Lion Announces Unaudited Full Year 2023 Financial Results
Lion Group Holding announced its unaudited financial results for 2023, showing an increase in revenue to $21.1 million from a loss in the prior year, driven by CFD trading services. Total expenses decreased by 14.6%, leading to a net loss of $5.8 million. The company focused on AI technology, risk management, and market expansion to drive growth. Non-GAAP diluted net loss per ADS was $0.75 in 2023.
Revenue increased to $21.1 million in 2023 from a loss in the prior year, mainly due to CFD trading services.
Total expenses decreased by 14.6% in 2023, contributing to improved financial performance.
The company's focus on AI technology, risk management, and market expansion indicates strong growth potential.
Non-GAAP diluted net loss per ADS improved to $0.75 in 2023, showcasing better financial management.
The total number of revenue-generating customer accounts decreased to 2,443 in 2023, from 4,526 in 2022, signaling a decline in client base.
Net loss for 2023 was $5.8 million, although an improvement from the prior year, reflecting ongoing financial challenges.
Insights
Lion Group Holding Ltd.'s transition from a revenue loss in the prior year to reporting $21.1 million in revenues for 2023 indicates significant operational improvement. The remarkable turnaround from a negative figure to a positive one is often a green flag for investors, signaling potential recovery and growth. However, the reduced number of revenue-generating customer accounts could be a concern, as it raises questions about customer retention and market position. The decline in policy renewal clients and CFD trading customers may warrant attention to the company's competitive strategies and customer satisfaction efforts.
While income from CFD trading services has substantially increased, the simultaneous decrease in revenue from TRS trading services and OTC stock options trading suggests a need for a closer examination of the diversification and sustainability of revenue streams. It's imperative to evaluate whether the growth in CFD trading is robust enough to offset losses in other areas. Meanwhile, the decrease in total expenses, particularly in research and development, could be a double-edged sword—investors must consider if this represents improved operational efficiency or potential underinvestment in future growth opportunities.
The company's proactive enhancement of risk management practices is noteworthy, especially the emphasis on direct hedging and the establishment of systems to trigger automatic liquidation. These strategies could not only mitigate the company’s risks but also enhance consumer confidence by protecting client investments from significant losses. Despite the progress in mitigating risks, the losses incurred from proprietary TRS trading activities and the decrease in interest income from loans provided to TRS trading customers indicate that market conditions and strategic execution in this segment remain challenging and might continue to be an area of volatility.
The surge in OTC stock options trading, despite resulting in a net loss, may represent an emerging market opportunity and warrants monitoring. If Lion can optimize its approach and capitalize on increasing client interest in this segment, it could become a significant contributor to future revenues. Furthermore, the commitment to investing in AI technologies to enhance customer service and business efficiency indicates an alignment with technological advancement and innovation—a factor that's becoming increasingly important in the trading platform landscape.
Understanding the nuances of financial instruments like CFDs, TRS and OTC stock options is important for investors. CFDs allow traders to speculate on the rising or falling prices of fast-moving global financial markets, while TRS are bilateral contracts where one party agrees to pay the other the return on an asset, security, or index. OTC stock options, traded outside traditional exchanges, offer the flexibility of customized contracts, which can be appealing to a certain investor demographic. Lion's performance in these areas will help informed investors gauge the company's proficiency in managing complex financial products.
All figures are stated in
FINANCIAL AND OPERATING HIGHLIGHTS
- Revenues in 2023 increased to
$21.1 million $2.5 million - Total number of revenue-generating customer accounts decreased to 2,443 in 2023, from 4,526 in 2022, mainly due to decline in policy renewal clients in insurance business and CFD trading customers.
- Income generated from CFD trading services increased by
$26.0 million $6.7 million $19.3 million - Total expenses decreased by
14.6% from$31.5 million $26.9 million - Diluted net loss attributable to LGHL ordinary shareholders per ADS was
$5.94 $34.97 - Non-GAAP diluted net loss attributable to LGHL ordinary shareholders per ADS was
$0.75 $29.52 - As of December 31, 2023, the Company's cash and restricted cash were
$31.1 million $14.4 million $13.4 million $3.9 million
Mr. Chunning (Wilson) Wang, CEO of Lion, commented, "2023 was a year of inflection for us. We are very pleased with our performance in the year, meeting or exceeding all our internal expectations. This achievement was made possible by the collective efforts of everyone at Lion. These results demonstrate our ability to execute and deliver growth in the face of certain geographic economic challenges. Our revenue surged from a negative amount in 2022 to
"Simultaneously, we enlarged our investments in risk management to mitigate volatilities and protect our customers, especially for our CFD and TRS (total return swap) trading business. For instance, we have driven our experienced risk management team to sustainably optimize models, meanwhile, connecting with liquidity providers, enabling direct hedging. Additionally, we established various parameters to control risk exposures; at the same time, we have implemented a system that automatically triggers liquidation of customer positions when risk exceeds predefined limits. These strategies not only minimize Lion's risk going forward, but also serve to protect our customers from significant investment losses."
