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spk00: Welcome to the Positbit Systems Corporation fourth quarter and full year 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow today's presentation. I will now turn the conference over to your host, James Carbonara, Investor Relations. You may begin.
spk02: Thank you, Operator. With me on this call are Ryan Hamlin, Chief Executive Officer, and Matthew Fowler, Chief Financial Officer. I would like to begin the call by reading the Safe Harbor Statement. This statement is made pursuant to the Safe Harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1955. All statements made on this call, with the exception of historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the company believes that expectations and assumptions reflected in these forward-looking statements are reasonable, it makes no assurances that such expectations will prove to have been correct. Actual results may differ materially from those expressed or implied in the forward-looking statements due to various risks and uncertainties. For discussion of such risks and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see risk factors detailed in the company's annual report and subsequent filed reports as well as in other reports that the company files from time to time with CDAR. Any forward-looking statements included in this call are made only at the date of this call. We do not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent knowledge, events, or circumstances. The company may also be citing adjusted EBITDA in today's discussion. Adjusted EBITDA is a non-IFRS measure used by management that does not have any prescribed meaning by IFRS, and that may not be comparable to similar measures presented by other companies. The company defines adjusted EBITDA as net income or loss generated for the period as reported before interest taxes, depreciation, and amortization. It's further adjusted to remove changes in fair value and expected credit losses, foreign exchange gains, and or losses and impairments. The company believes this is a useful metric to evaluate its core operating performance. Now, I would like to turn the call over to Ryan Hamlin, Chief Executive Officer. Ryan, please proceed.
spk04: Thank you, James, and welcome, everyone. As a reminder, all numbers that I'll be talking about today are in U.S. dollars. Across the board, 2022 was our most successful year for Positbit since the founding of our company in 2015. We continued our streak of doubling or nearly doubling revenue year over year, now for five years in a row. We continued to outpace industry growth, and we met or exceeded our core guidance in 2022 for both revenue and gross margins. We also executed our first point-of-sale royalty licensing agreement worth at a minimum $20 million in cash over four years. Lastly, in 2022, we laid the foundation for our acquisition strategy, which we have now started to execute upon in 2023. Our balance sheet remains strong, and we continue to successfully execute on our business strategy. Turning to financial results for the full year ending December 31, 2022, we delivered revenue of $49.8 million, which represents year-over-year growth of more than 134%, which greatly outpaced the cannabis industry and significantly increased our market share. Gross profit was $22.6 million, up 302%, and debit transactional sales volume increased 43% to $517 million. In our earnings release today, we alluded to a change in the accounting treatment of our software license agreement we had announced back in Q3. Had this change not been made, our 2022 revenue would have still been in guidance at approximately $37 million, and our gross profit would have been approximately $10 million, also in line with previously provided guidance. Matt will go into further details about this accounting treatment later in the call today. In 2022, we continue to drive strong growth in our core businesses of payments and point of sale. We increased same store revenue growth at our existing locations by nearly 20% via greater adoption of our fully compliant pin debit processing solution. Additionally, Positive added eight new states in 2022, further increasing our point of sale market penetration. We began 2022 servicing approximately 300 merchants. Over the course of the year, we added more than 250 merchant agreements to reach approximately 550 as we exited the year, an increase of nearly 45% year-over-year for both payments and point of sale. As I mentioned, we achieved our target of entering eight new states in 2022. We began the year with operations in 15 states and ended with 23. To support this growth, our team of high-performing sales, engineering, operations, and customer success professionals grew from 32 employees at the start of 2022 to 49 employees at the end of the year, a 35% increase year over year, putting us at approximately $1 million in revenue per employee, which is a great metric to demonstrate our ability to remain fiscally responsible while still significantly growing revenue. We are focused on the importance of scaling our business at a pace that aligns with our growth, an important factor in running a sustainable business in 2023 and beyond. In 2022, we continue to invest in our product capabilities. We launched our beta of Positive 2.0, the newly designed version of our Positive point-of-sale client. It is our most intuitive experience yet, elevating the day-to-day experiences of bud tenders, managers, and owners, whether they're a small retailer or a growing MSO. We've also continued to invest substantially in our robust payments platform, adding many enhancements to our payments