0.00%

Photo: Courtesy Of Markus Winkler On Unsplash