"During the reported period we observed an increase in the number of OTC stock options trading client accounts and in the trading volume. This underscores the solid execution of our new market focus and our sound market reputation, attracting new customers and driving further growth. We remain diligent in executing on our core business segments; meanwhile we work on strategically expanding our services with a near-term focus on OTC options, which we believe will be an important revenue driver for Lion. Moving forward, we remain committed to investing more in AI technologies to enhance customer services, reduce costs for customers, and improve our overall business efficiency. We are confident about our prospects in 2024 and with a view to delivering long-term value to our customers, shareholders, and other stakeholders."
FINANCIAL & OPERATING RESULTS
REVENUES
Note: The revenue segments in this report have been reclassified for the prior period for comparison to better represent business performance. The reclassification has no effect on previously reported net assets or net income (loss).
Total revenue for the year ended December 31, 2023 increased to
Year ended December 31, | ||||||||
2023 | 2022 | |||||||
$ | % | $ | % | |||||
CFD trading services | 19,326,140 | 91.6 | (6,694,312) | 271.0 | ||||
TRS trading services | (2,342,395) | (11.1) | (595,871) | 24.1 | ||||
OTC stock options trading[1] | (798,725) | (3.6) | 937,109 | (38.0) | ||||
Futures and securities brokerage services | 2,570,495 | 12.1 | 3,284,729 | (132.9) | ||||
Others[2] | 2,335,729 | 11.0 | 598,252 | (24.2) | ||||
Total | 21,091,244 | 100.0 | (2,470,093) | 100.0 | ||||
- CFD Trading Services Income (Losses). Income generated from CFD trading services increased by
$26.0 million from a loss of$(6.7) million in 2022 to an income of$19.3 million in 2023, attributable to an increase of$23.7 million $2.3 million Russia andUkraine conflict, surging inflation, etc. In addition, the enhancement of our risk management practice through the continued optimization of risk modelling and methods also contributed to the increase in CFD trading gains. Market making commission income increased from$0.8 million $3.1 million
- TRS Trading Services Income (Losses). Revenues generated from TRS trading services decreased by
$1.7 million $(0.6) million $(2.3) million $1.2 million $0.6 million China's stock markets which have suffered a protracted slump since 2021, caused byChina's economic slowdown, dismal economic outlook, heightened geopolitical tensions such asU.S. -China relation, escalated friction over the Taiwan Strait and South China Sea, and unpredictable regional military conflict worldwide etc. The decrease in interest income was primarily attributable to the decline in the daily average balance of the loans borrowed by TRS trading customers, as a result of investors' weakened sentiment towardsChina's stock markets. Total revenue-generating TRS trading client accounts increased to 348 accounts as of December 31, 2023, from 276 accounts as of June 30, 2023. TRS trading volume was$580 million $484 million
- OTC Stock Options Trading Income (Losses). The Company started to sell OTC stock call options in 2021 and in the fourth quarter of 2023 OTC stock options trading business grew rapidly. OTC stock options income (loss) consisting of the changes in fair value associated with the call options we sold to customers as well as the offsetting call options we purchased from third party option issuers, decreased from an income of
$0.9 million $0.8 million $10.9 million $181.5 million
- Futures and Securities Brokerage Services. Revenues from futures and securities brokerage services decreased by
21.7% from$3.3 million $2.6 million
- Others. Other income increased by
$1.7 million $0.6 million $2.3 million $0.7 million $0.3 million $1.1 million $0.4 million
EXPENSES
Our total expenses decreased by
- Commission and fees expenses increased by
$0.2 million $3.2 million $3.4 million $0.8 million $0.6 million - Compensation expenses increased by
13.2% from$3.6 million $4.1 million - Communication and technology expenses slightly decreased from
$3.4 million $3.1 million - General and administrative expenses increased by
16.6% from$1.2 million $1.4 million - Professional fees slightly decreased by
