Exchange: OTC | Sector: Communication Services | Industry: Internet Content Information
Q3 2024
Published: Sep 20, 2024
Earnings Highlights
Revenue of $1.50M up 16.4% year-over-year
EPS of $0.00 increased by 32% from previous year
Gross margin of 37.6%
Net income of -171.65K
"N/A" - N/A
Leafbuyer Technologies Inc (LBUY) QQ3 2024 Results Analysis: Revenue Growth Amid Persistent Losses and Balance Sheet Strain in Cannabis Digital Advertising
Executive Summary
Leafbuyer Technologies Inc (OTC: LBUY) reported Q3 2024 revenue of $1.4967 million, up 16.37% year over year and 4.36% quarter over quarter, supported by ongoing demand for cannabis-deals-focused content. Gross profit reached $563.1k with a gross margin of 37.6%, illustrating a stable product contribution but profitability remained constrained by elevated operating costs. The quarter produced an EBITDA of $41.7k (2.78% margin) but the company continued to incur a net loss of $171.6k, translating to an EPS of -$0.0017. Operating income was negative at -$139.4k, highlighting that, even with improving gross margins, G&A and selling expenses plus other costs outweighed operating performance.
From a balance-sheet and cash-flow perspective, Leafbuyer exhibits notable liquidity and leverage weaknesses. Cash and cash equivalents stood at $0.156 million at quarter end, with total current liabilities of $2.383 million and long-term debt of $0.456 million (short-term debt of $1.067 million), culminating in a current ratio of 0.156 and a net debt position of approximately $1.367 million. Operating cash flow was negative by about $0.053 million, and free cash flow was also negative by approximately $0.053 million, underscoring ongoing cash burn and balance-sheet risk. The company carried negative shareholders' equity (~$1.787 million), suggesting financial flexibility constraints absent additional financing or strategic restructuring.
Management commentary is not captured in the provided transcripts, and there is no earnings-call transcript available in the data set to anchor forward guidance. Given regulatory and competitive dynamics in cannabis advertising, the near-term path to sustainability will likely hinge on continued revenue monetization, cost discipline, and any capital-structure actions. Investors should monitor liquidity runway, debt maturities, gross-margin stability, and the trajectory of revenue growth to assess the potential for a meaningful path to profitability.
Net Income: -$171,649; Net Margin -11.47%; YoY +28.85%; QoQ +21.98%
EBITDA: $41,679; EBITDA Margin 2.78%
Financial Highlights
- Revenue: $1,496,714; YoY +16.37%; QoQ +4.36%
- Gross Profit: $563,051; Gross Margin 37.6%; YoY +9.03%; QoQ +254.05%
- Operating Income: -$139,432; Operating Margin -9.32%; YoY -3.25%; QoQ +29.25%
- Net Income: -$171,649; Net Margin -11.47%; YoY +28.85%; QoQ +21.98%
- EBITDA: $41,679; EBITDA Margin 2.78%
- EPS: -$0.0017; YoY +32.00%; QoQ +22.73%
- Cash Flow: Net cash provided by operating activities -$53,428; Free cash flow -$53,430
- Liquidity: Cash $155,942; Total current assets $371,362; Total current liabilities $2,383,164; Current ratio 0.156; Quick ratio 0.156; Cash ratio 0.0654
- Balance Sheet: Total assets $1,053,062; Total liabilities $2,839,298; Total stockholders’ equity -$1,786,236; Short-term debt $1,066,619; Long-term debt $456,134; Net debt ~$1,366,811
- Activity: Receivables turnover 7.70x; Asset turnover ~1.421x; Content platform monetization remains the key driver of gross profit vs. operating cost balance.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.50M
16.37%
4.36%
Gross Profit
563.05K
9.03%
254.05%
Operating Income
-139.43K
-3.25%
29.25%
Net Income
-171.65K
28.85%
21.98%
EPS
0.00
32.00%
22.73%
Key Financial Ratios
currentRatio
0.16
grossProfitMargin
37.6%
operatingProfitMargin
-9.32%
netProfitMargin
-11.5%
returnOnAssets
-16.3%
returnOnEquity
9.61%
debtEquityRatio
-0.85
operatingCashFlowPerShare
$-0
freeCashFlowPerShare
$-0
priceToBookRatio
-1.46
priceEarningsRatio
-3.8
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No management transcript data were provided in the provided materials. As such, there are no direct quotes or thematic highlights from an earnings call to cite. If a verbatim transcript or management Q&A is supplied, the highlights can be added under this section with quotes grouped by themes (strategy, operations, market conditions) and annotated for their significance.
