HeartCore Reports 2024 Financial Results

Rhea-AI Summary

HeartCore Enterprises (HTCR) reported its 2024 financial results, showing a 39% revenue increase to $30.4 million year-over-year. The company's gross profit grew 121% to $17.8 million. However, HeartCore recorded a $7.2 million impairment of goodwill related to its Sigmaways subsidiary, leading to a net loss of $5.2 million for the year.

The company maintained its market leadership in Japan for the ninth consecutive year and implemented several strategic initiatives, including expanding its CMS platform to a SaaS model and transitioning to multi-year contracts. HeartCore plans to expand its Go IPO consulting business into South Korea, with a seminar scheduled for September 2025.

The company ended 2024 with $2.1 million in cash and cash equivalents, up from $1.0 million in 2023, and reported adjusted EBITDA of $7.3 million compared to $(3.6) million in the previous year.

Positive

• Revenue increased 39% to $30.4 million
• Gross profit grew 121% to $17.8 million
• Adjusted EBITDA improved to $7.3 million from $(3.6) million
• Cash position doubled to $2.1 million from $1.0 million
• Maintained top market share in Japan for 9th consecutive year
• Transition to multi-year contracts from annual agreements

Negative

• $7.2 million impairment of goodwill related to Sigmaways subsidiary
• Net loss of $5.2 million for 2024
• Operating expenses increased 46% to $17.8 million
• Net loss attributable to HeartCore of $1.5 million

Insights

Financial Analyst

HeartCore's 2024 results present a mixed but generally improving financial picture. The 39% revenue increase to $30.4 million alongside a 121% jump in gross profit to $17.8 million demonstrates significant top-line growth, primarily driven by successful Go IPO consulting service clients. The impressive $7.3 million adjusted EBITDA (versus -$3.6 million last year) represents a dramatic operational improvement when excluding one-time impairments.

However, the $7.2 million impairment charge related to Sigmaways acquisition resulted in a net loss of $5.2 million, though losses attributable to HeartCore improved to $1.5 million from $4.2 million. Management's characterization of this as a one-time event appears reasonable given the corrective measures implemented, including separating Sigmaways' liabilities and suspending certain transactions.

The company's strategic pivot toward multi-year agreements, SaaS delivery models, and international expansion of its Go IPO business (particularly into South Korea) establishes promising growth vectors. The doubling of cash reserves to $2.1 million strengthens their financial position, though this remains modest relative to their revenue and acquisition ambitions. The articulated M&A strategy focusing on complementary technologies to increase wallet share within their existing 1,000+ enterprise customer base presents a pragmatic approach to sustained growth.

NEW YORK and TOKYO, March 31, 2025 (GLOBE NEWSWIRE) -- HeartCore Enterprises, Inc. (Nasdaq: HTCR) (“HeartCore” or the “Company”), a leading enterprise software and consulting services company based in Tokyo, reported financial results for the year ended December 31, 2024.

Recent Operational & Financial Highlights

• 2024 revenue increased 39% to $30.4 million year-over-year
• HeartCore recorded $7.2 million in impairment of goodwill and intangible asset related to acquisition of its subsidiary Sigmaways. The losses are considered as a one-time occurrence that will not affect the Company’s business and financial performance in the future quarters.
• Established new business development team aimed at strengthening customer success across HeartCore’s CMS business
• Announced plans to expand the Go IPO consulting business into South Korea. The Company adjusted its scheduled South Korea IPO seminar event to September 2025
• Announced new digital customer experience initiatives and cross-selling efforts
• Regained compliance with Nasdaq’s continued listing requirements
• Expanded CMS platform offering into a SaaS delivery model
• Entered into a sales collaboration with Tosho Computer Systems Co., Ltd.
• Announced transition from annual contracts to multi-year agreements for core software business contracts
• Partnered with NTT Data Business Brains Corporation to enhance website development service capabilities
• Achieved top market share in Japan for nine consecutive years
• Awarded new contract from Fourmix Co., Ltd. to implement CMS platform

