POSaBIT Systems (PBIT) Q3 2024 earnings summary

Executive summary

• Achieved positive free cash flow and adjusted EBITDA for the second consecutive quarter, with adjusted EBITDA rising 53% quarter over quarter to $148,000 in Q3 2024.

• Report covers unaudited results for the three and nine months ended September 30, 2024, with prior period restatements due to contract asset accounting corrections.

• POSABIT continues to operate as a going concern but faces material uncertainty due to recurring losses and negative operating cash flow.

• Launched the 1.0 version of the e-commerce and menu platform, targeting 50 merchants by year-end and over 200 by the end of next year.

• Expanded POSaBIT Pay, adding 40 new stores in Q3, and expect continued growth into 2025.

Financial highlights

• Total revenue was $4.1 million in Q3 2024, down 5% from $4.3 million in Q2 and down from $13.7 million in Q3 2023; adjusted revenue was $5 million, flat quarter over quarter.

• Adjusted gross profit was $2.7 million (54% of adjusted revenue), down from $3 million (59%) in Q2; gross margin for Q3 2024 was $1.6 million, compared to $3.3 million in Q3 2023.

• Adjusted EBITDA was $148,000, up from $97,000 in Q2.

• Net loss was $2.1 million, compared to $454,000 in Q2 and $7.7 million in Q3 2023; nine-month net loss was $4.5 million.

• Cash on hand at quarter end was $908,000, down from $1.1 million in Q2 and $1.5 million at year-end.

Outlook and guidance

• Focus remains on growing cash reserves, maintaining adjusted EBITDA profitability, and steady growth across business lines in 2025.

• Management highlights material uncertainty regarding the company's ability to continue as a going concern due to ongoing losses and negative cash flow.

• Optimism for regulatory changes in 2025, including potential cannabis rescheduling and SAFE Banking, which could enable full credit card processing.