Earnings call transcript: POSaBIT Systems sees profit growth in Q2 2025

POSaBIT Systems Corp, a point-of-sale technology provider with a market capitalization of $7.6 million, reported significant financial improvements during its second-quarter earnings call for 2025. Despite a decrease in total revenue compared to the previous year, the company achieved profitability and a substantial increase in its adjusted EBITDA. The stock price saw a notable rise, reflecting positive investor sentiment. According to InvestingPro analysis, the company maintains a FAIR financial health score of 1.93, suggesting stable operational fundamentals.

Key Takeaways

• POSaBIT reported a net income of $635,000, a turnaround from last year’s net loss.
• Revenue dropped to $2.7 million from $4.1 million in Q2 2024.
• The company maintained a gross margin of 70%.
• Operating expenses were reduced by 42%, enhancing profitability.
• The stock price increased by 15.38%, closing at $0.12.

Company Performance

POSaBIT Systems demonstrated robust financial health in Q2 2025, achieving a net income of $635,000, a significant recovery from a net loss of $454,000 in the same quarter of the previous year. The company’s focus on operational efficiency paid off, with a 42% reduction in operating expenses contributing to its profitability. Although total revenue decreased to $2.7 million, recurring revenue from its point-of-sale systems increased by 15% quarter-over-quarter, indicating strong demand for its services. InvestingPro data shows the company maintains a healthy current ratio of 1.62, suggesting adequate liquidity to meet short-term obligations.

Financial Highlights

• Total Revenue: $2.7 million (down from $4.1 million in Q2 2024)
• Net Income: $635,000 (compared to a net loss of $454,000 in Q2 2024)
• Gross Margin: 70% of revenue
• Adjusted EBITDA: $782,000 (up from $100,000 in Q2 2024)
• Cash on Hand: $806,000 (up 10% from Q1 2025)
• Debt Balance: Stable at $4.5 million

Market Reaction

POSaBIT’s stock price rose by 15.38%, closing at $0.12, reflecting investor optimism following the earnings report. The stock has moved significantly within its 52-week range, which spans from $0.035 to $0.19. The market’s positive response can be attributed to the company’s improved financial performance and strategic initiatives aimed at expanding its market presence. InvestingPro analysis suggests the stock is currently undervalued, presenting a potential opportunity for investors. For deeper insights into company valuations and more exclusive ProTips, explore InvestingPro’s comprehensive research platform.

Outlook & Guidance

Looking ahead, POSaBIT anticipates potential growth opportunities from the rescheduling of cannabis and the possibility of credit card processing if federal regulations change. The company is also focused on expanding its market reach into Oregon and New Mexico, which could further enhance its revenue streams. With trailing twelve-month revenues of $14.41 million and a gross profit margin of 48.78%, the company has demonstrated its ability to maintain profitable operations despite challenging market conditions. Discover more detailed financial metrics and growth indicators with an InvestingPro subscription, including exclusive ProTips and comprehensive company analysis. POSaBIT projects continued growth in gross margins and explores a potential one-time license buyout in the mid-8 figure range.

Executive Commentary

CEO Ryan Hamlin emphasized the company’s profitability and growth trajectory, stating, "Positive is profitable. We are growing, and we’re putting cash in the bank." He also highlighted the potential benefits of cannabis rescheduling and safe banking, which could enable the company to leverage credit card transactions. Additionally, Hamlin addressed the current stock price, describing it as "illogical," suggesting that the market has yet to fully recognize the company’s value.

Risks and Challenges

• Regulatory Changes: The company’s expansion and financial performance are closely tied to federal cannabis policy changes.
• Market Saturation: As POSaBIT expands into new states, it may face increased competition.
• Economic Conditions: Broader economic factors could impact consumer spending and the company’s revenue.
• Dependence on Cannabis Industry: The company’s growth is heavily reliant on the cannabis sector, which is subject to regulatory fluctuations.

Q&A

During the earnings call, analysts raised questions about the company’s limited investor communication strategy and the challenges associated with state-by-state expansion. Executives provided clarity on their ongoing licensing revenue model and addressed potential legislative impacts, emphasizing their strategic approach to navigating these challenges.

POSaBIT Systems Corp’s Q2 2025 earnings call highlighted its successful turnaround, strategic market expansion, and readiness to capitalize on upcoming regulatory changes, positioning the company for continued growth.

Full transcript - POSaBIT Systems Corp (PBIT) Q2 2025:

Conference Operator: Greetings and welcome to the Positive Systems Corporation Second Quarter twenty twenty five Earnings Call. At this time, all participants have been placed on a listen only mode and the floor will be open for questions and comments after the presentation. Please note this conference is being recorded. It is now my pleasure to turn the floor over to your host, Oscar Dahl. The floor is yours.

