Pineapple Financial Inc. (PAPL) Earnings Call Transcript & Summary

Good day, and welcome to the Pineapple Financial Fourth Quarter and Full Year 2025 Financial Results Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Jack Perkins, Senior Vice President of Investor Relations at KCSA Strategic Communications. Please go ahead.

Thank you, operator. Good morning, and welcome, everyone, to the Pineapple Financial Fiscal Fourth Quarter and Full Year 2025 Financial Results Conference Call. I'm joined today by Shubha Dasgupta, Chief Executive Officer; and Sarfraz Habib, Chief Financial Officer. Before we begin, I'm going to remind everyone that statements made during today's conference call may be deemed forward-looking statements within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially due to a variety of risks, uncertainties and other factors. For a detailed discussion of some of the ongoing risks and uncertainties in the company's business, I'll refer you to the press release issued this morning and filed with the SEC on Form 8-K as well as the company's reports filed periodically with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless otherwise required by law. In addition, during the call, we may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States, and they may be different from non-GAAP financial measures used by other companies. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure are contained in our earnings release issued this evening, unless otherwise noted. At this time, I would like to turn the call over to Pineapple's Chief Executive Officer, Shubha Dasgupta. Shubha?

Good morning, everyone, and thank you for joining us today. Today's call marks the start of a new chapter for Pineapple Financial. It's a chance to show how far we've come, how much we've evolved and where we're going next. Our story today is a unified one, a scaled mortgage business, a growing digital asset treasury and an expanding on-chain platform, all working together to shape the future of finance. If there's one theme that runs through everything we do, it's innovation, innovation that drives efficiency, strengthens profitability and will create long-term value for our shareholders. Before we review where we're going, let's take a moment to reflect on where we came from. About 10 years ago, my co-founders and I took a close look at the mortgage industry and saw an opportunity to make it better. The industry was stuck in time, slow, paper-heavy and disconnected, and we believed technology could change that. So we built Pineapple to be something smarter, faster and more intuitive for consumers, brokers and lenders alike. Over time, our goal was simple: to build a platform that improves the entire mortgage experience for everyone involved. Today, Pineapple has become one of the fastest-growing mortgage companies in Canada. We fund billions of dollars in mortgages each year and work with hundreds of brokers across the country. Every day, our platform helps thousands of people from first-time buyers to investors navigate one of the most important financial decisions in their lives. Through all that growth, we've stayed true to the same principles that got us here, innovation, integrity and impact. Our platform is cloud-based and connects the entire mortgage process from start to finish from lead generation to funding. We integrate directly with every major Canadian lender, including TD, Scotiabank, HomeTrust and others, allowing brokers and borrowers to work together seamlessly in one place. From the beginning, our mission has been to remove friction from the mortgage process by bringing acquisition, management, retention together, all under one roof. We're building something that's faster, smarter and more transparent for everyone involved. A few years ago, we recognized that artificial intelligence was going to transform financial services. We joined one of the first AI accelerators based at the University of Toronto and quickly realized that most companies weren't ready for AI, not because they lacked ambition, but because their data simply wasn't structured for it. That insight led us to completely rebuild our data architecture from the ground up that we could be ready for the future. Today, Pineapple is one of the first mortgage companies in Canada with AI fully integrated into its workflows. Our AI reviews and cross-checks documents for accuracy, fraud, analyzes borrower profiles and automatically matches customers with the best mortgage products for their needs. It even powers personalized broker websites and marketing content, helping our brokers reach more clients with less effort. We partnered with Google's Gemini AI to securely run these models inside our own environment. This ensures all customer data stays private, never shared, sold or used to train any external model. The results have been tremendous. We've reduced annual operating costs by more than $1 million while improving both scalability and efficiency across our business. As I mentioned, innovating is core to everything we do here at Pineapple. And earlier this fall, we launched something we're incredibly proud of for $100 million Injective Digital Asset Treasury Strategy. This initiative makes Pineapple the world's largest publicly traded holder of INJ tokens and marks a major step forward as we bridge traditional finance with the on-chain economy. The goal is simple, to create a new institutional standard for how public companies hold, manage and grow digital