POSaBIT Systems (PBIT) Q2 2024 earnings summary

Executive summary

• Achieved first-ever positive adjusted EBITDA and positive free cash flow in Q2 2024, marking a significant turnaround from prior challenges, with significant improvements across key metrics.

• Launched new products, including Posabit Pay (a Venmo-type app), a proprietary e-commerce/menu platform, and new mobile apps, all with strong early adoption and positive merchant feedback.

• Increased cash on hand by $200,000 during the quarter, reaching $1.1 million as of June 30, 2024, while paying down aged accounts payable.

• Point-of-sale (POS) business expanded outside Washington, now representing 23% of total revenue and providing steady, recurring cash flow.

• Expecting $12 million in licensing cash inflows over the next 24 months.

Financial highlights

• Q2 2024 total revenue was $4.3 million, up 13% sequentially from $3.8 million in Q1 2024, but down 69% year-over-year.

• Adjusted revenue reached $5.04 million in Q2 2024, up 11% quarter-over-quarter from $4.6 million in Q1 2024.

• Adjusted gross margin was $2.97 million (59% of adjusted revenue), up from $2.3 million (50%) in the prior quarter.

• Adjusted EBITDA was a profit of $97,000 in Q2 2024, compared to a loss of $684,000 in Q1 2024.

• Net loss narrowed to $454,000 in Q2 2024, from $1.5 million in Q2 2023 and $1.9 million in Q1 2024.

• Cash on hand increased to $1.1 million as of June 30, 2024, from $900,000 at March 30, 2024.

Outlook and guidance

• Focus for the next six months is on growing cash reserves and gross margin dollars to achieve sustainable profitability, with management expecting continued adjusted EBITDA profitability.

• Annualized run rate guidance implies ~$20 million adjusted revenue and ~$12 million adjusted gross profit.

• Anticipates continued growth from new product launches, expansion into new states, and broad adoption of new products in Q3 and Q4.

• Expects further adoption of new menu platform and Posabit Pay, targeting 50% of POS base.