SHF (SHFS) Q2 2024 earnings summary

Executive summary

• Achieved positive net income of $0.94 million in Q2 2024, reversing a $17.6 million net loss in Q2 2023, and solidified its position as a leading financial services provider for cannabis-related businesses through income diversification and enhanced product offerings.

• Operates a proprietary fintech platform for deposit compliance, onboarding, and loan servicing, with a focus on expanding its lending program and maintaining regulatory standards.

• Revenue is generated from deposit activity, onboarding fees, investment income, and loan interest, primarily through a commercial alliance with Partner Colorado Credit Union.

• Achieved significant cost reductions, with operating expenses dropping to $3.7 million in Q2 2024 from $22.5 million in Q2 2023.

• Expanded lending platform with new lines of credit and fully recovered a $3.1 million defaulted loan.

Financial highlights

• Q2 2024 total revenue was $4.0 million, down 12% year-over-year; six-month revenue was $8.1 million, down 7.6%.

• Loan interest income rose 204% year-over-year to $1.8 million in Q2 2024.

• Net income for Q2 2024 was $942,000, compared to a net loss of $17.6 million in Q2 2023; six-month net income was $3.0 million, versus a $19.0 million loss year-over-year.

• Adjusted EBITDA for Q2 2024 was $2.1 million, up from $1.3 million in Q2 2023; six-month Adjusted EBITDA was $2.1 million, up from $1.3 million year-over-year.

• Cash and cash equivalents as of June 30, 2024, were $6.1 million, up from $4.9 million at year-end 2023.

Outlook and guidance

• Full-year 2024 revenue expected in the range of $17–$18 million.

• Full-year 2024 Adjusted EBITDA projected between $3.75–$4.25 million.

• Management expects a shift in account and fee trends as the lending program expands, requiring borrowers to place deposits with partner institutions.

• Focused on growing the lending platform and monitoring incremental lending metrics as volume increases.

• Anticipates regulatory changes, such as cannabis rescheduling, to be a significant growth catalyst.