POSaBIT Systems (PBIT) Q2 2024 earnings summary

Executive summary

• Achieved first quarter of both positive adjusted EBITDA ($97,000) and positive free cash flow, increasing cash reserves by $200,000 to $1.1 million as of June 30, 2024.

• Revenue grew 13% quarter-over-quarter to $4.3 million, with payments revenue up 24% and gross margin dollars up 47%.

• Successfully launched Posabit Pay (Apple/Android app) and beta of proprietary e-commerce/menu platform, both gaining strong early adoption and positive feedback.

• Point-of-sale (POS) revenue now represents 23% of total revenue, with recurring, predictable cash flow.

• Substantial reductions in hosting, partner revenue sharing, and processing fees.

Financial highlights

• Q2 2024 revenue was $4.26 million, up 13% sequentially from Q1 2024.

• Adjusted revenue grew 11% quarter-over-quarter to $5.04 million.

• Adjusted gross margin was $3 million (59% of adjusted revenue), up from $2.3 million (50%) in the prior quarter.

• Adjusted EBITDA turned positive at $97,000, compared to a loss of $684,000 in Q1 2024.

• Net loss narrowed to $454,000 from $1.5 million year-over-year and $1.9 million in the prior quarter.

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

• Debt remains low at $4.5 million, consisting of an SBA loan and a five-year term loan.

Outlook and guidance

• Focus for the next six months is on growing cash reserves and gross margin dollars to achieve long-term, sustainable profitability.

• Management expects continued adjusted EBITDA profitability and growth in cash reserves for the next six months.

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

• Anticipates continued growth from new product launches (Posabit Pay, e-commerce menus) and further POS adoption.

• Expects $12 million in licensing cash to be paid over the next 24 months.

• Monitoring regulatory developments, with potential upside from state-level legalization (e.g., Ohio, Florida).