TORONTO & SEATTLE--(BUSINESS WIRE)--POSaBIT Systems Corporation (CSE: PBIT, OTC: POSAF), a leading provider of payments infrastructure in the cannabis industry, today announced its financial results for the three months ended March 31, 2023.
"We delivered solid results in the first quarter that were in-line with our expectations," said Ryan Hamlin, co-founder and CEO of POSaBIT. "Our team continues to build out exciting new features and products for our merchants while gaining market share. We are seeing strong demand for our products and services from both new and existing customers. We believe this demand is being driven by the structural trend to cashless PIN Debit payments and our focus on customer experience, support, and compliance. During a tumultuous period in the industry, POSaBIT remains in a strong position."
Hamlin continued, "Based on our current visibility, we are reaffirming our full-year 2023 revenue guidance of between $58.5 and $61.5 million, which represents growth of more than 62% at the midpoint compared to 2022, gross profit of between $12.5 and $14.5 million, and Adjusted EBITDA of slightly negative."
Recent Operational Highlights
- The full integration of the Hypur team and its products of PIN Debit, B2C and B2B payments has been progressing on schedule; we expect it to be complete by the end of Q2 2023.
- POSaBIT enjoyed its sixth consecutive year of 100% uptime on 4/20/2023.
- POSaBIT is the number one Point of Sale provider in our home state of Washington with nearly 40% market share and growing.
- With the acquisition of Hypur's compliance tools and expertise, POSaBIT continues to differentiate itself with a focus on compliance.
First Quarter 2023 Financial Highlights
- Transactional sales for payment services totaled $136 million, up 33% compared with $102.5 million in the first quarter of 2022, and down (5)% compared with $143.5 million in Q4 2022.
- Total revenue was $11.5 million, up 82% compared with $6.3 million in the first quarter of 2022.
- Gross profit was $2.3 million, or 20% of revenue, up 56% on a dollar basis compared with $1.5 million, or 24% of revenue, in the first quarter of 2022.
- Operating loss was $(2.9) million, inclusive of a $0.3 million non-cash change in the fair value of foreign currencies, compared with an operating loss of $(2.0) million, inclusive of a $(0.3) non-cash change in the fair value of foreign currencies, in the first quarter of 2022.
- Net loss was $(3.0) million, inclusive of a $0.1 million non-cash change in fair value of derivative liabilities, compared with a net loss of $(0.5) million, inclusive of a $1.6 million non-cash change in fair value of derivative liabilities in the first quarter of 2022.
- Adjusted EBITDA was $(1.9) million, or (17)% of revenue, compared with $(1) million, or (20)% of revenue, in the first quarter of 2022.
Balance Sheet
As of March 31, 2023, the company had cash and cash equivalents of $7.3 million compared to $3.1 million as of December 31, 2022.
Financial Results
in US Dollars | Three months ended | |||||
March 31, 2023 | March 31, 2022 | % Chg. | ||||
Revenue | $11.5M | $6.3M | 82% | |||
Cost of goods sold | $(9.2)M | $(4.8)M | 90% | |||
Gross profit | $2.3M | $1.5M | 56% | |||
Gross profit margin | 20% | 24% | NM | |||
Operating costs | $(5.2)M | $(3.5)M | 49% | |||
Operating income (loss) | $(2.9)M | $(2.0)M | 43% | |||
Other expenses (income) | $(0.13)M | $1.5M | (108)% | |||
Net income (loss) | $(3.0)M | $(0.5) | 546% | |||
NM - Not Meaningful
The following tables reconcile Adjusted EBITDA to net loss, as reported.