Oscar Dahl, Corporate Representative, Positive Systems Corporation: Thank you, operator. With me on this call are Ryan Hamlin, Chief Executive Officer and Emily Egan, Senior Corporate Controller. 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 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 a 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 SEDAR. 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 setting 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 defines adjusted revenue as gross revenue minus license support revenue plus actual licensing cash received as part of Posibis licensing deals. The company defines adjusted gross profit as adjusted revenue less company cost of goods sold. The company defines adjusted EBITDA as net income or loss generated for the period as reported before interest, taxes, depreciation, and amortization, and further adjusted to remove changes in fair value and expected credit losses, foreign exchange gains, and or losses in 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.

Ryan Hamlin, Chief Executive Officer, Positive Systems Corporation: Thanks, Oscar, and welcome, everyone. As a reminder, all the numbers that I’ll be talking about today are gonna be in US dollars. Q two was a historic quarter’s repository. You can see it clearly in the numbers we just released a half an hour ago. It’s a testament to all that all the work we put in into the company over the past twelve months, getting lean, improving efficiencies, focusing on operational excellence, and executing on all of our product goals.

Not only are the numbers great, but our customers are very happy. I’ll start with some key highlights in case you’ve missed the press release that came out thirty minutes ago. We had a massive adjusted EBITDA profit this quarter to the tune of 782,000, the most of any quarter in the history by seven x. A net income gain of 635,000 in q two. Again, this is the first quarterly income gain in the history of Positive Ed.

And a huge 78% adjusted gross profit margin versus 61% in q one of this year, another record for positive. And lastly, cash in hand grew quarter over quarter by 10%, and our accounts payable decreased by $2,000 versus q one. So we are paying down our debt and still putting money in the bank. So I guess if you take one thing away from this call today, it’s this. Positive is profitable.

We are growing, and we’re putting cash in the bank. Now I’m gonna update you on a few other details from the quarter. We installed our point of sale in over 50 new stores during q two, continuing the incredible momentum with our core product offering. We continue to dominate in Washington State and are now seeing more and more stores in Oregon and New Mexico. We believe this is due to our continued improvements in our POS, adding more and more key features that our merchants greatly appreciate.

Adding to overall reoccurring revenue with the POS is the continued success of our ecommerce menu, which brings in additional SaaS revenue to positive per store. We are seeing stores move away from third party menus like Jane and Dutchy, which is opening the door for us to offer a complete all in one solution to our customers. We are very excited about the future of our ecom offering. Product enhancements and new features will continue to be rolled out over the remainder of this year. I know we have talked about this many times in the past, but cannabis rescheduling is back in the news, and all indications this time are very positive.

We believe there is a good chance we see rescheduling happening in the coming months. If and when this happens, it’ll be a game changer for Positive. Our merchants will have more cash due to $2.80 e going away and the potential of actual merchant services like credit card processing. We’ve always talked about the upside when credit card processing is available. We are already processing over 2,000,000,000 in cash sales annually through our POS, and the majority of that would shift to credit and debit cards when available.

Our overall GMV will go up as our cost remains flat. This is the holy grail we’ve always talked about, but it’s now finally looking like it is on the horizon. We’ll share more to our investors as we learn how the Trump administration finalizes their ruling on rescheduling in the weeks and months ahead. Now I’d like to turn it over to Emily Egan, our senior corporate controller, to dive a little bit deeper into our q two members. Emily?

Emily Egan, Senior Corporate Controller, Positive Systems Corporation: Thank you, Ryan. I’m going to review two q two results. So this is the three months ending 06/30/2025 versus the same period last year. Total revenue was 2,700,000.0 in the 2025. And while this is down compared to 4,100,000.0 this time last year, the change was driven entirely by the transition to our new payment processing.

While within our revenue line, our POS recurring revenue actually increased by 15% quarter over quarter. So although top line revenue appears lower, this shift has positioned us squarely in the sweet spot for improved gross margins as Ryan highlighted. Gross margin was 1,900,000.0 or 70% of revenue compared with 2,200,000.0, which was only 54% of revenue in the 2024. This improvement reflects the reduction in processing costs following our payment processor change as well as an overall more favorable mix of higher margin revenue streams with POS. As a result, the improvement in gross margin flowed through to the bottom line with adjusted EBITDA meaningfully improving compared to last year’s second quarter.

