AtlasClear Holdings, Inc. Announces First Quarter 2024 Financial Results
AtlasClear Holdings (NYSE American: ATCH) announced its Q1 2024 financial results. Key highlights include a 27.9% increase in commissions and clearing revenue for its subsidiary Wilson-Davis. However, the company reported a net loss of $88.58 million, primarily due to non-recurring losses and transaction costs related to recent business combinations and acquisitions. Specifically, a non-cash loss of $68.5 million was attributed to the acquisition of AtlasClear asset purchase. Additional non-recurring expenses totaled $11.54 million, with the majority related to these transactions.
Wilson-Davis showed promising growth in commissions and interest income, reflecting the company's strategic efforts in expanding its brokerage model. AtlasClear aims to continue growing through further acquisitions and expanding its balance sheet.
- 27.9% increase in commissions and clearing revenue for Wilson-Davis.
- 9% increase in interest income driven by higher money market balances.
- Wilson-Davis was profitable as a standalone entity.
- Expansion in income-generating activities such as margin lending, stock loan business, and a new investment banking line.
- Net loss of $88.58 million for Q1 2024.
- Non-cash loss of $68.5 million related to the acquisition of AtlasClear assets.
- Regulatory and professional fees totaling $11.54 million, mostly non-recurring transaction costs.
- Non-cash changes in fair value of financing instruments led to a loss of $6.71 million.
The first quarter financial results reveal significant increases in commissions and clearing revenue for AtlasClear’s subsidiary, Wilson-Davis, showing a 27.9% increase compared to the same period in 2023. This rise underscores the firm's business model, which offers comprehensive technology and financing solutions to smaller market participants.
However, the consolidated earnings show a net loss of
Another important aspect is the
In the short term, the financial results might seem concerning due to the net loss. However, the strategic acquisitions and expanded income-generating activities, including new investment banking operations, could potentially enhance long-term growth prospects.
The ongoing profitability of Wilson-Davis, bolstered by increased margin lending and stock loan business, presents a positive outlook for sustainable revenue growth. Investors should focus on these core operational strengths rather than the extraordinary losses related to recent transactions.
AtlasClear’s latest financial results highlight the company's strategic positioning within the brokerage sector, especially targeting smaller institutional players. The 27.9% increase in commissions and related execution fees for Wilson-Davis indicates a successful market fit for their comprehensive brokerage solutions.
This performance, driven by tailored offerings to smaller institutions and broker-dealers, suggests AtlasClear’s strategy of filling market gaps is proving effective. The 9% rise in interest income, attributable to increased money market balances, further reflects the company’s ability to capitalize on market opportunities.
Looking forward, the firm's expansion into new lines of investment banking business and increased margin lending are promising. These initiatives could diversify and potentially stabilize revenue streams, reducing reliance on any single income source.
The strategic acquisitions and business combinations, despite bringing substantial one-time costs, pave the way for increased market presence and operational scale. Investors should consider the long-term potential benefits of these acquisitions, which could enhance AtlasClear's competitive position in the brokerage and financial services market.
