In This Article:
Release Date: March 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Netcapital Inc (NASDAQ:NCPL) successfully established its broker dealer subsidiary, Netcapital Securities Inc, following FINRA approval.
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The company is now positioned to handle private placements of securities and support companies raising equity capital under Reg A and Reg D.
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Netcapital Securities Inc has already engaged with Algernon Neuroscience Inc for a planned Reg A offering.
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The shift in focus towards establishing a broker dealer subsidiary is seen as a strategic move to diversify revenue sources.
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Management remains cautiously optimistic about future prospects despite current market uncertainties.
Negative Points
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Revenues for the third quarter of fiscal 2025 decreased by approximately 85% compared to the same period in the previous year.
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The company reported an operating loss of $1,687,692 for the third quarter of fiscal 2025, an increase from the previous year's loss.
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Netcapital Inc (NASDAQ:NCPL) reported a net loss of approximately $3 million for the third quarter, up from $2.2 million in the prior year.
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The third quarter results included an impairment charge of $1.3 million for one of the portfolio companies.
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The decline in revenue was attributed to the lack of consulting service revenue for equity securities in Q3 2025.
Q & A Highlights
Q: Can you elaborate on the reasons behind the significant revenue decline in Q3 2025? A: Corinne Kreisler, CFO: The revenue decline of approximately 85% to $152,682 was primarily due to the absence of consulting service revenue for equity securities in Q3 2025, compared to $862,346 in Q3 2024. This shift is part of our strategic focus on establishing our broker-dealer subsidiary, Net Capital Securities Inc., which received FINRA approval in November 2024.
Q: What are the key functions of Net Capital Securities Inc. following its approval as a broker-dealer? A: Martin Kaay, CEO: Net Capital Securities Inc. is now approved to handle private placements of securities, support companies raising equity capital under Reg A and Reg D, and partner with other broker-dealers. This strategic move aims to diversify our revenue streams and attract a broader range of issuers.
Q: How did the operating and net losses for Q3 2025 compare to the previous year? A: Corinne Kreisler, CFO: We reported an operating loss of $1,687,692 for Q3 2025, compared to $1,205,157 in Q3 2024. The net loss for Q3 2025 was approximately $3,006,537, up from $2.2 million in the same period last year. This includes an impairment charge of $1.3 million for one of our portfolio companies.