POSaBIT Systems Corporation (POSAF), a leading provider of payment and point-of-sale (POS) infrastructure solutions for the burgeoning cannabis industry, released its financial results for the third quarter of 2024 (ended September 30th), revealing a mixed bag of performance indicators. While revenue experienced a significant year-over-year decline, other key metrics point towards a positive trajectory and a promising future for the company.
The company reported revenue of $4.08 million for Q3 2024, a substantial 70% decrease compared to the same period in 2023. This downturn is primarily attributed to temporary disruptions in transaction processing. However, POSaBIT management has confirmed that these disruptions have been addressed, and transaction processing has been restored to 75% of pre-disruption levels, suggesting a strong recovery is underway. Despite this revenue setback, the company demonstrated impressive improvements in profitability.
One of the most significant highlights of the Q3 report is the substantial increase in gross profit margin. The gross profit margin reached 40%, a remarkable jump from 23% in Q3 2023. This signifies improved operational efficiency and cost management within the company. This is particularly noteworthy considering the revenue decline, highlighting the effectiveness of internal strategies to mitigate the impact of the transaction processing issues.
Further bolstering the positive outlook is the growth in adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization). POSaBIT achieved an adjusted EBITDA gain of $148,128, a significant improvement from an adjusted EBITDA loss of $32,622 in the same quarter of the previous year, representing a 53% quarter-over-quarter increase. This demonstrates a clear path toward profitability and strengthens investor confidence in the company’s long-term viability.
Ryan Hamlin, co-founder and CEO of POSaBIT, expressed optimism about the company’s performance and future prospects. He highlighted the success of the company’s new eCommerce menu capability, which has already attracted nearly 40 new merchants in the past 90 days, projecting over 200 merchants utilizing the platform by Q3 2025. This diversification strategy signals a move towards a more resilient business model, less susceptible to single-point-of-failure scenarios.
In addition to the positive financial developments, POSaBIT has undertaken several strategic initiatives to further enhance its operational efficiency and market positioning. The company implemented a comprehensive cost reduction program, targeting approximately $4 million in annual savings. This proactive approach underscores the company’s commitment to long-term fiscal responsibility and sustainability. Furthermore, POSaBIT announced its intention to apply for a listing on the TSX Venture Exchange (TSXV), a move designed to increase shareholder ownership and improve trading liquidity.
The company’s strong performance was also recognized externally. POSaBIT secured the 132nd position on the Deloitte Technology Fast 500, a prestigious ranking of the fastest-growing technology companies in North America. This accolade underscores the company’s innovative spirit and its significant contribution to the rapidly expanding cannabis technology sector.
As of September 30, 2024, POSaBIT held $900,000 in cash and cash equivalents. While slightly lower than the previous quarter, this remains a healthy reserve to support ongoing operations and future growth initiatives. With its strategic cost-cutting measures, renewed focus on eCommerce, and pursuit of a TSXV listing, POSaBIT is well-positioned for continued growth and increased profitability in the years ahead. The company’s Q3 results, while showing a temporary revenue dip, ultimately present a compelling narrative of resilience, adaptation, and strategic progress within a dynamic and rapidly evolving market.
