10-Q: Leafbuyer Technologies Q1 2026 Financial Update

Leafbuyer Technologies reports a 35% revenue decline in Q1 2026 due to new FCC regulations impacting SMS/MMS marketing.

Summary

• Leafbuyer Technologies reported revenue of $1.13 million for the three months ended March 31, 2026, a decrease of 35% compared to $1.73 million in the same period of 2025.
• For the nine months ended March 31, 2026, revenue was $3.06 million, down 39% from $5.06 million in the prior year period.
• Net income for the three months ended March 31, 2026, was $139,419, a decrease of 41% from $235,154 in the prior year period.
• Net income for the nine months ended March 31, 2026, was $14,796, a significant decrease from $321,471 in the prior year period.
• The company has a working capital deficit of $906,679 as of March 31, 2026, and is dependent on future financing.
• The company's ability to continue as a going concern is subject to doubt, dependent on future profitable operations and/or obtaining necessary financing.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative filing due to significant revenue and net income declines, coupled with substantial going concern doubts, despite efforts to comply with new regulations.

Positives

• The company has $956,154 in cash and cash equivalents as of March 31, 2026.
• Operating expenses decreased by 14% for the three months ended March 31, 2026, compared to the same period in 2025, due to lower stock-based compensation and sales commissions.
• The company has restructured its platform to ensure 100% compliance with new FCC regulations.
• Some customers have returned after competitor promises proved unsustainable.

Negatives

• Revenue for the three months ended March 31, 2026, decreased by 35% to $1.13 million from $1.73 million in the prior year period.
• Revenue for the nine months ended March 31, 2026, decreased by 39% to $3.06 million from $5.06 million in the prior year period.
• Net income for the three months ended March 31, 2026, decreased by 41% to $139,419 from $235,154 in the prior year period.
• Net income for the nine months ended March 31, 2026, decreased by 95% to $14,796 from $321,471 in the prior year period.
• The company has a working capital deficit of $906,679 as of March 31, 2026.
• There is substantial doubt about the company's ability to continue as a going concern within one year.

Risks

• New FCC regulations (FCC 23-107) and 10DLC compliance requirements have altered SMS/MMS marketing strategies, impacting revenue.
• The company's ability to continue as a going concern is dependent on generating profitable operations and/or obtaining necessary financing.
• The company operates in a rapidly evolving and highly regulated industry (cannabis).

Future Outlook

The company expects to earn back some of the lost revenue moving forward due to platform restructuring for FCC compliance and the addition of several channel partner agreements. However, the ability to continue as a going concern is dependent on generating profitable operations and/or obtaining necessary financing.

Management Comments

• The company has completed a restructuring of its platform to ensure Leafbuyer Technologies Inc is 100% compliant and existing customers are able to send SMS or MMS messages without having to worry about compliance.
• Some customers have returned after realizing this change affects the entire text marketing industry, and after empty promises by competitors were found to be non-sustainable.
• With these changes and the addition of several channel partner agreements we expect to earn back some of this lost revenue moving forward.

Industry Context

StockSavvy.ai notes that the revenue decline is attributed to significant regulatory changes in the SMS/MMS marketing space, specifically FCC 23-107 and 10DLC compliance, which have impacted the entire industry. Competitors are also facing similar challenges, with some failing to provide sustainable solutions.

Comparison to Industry Standards

• The filing does not provide specific comparisons to industry benchmarks or competitors' financial results.
• The company operates in the cannabis marketing technology sector, which is subject to evolving regulations and market dynamics.

Legal Proceedings

• The company is not aware of any legal proceedings to which it is a party or of which its property is the subject.
• The company is not aware of any legal proceedings threatened against it.

Related Party Transactions

• The company had outstanding notes payable to related parties, which have been paid in full as of September 17, 2024.
• Accrued interest on these past related party notes was recorded in accrued liabilities as of March 31, 2026.

Stakeholder Impact

• Shareholders may experience a negative impact due to the decline in revenue and net income, and the going concern uncertainty.
• Customers are impacted by the new FCC regulations affecting SMS/MMS marketing, though the company is working to ensure compliance.
• Creditors and lenders may be concerned about the company's ability to meet its obligations given the going concern issues.

Next Steps

• Continue to work with customers to navigate the new FCC regulatory landscape.
• Pursue channel partner agreements to regain lost revenue.
• Seek necessary financing (equity or debt) to meet obligations and continue operations.

Key Dates

Recommendation

While the company is facing significant headwinds due to regulatory changes and a going concern warning, its efforts to comply and secure future financing warrant a hold. Investors should monitor the success of its compliance strategy and capital raising efforts.

Keywords

Leafbuyer Technologies, 10-Q Filing, Cannabis Marketing, SMS Marketing, FCC Regulations, Financial Results, Going Concern, Revenue Decline