8.3% from$3.7 million $3.4 million - Service fees for independent contractors and consultants increased by
20.2% from$2.0 million $2.4 million - Research and development expenses were
$7.1 thousand $4.7 million - Interest expenses increased slightly to
$2.4 million $2.3 million - Occupancy expenses were
$0.8 million - Marketing expenses increased by
12.1% from$3.7 million $4.2 million - Depreciation expenses decreased by
11.7% from$2.0 million $1.8 million - Impairment of fixed assets was nil in 2023, compared to
$1.7 million - Impairment of cryptocurrencies was nil in 2023, compared to
$0.3 million - The gain from the change in fair value of the outstanding Public and Private Warrants was
$0.6 million $1.3 million - Other expenses increased from
$32.4 thousand $430.2 thousand
INCOME TAX EXPENSES
Income tax expenses decreased from
NET (LOSS) INCOME
As a result of the above, net loss was
NON-GAAP FINANCIAL RESULTS
Non-GAAP net loss, which excludes change in fair value of warrant liabilities, stock-based compensation expenses, amortization of debt discounts, depreciation expenses and impairment of fixed assets was
LIQUIDITY
As of December 31, 2023, the Company's cash and restricted cash were
Non-GAAP Financial Measures
This press release includes reconciliations of the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the
For more information on the non-GAAP financial measures, please see the table, titled "Unaudited Reconciliations of Non-GAAP and GAAP Financial Results," set forth at the end of this press release.
About Lion
Lion Group Holding Ltd. (Nasdaq: LGHL) operates an all-in-one, state-of-the-art trading platform that offers a wide spectrum of products and services, including (i) total return service (TRS) trading, (ii) contract-for-difference (CFD) trading, (iii)
Forward-Looking Statements
This press release contains, "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Lion's actual results may differ from their expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "might" and "continues," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, but are not limited to, statements about: Lion's goals and strategies; our ability to retain and increase the number of users, members and advertising customers, and expand its service offerings; Lion's future business development, financial condition and results of operations; expected changes in Lion's revenues, costs or expenditures; the impact of COVID-19; competition in the industry; relevant government policies and regulations relating to our industry; general economic and business conditions globally and in
Contacts
Lion Group Holding
Tel: +852 2820 9011
Email: ir@liongrouphl.com
ICR, LLC
William Zima
Tel: +1 203 682 8233
Email: ir@liongrouphl.com
Skyline Corporate Communications Group, LLC
Scott Powell, President
Tel: (646) 893-5835
Email: info@skylineccg.com
LION GROUP HOLDING LTD | |||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | |||||
(in dollar amount) | |||||
Year Ended December 31, | |||||
2023 | 2022 | ||||
Revenues (losses) | |||||
Insurance brokerage commissions | $ | 1,169,306 | $ | 455,394 | |
Securities brokerage commissions and fees | 2,732,846 | 3,412,644 | |||
Market making commissions and fees | 3,121,661 | 781,878 | |||
Interest income | 2,424,676 | 3,229,716 | |||
Trading gains (loss) | 10,479,504 | (11,467,969) | |||
Other income | 1,163,251 | 1,118,244 | |||
21,091,244 | (2,470,093) | ||||
Expenses and others | |||||
Commissions and fees | 3,418,398 | 3,198,934 | |||
Compensation and benefits | 4,099,852 | 3,620,506 | |||
Occupancy | 870,254 | 826,254 | |||
Communication and technology | 3,059,462 | 3,392,794 | |||
Cost of crypto mining | - | - | |||
General and administrative | 1,432,148 | 1,228,572 | |||
Professional fees | 3,407,365 | 3,716,839 | |||
Research and development | 7,115 | 4,693,995 | |||
Services fees | 2,352,832 | 1,956,785 | |||
Interest | 2,413,102 | 2,334,598 | |||
Depreciation and amortization | 1,795,011 | 2,032,386 | |||
Marketing | 4,196,795 | 3,743,567 | |||
Impairment of fixed assets | - | 1,690,028 | |||
Impairment of cryptocurrencies | - | 293,619 | |||
Change in fair value of warrant liabilities | (565,313) | (1,260,354) | |||
Other operating | 430,214 | 32,406 | |||
26,917,235 | 31,500,929 | ||||
