Cannabis Fintech POSaBIT Systems Q3 Revenue Plunges Amid Temporary Processing Disruptions, But Gross Prof

POSaBIT Systems Corporation (OTCQX:POSAF), a provider of payments and point-of-sale infrastructure for the cannabis industry, reported Tuesday its financial results for the three months ended Sept. 30, 2024. Revenue for the quarter was $4.08 million, reflecting a 70% year-over-year decline primarily due to temporary disruptions in transaction processing, which has now been restored to 75% of pre-disruption levels, management said. Despite the revenue drop, the company achieved a higher gross profit margin of 40%, up from 23% in the same quarter of last year.

"We are pleased to report another solid performance in the third quarter, highlighted by our continuation of positive adjusted EBITDA, growing adjusted EBITDA quarter over quarter by 53%," said Ryan Hamlin, co-founder and CEO of POSaBIT. "Additionally, we are excited to report that POSaBIT's new eCommerce menu capability for our POS merchants is getting great reviews, with nearly 40 new merchants in the last 90 days. We expect by next year at this time, we will have over 200 merchants using the POSaBIT eCommerce menu."

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Q3 Financial Highlights

Gross profit was $1.63 million compared to $3.19 million in the comparable quarter of last year.
Gross profit margin was 40% compared to 23% in the third quarter of 2023.
Operating costs amounted to $3.37 million compared to $3.45 million in the same quarter of the prior year.
Loss was $2.08 million compared to $7.49 million in the corresponding period of 2023.
Adjusted EBITDA was a gain of $148,128 compared to an adjusted EBITDA loss of $32,622 in the third quarter of last year.
As of September 30, 2024, the company had cash on hand and cash equivalents of $900,000, slightly down quarter over quarter.

Recent Operational Highlights

Restored transaction processing levels to 75% of pre-disruption levels.
Implemented cost reduction program with ~$4 million of annual savings.
Intends to apply to list its common shares on the TSXV.
Ranked 132nd on the Deloitte Technology Fast 500, a ranking of the fastest-growing technology, media, telecommunications, life sciences, fintech and energy tech companies in North America.

"In alignment with our commitment to operational excellence, we recently initiated a comprehensive cost reduction program aimed at driving efficiencies across our business, with the ultimate goal of achieving profitability," Hamlin continued. "Additionally, we announced our intention to apply to list on the TSXV in order to facilitate ownership of our shares and improve trading liquidity. As we approach 2024, I am genuinely excited about the strategic initiatives and opportunities that lie ahead for POSaBIT."