Hearte Enterprises(HTCR) - 2025 Q2 - Quarterly Results

Financial & Operational Highlights Management Commentary The company returned to profitability in the second quarter, driven by a significant software deal, and anticipates further growth from its 'Go IPO' business - The company returned to profitability in Q2 2025, a result attributed to the resilience of the software business and a significant deal with a major infrastructure company[3] - An existing 'Go IPO' client is expected to list on the Nasdaq Stock Market in the near-term, which is anticipated to strengthen Q3 2025 financial results[3] - The company signed its 15th and 16th 'Go IPO' contracts and plans to host an event in Korea to expand its presence in that market[3] Second Quarter 2025 Financial & Operational Results The company achieved a significant turnaround in Q2 2025, returning to profitability with strong revenue and gross profit growth while regaining Nasdaq compliance Q2 2025 Financial Performance vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $4.7 million | $4.1 million | +16.7% | | Gross Profit | $2.2 million | $0.8 million | +175.2% | | Operating Expenses | $2.1 million | $2.3 million | -8.7% | | Net Income (Loss) | $1.1 million | ($2.2 million) | N/A | | Adjusted EBITDA | $0.1 million | ($1.2 million) | N/A | - Revenue growth was primarily driven by increased sales of on-premise CMS licenses and expansion of the traditional SaaS business in Japan[4] - Gross profit margin expanded significantly due to high-margin, independently developed software sales and reduced outsourcing costs in the customized software segment[6] - As of June 30, 2025, total shareholders' equity was $3.5 million, satisfying the Nasdaq's $2.5 million minimum requirement[5] - Key operational achievements include signing two new 'Go IPO' contracts and forming strategic partnerships with Silver Egg Technology and NEC Solutions Innovators[5] Six Months Ended June 30, 2025 Financial Results For the first half of 2025, revenues declined, but gross profit increased and the net loss narrowed due to improved cost management and a strategic shift Six Months 2025 Financial Performance vs. Six Months 2024 | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $8.3 million | $9.1 million | -8.8% | | Gross Profit | $3.3 million | $2.8 million | +16.9% | | Operating Expenses | $4.4 million | $5.0 million | -12.0% | | Net Loss | ($2.1 million) | ($3.7 million) | +43.2% | | Adjusted EBITDA | ($1.1 million) | ($1.6 million) | +31.3% | - The revenue decline was primarily caused by a slowdown in the Sigmaways customized software business and decreased Go IPO consulting services revenue[10] - Gross profit increased due to a strategic focus on higher-margin on-premise software and cost reductions from ending cooperation with costly vendors[11] Non-GAAP Financial Measures Reconciliation of Net Loss to Adjusted EBITDA The company's Adjusted EBITDA showed significant improvement for both the second quarter and the first six months of 2025 compared to the prior year Q2 Adjusted EBITDA Reconciliation (in millions) | Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (loss) | $1.1 | ($2.2) | | Adjustments | ($1.0) | $1.0 | | Adjusted EBITDA | $0.1 | ($1.2) | Six Months Adjusted EBITDA Reconciliation (in millions) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net loss | ($2.1) | ($3.7) | | Adjustments | $1.0 | $2.1 | | Adjusted EBITDA | ($1.1) | ($1.6) | Consolidated Financial Statements Consolidated Balance Sheets The company's balance sheet as of June 30, 2025, shows total assets of $13.5 million and an increase in shareholders' equity Key Balance Sheet Items | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,347,622 | $2,121,089 | | Total Assets | $13,525,320 | $13,965,034 | | Total Liabilities | $9,966,303 | $10,503,019 | | Total Shareholders' Equity | $3,559,017 | $3,462,015 | Consolidated Statements of Operations and Comprehensive Loss For the first six months of 2025, the company reported an improved net loss per share compared to the prior-year period Six Months Statement of Operations Highlights | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Revenues | $8,331,272 | $9,113,120 | | Gross Profit | $3,317,879 | $2,838,070 | | Loss from operations | ($1,136,692) | ($2,190,159) | | Net loss attributable to common shareholders | ($1,987,701) | ($3,284,450) | | Net loss per share (Basic & Diluted) | ($0.09) | ($0.16) | Consolidated Statements of Cash Flows The company experienced a net increase in cash for the first six months of 2025, driven by investing and financing activities Six Months Cash Flow Summary | Cash Flow Activity | Six Months Ended June 30, 2025 | | :--- | :--- | | Net cash used in operating activities | ($2,674,892) | | Net cash provided by investing activities | $1,091,636 | | Net cash provided by financing activities | $1,770,767 | | Net change in cash and cash equivalents | $226,533 | | Cash and cash equivalents - end of period | $2,347,622 | About the Company & Other Information About HeartCore Enterprises, Inc. HeartCore Enterprises is a Tokyo-based software and consulting firm specializing in SaaS, CXM, and 'GO IPO' services for Japanese companies - Offers SaaS solutions, a CXM Platform, and data analytics services to enterprise customers[14] - Operates a digital transformation business utilizing robotics process automation (RPA)[14] - Provides 'GO IPO' consulting services to help Japanese companies go public in the U.S[14] Forward-Looking Statements The press release contains forward-looking statements that are subject to risks and uncertainties and are not guarantees of future performance - The report includes forward-looking statements subject to risks, uncertainties, and other factors that could cause actual results to differ materially[20] - Investors are cautioned not to place undue reliance on these statements as they are based on current views and are not a guarantee of future performance[20]