Netcapital Q2 2024 Earnings Call Transcript

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December 15, 2023

There are 4 speakers on the call.

Operator

Good day, and welcome to the NET Capital Second Quarter Earnings Call. At this time, all participants have been placed on a listen only mode and the floor will be open for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Corrine Kreisler. The floor is yours.

Speaker 1

Thank you so much. Good morning, everyone, and thank you for joining NET Capital's fiscal Q2 2024 Financial Results Conference Call. This is Corinne Kreisler, CFO of Net Capital Inc. I will begin with a review of our financial results. Following that, NET Capital's CEO, Martin Kaye, will follow with his prepared remarks before we open the call up for questions.

Speaker 1

Before we begin, I'd like to call your to provide 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, for the company's growth strategy, liquidity and future events. Nett 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.

Speaker 1

Turning to our financial results for the Q2. During the quarter, we experienced a significant increase in revenue from our funding portal, reflecting a 151% year over year growth helped by the success of several large issuers during the period. Total company revenues grew 15 percent year over year to $2,000,000 as compared to revenue of $1,800,000 in the Q2 of fiscal year 2023. Net income increased 85 percent to $339,616 as compared to $183,138 for the Q2 fiscal year 2023 with the increase driven primarily by an income tax benefit of approximately $326,000 Operating income for the 2nd quarter decreased to $52,220 compared to $336.65 in the Q2 of fiscal 2023. The decrease was driven primarily by higher stock based compensation expense.

Speaker 1

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

Speaker 2

Thank you, Corine, and welcome, everyone. We followed up the Q1 of fiscal 2024 with another solid quarter with both overall revenues and revenue from our funding portal showing growth. As Quinn mentioned, there was sizable activity in the funding portal of our business with a significant increase in our revenue and the amount of dollars closed on offerings, which we're pleased to have seen. There were 2 significant deals that were closed by issuers during the quarter. The first Avidane, a graphene technology company, successfully sold out their 4 point $5,000,000 offering after upsizing the offering several times due to strong demand.

Speaker 2

And the second deal, Earthgrid PBC, a plasma boring technology company closed a $3,300,000 offering. These deals are a testament to the confidence both our client companies and our investor community have in our funding portal. Netcapital is a unique platform that is scalable, a scalable real time transaction processing engine that runs 24 hours a day, 7 days a week. We have over 100,000 users and over 50 companies that are currently raising capital on the platform. By offering a cost effective online capital raising solution and delivering exceptional issuer experience with easy access and onboarding process, backed by solid technology and boasting an extensive network of investors and companies.

Speaker 2

We're confident that we continue to offer a strong value proposition. As always, thank you for your interest and support of NET Capital. And operator, we're ready for questions.

Operator

Certainly, the floor is now open for questions. And the first question this morning is coming from Michael Matheson from Singular Research. Michael, your line is live. Please go ahead.

Speaker 3

Good morning, you guys, and congratulations on the quarter.

Speaker 2

Thanks, Michael.

Speaker 1

Hi, Michael. Thanks for joining.

Speaker 3

Yes, great. Particularly in light of current macro conditions, very, very impressive to have sold out offerings like that. Let me move forward to questions. The crucial one, Karim, you know me, I always focus on cash flow. And I noticed that while you often accept equity in lieu of cash for your fees.

Speaker 3

This quarter, if I'm reading your statement right, all the revenue was in the form of cash. Am I correct on that? And how should we model going forward? So

Speaker 1

During the quarter, approximately 26% of the revenues were cash. Cash revenues totaled 524,000 991. You can see that in the management's discussion analysis of the quarter.

Speaker 3

Okay, great. Thank you for the correction. Yes. Second question, we've talked about an citing a thing you've been trying to get off the ground, secondary trading on your platform. And I'm wondering how that's going.

Speaker 1

Yes. So I would say that we've made very significant progress on that. Right now, we're just dotting our I's and crossing our T's. Given how close we are to the holidays, I wouldn't expect us to launch pre holiday. But certainly, once the holidays are over, You should expect a launch reasonably soon after that.

Speaker 3

Great. Thank you for taking my questions.

Speaker 1

Absolutely.

Operator

Thank you. Please hold a moment while we check the questions one last time. And there are no further questions in queue at this time.

Speaker 1

Great. Thank you so much everyone for joining. We really appreciate your time and tension, especially during this very busy holiday season. We're very excited about how well our Funding portal has been performing. I think it's a testament to the product that we've built and the confidence that both investors and issuers have in our product.

Speaker 1

And thank you very much.

Operator

Thank you. 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.

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Earnings Conference Call
Netcapital Q2 2024
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