“I am pleased to report that our subsidiary, Wilson-Davis, delivered solid first quarter results highlighted, on a proforma basis (reflecting Wilson-Davis’ results on a stand-alone basis), by a
On February 9, 2024, we closed our previously announced business combination. In connection with the transaction, AtlasClear, Inc. received certain assets from Atlas FinTech Holdings Corp., (“Atlas FinTech”) and Atlas Financial Technologies Corp. and completed the acquisition of broker-dealer,
First Quarter 2024 Highlights:
The consolidated earnings reflect net loss of
-
was a non-cash loss on the acquisition of the AtlasClear asset purchase. Under SAB topic 5G transfers of nonmonetary assets for stock prior to an initial offering should be recorded at predecessor cost in accordance with GAAP. The value of the Developed Technology was based on the carrying value of Atlas FinTech of$68.5 million . As such, in accordance with ASC 350 the company cannot recognize goodwill in an asset purchase. This is a non-recurring transaction which occurred in the first quarter. See footnote 9 to the financial statements included in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, for additional information.$18.16 million -
Regulatory, professional fees and related expenses of
recognized as of March 31, 2024, was substantially due to transaction cost incurred with the business combination and asset purchase transaction with AtlasClear, Inc. Of the$11.54 million ,$11.54 million were directly related to the closing of the business combination. These are non-recurring transaction expenses.$10.31 million -
are non-cash changes in fair value associated with the financing instruments issued in connection with the transaction, which included derivative elements requiring recognition of the obligations at fair value and changes in fair value recognized in earning. These consist of the conversion feature included in the short- and long-term notes to sellers, the convertible note issued to Chardan, the earnout liability, the subscription agreement and the non-redemption agreement.$6.71 million
The transaction in connection with
-
Commissions and related execution fees increased from
in the first quarter of 2023 to$1,396,954 in the first quarter of 2024, a$1,786,403 27.9% increase. -
Interest income increased
9% in 2024, driven by increases in our money market balances. -
As a stand-alone company,
Wilson -Davis was profitable and we anticipate improving on that going forward. - We expanded the scale of our income generating activities, with increased margin lending, increased stock loan business and we have begun a new line of investment banking business.
Earnings Teleconference Information
AtlasClear will discuss its first quarter financial results during a teleconference today, at 8:30 a.m. (ET). The conference call can be accessed by dialing 1-877-407-0752 (domestic) or 201-389-0912 (international). A replay of the conference call will be available at 1-844-512-2921 (domestic) or 412-317-6671 (international). The call will also be broadcast simultaneously via webcast at https://investors.atlasclear.com/. Following the completion of the call, a recorded replay of the webcast will be available on AtlasClear’s website.
About AtlasClear Holdings, Inc.
AtlasClear Holdings plans to build a cutting-edge technology enabled financial services firm that would create a more efficient platform for trading, clearing, settlement and banking of evolving and innovative financial products with a focus on the small and middle market financial services firms. The goal of AtlasClear Holdings is to have a fully vertically integrated suite of cloud-based products including account opening, trade execution, risk management, regulatory reporting and settlement. The team that leads AtlasClear Holdings consists of respected financial services industry veterans that have founded and led other companies in the industry including Penson Clearing, Southwest Securities, NexTrade and Anderen Bank.
About the Financial Technology
We are supported by robust financial technologies that we believe will enable the flow of business and success of the enterprise. Our goal is to have a full exchange platform for a spectrum of financial products. In addition, we expect to have a full prime brokerage and, following the completion of the proposed acquisition of Commercial Bancorp of
About
Cautionary Statements Regarding Forward-Looking Statements
This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that reflect AtlasClear Holdings’ current views with respect to, among other things, the future operations and financial performance of AtlasClear Holdings. Forward-looking statements in this communication may be identified by the use of words such as “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “foreseeable,” “future,” “intend,” “may,” “outlook,” “plan,” “potential,” “proposed,” “predict,” “project,” “seek,” “should,” “target,” “trends,” “will,” “would” and similar terms and phrases. Forward-looking statements contained in this communication include, but are not limited to, statements as to (i) AtlasClear’s expectations as to various operational results, (ii) AtlasClear’s anticipated growth strategy, including expected organic growth and acquisitions, and (iii) the financial technology of AtlasClear Holdings.
The forward-looking statements contained in this communication are based on the current expectations of AtlasClear Holdings and its management and are subject to risks and uncertainties. No assurance can be given that future developments affecting AtlasClear Holdings will be those that are anticipated. Actual results may differ materially from current expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond the control of AtlasClear Holdings. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Factors that could cause actual results to differ may emerge from time to time, and it is not possible to predict all of them.
Such factors include, but are not limited to: AtlasClear’s inability to successfully integrate, and/or realize the anticipated benefits of, the acquisition of
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Source: AtlasClear
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