Loss before income taxes | (5,825,991) | (33,971,022) | |||
Income tax expense | (1,058) | (3,419) | |||
Net loss | $ | (5,827,049) | $ | (33,974,441) | |
Net loss attributable to non-controlling interests | (568,041) | (2,411,158) | |||
Net (loss) gain attributable to LGHL | $ | (5,259,008) | $ | (31,563,283) | |
Deemed dividend on the effect of the down round features | (6,112,000) | - | |||
Deemed dividend on the effect of the warrant modification | (3,086,000) | - | |||
Dividends and deemed dividends on preferred shares | - | (595,208) | |||
Net loss attributable to LGHL ordinary shareholders | $ | (14,457,008) | $ | (32,158,491) | |
Loss per share for both Class A and Class B ordinary shares | |||||
- basic and diluted (i) | $ | (0.12) | $ | (0.70) | |
Loss per ADS | |||||
- basic and diluted (i) | $ | (5.94) | $ | (34.97) | |
Weighted average Class A ordinary shares outstanding | |||||
- basic and diluted (i) | 108,269,640 | 40,438,604 | |||
Weighted average Class B ordinary shares outstanding | |||||
- basic and diluted (i) | 13,478,813 | 5,535,888 | |||
LION GROUP HOLDING LTD | |||||
CONSOLIDATED BALANCE SHEETS | |||||
(in dollar amount) | |||||
December 31, | |||||
2023 | 2022 | ||||
Assets | |||||
Current Assets | |||||
Cash and cash equivalents | $ | 28,953,780 | $ 11,159,610 | ||
Restricted cash-bank balances held on behalf of customers | 2,142,615 | 3,242,989 | |||
Securities owned, at fair value | 4,522,805 | 11,104,047 | |||
Receivables from broker-dealers and clearing organizations | 13,852,846 | 33,342,254 | |||
Short-term loans receivable | - | 7,126,021 | |||
Other receivables | 60,413 | 534,437 | |||
Derivative assets, at fair value | 1,801,095 | - | |||
Prepaids, deposits and other | 2,095,800 | 2,534,684 | |||
Total current assets | 53,429,354 | 69,044,042 | |||
Long term investment | - | 1,436,142 | |||
Fixed assets, net | 19,844,396 | 13,786,344 | |||
Right-of-use assets | 593,678 | 1,160,563 | |||
Other assets | 677,158 | 1,207,293 | |||
Total Assets | $ | 74,544,586 | $ 86,634,384 | ||
Liabilities and Stockholders' Equity | |||||
Liabilities | |||||
Current Liabilities | |||||
Payables to customers | $ 22,518,927 | $ 23,829,192 | |||
Payables to broker-dealers and clearing organizations | 15,089,756 | 24,963,524 | |||
Accrued expenses and other payables | 2,198,697 | 1,923,305 | |||
Derivative liabilities, at fair value | 3,009,166 | - | |||
Embedded derivative liabilities | 878,420 | 2,292,056 | |||
Short-term borrowings | 110,000 | 110,000 | |||
Lease liability - current | 537,440 | 601,531 | |||
Due to director | - | 146,671 | |||
Total current liabilities | 44,342,406 | 53,866,279 | |||
Lease liability - noncurrent | 83,480 | 618,705 | |||
Convertible debentures | 1,597,404 | 4,061,735 | |||
Warrant liabilities | 109,687 | 675,000 | |||
Total Liabilities | 46,132,977 | 59,221,719 | |||
Commitments and Contingencies | |||||
Stockholders' Equity | |||||
Preferred shares, | - | - | |||
Class A ordinary shares, | |||||
authorized, 179,250,754 and 48,761,596 shares issued and outstanding | |||||
at December 31, 2023 and 2022, respectively (i) | 17,925 | 4,876 | |||
Class B ordinary shares, | |||||
authorized, 23,843,096 and 9,843,096 shares issued and outstanding | |||||
at December 31, 2023 and 2022, respectively (i) | 2,384 | 984 | |||
Additional paid in capital | 71,532,253 | 63,660,939 | |||
Accumulated deficit | (39,751,871) | (34,492,863) | |||
Accumulated other comprehensive income (losses) | (268,562) | (303,213) | |||
Total LGHL shareholders' equity | 31,532,129 | 28,870,723 | |||
Non-controlling interest | (3,120,520) | (1,458,058) | |||
Total shareholders' equity | 28,411,609 | 27,412,665 | |||
Total Liabilities and Stockholders' Equity | $ 74,544,586 | $ 86,634,384 | |||
(i) On July 3, 2023, LGHL announced that it plans to change its American depositary share ("ADS") to ordinary share ("Share") ratio from one (1) ADS representing one (1) Share to one (1) ADS representing fifty (50) Shares. The change in the ADS ratio was effective on July 13, 2023. For LGHL's ADS holders, the change in the ADS ratio had the same effect as a one-for-fifty reverse ADS split. The ADS ratio change has no impact on LGHL's underlying Shares. Loss per ADS for all periods presented had been retrospectively adjusted accordingly.