Management Commentary
HeartCore CEO Sumitaka Kanno commented: “Over the past year, we made several strategic advancements in our software business model, all aimed at driving sustainable and predictable revenue growth, improving margins, and enhancing our ability to effectively cross-sell and upsell to our 1,000+ enterprise customers. While we are confident that the initiatives we have implemented will yield meaningful returns, we have also recognized that strategic acquisitions will be critical to maintaining our market leadership in Japan and sustaining our strong customer retention rate. With a well-established customer base built over the years, our acquisition strategy will primarily focus on deepening wallet share with each client we are engaged with, while seamlessly complementing and enhancing our existing suite of software solutions. This will include acquiring companies with synergistic technologies that align with our core offerings and leveraging effective use of AI to strengthen our value proposition and competitive edge. Outside of acquisitions, another key focus for HeartCore will be to accelerate the development of new products geared for global expansion in 2025, with the target launch aimed for the first half of 2026. Currently, only a small portion of our customer base consists of enterprises outside of Japan. By focusing on creating globally scalable solutions and enhancing our offerings with synergistic technologies through strategic acquisitions, we aim to expand our presence across international markets and drive additional growth in our software business.

“Looking at our financial performance, we recorded approximately $7.2 million in impairment of goodwill and intangible asset, primarily related to our subsidiary, Sigmaways. While these losses impacted our full-year results, they are classified as one-time occurrences and are not expected to affect our financial performance in future quarters. To address this, we have already implemented several corrective measures, including separating Sigmaways’ liabilities and suspending all transactions with small venture companies to minimize any non-essential costs. While net loss for the year was $5.2 million, we believe a more relevant measure of our performance is adjusted EBITDA, which totaled $7.3 million for 2024, as it excludes the losses related to Sigmaways. Nevertheless, our subsidiaries continue to deliver synergistic technologies that enable us to effectively upsell and cross-sell to our shared clients. We believe that over the long term, as we continue to develop and innovate our solutions, acquire new technologies through M&A, and tap into mutual client portfolios across our partners and subsidiaries, we will drive positive outcomes for our financial performance.

“Outside of exploring synergistic M&A opportunities within our software business to fuel growth, we are also focused on expanding our Go IPO business. We recently announced our plans to extend our service into South Korea and have formed a strategic partnership with a venture fund in the region. To kick off this initiative, we will be hosting a seminar in September of this year. South Korea will be the first of several markets we aim to expand into across the APAC region, as IPO interests from foreign issuers have steadily increased over the years. Expanding beyond Japan’s borders marks a significant milestone for our Go IPO business, opening up new opportunities for us to leverage. To ensure successful market entry, we are actively seeking strategic partnerships, such as in South Korea, to gain access to their clientele portfolio that are interested in our services. We remain dedicated to executing both lines of business and look forward to our growth prospects throughout 2025.”

2024 Financial Results
Revenues increased 39% to $30.4 million, compared to $21.8 million in the same period last year. The increase was primarily due to revenue from warrants and ordinary shares associated with the successful listing of two Go IPO consulting service clients.

Gross profit increased 121% to $17.8 million, compared to $8.1 million in the same period last year. The increase was primarily due to the aforementioned reason.

Operating expenses increased 46% to $17.8 million, compared to $12.2 million in the same period last year. The increase was primarily due to impairment of goodwill and intangible asset totaling approximately $7.2 million primarily related to our subsidiary, Sigmaways. The Company anticipates these impairment losses to be a one-time occurrence and does not foresee any material impact on its financial performance in future quarters.

Net loss for 2024 was $5.2 million. Net loss attributable to HeartCore improved to $1.5 million, compared to a loss of $4.2 million in the same period last year.

Adjusted EBITDA for the year totaled $7.3 million compared to $(3.6) million in the same period last year.

As of December 31, 2024, the Company had cash and cash equivalents of $2.1 million, compared to $1.0 million on December 31, 2023.

About HeartCore Enterprises, Inc.
Headquartered in Tokyo, Japan, HeartCore Enterprises is a leading enterprise software and consulting services company. HeartCore offers Software as a Service (SaaS) solutions to enterprise customers in Japan and worldwide. The Company also provides data analytics services that allow enterprise businesses to create tailored web experiences for their clients through best-in-class design. HeartCore’s customer experience management platform (CXM Platform) includes marketing, sales, service and content management systems, as well as other tools and integrations, which enable companies to enhance the customer experience and drive engagement. HeartCore also operates a digital transformation business that provides customers with robotics process automation, process mining and task mining to accelerate the digital transformation of enterprises. HeartCore’s GO IPO^SM consulting services helps Japanese-based companies go public in the U.S. Additional information about the Company's products and services is available at and https://heartcore-enterprises.com/.