Operating expenses were 1,600,000.0 this quarter, down by 42% compared to this time last year, which was at 2,800,000.0. The decrease was driven by lower professional fees, reduced share based compensation, and a favorable foreign exchange impact. Let’s look at that primary driver of professional fees. Professional expenses were a quarter million this quarter compared to 3 quarter million this time last year, a decrease of 64% with legal costs remaining that largest component. Operating income was 207,000 this quarter compared to an operating loss of 639,000 q ’2 of last year.

That’s a triple digit improvement of 132 percent. Again, kudos to team positive for all the hard work as Ryan outlined. On an adjusted basis, adjusted EBITDA was approximately 782,000 this quarter compared to adjusted EBITDA of only a 100,000 this time last year. The improvement again reflects both higher gross margins and disciplined expense management. Net income was 635,000 for the 2025 compared to a net loss of 454,000 this time last year.

The swing to profitability was driven by stronger gross margins and lower operating expenses, Impressive improvements to the p and l performance. To wrap it up, I’ll call out a few key balance sheet highlights as well. Cash on hand at 06/30/2025 was 806,000 as compared to a million dollars this time last year. However, when we look quarter over quarter, we are up 10% for a $100,000 from q one of this year. Our debt balance remained stable at 4,500,000.0.

And lastly, Positive Pay down $200,000 in outstanding accounts payable quarter over quarter, further cleaning up our books and setting us ourselves up for future success. And with that, I will hand it back to Ryan for closing remarks.

Ryan Hamlin, Chief Executive Officer, Positive Systems Corporation: Thanks, Emily. Before we get into our questions, I just wanna share a couple final thoughts. I wanna make sure our investors fully understand the impact of the results of this quarter. For the last several quarters, we’ve been talking with all of you about how we’ve been lean and efficient in our cost control, and how we’ve been able to continue to grow, particularly in the point of sale. It is great to finally be able to share these positive results from q two after several tough quarters, in the cannabis industry.

I wanna thank our amazing positive team, our board, our investors, all of you who’ve been patient with us during this time. Now I do wanna discuss our stock price. If you read the press release that went out half an hour ago, you’ll see a strong statement made by me about how we all remain very disappointed in our stock and our overall valuation of the company. Its current price, frankly, is illogical. As you can see by the numbers, the the degree to which we really hunker down as a company over the past year has now paid off in spades.

We focused on efficiency and profitability, and it worked. Most savvy investors will look at our total gross margin growth, our cash on hand, our point of sale growth, and our committed licensing revenue and frankly scratch their heads. Yes. We do trade on a lesser known market, and there tends to be a lot of day traders on those markets. But in the end, things are just not making sense.

We will continue to execute and have faith that the market will eventually respond in a way that reflects all the amazing work and profits that Positive has worked so hard to achieve. To all of you investors, I I just say stay positive. You have my commitment that we will keep working and executing. And, frankly, that’s all we can control. As a side note, our investors have been buying POSIT stock during the non blackout period this last month.

In fact, over half a million shares were purchased by insiders in July. Internally, we could not be more bullish about where Pozmit sits at the moment. We have built an incredible product. The company’s infrastructure is stronger than ever, and we sit in a solid financial position. Now I’m gonna open it up to questions and hand over to the operator so they can go over some logistics.

And then after that, we’re gonna turn to some of the mailed in questions. And I appreciate it. We actually got a fair amount of questions mailed in this time. Operator?

Conference Operator: 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 one on your telephone keypad. I’d now like to turn the floor back to Oscar Dahl for any questions he may have via email.

Oscar Dahl, Corporate Representative, Positive Systems Corporation: Alright. Thank you. First question we received, I’ve raised this point before as have other investors, but we’ve never received a clear answer. Does management have any concrete plans to implement a regular investor communication strategy, whether through press releases, updates, or other means?

Ryan Hamlin, Chief Executive Officer, Positive Systems Corporation: Good question. And, you know, I get emails from our investors quite a bit on this. And I I think we’ve been clear in this earnings call that we’ve spent the last two years trying to get lean and making sure that every dollar we spend has positive ROI. Part

Oscar Dahl, Corporate Representative, Positive Systems Corporation: of

Ryan Hamlin, Chief Executive Officer, Positive Systems Corporation: that was decreasing and looking at our marketing spend and our IR spend. And we made a business decision that at the time, it just doesn’t make a lot of sense to spend a lot of money in that area. Because we looked at what we had done in the prior years, and we’ve spent quite a bit of money. And frankly, it didn’t move the stock at all. And so like I mentioned, everything that we do now, we have a really hard line to make sure that the money that’s spent is spent well and does have a return.