portal for reporting and reconciliation, making our reporting tool easy to use by accountants and owners to ensure proper financial accounting, something that is valued in a highly regulated industry. As we go into 2023, We will continue to invest in our products and platform with a focus toward adding more merchant service offerings to our already robust suite of products. One significant investment that was already made in April of this year was the acquisition of Hyper for approximately $7.5 million to establish Positive as the top payments provider in the cannabis industry in terms of overall market share and number of processors supported. It is important to note that $6 million of the $7.5 million paid was in equity. This again demonstrates the value that Hyper and its investors placed in owning our stock versus being paid in cash. We treat our equity as a very valuable currency and continue to be careful in how we use this currency as we grow. For those not familiar with Hyper, Hyper is a leading provider of compliant, sustainable payment and bank-compliant solutions for high-risk industries, including cannabis. With this transaction, we added more than $100 million in additional debit transactional sales volume, moving our total forecasted payment transactional volume in 2023 to near $1 billion. Hyper has extensive partnerships with banks and credit unions throughout the U.S. that have used this technology to provide banking and payment services to the cannabis industry since 2016. This acquisition enables us to offer a comprehensive suite of payment and compliance solutions, including redundant pin debit payment processing, HyperPay, a leading cannabis ACH e-commerce and mobile payment solution, Hyper B2B ACH, which has robust invoicing functionality, and HyperComply, a leading compliance technology for financial institutions serving the cannabis industry. With the addition of Hyper's pin debit, it now makes Positbit the only pin debit provider in the cannabis industry that has dual processors for back-end redundancy, as well as allowing us to optimize which solution works best for our merchants based on their location and processing needs. Lastly, on the product side, we continue to expand our breadth of point-of-sale features and partners we integrate with to provide the most open platform to ensure merchants have the choice of products to use. Many in our industry require merchants to use tools in a closed environment. We have always believed in the freedom of choice, and I know our customers, merchants, appreciate not being limited by the type of solutions they need to run their business. This is why Positbit has always placed a high value in our integration with industry partners who collectively support the entire technology ecosystem necessary to compete in the marketplace. As a reminder in August, we successfully executed our first software licensing deal with a large cannabis technology provider for the use of our point-of-sale technology. The deal guarantees licensing payments to Positivit of approximately $20 million over four years. It also improves our working capital position and provides an ongoing infusion of non-dilutive capital. Our open platform and strong reputation as a point-of-sale leader were critical factors for this partner to select Positivit. This partnership is a great proof point of the value of our solutions and how it is architected to handle tens of thousands of transactions a day. Now I'll briefly discuss our sales pipeline. We have our strongest pipeline ever as we exited 2022 and into Q1 of 2023, with more than 200 deals in process that should be coming online over the next two quarters. With Hyper's pinned debit processing now part of Positiv's overall debit processing, We are tracking to near a billion in transactional sales in 2023. Our acquisition of Hyper brought together the top two leaders in cannabis payments under one umbrella. We can now unilaterally provide compliant, reliable, and redundant payment solutions, further distinguishing us from our competitors. Let's talk a little bit about the cannabis market. It's really no surprise that the cannabis industry is getting hit, much like the rest of the industries right now in the US. We're seeing a decrease in the overall ticket price per transaction, down about 5% year-over-year. While there's a decrease in ticket prices, Positivit still is able to see strong same-store growth due to an increase in the number of customers that are using debit over cash during their return visits. With the industry's overall dip in consumer spending, many of our competitors are now struggling. The days of high valuations for privately held companies are no longer in play, and you're seeing investor frustration over a lack of business execution made on promises that were not kept. For companies like Positive, this represents opportunities for us to capitalize on distressed companies that no longer have the capital to survive or the longevity to execute out of this industry low. We expect that over the next 12 to 18 months, many businesses in our space will be forced to pursue strategic alternatives or face closing, which creates attractive opportunities for us. We are well-positioned and well-funded, and our brand recognition is rising, which gives us substantial leverage to be selective and patient with any M&A transactions we pursue. I do want to briefly touch on the current acquisition we announced earlier this year. we had announced an agreement to acquire MJ Freeway Leaf Data Systems and Ample Organics from Akerna for $4 million in an all-cash transaction. Since then, we received notice of termination of the definitive