Non-GAAP Financial Measures Disclaimer
This document includes references to adjusted EBITDA, which is a non-GAAP financial measure. For the purposes of this presentation, adjusted EBITDA is calculated by adjusting net loss to exclude depreciation and amortization, impairment of intangible asset, and impairment of goodwill.

This measure is presented as supplemental information and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP.

Management believes that this adjusted EBITDA provides useful information to investors by highlighting the company’s core operational performance, excluding non-cash and non-recurring items. However, non-GAAP financial measures have limitations and should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.

Item	FY24	FY23
Net Loss	-$5.2 million	-$4.9 million
(+) Depreciation	$0.1 million	$0.1 million
(+) Impairment loss on goodwill	$3.3 million	$0.0 million
(+) Impairment loss on intangible assets	$3.9 million	$0.0 million
(+) Changes in fair value of investments in marketable securities	$2.4 million	$0.6 million
(+) Changes in fair value of investment in warrants	-$1.7 million	$0.5 million
(+) Loss on sale of warrants	$4.0 million	$0.0 million
(+) Impairment of investment in equity securities	$0.3 million	$0.0 million
(+) Loss on forgiveness of note receivable	$0.1 million	$0.0 million
(+) Interest income	$0.0 million	-$0.1 million
(+) Interest expenses	$0.1 million	$0.2 million
(+) Government grants	$0.0 million	-$0.1 million
Adjusted EBITDA	$7.3 million	-$3.6 million

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, or the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by words such as “believed,” “intend,” “expect,” “anticipate,” “plan,” “potential,” “continue,” or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks, and uncertainties are discussed in HeartCore’s filings with the Securities and Exchange Commission. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond HeartCore’s control which could, and likely will materially affect actual results, and levels of activity, performance, or achievements. Any forward-looking statement reflects HeartCore’s current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to operations, results of operations, growth strategy, and liquidity. HeartCore assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The contents of any website referenced in this press release are not incorporated by reference herein.

HeartCore Investor Relations Contact:
Gateway Group, Inc.
Matt Glover and John Yi
HTCR@gateway-grp.com
(949) 574-3860

	HeartCore Enterprises, Inc.
	Consolidated Balance Sheets
			December 31,			December 31,
			2024			2023
	ASSETS
	Current assets:
	Cash and cash equivalents	$	2,121,089		$	1,012,479
	Accounts receivable		1,950,050			2,623,682
	Investments in marketable securities		4,495,703			642,348
	Investment in equity securities		-			300,000
	Prepaid expenses		458,839			536,865
	Current portion of long-term note receivable		100,000			100,000
	Due from related party		40,139			44,758
	Other current assets		251,545			234,761
	Total current assets		9,417,365			5,494,893
	Non-current assets:
	Accounts receivable, non-current		752,930			-
	Property and equipment, net		584,854			763,730
	Operating lease right-of-use assets		1,936,097			2,467,889
	Intangible asset, net		-			4,515,625
	Goodwill		-			3,276,441
	Long-term investment in warrants		577,786			2,004,308
	Long-term note receivable		100,000			200,000
	Deferred tax assets		152,300			369,436
	Security deposits		307,996			348,428
	Long-term loan receivable from related party		123,928			182,946
	Other non-current assets		11,778			71
	Total non-current assets		4,547,669			14,128,874
	Total assets	$	13,965,034		$	19,623,767
	LIABILITIES AND SHAREHOLDERS' EQUITY
	Current liabilities:
	Accounts payable and accrued expenses	$	2,039,323		$	1,757,038
	Accounts payable and accrued expenses - related party		47,199			-
	Accrued payroll and other employee costs		675,502			723,305
	Due to related parties		932			1,476
	Short-term debt		-			135,937
	Short-term debt - related party		75,000			-
	Current portion of long-term debts		401,255			371,783
	Insurance premium financing		16,626			-
	Factoring liability		172,394			562,767
	Operating lease liabilities, current		371,951			396,535
	Finance lease liabilities, current		15,956			17,445
	Income tax payables		822,014			162,689
	Deferred revenue		1,876,490			2,166,175
	Other current liabilities		907,080			216,405
	Total current liabilities		7,421,722			6,511,555
	Non-current liabilities:
	Long-term debts		1,238,813			1,770,352
	Operating lease liabilities, non-current		1,614,996			2,135,160
	Finance lease liabilities, non-current		43,593			66,779
	Deferred tax liabilities		-			1,264,375
	Other non-current liabilities		183,895			208,732
	Total non-current liabilities		3,081,297			5,445,398
	Total liabilities		10,503,019			11,956,953
	Shareholders' equity:
	Preferred shares ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of December 31, 2024 and 2023)		-			-
	Common shares ($0.0001 par value, 200,000,000 shares authorized; 21,937,987 and 20,842,690 shares issued and outstanding as of December 31, 2024 and 2023, respectively)		2,193			2,083
	Subscription receivable		(103,942	)		-
	Additional paid-in capital		20,656,153			19,594,801
	Accumulated deficit		(16,244,843	)		(14,763,469	)
	Accumulated other comprehensive income		343,936			331,881
	Total HeartCore Enterprises, Inc. shareholders' equity		4,653,497			5,165,296
	Non-controlling interests		(1,191,482	)		2,501,518
	Total shareholders' equity		3,462,015			7,666,814
	Total liabilities and shareholders' equity	$	13,965,034		$	19,623,767