And so it doesn’t mean that we’re not going to assess this and do more scheduled IR in the future. It just means that right now, my my hope is that most investors want us to put our energy and our time, on the company and the growth. And we have these quarterly earning calls, and I I hope everyone listens in and reads the the full press release and the numbers, because the numbers are gonna tell the best story, than than just the PR message that comes out occasionally. So, like I said, we’ll we’ll keep evaluating it. But at this point, we don’t wanna spend a lot of money in this area because we just haven’t seen any sort of positive return in the past.

Oscar Dahl, Corporate Representative, Positive Systems Corporation: Alright. Next email question. You’ve done a great job earning substantial market share in the state of Washington. Why have you not succeeded in doing the same thing in a meaningful way

Ryan Hamlin, Chief Executive Officer, Positive Systems Corporation: in other states? Yeah. We talk about this a lot. Washington is our home state. We’ve had a lot of success here, and I think we’re up to close to 90% of all transactions flow through our POS, which is amazing.

A lot of that stems from us being based here, but we’re very involved here in the state of Washington with the LCB. I’m on the board of the Washington Washington Cannabis Association. We have a great reputation with retailers and processors. And what I’ll say is it takes time. When you go into a new state, it’s not that easy.

Every state is different with its requirements. It requires product updates. It requires putting salespeople in the field. It requires us attending conferences in those states to get our reputation. So because cannabis isn’t federally legal, rules are different everywhere you go.

So it’s a little bit different beast than what a lot of people think. So we want to be lean. We want to maintain smart investments and making sure everything pays off. So the playbook that we executed in Washington, we’re starting to now execute in Oregon, and it’s working. So, yes, you will see us expand into other states, but we’re gonna do it strategically and do the playbook that we know worked in Washington.

We’re not gonna take a shotgun approach like a lot of our competitors and just try to go into as many states as possible. That’s proven, frankly, as a failed strategy. So we we’re gonna keep doing what we do right.

Oscar Dahl, Corporate Representative, Positive Systems Corporation: Alright. Next email question. There are a number of possible legislative bills and policies being considered that could dramatically change the cannabis landscape. What would be the best outcome for Pozabit, and what would be the least favorable? We think that part of the reason the stock has seen such low interest is that investors are confused about how these outcomes would help or hurt the company.

Ryan Hamlin, Chief Executive Officer, Positive Systems Corporation: Yeah. Good question. And I hope you got some of that earlier in this call when I addressed this already about the likelihood of rescheduling. We know that a

Oscar Dahl, Corporate Representative, Positive Systems Corporation: lot

Ryan Hamlin, Chief Executive Officer, Positive Systems Corporation: of these things have been talked about for years in the industry. In particular, there’s three initiatives, There’s safe banking, there’s rescheduling to a Schedule III drug, and then there’s full federal legalization. And frankly, safe banking has been tried, I think, seven times to go through the the house and the senate, and it’s failed. I think safe banking, as we know it today, is probably pretty dead. I think safe banking will make a comeback once rescheduling happens.

So I think everyone on this call should realize rescheduling is, I think, in motion and has a very high chance of passing. If you just look at some of the recent quotes that Trump made two weeks ago at at a fundraiser. There was a lot of questions asked about this, and and there was a commitment made that that an answer would be coming soon in the next coming weeks. So excited for that. If rescheduling happens, like I said, $2.80 goes away, that’s a lot more money for our merchants.

That’s a good thing to pause, but that means more services more services revenue for us as well. If federal legalization would happen, that would be great, but I don’t think anyone in the cannabis industry thinks that’s happening anytime soon. So I would, you know, I would look at it as rescheduling first, safe banking second, and then federal organization third. But with each of those, I want our investors to know that that’s a positive move. That’s a really good thing for POS.

But we want rescheduling. We want safe thinking because, again, it goes back to leveraging credit cards, which we already have a ton of money coming through our POS, but also $2.80 going away.

Oscar Dahl, Corporate Representative, Positive Systems Corporation: Alright. Final email question. Why are management and or major insiders no longer buying, at least in a meaningful way? We know that insiders already own a lot of stock. But at the current levels, why are you not making at least small purchases anyway given these absurd prices?

We know that there are limited windows for insiders. That doesn’t explain it as even going back a full year, there

Ryan Hamlin, Chief Executive Officer, Positive Systems Corporation: have been limited purchases. And then secondly, how do

Oscar Dahl, Corporate Representative, Positive Systems Corporation: we drive a return to meaningful growth in adjusted gross profit dollars?