asset treasuries. This isn't a side project. It's a strategic move that puts Pineapple at the intersection of fintech and blockchain-based finance. The Injective Foundation, along with its co-founders, personally invested in this program at a premium and under long-term lockups, demonstrating confidence in both our vision and execution. We also partnered with anchor investors, including FalconX, Monarq Asset Management, Canary Capital and Kraken, all of whom bring deep expertise and institutional credibility to the table. Injective is one of the most advanced and fastest-growing blockchains in the world. It's purpose-built for financial applications with instant transaction finality, 0 gas fees and the ability to process over 25,000 transactions per second. So far, Injective has processed over $73 billion in transaction volume, facilitated more than 2.6 billion individual transactions and permanently burned 6.8 million INJ tokens, an important component of its deflationary model that supports long-term value creation. It's also one of the only major tokens that's fully circulating. There's no unlock risk, no future vesting schedules and no hidden overhang. In fact, over half of all INJ tokens are currently staked and the entire supply is already in market, making Injective one of the most transparent and stable ecosystems in blockchain. Each week, on-chain revenue is used to buy back and burn tokens, creating natural scarcity as usage continues to rise. With staking yields averaging between 10% and 12% annually paid in stable assets like USDC and ETH, Injective offers a compelling opportunity for institutional treasuries. Network activity has grown more than 1,000% year-to-date, supported by participation from major institutions, including Coinbase, Galaxy, Google Cloud, Deutsche Telekom and Republic. This level of institutional adoption speaks volumes about the strength and staying power of the Injective network. For Pineapple, this is much more than an investment. It's a strategic differentiator and a new long-term revenue channel that complements our core business. As we accumulate and stake INJ, our treasury generates a steady compounding yield stream that increases our holdings over time. As I mentioned, we expect those yields to be in the 10% to 12% range, driven by real network activity rather than speculation or leverage. It's a sustainable and transparent source of income that reinforces our focus on profitability. Just as important, this strategy connects directly to our operating business. Through Injective, we can now build on-chain mortgage products that operate on the same blockchain we're investing in. Our data, our treasury and our technology, all working in sync, creating a powerful flywheel of growth, transparency and innovation. This is how we continue to stay ahead of the curve by integrating blockchain technology into real-world financial systems. We're expanding access, improving efficiency and driving new value for shareholders. Looking ahead, this strategy places Pineapple as the first public company in North America to combine a profitable mortgage platform with a digital asset treasury on the same balance sheet. It gives public market investors something new, direct exposure to the INJ ecosystem through a listed equity vehicle. That's something institutions have been looking for, but haven't had a simple way to access until now. When you take a step back, the broader opportunity becomes even clear. More than $130 trillion in global assets are expected to move on chain by 2030. Pineapple is positioned right at the intersection of 2 massive industries, mortgage finance and blockchain infrastructure. In short, we're not just watching the future of finance unfold, we're helping to build it. It's important to point out that our digital asset treasury doesn't exist separately from our core operations. It strengthens them. Our AI and on-chain systems now work together to reduce processing costs, speed up funding and improve accuracy across the platform. The objective partnership has already raised our visibility in the market. We're seeing more inbound interest from brokers, lenders and investors who want to be a part of what we're creating. We've also gained access to world-class blockchain engineers and product experts without the overhead cost of building those capabilities internally. All of this makes Pineapple a stronger, more efficient and more innovative company with multiple growth levers and better operating leverage over time. I'd like to take a moment to reflect on what defines Pineapple. Over the past decade, our journey is built on consistent innovation. Our mortgage platform generates data that strengthens our treasury. Our treasury fuels innovation and that innovation in turn accelerates our mortgage platform. It's a cycle of growth and efficiency that perfectly captures what Pineapple stands for, technology-driven finance built for the modern era. We are pioneers in digitizing mortgages. We are pioneers in bringing AI into the mortgage process. And now we're leading the way in bringing real mortgage data and financial operations on chain. Pineapple shows that fintech can be both profitable and pioneering, balancing growth and governance and innovation with execution. We're incredibly excited about what's ahead and deeply grateful to our investors, partners and especially our team for making it all possible. With that, I'll hand things over to Sarfraz to review our financial results. Sarfraz?

