Release Date: December 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Netcapital Inc (NCPL, Financial) received approval from FINRA for its broker-dealer subsidiary, marking a significant achievement and opening new revenue opportunities.
- The company is focusing on its broker-dealer subsidiary, which is expected to create new revenue streams through REG A and REG D offerings.
- Netcapital Inc (NCPL) has a portfolio of equity securities valued at over $25 million, providing a substantial asset base.
- The company has over 115,000 investor accounts and strong relationships with digital marketing providers, enhancing its platform's reach.
- Netcapital Inc (NCPL) has successfully facilitated fundraising for nearly 300 companies, indicating a robust operational track record.
Negative Points
- Revenues for Q2 fiscal 2025 decreased by approximately 92% compared to the same period in the previous year.
- The company reported an operating loss of approximately $2.2 million for the second quarter of fiscal 2025.
- Netcapital Inc (NCPL) experienced a net loss of approximately $2,220,501 for the second quarter of fiscal 2025.
- The company has not disclosed specific revenue forecasts for its new broker-dealer operations, creating uncertainty about future financial performance.
- The launch of the Temple ATS exchange has been delayed, with no clear timeline provided for its full rollout.
Q & A Highlights
Q: Can you provide an update on Netcapital's capital structure and the number of shares outstanding?
A: Martin Kay, CEO: Our capital structure is straightforward, consisting of common stock. We trade on NASDAQ with a diversified shareholder base. Currently, we have approximately 11.8 million shares outstanding.
Q: What differentiates Netcapital Securities from other broker dealers?
A: Martin Kay, CEO: Our platform supports Reg A fundraising, leveraging an established ecosystem that connects investors and issuers. We have over 115,000 investor accounts and strong digital marketing partnerships, which is unique compared to traditional broker dealer activities.
Q: Does the new broker dealer registration provide any revenue visibility?
A: Martin Kay, CEO: While we haven't disclosed specific forecasts, the registration opens potential for new revenue streams. For instance, Reg A allows issuers to raise up to $75 million, and as a broker dealer, we can structure fee arrangements based on a percentage of the capital raised.
Q: What is the status of the Temple ATS exchange launch?
A: Martin Kay, CEO: The technical buildout is complete, but we are still working through regulatory details. We aim to ensure the best product experience and compliance before launching. No official timeline has been disclosed yet.
Q: What is the current cash position and net asset value of Netcapital?
A: Martin Kay, CEO: As of the end of the quarter, we have cash and cash equivalents of over $1.3 million. Our portfolio of equity securities is valued at over $25 million in net asset value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
