Posabit Systems Corp

Good day, ladies and gentlemen, and welcome to the Positbit Systems Corporation's second quarter 2023 earnings call. All participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Oscar Dahl. The floor is yours.

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 statements. This statement is made pursuant to the safe harbor for forward-looking statements described in the Private Securities Litigation Reform Act of 1995. 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 assurance 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 discussions. 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 a net income or loss generated for the period as reported before interest, tax, 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.

Thanks, Oscar, and welcome, everyone. As a reminder, all numbers that I'll be talking about today are in U.S. dollars. Let's begin with our financial results. Q2 was our best quarter in the history of Positbit, a nice rebound from the typical seasonality of a slow Q1. For the quarter, revenue was nearly 13.5 million, up 64% year-over-year versus 8.2 million in Q2 of last year. Gross profit was also up to 2.7 million versus 2 million in Q2 of last year. Our quarter-over-quarter and year-over-year growth remains exceptional, especially in an industry where so many businesses right now are struggling to get by. Our balance sheet continues to be in a great position with a sustainable amount of cash on hand to execute on our short and long-term goals. I want to repeat Q2 was a record quarter for Positivate, keeping us on track to hit our 2023 guidance and continuing our streak of quarter over quarter growth. Despite all turmoil within the industry and the economy at large, we continue to grow as we have since the company's inception. As noted in previous calls and press releases, Our acquisition of Hyper closed on April 1st of this year. In Q2, we spent time bringing the Hyper team and technology into the fold, and I'm proud to report that Hyper has been fully integrated into Positbit. The expertise and tech solutions we've gained through this acquisition has been and will continue to be an invaluable asset for Positbit as we continue to grow and gain market share. Additionally, the Hyper base of pin debit merchants has bolstered our customer base in a meaningful way, the impact of which is reflected in our Q2 revenue numbers. Now, I want to address the recent news that many of you are aware of regarding MasterCard and the use of MasterCard services in the cannabis industry. In fact, I would guess many of you likely heard some chatter within the industry regarding a Bloomberg article that quoted a recent MasterCard shutdown. While there have been a number of payment technology providers in dispensaries impacted by this recent shutdown, it is business as usual for Positbit. Let me repeat, at Positbit, it's business as usual. We have built this company with an incredible high standard for compliance. We've been doing this for over eight years. We go above and beyond when it comes to transparency and regulatory matters. This won't change, and being built on the backbone of compliance has served us quite well over the years. Of course, with this recent news, It once again points to the need for safe banking and other legislative measures regarding de-scheduling that are needed now more than ever before. Now I'd like to touch on a couple of personnel changes we've made recently. Michael J. Sinwell, Jr., who came over to Positbit in the hyperacquisition, has recently been promoted to Chief Product Officer. Michael has decades of experience in the fintech space and will lead our product development team for both our point of sale and our payment solutions. Chris Baker, previously in the role of Chief Strategy Officer, has been given the title Chief Operating Officer. Chris joined the team late last year after 18 years at IBM to help us out with a handful of important strategic opportunities, including the hyperacquisition, and proved himself to be an excellent operational asset whose knowledge and experience will serve us well as we continue to grow. Lastly, effective today, We have promoted Matt Fowler to Chief Financial Officer for our parent company, Positive Systems Corporation. Prior to this, Matt has been our CFO for our wholly owned U.S. subsidiary of Positive U.S. Inc. Please join me in virtually congratulating Chris, Matt, and Michael on these new leadership roles within Positive. Now let's talk a little bit about our Positive sales growth. Positive continues to generate an abundance of new business. with over 600 stores already live and hundreds more currently in the pipeline. We anticipate installing a significant number of those stores by the end of the year. Our sales success can be attributed to a couple key factors. One, our compliant debit solution is the best in the market and the industry has responded very well to our ongoing compliance efforts amid confusion and turmoil in the industry. Our point of sale is a dominant player in our home state of Washington with over 40% market share and growing. And three, a seasoned team of payments and point of sale experts with decades of experience in software and fintech. I'd like to briefly touch on the state of the cannabis industry. There have been no shortage of trials and tribulations in cannabis over the past year. This is not surprising given the newness of the industry and the general excitement around it. Despite these growing pains, it is our firm belief that the smartest, best-run, and most compliant business will win out. To that end, positive fits the bill. Even with the challenges the industry has faced, we have remained steady. We continue to grow at a rapid pace. Our quarter-over-quarter and year-over-year growth, for instance, comes despite a downturn in the average ticket price for debit payments in Q2 versus Q1. Our growth continues despite store closures and industry consolidation. All that is to say, we have the confidence and ability to stay on plan no matter what the industry throws at us. Which leads me to a few comments I'd like to share with our investors today. Positive's market valuation is unfortunately not reflective of the great results the team has been able to produce over the last eight years. We have doubled revenue for five years in a row, and our overall unit economics for the business remain at an all-time high. Yet the stock fails to accurately reflect this value. Some of this I chalk up to investors being weary of the cannabis industry and others just concerned about our U.S. economy as a whole. I do want to say thank you to our loyal investors who believe in the vision and have stuck with us even in these down times across the industry recently. I jokingly say to my friends and family, that it is my goal to make all investors that have sold positive disappointed sometime down the road. We will keep executing as we have over the years and hope this will get rewarded in the public market at some point in the near future. All right, enough about that. I'm going to now turn in my comments and I'll turn it over to Matt Fowler, our CFO, for a more detailed review of our financial results for the second quarter ending June 30th, 2023.