Thank you, Shubha, and thank you to today's call attendees for your continued support of Pineapple Financial. I will now walk through our financial performance for the fiscal year ended August 31, 2025, and discuss progress in our key performance indicators and outline the steps we are taking to position Pineapple for a long-term financial stability and growth. Fiscal year 2025 was a year marked by operational resilience, disciplined cost management and meaningful improvements in productivity and innovation across our business. Despite elevated interest rate pressures and continued softness in the Canadian housing market, we delivered year-over-year gains across mortgage volume, gross billings and total revenue. For fiscal year 2025, our total revenue was $3.0 million, an increase of 11% compared to $2.7 million in fiscal year 2024. Revenue growth was driven by higher mortgage funded volumes, along with early traction in our insurance revenue stream and stable subscription income from our agent base. Worth noting, we continue to present mortgage revenue on a net basis, consistent with our role as an agent under U.S. GAAP ASC 606. Total operating expenses for fiscal year 2025 declined from $6.5 million to $5.9 million, an improvement of 8.9% year-over-year. Operating loss also narrowed by 11.3% to $3.6 million compared to $4.1 million in fiscal year 2024. Several factors contributed to our improved cost structure, including a 5.4% year-over-year decline in selling, general and administrative expenses to $2.3 million tied to streamlined operations and reduced reliance on external services. Workforce optimization and enhanced automation also aided the decrease in operating expenses. Investment in technology development totaled $944,000, consistent with our strategy to enhance Pineapple+ and our internal infrastructure. Through August 31, 2025, cash on hand was $2.1 million compared to $0.6 million at the end of fiscal year 2024. Net cash provided by financing activities totaled $3.46 million, reflecting warrant conversion, short-term funding support and our May 2025 equity raise. This improved liquidity provides us with the foundation we need to execute on our strategic initiatives, including insurance expansion and technology development. Finally, I want to provide a few highlights in regard to our key performance indicators, including in our earnings report. Mortgage volume increased to $1.6 billion, up from $1.5 billion as of August 31, 2025, a 4.6% year-over-year increase driven by stronger renewal and refinance activity. Gross billing rose to $17.4 million compared to $16.3 million at fiscal year-end 2024, a 7.2% increase, reflecting increased throughput and agent activity. Net sales revenue grew to $1.6 million, up from $1.4 million, a nearly 18% improvement, while subscription revenue remained stable at $750,000, supported by continued adoption and retention of our Pineapple+ platform. Insurance revenue totaled $198,000, marking our first full year of activity for Pineapple Insurance. Underwriting revenue was $126,000 and other income totaled $308,000 primarily from technology setup and sponsorship fees. These results tell a clear story. Our diversified revenue model is working. Our agents are becoming more efficient on our platform and Pineapple Insurance is beginning to contribute incrementally as planned. Our financial discipline, combined with our technology and people-first strategy has positioned Pineapple to capitalize on improving market conditions as interest rates stabilize and borrower confidence returns. Thank you for your time. We appreciate the continued support of our shareholders and partners. We will now open the call for questions. Operator?

Our first question is from Jason Kolbert with D. Boral Capital.

Congratulations on all the progress. I wondered if you could talk a little bit about the intersection or the outlook of interest rates and the mortgage business. And also, if you could offer any sense of guidance on what we might be looking for in terms of revenues over the next year or 2?