Netcapital Announces Full Year Fiscal 2024 Financial Results

Rhea-AI Summary

Netcapital Inc. (NCPL) reported its full fiscal year 2024 financial results, showing mixed performance. While overall revenues decreased by 42% to $4.9 million, portal fees surged by 109% to $874,368. The company faced challenges, reporting an operating loss of $3,442,388 and a net loss of $4,986,317, compared to profits in the previous year. Loss per share was $0.41, down from earnings of $0.63 in fiscal 2023. Netcapital also recorded an impairment loss of $1,048,430. Despite these setbacks, CEO Martin Kay expressed optimism about the future, citing significant growth in key areas amidst a challenging economic environment. The company will host an investor conference call on July 30, 2024, to discuss these results further.

Positive

• Portal fees increased by 109% year-over-year to $874,368
• Cash and cash equivalents of $863,182 as of April 30, 2024

Negative

• Revenues decreased by 42% year-over-year to $4.9 million
• Operating loss of $3,442,388 compared to operating income of $2,271,876 in previous year
• Net loss of $4,986,317 compared to net income of $2,954,972 in previous year
• Loss per share of $0.41 compared to earnings per share of $0.63 in previous year
• Impairment loss of $1,048,430 recorded in fiscal year 2024

Insights

Financial Analyst

Netcapital's fiscal 2024 results paint a challenging picture, with significant declines in both revenue and profitability. The 42% year-over-year revenue decrease to $4.9 million is concerning, especially when coupled with the shift from an operating income of $2.27 million in fiscal 2023 to an operating loss of $3.44 million in fiscal 2024. This stark reversal indicates substantial pressure on the company's core business model.

However, it's not all doom and gloom. The 109% increase in portal fees to $874,368 is a bright spot, suggesting growing traction in Netcapital's digital private capital markets platform. This growth in a key revenue stream could be pivotal for future performance if the trend continues and expands.

The $1.05 million impairment loss is noteworthy and likely contributed significantly to the net loss. Investors should seek clarity on the nature of this impairment during the upcoming earnings call, as it could provide insights into potential future write-downs or strategic shifts.

With cash and cash equivalents of $863,182, liquidity might become a concern if the company cannot reverse its loss-making trend. The burn rate implied by the operating loss suggests that without additional financing or a rapid turnaround, Netcapital may face cash flow challenges in the near term.

Overall, while the portal fee growth is encouraging, the company's ability to manage costs and return to profitability will be important for its long-term viability in the competitive digital capital markets space.

Market Research Analyst

Netcapital's performance in fiscal 2024 reflects broader trends in the private capital markets ecosystem. The substantial revenue decline of 42% year-over-year suggests that the challenging economic environment has significantly impacted investor appetite for private market opportunities.

However, the impressive growth in portal fees (109% increase) is a silver lining, indicating that Netcapital's platform is gaining traction among users despite market headwinds. This could be attributed to a shift towards digital platforms for capital raising, accelerated by the pandemic and changing investor behaviors.

The company's transition from profitability to a significant loss ($4.99 million net loss in FY2024 vs. $2.95 million net income in FY2023) raises questions about its cost structure and scalability. It's important to understand whether this is a temporary setback due to market conditions or if it reveals underlying issues with the business model.

Looking ahead, Netcapital's ability to capitalize on the growing interest in private markets, as evidenced by the portal fee increase, while managing costs effectively, will be key to its recovery. The upcoming earnings call should provide valuable insights into management's strategy for navigating these challenges and leveraging opportunities in the evolving digital private capital landscape.

• Management to Host Earnings Call on July 30, 2024 at 11 a.m. ET

BOSTON, MA, July 29, 2024 (GLOBE NEWSWIRE) -- Netcapital Inc. (Nasdaq: NCPL, NCPLW) (the “Company”), a digital private capital markets ecosystem, today announced select financial results for the full fiscal year 2024 ended April 30, 2024.

"We saw significant growth in key areas despite a challenging economic environment,” said Martin Kay, CEO of Netcapital Inc. “While there were decreases in both top and bottom line, we remain optimistic about the future, particularly with portal fees increasing over 100% during the year.”

Full Year Fiscal 2024 Financial Highlights

• Revenues decreased by approximately 42% year-over-year to $4.9 million, compared to revenue of $8.5 million for full fiscal year 2023.
• Revenue from portal fees increased by approximately 109% year-over-year to $874,368 in the full fiscal year 2024 compared to $418,513 for full fiscal 2023.
• As of April 30, 2024, the Company had cash and cash equivalents of $863,182.
• Operating loss of ($3,442,388) for full fiscal year 2024 as compared to operating income of $2,271,876 for full fiscal year 2023
• Net loss for the full fiscal year 2024 was ($4,986,317) in the full fiscal year 2024, as compared to net income of $2,954,972 for fiscal year 2023
• Loss per share of ($0.41) in the full fiscal year 2024, were down compared to earnings per share of $0.63 for the full fiscal year 2023.
• The Company recorded an impairment loss of $1,048,430 in fiscal year 2024.