Ryan Hamlin, Chief Executive Officer, Positive Systems Corporation: Yeah. I I guess I’ll start and echo what I said earlier, which is I agree the stock price is ridiculous, and it’s definitely not reflective of our results. If you just look into the numbers that we released and you look at the broader picture, you look at our adjusted revenue by quarter, you multiply that by four quarters, you’re gonna do about 15,000,000 adjusted revenue. We’re gonna do about 12,000,000 in adjusted gross profit. We’re putting cash in the bank.

We’re profitable. I mean, these are these are things that are kind of mind blowing when we look at the current valuation of stock. Again, I’m gonna attribute some of this to smaller changes like CSC and OTC and some of the trading that happens on those markets. The next natural question will be, well, then, you know, Ryan, why aren’t you up listening to TSX? Well, we talked about this, and we were talking about getting to the TSX.

And that was when the company’s valuation was much different than where it is today. So it’s still there. It’s still a possibility. The board talks about it, but it’d be silly to do that now and spend a bunch more money on uplifting when what we’re doing right now is putting cash in the bank and also, where the valuation is. So, yes, it’s coming, hopefully, a larger market, but right now, it just it it doesn’t make sense.

Regarding your second question about driving meaningful gross profit dollars, I think and I appreciate you sent this in before you read our our press release, but, obviously, we did grow our adjusted gross profit dollars very meaningfully. We grew 300,000 over q one. So in the grand scheme of things, that’s a that’s a huge percentage of growth. So this is something we’re focused on. We’ll continue to focus on.

You’re gonna see us keep growing our gross profit each quarter. We’ve we’ve I’ve got ourselves very lean, which is great. So that means as we grow, gross margin should grow. Gross margin dollars should grow. And then the last thing, I guess I forgot to mention is, yeah, insiders.

I mentioned earlier, but our insiders are buying. It’s we all look at stock price. We see it too and and scratch our heads. So thanks for that that question. It’s a good one, and we’ll keep just executing and hope that the market responds appropriately.

So I guess with that, we’re gonna turn it over to the operator again if you have any questions that have come in on the phone.

Conference Operator: Thank you. We do have a question coming from Paul Johnson, private investor. Paul, please proceed.

Paul Johnson, Private Investor: Thank you and congratulations on the quarter. Can you talk a little bit about the company license? I think it ends well, last year starts in August month, and it’s a $6,150,000 payment, but then it’s over at that point. I assume, first of all, that everything with the licensing company is status quo and no changes there. And what do you plan to do once that money discontinues a year from now?

Ryan Hamlin, Chief Executive Officer, Positive Systems Corporation: Good question, Paul. And, yeah, thanks for bringing that up. Obviously, enjoyed that deal. It’s been a great deal for us financially. When that ends in roughly thirteen months, there is a ongoing residual that continues.

So the money doesn’t stop. There’s still an ongoing residual. So the companies that are using our software license still have a commitment to perpetuity to pay us a per terminal licensing licensing fee per month. So I do wanna be clear. Money does not go away.

I will say the money does go down, but it definitely doesn’t go away. So there still is a gap, if you wanna think of it that way. And and our team has been looking at this very closely and figuring out, okay. How do we fill that remaining gap after the ongoing residual? So there is some new things that, new products that we’ll be putting in the market that will drive additional revenue.

There is the ecom menu, which we’ve been seeing a lot of very positive growth on, and that’s all incremental new revenue. So between the new services that we forecast out and the ongoing residual to perpetuity, we feel confident that that gap is is not is is very small or nonexistent by the time we get there in thirteen months.

Paul Johnson, Private Investor: Okay. And and the really

Ryan Hamlin, Chief Executive Officer, Positive Systems Corporation: Let me just add one other sorry. Sorry, Paul. One other quick comment. The other option is without the on if if the the company that is using our software decides not to pay the ongoing residual, they have an opportunity to to do a onetime buyout, which is a in the mid 8 figure number. So, you know, I think we’re covered both if they were to buy it out and or this ongoing residual.

Paul Johnson, Private Investor: You’re saying they have an option to buy what out?

Ryan Hamlin, Chief Executive Officer, Positive Systems Corporation: The the ongoing residual that is to perpetuity. If they don’t wanna keep paying that monthly perpetuity license, they could buy the license out, but that would, be a very large substantial payment that would be right now, it’s probably 10 times the value of the company. So

Paul Johnson, Private Investor: Gotcha. Okay. Understood. And and your relationship with the company

Ryan Hamlin, Chief Executive Officer, Positive Systems Corporation: It’s it’s status quo? Yeah. It’s very good. Yep. We view them as partners.

We have a good relationship. Excellent. Thank you. Thanks, Paul.

Conference Operator: We have no further questions in the queue. This concludes today’s conference, and you may disconnect your lines at this time. Thank you for your participation.

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