agreement from Akerna. The notice states that Akerna has determined that a third-party proposal for the acquired companies is reasonably likely to result in a superior offer under the definitive agreement. After considering all relevant circumstances, the POSBIT board and management unanimously agreed not to increase our offer to match the alternative offer. It is important to note that this does not impact the commercial agreements in place between MJ Freeway and POSBIT, including a payment services referral agreement, which grants POSBIT certain exclusive rights to provide payment processing services, including our newly acquired suite of hyperpayment products to MJ Freeway merchants. I'll end talking a little bit about some organizational changes and updates. We added three new C-suite executives to our team. Chris Baker was recently appointed to the newly created role of Chief Strategic Officer, leading our acquisition integration team, as well as several core operational roles, including HR, IT, and business development. Chris has more than 20 years of leadership in the technology industry, and has led award-winning multidisciplinary teams for global enterprise clients. Sarah Mirsky Terranova joined us in February and was appointed Chief Compliance Officer. As a leading provider of payments in cannabis, it's expected and needed to have a dedicated CCO on staff to ensure we remain fully compliant in this ever-changing industry. Sarah is a skilled compliance executive and attorney with extensive experience managing and advising in in-depth case investigations pertaining to BSA, AML, financing and trafficking, sanctions, KYC, and fraud-related matters. Lastly, Michael J. Swinwell Jr. joined us as part of the HYPR acquisition, where he was CEO and co-founder of HYPR. Michael is our new Chief Payments Officer and will be responsible for driving our payment strategy and execution as we go forward. Michael brings 25 plus years of deep payments and merchant services experience that will be invaluable to us as we continue to grow as the payments leader in cannabis. With that, I'm going to now turn the call over to Matt Fowler, our CFO, for a more detailed review of our financial results for the fourth quarter and full year ending December 31st, 2022. Thank you, Ryan.
spk03: Before I start with the results for the fourth quarter, I did want to reiterate the updated accounting treatment for our software license agreement. As many of you may have read in today's press release, as part of our year-end audit, it was determined that the software license agreement previously announced on August 23rd, 2022, should be accounted for as a right to use instead of a right to access under IFRS 15. This change resulted in accelerated recognition of licensing revenue for the year ended December 31, 2022. It is important to note that this change did not affect the underlying timing of cash flows from the licensing agreement. The impact of this change was we recognized approximately $15.2 million in revenue in 2022 for the licensed of the software and support services tied to the licensing agreement. The remaining balance for the support services will be recognized on a straight line basis over the life of the contract. This will result in approximately $1.5 million of revenue in each year from 2023 to 2025 and $800,000 in 2026. As far as the impact on 2022, the change in accounting treatment of licensing agreement resulted in total 2022 revenue of approximately $49.8 million. As Ryan mentioned earlier, excluding the change in accounting, 2022 revenue would have been approximately $37 million and gross profit would have been approximately $10 million in line with the previously provided guidance. With that, let's turn to Q4 2022 results. Transactional sales through our payments platform was $143 million, up 35% compared with $105.6 million in 2021. Exiting 2022, we were at $580 million, and transactional sales volume on an annualized basis. Transactional sales is a non-IFRS measure and one of the key drivers for our business. Total revenue was $24.9 million, up 289% compared to $6.4 million in the fourth quarter of 2021. Gross profit was $16.2 million, with 65% of revenue, up 1,146%, on a dollar basis compared with $1.3 million, or 20% of revenue, in the fourth quarter of 2021. Consequently, gross profit on a dollar basis was up 459% compared to $2.9 million in Q3 2022. Operating expense was $5 million compared to $2.3 million in the prior year's quarter. The primary driver of the increase in operating expense was an increase in administrative expense of $3.4 million. Administrative expense were primarily made up of our people costs, which were 2.6 million. The higher people costs are tied to additional headcount during the year to support our growth, primarily in our revenue operations team, which is made up of our sales, customer success, support team, and to a lesser extent, our engineering team. We also had higher stock-based comp during the quarter of $540,000 and foreign exchange of $594,000, both non-cash expenses. Net income was $9.4 million, inclusive of the negative impact of $1.3 million non-cash change and a fair value derivative of liabilities. This compares to the net loss of $2 million, inclusive of the negative impact of $520,000 non-cash change and a fair value derivative of liabilities for the fourth quarter of 2021. The mark-to-market of embedded derivative liabilities is tied to our convertible debt and is a non-cash accounting entry required by RFRS. It could cause significant differences in net income or loss quarter to quarter. Fluctuations through this line item of our income statement may become more