LION GROUP HOLDING LTD | ||||||
SUMMARY OF CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW DATA | ||||||
(in dollar amount) | ||||||
Year ended December 31, | ||||||
2023 | 2022 | |||||
Net cash provided by (used in) operating activities | $ | 13,412,873 | $ | (3,940,552) | ||
Net cash provided by (used in) investing activities | 1,416,000 | (7,093,339) | ||||
Net cash provided by financing activities | 1,659,010 | 9,808,775 | ||||
Effect of exchange rate changes on cash and restricted cash | 205,913 | (123,760) | ||||
Net increase (decrease) in cash and restricted cash | 16,693,796 | (1,348,876) | ||||
Cash and restricted cash at beginning of period | 14,402,599 | 15,751,475 | ||||
Cash and restricted cash at end of period | $ | 31,096,395 | $ | 14,402,599 | ||
LION GROUP HOLDING LTD | ||||
RECONCILIATIONS OF NON-GAAP AND GAAP FINANCIAL RESULTS | ||||
(in dollar amount) | ||||
US$ | US$ | |||
Net (loss) income attributable to LGHL | $ (5,259,008) | $ (31,563,283) | ||
Stock-based compensation | 1,673,883 | 1,300,550 | ||
Amortization of debt discounts | 522,319 | 658,680 | ||
Depreciation expenses | 1,795,011 | 2,032,386 | ||
Impairment of fixed assets | - | 1,690,028 | ||
Change in fair value of warrant liabilities | (565,313) | (1,260,354) | ||
Non-GAAP (loss) income attributable to LGHL before | $ (1,833,108) | $ (27,141,993) | ||
Non-GAAP (losses) earnings per share for both Class A and Class B | ||||
- basic | $ (0.02) | $ (0.59) | ||
- diluted | $ (0.02) | $ (0.59) | ||
Non-GAAP income (loss) per ADS | ||||
- basic | $ (0.75) | $ (29.52) | ||
- diluted | $ (0.75) | $ (29.52) | ||
Weighted average Class A ordinary shares outstanding | ||||
- basic and diluted | 108,269,640 | 40,438,604 | ||
Weighted average Class B ordinary shares outstanding | ||||
- basic and diluted | 13,478,813 | 5,535,888 | ||
Year ended December 31, | ||||||||
2023 | 2022 | |||||||
Basic | Fully Diluted | Basic | Fully Diluted | |||||
Earnings (Loss) attributable to LGHL per share for both Class | (0.04) | (0.04) | (0.69) | (0.69) | ||||
Stock-based compensation | 0.01 | 0.01 | 0.03 | 0.03 | ||||
Amortization of debt discounts | 0.00 | 0.00 | 0.01 | 0.01 | ||||
Depreciation expenses | 0.01 | 0.01 | 0.04 | 0.04 | ||||
Impairment of fixed assets | - | - | 0.04 | 0.04 | ||||
Change in fair value of warrant liabilities | (0.00) | (0.00) | (0.03) | (0.03) | ||||
Non-GAAP (losses) earnings per share for both Class A and | (0.02) | (0.02) | (0.59) | (0.59) | ||||
[1] OTC stock options trading is a new segment line added to provide better analysis of revenues due to the growing significance of OTC stock options trading to the Company's revenue. Prior periods in this report have also been reclassified to reflect these changes for comparison purposes. The reclassification has no effect on previously reported net assets or net income (loss). |
[2] Foreign currency gains were significant in 2023, so the Company reclassified such amounts from expenses to Others in revenue. The reclassification has no effect on previously reported net assets or net income (loss). |
[3] The Company implemented an ADS ratio change on July 13, 2023, from one (1) ADS representing one (1) ordinary share to one (1) ADS representing fifty (50) ordinary shares. The ADS ratio change has no impact on LGHL's underlying ordinary shares. Loss per ADS for the year ended December 31, 2023 and 2022 had been retrospectively adjusted accordingly. |
[4] Non-GAAP diluted net loss per ADS for the year ended December 31, 2023 and 2022 had been retrospectively adjusted accordingly. |
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SOURCE Lion Group Holding Ltd.
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