Q3 2024 Netcapital Inc Earnings Call

Good morning, everyone and welcome to the net capital incorporated quarterly earnings calls.

At this time, all participants have been placed on a listen only mode and we will open the floor for questions. Following the presentation.

It's now my pleasure to turn the floor over to your house Corrine craze of net capital carried the floor is yours.

Thank you so much Jenny good morning, everyone and thank you for joining that capital fiscal third quarter 2024 financial results Conference call. That's as Corrine Chrysler CFO of <unk> Capital, Inc. I will begin with a review of our financial results.

Knowing that not capitals CEO Martin K will follow with his prepared remarks before we open the call up for questions.

Before we begin I'd like to call your attention to the customary safe Harbor disclosure regarding forward looking information.

Management's discussion may include forward looking statements.

These statements relate to future events or to future financial performance.

And involve known and unknown risks uncertainties and other factors that may cause actual results to be materially different from any future results levels of activity performance or achievements expressed or implied by these forward looking statements.

Any forward looking statements reflect management's current views with respect to operations results of operations growth strategy liquidity and future events.

Net capital 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.

Turning to our financial results for the third quarter.

During the quarter revenue decreased by approximately $1 2 million or 54% to $1 million as compared to $2 3 million. During the three months ended January 31, 2023. The decrease was primarily attributed to addict a decrease in revenue for consulting services.

Is that we provide in exchange for equity securities during the quarter in the three months ended January 31, 2020 for revenues from equity based contracts decreased by $1 $1 million or 56% to $862000 as compared to revenues of $1 9 million.

In the three months ended January 31 2023.

A decrease of approximately 52000 or 23% was also noted in funding portal revenues during the quarter when compared to the prior fiscal quarter in.

In Q3, we recorded $179588 in funding portal revenues, consisting of portal fees of $84548 and listing fees of $95040.

Compared to funding portal revenue of $231000 a 33 in the three months ended January 31, 2023, consisting of portal fees of $99333 and listing fees of 132500.

The decrease in funding portal revenues for the third quarter is primarily attributable to fewer issuers lifting to raise capital on the funding portal platform.

Ending portal revenues decreased approximately 23% to 179588 compared to two two or 231833 in the third quarter of fiscal 2023.

We reported diluted earnings per share of a loss of 19 cents in the three months ended January 31 2024.

Which was down compared to diluted earnings per share of 33 cents for the same period in the prior year.

January 31, 2024, we had cash and cash equivalents of $2 million 172099.

I'll now turn the call over to our CEO Martin K.

Thank you Corey.

This was a challenging quarter for many businesses trying to raise capital in the current market environment, we had fewer issuers listing on our funding during the quarter than in the prior year period, but we remain optimistic about our future prospects all companies need capital and net capital provides an easy to use easy to access platform.

That connects high quality investors with high quality companies.

We saw both overall revenue on funding portal revenue dropped for the quarter, but we remain steadfast that we're providing the best service for our clients and then our value proposition continues to resonate with private companies looking for capital and with investors looking for opportunities.

While our overall revenue for the first nine months of fiscal 2024 dipped by approximately 14% compared to the prior year period.

Funding portal revenues increased by more than 70%.

We had an increase in portal fees of 375000, and 683 or 152% and an increase in listing fees of 48040 or 14%.

The increase in funding portal revenues during the time is primarily attributable to increased offering activity on the platform that generated increased investments by investors, who purchase securities on the portal.

Another bright point during Q3 was that we closed a $4 million public offering in December which adds to our working capital and strengthens our balance sheet.

We're pleased to see the continued growth in our funding portal revenues and believe it's a testament to the platform itself and the need for it.

That form continues to grow with over 100000 people using it and with over 50 companies currently raising capital.

Moving forward, we plan to continue to scale, our platform and to continue catering to accredited and non accredited retail investors early stage companies and others that need a platform designed to provide a real time solution is user friendly and works 24 hours a day seven days a week.

The scalability of our platform is a key driver of our business model, allowing us to grow revenues ahead of costs.

I was always that capital will remain vigilant and dedicated to our shareholders staff customers and the investment community.

And as always we want to thank you for your interest and continued support of net capital.

Operator, we are ready for questions.

Thank you very much we will now be opening the floor for questions.

Do you have any questions. Please press star one on your phone keypad now we also while you're posing your question you. Please pickup your handset if you're listening on a speaker phone to provide optimal sound quality. Please hold them and also we pulse our questions.

Thank you. Our first question is coming from Bill Peters of Cas three investments Phil Your line is life.

Hi, Good morning, Thank you for taking my call.

Do you.

See the crowdfunding market consolidating it seems so fractured and if so would management consider that and use their invaluable Nasdaq listing.

As a potential partner.

You.

Okay.

Mike do you want to handle that yeah. Thanks for that question, yes, very good question.

We certainly agree that it's early.

Relatively early in our industry and we are still relatively small as an industry I think if you look at the data that's collected by third parties.

The equity crowdfunding industry is probably around $1 billion.

Combined.

Hey, good flowing into private companies and obviously, that's just a drop in the bucket compared to.

The overall amount of capital that's flowing into private companies. So we believe that right now it's very early in the industry.

Still growing and there's certainly room for multiple competitors.

That said, obviously like any other company, we're always open to discussions and ways in which we can find opportunities to create value for our shareholders in partnership with others.

Okay. Thank you.

Thank you very much just as another reminder, that if you have any further questions. Please press star one on your phone keypad now to join Nikki.

I'm not seeing any further questions come into queue.

Hope we have another question just popped up.

And it's from Bill Peters again from cost three investments.

Hi, Thank you for taking my call again, I forgot to mention where does the company stand with the Etfs.

The alternative trading system.

Again, great question Bill, it's certainly been a focus for management over this quarter.

We are currently in a.

In a closed beta is how I would describe that in a production environment. So we're working with our Ats partner template.

We have and invited set of beta users.

What was previously.

A test environments now in a production environment and.

We expect to be able to launch more broadly in the near future.

Near future six months from now.

Is that realistic.

Yes within certainly that's realistic I would expect that to I would expect we would hope to be able to launch sooner than that.

Okay. Thank you have a good day.

Thanks Bill.

Thank you very much well again, we don't appear to have any further questions in the key I can hand, it back over to the management team for any closing comments.

Thank you Jenny and thank you everyone for joining us and we look forward to speaking Houston.

Thank you thank you corrine.

This does conclude today's conference call you may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.

Yeah.