SHF Holdings 2025 Q1 Earnings Misses Targets with Net Income Down 115.3%

SHF Holdings (SHFS) reported its fiscal 2025 Q1 earnings on May 21st, 2025. The company failed to meet expectations as both revenue and net income figures demonstrated significant declines compared to the previous year. Despite projecting continued revenue growth, the guidance remains cautious, with expectations to improve earnings per share to -$0.11. SHF Holdings aims to enhance operational efficiency and expand its market reach in the cannabis sector to bolster financial performance.

Revenue

Total revenue for SHF Holdings in Q1 2025 dropped to $1.93 million, a 52.3% decrease from $4.05 million in Q1 2024. Account fee income was the largest contributor, generating $1.07 million. Loan interest income added $540,222, while investment income contributed $300,435. The Safe Harbor Program income was notably lower at $19,230. This revenue contraction reflects challenges in the cannabis financial services market.

Earnings/Net Income

SHF Holdings experienced a net loss of $313,627 in Q1 2025, a stark contrast to the net income of $2.05 million in Q1 2024, marking a 115.3% deterioration. The company swung from a profit of $0.74 per share to a loss of $0.11 per share, indicating poor EPS performance.

Price Action

The stock price of SHF Holdings has climbed 5.34% during the latest trading day, has dropped 3.13% during the most recent full trading week, and has plummeted 48.21% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing SHF Holdings shares following a revenue decline demonstrated poor performance, resulting in a substantial loss. The strategy's return was -99.00%, significantly underperforming a benchmark return of 44.88% with an excess return of -143.88%. The Sharpe ratio was -0.59, indicating inadequate risk-adjusted returns, and the maximum drawdown was -99.15%, underscoring the high risk and severe losses associated with this approach. This reflects the volatility and challenges in the cannabis financial services sector and highlights the need for cautious investment strategies when dealing with companies experiencing substantial revenue contractions.

CEO Commentary

CEO of SHF Holdings, Inc. emphasized the company's ongoing efforts to navigate a challenging market landscape while focusing on strengthening its financial services tailored to the cannabis industry. He highlighted a modest revenue increase to $1.93 million in Q1 2025, driven by strategic partnerships and enhanced service offerings. Despite facing a net loss of approximately $313,627, the CEO expressed cautious optimism about future growth, noting that investments in compliance and technology are pivotal for long-term success. The leadership remains committed to creating value for stakeholders while addressing operational challenges.

Guidance

For the upcoming fiscal periods, SHF Holdings projects continued revenue growth, with expectations of incremental increases in service adoption within the cannabis sector. The company aims to improve its earnings per share (EPS) to -$0.11 as it implements strategic initiatives. Additionally, while specific capital expenditures were not detailed, there is a qualitative focus on enhancing operational efficiency and expanding market reach to bolster financial performance.

Additional News

In recent developments, Safe Harbor Financial has expanded its executive leadership team with new appointments. Jeffrey Kay has been named Senior Vice President of Marketing, bringing over 30 years of marketing experience, and Dominic Marella returns as Vice President of Business Development. Their roles focus on driving growth in the cannabis financial services sector through integrated marketing strategies and partnership programs. Additionally, Safe Harbor Financial announced a mutual referral agreement with FundCanna to provide financial services and credit facilities to cannabis-related businesses. This partnership aims to expand access to capital for cannabis operators facing limitations from traditional financial institutions. Furthermore, Safe Harbor Financial has modified its debt agreement with Partner Colorado Credit Union, unlocking over $6 million in cash flow to enhance financial flexibility.