N/A
— N/A
N/A
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Forward Guidance
No explicit forward guidance is contained in the supplied data. Given the current quarter’s results, a cautious, scenario-based view is warranted. Potential outcomes hinge on: (1) revenue growth acceleration through expanded advertiser relationships and monetization of Leafbuyer’s deal-platform content; (2) ongoing operating-cost discipline to shrink the gap between gross profit and operating expenses; (3) liquidity management and debt maturity planning to extend runway or secure new financing; and (4) regulatory developments affecting cannabis advertising and consumer access. Suggested monitoring metrics include: quarterly revenue growth rate, gross margin stability, SG&A/operating expense ratio, FCF trajectory, working capital changes, and any announced debt refinancing or equity financing. Management would also need to address balance-sheet leverage and equity position to restore financial flexibility.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
LBUY Focus
37.62%
-9.32%
9.61%
-3.80%
ALEAF
-35.50%
-77.70%
-8.04%
-34.00%
CVSI
45.10%
-10.70%
-12.80%
-4.09%
DGTHF
30.50%
-69.80%
12.30%
-35.20%
ITHUF
44.90%
-3.12%
12.40%
-1.48%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Investment risk is high given the small scale of the business, negative equity, and cash-bleed operating losses. The QQ3 2024 results show revenue growth and a modest EBITDA buffer, but the gap to sustained profitability remains wide. Until Leafbuyer demonstrates meaningful free cash flow improvement, a meaningful reduction in leverage, or a credible plan to restore equity, the stock represents a high-risk, high-uncertainty opportunity suitable only for risk-tolerant investors. Near-term catalysts would include debt refinancings, capital raises, or strategic cost-reduction initiatives that materially extend liquidity and improve profitability metrics. Evaluators should weigh the potential upside from cannabis-market growth and digital-ad monetization against the pronounced balance-sheet and liquidity constraints evident in the QQ3 2024 results.
Key Investment Factors
Growth Potential
Growth potential hinges on expanding advertiser base, improving monetization of Leafbuyer’s platform, and potential partnerships or premium offerings in cannabis deals and information services. If Leafbuyer can scale revenue meaningfully without proportional cost increases, the current margin framework could improve over time.
Profitability Risk
Key risks include persistent negative equity and heavy leverage, limited liquidity, and a reliance on a highly regulated cannabis advertising environment. Additional debt maturities or financing rounds could dilute shareholders. Competitive pressure from other cannabis-focused portals and macro cannabis market volatility could cap revenue growth.
Financial Position
A precarious financial position characterized by current liabilities far exceeding current assets (current ratio 0.156), net debt of ~$1.37 million, and negative shareholders’ equity (~$1.79 million). Cash runway is limited (~$0.156 million), with negative operating cash flow, underscoring dependence on external financing to sustain operations.
SWOT Analysis
Strengths
Niche online platform focused on cannabis deals and promotions, leveraging a specialized audience in the cannabis ecosystem.
Gross margin of ~37.6% in Q3 2024 indicates a viable product contribution when matched with controllable operating costs.
Weaknesses
Negative shareholders’ equity (~$1.79 million) and significant net debt (~$1.37 million) create balance-sheet fragility.
Low liquidity, evidenced by current ratio of 0.156 and cash balance of ~$0.156 million.
Persistent operating losses (net income -$171.6k) despite revenue growth.
Limited visibility due to lack of management commentary or forward guidance in the provided data.
Opportunities
Ramping cannabis-advertising growth in compliant markets could expand revenue opportunities.
Potential for platform monetization improvements and premium services to increase ARPU.
Strategic partnerships or monetization deals with operators in the cannabis sector.
Threats
Regulatory risk and evolving advertising restrictions in cannabis could constrain monetization.
High competition in cannabis digital content and deal directories.
Financing risk and potential dilution if additional capital is needed to fund operations and debt service.