	HeartCore Enterprises, Inc.
	Consolidated Statements of Operations and Comprehensive Loss
			For the year ended December 31,2024			For the year ended December 31, 2023
	Revenues	$	30,407,229		$	21,845,830
	Cost of revenues		12,579,359			13,778,416
	Gross profit		17,827,870			8,067,414
	Operating expenses:
	Selling expenses		1,255,368			1,516,247
	General and administrative expenses		8,623,587			9,651,381
	Research and development expenses		729,584			1,019,141
	Impairment of intangible asset		3,878,125			-
	Impairment of goodwill		3,276,441			-
	Total operating expenses		17,763,105			12,186,769
	Income (loss) from operations		64,765			(4,119,355	)
	Other income (expenses):
	Changes in fair value of investments in marketable securities		(2,412,385	)		(615,520	)
	Changes in fair value of investment in warrants		1,657,699			(501,445	)
	Loss on sale of warrants		(3,970,628	)		-
	Impairment of investment in equity securities		(300,000	)		-
	Loss on forgiveness of note receivable		(100,000	)		-
	Interest income		18,835			70,624
	Interest expenses		(144,033	)		(162,968	)
	Government grants		-			76,612
	Other income		260,918			366,283
	Other expenses		(424,893	)		(124,595	)
	Total other expenses		(5,414,487	)		(891,009	)
	Loss before income tax benefit		(5,349,722	)		(5,010,364	)
	Income tax benefit		(136,822	)		(133,664	)
	Net loss		(5,212,900	)		(4,876,700	)
	Less: net loss attributable to non-controlling interests		(3,731,526	)		(686,810	)
	Net loss attributable to HeartCore Enterprises, Inc.	$	(1,481,374	)	$	(4,189,890	)
	Other comprehensive loss:
	Foreign currency translation adjustment		(16,614	)		(34,628	)
	Total comprehensive loss		(5,229,514	)		(4,911,328	)
	Less: comprehensive loss attributable to non-controlling interests		(3,760,195	)		(688,482	)
	Comprehensive loss attributable to HeartCore Enterprises, Inc.	$	(1,469,319	)	$	(4,222,846	)
	Net loss per common share attributable to HeartCore Enterprises, Inc.
	Basic	$	(0.07	)	$	(0.21	)
	Diluted	$	(0.07	)	$	(0.21	)
	Weighted average common shares outstanding
	Basic		20,940,956			20,404,642
	Diluted		20,940,956			20,404,642