For additional disclosure regarding Netcapital’s operating results, please refer to the Annual Report on Form 10-K for the period ended April 30, 2024, which has been filed with the Securities and Exchange Commission.

Conference Call Information

The Company will host an investor conference call on Tuesday, July 30th, 2024, at 11 a.m. ET.

Participant access: 844-985-2012 or 973-528-0138

Conference entry code: 861716

About Netcapital Inc.

Netcapital Inc. is a fintech company with a scalable technology platform that allows private companies to raise capital online and provides private equity investment opportunities to investors. The Company's consulting group, Netcapital Advisors, provides marketing and strategic advice and takes equity positions in select companies. The Company’s funding portal, Netcapital Funding Portal, Inc. is registered with the U.S. Securities & Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA), a registered national securities association.

Forward Looking Statements

The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume 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.

Investor Contact

800-460-0815 
ir@netcapital.com

Netcapital Inc. Consolidated Statements of Operations

		Year Ended				Year Ended
		April 30, 2024				April 30, 2023
Revenues		$	4,951,435			$	8,493,985
Costs of services			108,060				85,038
Gross profit			4,843,375				8,408,947
Costs and expenses:
Consulting expense			610,209				589,349
Marketing			333,771				85,482
Rent			76,117				75,052
Payroll and payroll related expenses			3,838,640				3,646,490
General and administrative costs			3,427,026				1,740,698
Total costs and expenses			8,285,763				6,137,071
Operating income (loss)			(3,442,388	)			2,271,876
Other income (expense):
Interest expense			(45,990	)			(93,842	)
Gain on debt conversion			-				224,260
Amortization of intangible assets			(93,862	)			(96,407	)
Impairment expense			(1,048,430	)			-
Other income			1,200				51,645
Unrealized gain (loss) on equity securities			(2,696,135	)			1,857,500
Realized loss on sale of investment			-				(406,060	)
Total other income (expense)			(3,883,217	)			1,537,096
Net income (loss) before taxes			(7,325,605	)			3,808,972
Income tax expense (benefit)			(2,339,288	)			854,000
Net income (loss)		$	(4,986,317	)		$	2,954,972
Basic earnings (loss) per share		$	(0.41	)		$	0.63
Diluted earnings (loss) per share		$	(0.41	)		$	0.63
Weighted average number of common shares outstanding:
Basic			12,105,577				4,677,214
Diluted			12,105,577				4,677,464

Netcapital Inc. Consolidated Balance Sheets

		April 30, 2024				April 30, 2023
Assets:
Cash and cash equivalents		$	863,182			$	569,441
Accounts receivable net			134,849				1,388,500
Note receivable			20,000				-
Interest receivable			1,200				-
Prepaid expenses			23,304				583,030
Total current assets			1,042,535				2,540,971
Deposits			6,300				6,300
Notes receivable - related parties			202,000				202,000
Purchased technology, net			14,733,005				15,875,297
Investment in affiliate			240,080				240,080
Equity securities			25,333,386				22,955,445
Total assets		$	41,557,306			$	41,820,093
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
Trade		$	793,325			$	578,331
Related party			-				75,204
Accrued expenses			310,300				285,065
Stock subscription payable			-				10,000
Deferred revenue			466				661
Interest payable			92,483				98,256
Current taxes payable			-				174,000
Deferred tax liability, net			-				1,657,000
Related party debt			-				15,000
Secured note payable			-				350,000
Current portion of SBA loans			1,885,800				1,885,800
Loan payable - bank			34,324				34,324
Total current liabilities			3,116,698				5,163,641
Long-term liabilities:
Long-term SBA loans, less current portion			500,000				500,000
Total liabilities			3,616,698				5,663,641
Commitments and contingencies			-				-
Stockholders’ equity:
Common stock, $.001 par value; 900,000,000 shares authorized, 22,880,680 and 6,440,527 shares issued and outstanding			22,880				6,441
Shares to be issued			122,124				183,187
Capital in excess of par value			37,316,041				30,500,944
Retained earnings			479,563				5,465,880
Total stockholders’ equity			37,940,608				36,156,452
Total liabilities and stockholders’ equity		$	41,557,306			$	41,820,093

FAQ

What were Netcapital's (NCPL) revenue figures for fiscal year 2024?

Netcapital's revenues for fiscal year 2024 were $4.9 million, a 42% decrease from $8.5 million in fiscal year 2023.

How did Netcapital's (NCPL) portal fees perform in fiscal year 2024?

Netcapital's portal fees increased by 109% year-over-year, reaching $874,368 in fiscal year 2024 compared to $418,513 in fiscal year 2023.

What was Netcapital's (NCPL) net income/loss for fiscal year 2024?

Netcapital reported a net loss of $4,986,317 for fiscal year 2024, compared to a net income of $2,954,972 in fiscal year 2023.

When is Netcapital (NCPL) hosting its earnings call for fiscal year 2024 results?

Netcapital is hosting its earnings call on July 30, 2024, at 11 a.m. ET to discuss the fiscal year 2024 results.