extreme during periods of increased volatility in the price of the company's stock. Adjusted EBITDA was $12.3 million, or 50% of revenue, compared to an adjusted EBITDA loss of $911,000, or negative 14% of revenue, in the fourth quarter of 2021. turning to the full year. Repayment services totaled $517 million for the full year 2022, up 43% compared to $362 million in 2021. Total revenue was $49.8 million in 2022, up 134% compared to $21.3 million in 2021. Gross profit was $22.6 million or 45% of revenue compared with $5.6 million or 26% of revenue in 2021. Operating expense was $17.4 million compared to $5.7 million in the prior year. Primary driver of the increase in operating expense was administrative expenses of $9.9 million compared to $5.6 million in the prior year. The main driver of the increase in administrative expense were pupil costs of $7.5 million compared to $3.9 million in the prior year. If noted in my fourth quarter comments, this is tied to additional team members hired during the year to support our growth. An additional expense in administrative costs also tied to our team is share-based compensation. We had $2.2 million in non-cash share-based compensation expenses in 2022, compared to $764,000 in the prior year. Net income was $8.1 million. inclusive of the positive impact of $4 million non-cash change and the fair value of derivative liabilities. This compares to the net loss of $10.6 million, inclusive of the negative impact of $9.7 million non-cash change and the fair value of derivative liabilities for 2021. Adjusted EBITDA was a positive $10.4 million or 21% of revenue compared to an adjusted EBITDA loss of $1.3 million for negative 6% of revenue in 2021. Cash on hand at the end of the year was $3.1 million. This compares to $4.4 million at the end of 2021. Our debt balance remains low at $313,000 of long-term debt consisting of an SBA loan and convertible notes. Finally, we do not have anything new to report about uplisting companies stocked in NASDAQ or the TSX. Other than to reiterate, positioning the company so investors can easily invest remains important to management and the Board, and we continue to discuss all options with Council. Before I hand it back to Ryan, I did want to briefly touch on the impact the account treatment will have on our 2023 outlook. In 2023, the change in treatment will result in reduced revenue, gross profit dollars, and adjusted EBITDA by approximately $3.5 million. As previously noted, there is no change in the timing of cash flows expected to be received in 2023. Conforming the previously provided 2023 guidance, this change in account agreement results in the following adjustments to guidance. Under the prior methodology, on March 20, 2023, we guided 2023 revenue of approximately $60 to $63 million and gross profit of approximately $15 to $17 million and to be adjusted even at positive. adjustment in accounting treatment, we will see a decrease of approximately $3.5 million to those figures in 2023. When adjusting March 2023 guidance for the approximate $3.5 million accounting reduction is of March 2023, we would have expected 2023 total revenue of $56.5 to $59.5 million gross profit of $11.5 to $13.5 and to be slightly negative on the adjusted EBITDA basis. With that, I'll turn the call back to you, Ryan, for closing remarks. Thanks, Matt.
spk04: A lot of numbers there. Appreciate you going through that. I want to thank everyone for your patience today. I recognize the updated accounting treatment of our software license agreement has caused a little noise reporting today, but it is worth it. The transaction itself is a great source of non-dilutive cash over the next several years. So I appreciate you bearing with us as we explain the pre and post numbers. The good news that I hope you take away from our call today is that Positivit once again hit our guidance of our core metrics of revenue and gross margin, while unfortunately most in this industry have missed badly. It is important to note, and I will stress again, that we keep executing and we keep hitting our numbers. We are living in interesting times right now. It reminds me personally of a lot of other times in my career in 2001 and 2008. We're in a down market and economy and an equally distressed cannabis industry. Good companies come out of times like this stronger than ever and tend to take a significant market share. Our commitment to our shareholders is that we will continue to execute and drive growth, even in frustrating economic times. We just came off our best 420 ever, growing year-over-year sales on 420 by more than 30% in transactional and revenue volume. We also maintained our streak of never going down or having any system issues for the entire history of our company on any 420. I want to end our call today by reiterating our guidance for 2023, which now includes our expectations for HYPR as well as the new accounting treatment for our POS licensing deal. For the full year, 2023, we expect revenue of $58.5 million to $61.5 million and a gross profit of $12.5 million to $14.5 million and to be slightly negative on an adjusted EBITDA basis. This represents a 62% increase year-over-year in revenue at the midpoints in a time when most companies are flat or decreasing their revenue. Gross profit dollars are also growing 35% year over year. Thanks again for your time. Operator, we're going to now open up the call lines for any questions people may have.
spk00: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Please hold while we poll for questions. And the first question we have today is coming from James Baglanis, and James is a private investor. James, your line is live.