	HeartCore Enterprises, Inc.
	Consolidated Statements of Cash Flows
			For the year ended December 31, 2024			For the year ended December 31, 2023
	Cash flows from operating activities:
	Net loss	$	(5,212,900	)	$	(4,876,700	)
	Adjustments to reconcile net loss to net cash flows
	used in operating activities:
	Depreciation and amortization expenses		749,639			683,019
	Loss (gain) on disposal of property and equipment		1,894			(4,514	)
	Amortization of debt issuance costs		4,567			3,733
	Non-cash lease expense		365,531			346,070
	Loss (gain) on termination of lease		(469	)		76
	Impairment of intangible asset		3,878,125			-
	Impairment of goodwill		3,276,441			-
	Deferred income taxes		(1,076,600	)		(291,596	)
	Stock-based compensation		368,744			1,430,513
	Marketable securities received as noncash consideration		(572,010	)		-
	Warrants received as noncash consideration		(12,969,683	)		(3,763,621	)
	Changes in fair value of investments in marketable securities		2,412,385			615,520
	Changes in fair value of investment in warrants		(1,657,699	)		501,445
	Loss on sale of warrants		3,970,628			-
	Impairment of investment in equity securities		300,000			-
	Impairment of investment in SAFE		75,000			-
	Loss on forgiveness of note receivable		100,000			-
	Changes in assets and liabilities:
	Accounts receivable		(193,369	)		(338,312	)
	Prepaid expenses		210,477			359,310
	Other assets		(38,336	)		(133,550	)
	Accounts payable and accrued expenses		331,685			532,790
	Accounts payable and accrued expenses - related party		47,955			-
	Accrued payroll and other employee costs		3,623			152,101
	Due to related parties		(1,338	)		1,123
	Operating lease liabilities		(371,877	)		(327,877	)
	Income tax payables		669,142			162,045
	Deferred revenue		(156,527	)		553,130
	Other liabilities		710,001			64,086
	Net cash flows used in operating activities		(4,774,971	)		(4,331,209	)
	Cash flows from investing activities:
	Purchases of property and equipment		(7,446	)		(526,260	)
	Proceeds from disposal of property and equipment		-			24,814
	Advance on note receivable		-			(600,000	)
	Purchase of investment in SAFE		(75,000	)		-
	Net proceeds from sale of warrants		5,640,000			-
	Proceeds from sale of marketable securities		749,546			-
	Repayment of loan provided to related party		42,104			45,404
	Payment for acquisition of subsidiary, net of cash acquired		-			(724,910	)
	Net cash flows provided by (used in) investing activities		6,349,204			(1,780,952	)
	Cash flows from financing activities:
	Payments for finance leases		(16,766	)		(22,422	)
	Proceeds from short-term and long-term debts		68,138			710,107
	Proceeds from related party debt		75,000			-
	Repayment of short-term and long-term debts		(554,553	)		(711,395	)
	Repayment of insurance premium financing		(156,063	)		(389,035	)
	Net proceeds from factoring arrangement		-			562,767
	Net repayment of factoring arrangement		(390,373	)		-
	Payments for debt issuance costs		-			(13,828	)
	Distribution of dividends		(834,566	)		-
	Capital contribution from non-controlling shareholder		67,195			-
	Proceeds from issuance of common shares		1,423,342			-
	Net cash flows provide by (used in) financing activities		(318,646	)		136,194
	Effect of exchange rate changes		(146,977	)		(188,880	)
	Net change in cash and cash equivalents		1,108,610			(6,164,847	)
	Cash and cash equivalents - beginning of the year		1,012,479			7,177,326
	Cash and cash equivalents - end of the year	$	2,121,089		$	1,012,479
	Supplemental cash flow disclosures:
	Interest paid	$	143,101		$	85,634
	Income taxes paid	$	298,466		$	91,707
	Non-cash investing and financing transactions
	Finance lease right-of-use assets obtained in exchange for finance lease liabilities	$	-		$	93,217
	Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	125,735		$	317,040
	Remeasurement of operating lease liabilities and right-of-use assets due to lease modification	$	23,956		$	30,186
	Insurance premium financing	$	172,689		$	389,035
	Common shares issued for acquisition of subsidiary	$	-		$	3,150,000
	Warrants converted to marketable securities	$	6,443,276		$	1,257,868
	Note receivable converted to investment in equity securities	$	-		$	300,000

FAQ

What was HeartCore's (HTCR) revenue growth in 2024?

HeartCore's revenue grew 39% to $30.4 million in 2024 compared to $21.8 million in 2023.

How much was HTCR's goodwill impairment in 2024?

HeartCore recorded $7.2 million in impairment of goodwill and intangible assets, primarily related to its Sigmaways subsidiary.

What is HeartCore's (HTCR) expansion plan for its Go IPO business?

HeartCore plans to expand its Go IPO consulting business into South Korea, with a seminar scheduled for September 2025, as the first step into the APAC region.

What strategic changes did HTCR make to its software business model in 2024?

HeartCore expanded its CMS platform to a SaaS delivery model and transitioned from annual to multi-year contracts for core software business.

What was HeartCore's (HTCR) cash position at the end of 2024?

HeartCore had $2.1 million in cash and cash equivalents as of December 31, 2024, up from $1.0 million in 2023.