Posabit Systems Corp

Good day, everyone, and welcome to the Positbit Systems Corporation First Quarter 2025 Earnings Call. At this time, all participants have been placed on a listen-only mode. If you have any questions or comments during the presentation, you may press star 1 on your phone to enter the question queue at any time, and we'll open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Oscar Dial, Chief Administrator

Thank you, operator. With me on this call is Ryan Hamlin, Chief Executive 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 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 in Section 21 of the Security Exchange Act in 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 will also be citing adjusted EBITDA, adjusted revenue, and adjusted gross profit in today's discussion. Adjusted revenue, adjusted gross profit, and adjusted EBITDA are non-IFRS measures used by management that do not have any prescribed meaning by IFRS and may not be comparable to similar measures presented by other companies. The company defined adjusted revenue as gross revenue minus license support revenue plus actual licensing cash received as part of POSBIT's licensing deals. The company defined adjusted gross profit as adjusted revenue less company cost of goods sold. The company defined adjusted EBITDA as net income or loss generated for the period as reported before interest, taxes, depreciations, and amortization and further adjusted to remove changes in fair value and expected credit losses. foreign exchange gains, and or losses and impairments. The company believes these non-IFRS measures are useful metrics to evaluate its core operating performance and uses these measures to provide shareholders and others with supplemental measures of its operating performance. The company also believes that securities analysts, investors, and other interested parties frequently use these non-IFRS measures in the evaluation of companies, many of which present similar metrics when reporting their results. We caution that adjusted revenue, adjusted gross profit, and adjusted EBITDA are not substitutes for gross revenue, gross profit, or profit loss, respectively. 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 we'll be talking about today are in U.S. dollars. I do appreciate everyone who's made the time to listen in today. I know a call at 4.30 PM on Eastern time on a Friday is not ideal. But as you know, we just recorded our annual earnings for 2024 about a month ago. So not a lot has changed since we last spoke. So we're going to keep today's call relatively short. I would characterize Q1 of 2025 as another consistent quarter based on our last four quarters, meaning Our adjusted gross margin dollars and adjusted gross margin percent remain relatively similar quarter over quarter. This is a tribute to us focusing on being efficient with our resources and focusing on ways to maximize our gross profit, even in months where revenue may be slightly down. We continue to see excellent growth within our point of sale side of the business. We onboarded over 50 new locations in Q1 alone, with no signs of slowing down. Our product continues to win in both new retail locations and existing stores that are looking to make a move away from Dutchie and other POS providers. Our new e-commerce platform has seen similar success, growing rapidly since our beta launch early last year. This product, in particular, has exceeded our forecast. We see e-com as a key product for POSBIT now and in the future, and are looking forward to honing and improving the platform over the coming months. We are focused on organizational efficiency and financial stability. Positively, it remains in a solid position, especially compared to much of the cannabis industry. We have a number of initiatives and projects in the hopper that we'll be announcing over the coming months. Jumping into the numbers briefly, I'd like to just highlight a couple of key points. Top line revenue was down slightly quarter over quarter. This is almost entirely due to our continued migration from one payment processor to another, an effort we are taking on to improve our overall gross margin dollars as opposed to top line revenue and reduce our overall risk to our payments business. In that vein, adjusted gross margin percentage increased slightly quarter over quarter from 64% in Q4 of last year to 65% in Q1. which for us was an all-time high for positive. Also, if you look at Q1 of 2024 versus Q1 of 2025, you will see our adjusted gross profit grew by 9.4% year over year, and our adjusted EBITDA grew by 93.5%. This is a massive improvement in our adjusted EBITDA from Q1 of this year versus Q1 of last year. Our available cash went down slightly in Q1 from where we ended it in Q4 of 2024. The reduction of cash is due to paying off a final payment on a legal liability, small incremental salary increases for non-executive level employees, basically a slight COLA increase, and our continued goal of paying down aged payables. We will actually cash flow positive in the quarter, and we expect this quarter and all future quarters to show a positive influx of cash. Lastly, looking forward, we expect to see a slightly better Q2 in both adjusted gross margin dollars and adjusted EBITDA. I'm not prepared to give formal guidance on this call, but we remain very optimistic about the future of positives. And with that said, as I mentioned, it's pretty brief here on our Q1 call. I'd like to hand the call back over to the operator. If there are any questions in the queue, I'll answer them now.

Certainly. Everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while posing a question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if there are any questions or comments, please press star 1 on your phone.

Please hold while you poll for questions. Thank you. There are no questions in the queue. Thank you. Once again, there are no questions in the queue at this time.

Thank you, operator. We'll be concluding the call. Appreciate it. Thanks for everyone for joining us all today.

Thank you. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.