spk04: Hey, Ryan. Congrats on closing out the year inside of your initial guidance range. I think that's really quite the accomplishment considering everything that happened that I can't imagine was contemplated when you guys first gave this guidance. I guess just on the first part, can you size how much the point of banking shift that happened in the fourth quarter was and kind of your outlook for that for fiscal 23? Yeah, definitely. I'll give kind of a top level, and then Matt can maybe give some specifics. But, yeah, certainly, you know, as most people know that follow this industry, point of banking, there was a Visa memo that came out in December of 21, and then in 22, most of the point of banking services were shut down, and it was due to compliance. You know, we had some existing point of banking. Fortunately for us, we had a pin debit compliance solution that we had in the market for about two and a half years, so we were able to successfully migrate people over. It definitely had a bit of an adjustment for us just because you had to transition people over, number one. And then number two, you know, whenever there is change, you always risk the potential for churn. So we did have a little bit of a churn as well. So I think, you know, what we feel that we made it through that conversion of POB to PIN actually very successful in keeping the majority of those merchants. But the way that you know, we recorded revenue from POV to PIN. It was a bit of a mixed shift in how the revenue is recognized. And so it's a little bit different when you compare a straight point of banking transaction versus a PIN transaction. Yeah. Okay. Makes sense. Thanks for that. And then I think you might have said this, but I missed it. What was the average order size in the quarter? So we looked at it. If you look quarter over quarter, it's gone down. It's about, I think it's $72.40 or something, roughly $72.40. And again, that was down about 5% of where we were last year at this time. Gotcha. Okay, thanks. And did I hear you say that you're tracking through about a billion of transactional sales as we look to fiscal 23? Yeah, and a big part of that is Obviously, the acquisition of Hyper was great because it came with 150 merchants and already processing over 100 million. And so we expect not only those existing merchants to continue to increase transactional volume, but they had a very healthy funnel as well. So now you've got, like I mentioned, kind of the best of both worlds, the two, frankly, the two top providers of payments now coming together. to have a very strong funnel. And, you know, we feel great that we're going to get to near that billion-dollar mark, which is kind of something we've been talking about for a while now. It's kind of a big, momentous metric for us. Yeah, no, absolutely. And that's a good transition into the next thing I wanted to ask you about was now that you've closed that deal. You talked to me about this on the call of how it rounds out your offering, but if you could just kind of talk about what that brings beyond just another best-in-class payments provider that your solution now has that you didn't before you bought it. Yeah, so kind of, I guess, a handful of big points regarding the hyperacquisition. The first is it gave us dual processing and processing partners. So no one in this industry today has multiple processors. That's a really important step because now there's not a single threat of failure. So if for one reason or another there's an outage, planned or unplanned, you have redundancy built in. So that's important. very significant for us that we're the only provider in the entire cannabis industry that have multiple debit processors. That also allows us to load balance. It gives us the ability to look across geographies to see where some cards are accepted on some networks in geographic areas at a higher percent. And so, again, we get a kind of load balance and choose where we put them. The second thing is it gave us an ACH, we say B2C, but also B2B payment. So the Hyper has about 165,000 consumers that have downloaded their Hyper Android and iOS app, which allows you to pay using your checking account via ACH for online orders. That definitely filled the product gap that we had, and it's a natural fit for us as a payments provider to now have that. The other thing we have is with the B2B invoicing capability. We couldn't monetize the supply chain because we were primarily focused or have been focused 100% on the dispensary. Now it gives us the ability to take this great payments platform we've built and add B2B ACH payments and invoicing, basically bill.com for B2B. businesses to be able to take advantage of our platform. And then lastly, it gave us the investment of some great compliance software. So HyperComply is used by several banks that bank the cannabis industry. We've always been touting for a long, long time that we value and we do invest heavily in our compliance. And so now to have our own actually compliant software that is used by banks just further strengthens our commitment to making sure we run a compliance service in this kind of very interesting cannabis industry that we live in today. And then I guess I will say, sorry for the long answer, but Michael, who I announced is coming over, who is the CEO and co-founder, he is an amazing person already. I'm very excited to work with him. He's been in the payments industry for a long, long time. And I can honestly say he immediately started significantly raised up the quality bar of just the overall payments knowledge on our team. And I would put Michael as, you know, literally a top one or two or three in the entire industry when it comes to just payment expertise and payment knowledge. So very happy to have him on board as our chief payments officer. That sounds like you guys have two of the top three now. So no, that makes a ton of sense. And I guess on the backlog that you mentioned in the press release, can you accelerate kind of the closing and conversion of that backlog too? Because it would seem like in addition to all the capabilities you outlined, that there's a ton of room to kind of put your foot down and stomp on the accelerator here for the opportunities they have. Yeah, so you've got kind of like I mentioned, we have both of our funnels. And the other thing that allows us to do is, Not only do we have more salespeople selling it, but we have built, Positive had built out a real robust underwriting process and team. And so now having that team focus on the Hyper backlog is going to expedite our ability to get those customers or those merchants into market faster too. So it was one of the things when we looked at Hyper where we felt like we have this really great underwriting team in place and that it could definitely help expedite the backlog that they had in their funnel. Yeah, okay, makes sense. Last question for me, and then I'll give up the phone, is you talked about 62% growth as the guidance, but if I take a math comment about $3.5 million as the headwind for next year and kind of compare it to the $37 million you guys did this year, I get something closer to kind of 70%, 72% growth. Am I missing something there, or is that kind of the core underlying growth outlook for next year is kind of closer to 70-ish percent.