in US Dollars | Three months ended | |||||
March 31, 2023 | March 31, 2022 | Dec. 31, 2022 | ||||
Income (loss), as reported | (3,036,726) | (469,754) | $9,377,823 | |||
Add back / (deduct): foreign exchange gains, as reported | 257,562 | 320,204 | $593,993 | |||
Add back: share-based compensation, as reported | 624,101 | 659,919 | $539,942 | |||
Add back / (deduct) change in fair values of digital assets, as reported | - | 3,046 | - | |||
Add back amortization and depreciation, as reported | 8,674 | 16,536 | $(128,411) | |||
Add back / (deduct): change in expected credit loss, as reported | 4,347 | (1,993) | $(55,221) | |||
Add back, bad debts, as reported | 13,824 | - | - | |||
Add back, finance costs, as reported | 13,495 | 21,546 | $23,178 | |||
Add back interest accretion, as reported | 57,834 | 30,129 | $67,106 | |||
Add back / (deduct) change in fair value of derivative liability, as reported | (123,960) | (1,637,649) | $1,298,578 | |||
Add back income taxes, as reported | - | - | 404,135 | |||
Add back/ (deduct): transaction costs, as reported | 239,526 | 25,462 | $181,430 | |||
Adjusted EBITDA | (1,941,323) | (1,032,554) | $12,302,553 | |||
The Company is reiterating its guidance for the full year 2023. The Company's guidance does not include additional acquisitions or other strategic transactions.
As of May 31, 2023 | ||||||||
Total Revenue | $58.5 to $61.5 million | |||||||
Gross Profit | $12.5 to $14.5 million | |||||||
Adjusted EBITDA | Slightly negative |
Conference Call Information
Date: May 31, 2023
Time: 4:30 PM Eastern Time
Toll Free: 888-506-0062
International: 973-528-0011
Participant Access Code: 478379
Webcast URL: https://www.webcaster4.com/Webcast/Page/2708/48472
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: 48472
Webcast Replay URL: https://www.webcaster4.com/Webcast/Page/2708/48472
Financial Reports
Full details of the financial and operating results are described in the Company's consolidated financial statements for the three month period ended March 31, 2023 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.sedar.com.
Non-IFRS Measures
Adjusted EBITDA is a non-IFRS measure used by management that does not have any prescribed meaning by IFRS and may not be comparable to similar measures presented by other companies. 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 to remove changes in fair values and expected credit losses, foreign exchange gains and/or losses, impairments. The Company believes this non-IFRS measure is a useful metric to evaluate its core operating performance and uses this measure 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 this non-IFRS measure in the evaluation of companies, many of which present similar metrics when reporting their results. We caution readers that Adjusted EBITDA should not be substituted for determining net loss as an indicator of operating results, or as a substitute for cash flows from operating and investing activities.
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 our future revenue, gross profit and Adjusted EBITDA; our future customer concentration; our anticipated cash needs and our estimates regarding our capital requirements; our ability to anticipate the future needs of our customers; our plans for future products and enhancements of existing products; our ability to integrate Hypur; 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.
Financial Outlook
This press release contains a financial outlook within the meaning of applicable Canadian securities laws. The financial outlook has been prepared by management of the Company to provide an outlook for the Company's forecasted revenue, gross profit and Adjusted EBITDA for the 12 months to be ended December 31, 2023 and may not be appropriate for any other purpose. The financial outlook has been prepared based on a number of assumptions including the assumptions discussed under the heading "Forward-Looking Statements" herein. The actual results of the Company's operations for any period will likely vary from the amounts set forth in these projections and such variations may be material. The Company and its management believe that the financial outlook has been prepared on a reasonable basis. However, because this information is highly subjective and subject to numerous risks, including the risks discussed under the heading "Forward-Looking Statements" herein, it should not be relied on as necessarily indicative of future results.
ABOUT POSABIT
POSaBIT (CSE: PBIT) is a financial technology company that delivers unique and innovative payment processing and point-of-sale systems for cash-only businesses. POSaBIT specializes in resolving pain points for complex, high-risk, emerging industries like cannabis with an all-in-one solution that is compliant, user-friendly and utilizes top-of-the-line hardware. POSaBIT's unique solution provides a safer and transparent environment for merchants while creating a better overall experience for the consumer. For additional information, visit: www.posabit.com.
Contacts
Investor Relations:
investors@posabit.com
Media Relations:
Oscar Dahl
855-767-2248
oscar@posabit.com
Management:
Ryan Hamlin
Co-founder and CEO of POSaBIT
855-767-2248
investors@posabit.com