spk03: Yeah, yeah, correct. That's the underlying growth is right. You kind of exactly nailed it there, James. Okay. I mean, that's a really good number.
spk04: Can you, and then just start, to the drivers of that, kind of how do we get to 70-ish percent? So it's a couple of things, pretty consistent with what we've said in the past. You know, same store revenue growth is really important for us. As I mentioned, you know, earlier in the call today, we grew 20% year-over-year. So, obviously, the more merchants we have, you just get that natural same-store revenue growth happening every year. So, that's a huge benefit. We're also signing on merchants faster than we ever have. So, obviously, you know, new store growth. And then, frankly, the new products. Now that we have hyper-ACH products, we have the B2C, the B2B, that creates a new source of revenue that we otherwise wouldn't have had, you know, prior to that acquisition. So you've kind of got three major sources now of revenue that have kind of accelerated around same store, around adding more stores because of both the hyper and the positive funnel, and then having the new hyper ACH B2B and B2C products. Got it. That's fantastic. Well, thanks so much for taking my questions, guys. Talk to you next quarter. Thanks, James.
spk00: Thank you. And once again, ladies and gentlemen, if you do wish to enter the Q&A queue to ask a question, please press star 1 on your phone. The next question is coming from Mike Regan from Excelsior Equities. Mike, your line is live.
spk01: Hi. Thanks for taking the question. So quickly, can you remind us cash flows are unchanged for the software agreement. So the cash flows should still be $5 million a year, of which only $1.5 million will be booked as revenue. Am I understanding that correctly?
spk03: Yep. Yeah, that's absolutely right.
spk01: Okay, got it. So you'll have a big deferred revenue and your cash will actually be higher than the revenue you're reporting in that segment. And then when you're talking about the trends and just sort of building it up, I guess what You know, the average ticket is down about 5%. Do you have sort of an average ticket assumption in your guidance? Is that also down 5% in terms of, you know, obviously then made up by the volume increases from new stores and, you know, just more people charging?
spk04: Nope. What we did is we took the average ticket as we exited the year, and that was the basis for our pro forma. So we're actually using that lower ticket price. And so obviously there's opportunity there. if things change in this industry, the economy, cannabis, and spend goes up a little, anything that goes above that $72.40 on average ticket is going to be on top of the forecast we've already put forth.
spk01: Got it. Okay, so it's basically assuming it flats exactly. If it's higher, then that will be higher. Lower, it will be lower. Yep. Okay. And then a follow-up question on just the pro-pharma, including Hype here. You closed on HyPure, I think, April 1st. So basically, the base guidance includes nine months of HyPure, correct?
spk04: That is correct.
spk05: Or is that... Okay, so that's why the pro forma... ...adding, you know, $2 million is that it would have had $2 million in gen, you don't have it there.
spk01: So it's not that HyPure's revenues went from $5 million to $2 million. It's that you only had it for one, you know, it's just adding back that one quarter.
spk04: Yeah, you cut out a little bit, Mike, but I think what your question is, is, yeah, we only get to recognize that. And we had put down the $5.4 million of hybrid revenue, of which we'll get to recognize nine months of that. That's why when we talked about the guidance, guidance is going up because we unfortunately had to take down the revenue from the accounting side. recognition of the the POS license by three and a half but we're able to offset with the incremental hyper revenue of those nine months coming in which is about four point one million okay great that's those are the clarification questions I had well thanks a lot thanks Mike appreciate the call thank you there were no other questions at this time please
spk00: And this does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.
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