Netcapital (NCPL) - 2026 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported revenues of approximately $51,000 for the three months ended October 31, 2025, a decrease from approximately $170,000 during the same period in 2024, primarily due to a decrease in portal fees [3] - An operating loss of approximately $2.1 million was reported, compared to an operating loss of approximately $2.2 million for the second quarter of fiscal year 2025 [4] - The loss per share was $0.44, an improvement from a loss per share of $2.34 for the second quarter of fiscal year 2025 [4] - As of October 31, 2025, the company had cash and cash equivalents of approximately $1.7 million [4] Business Line Data and Key Metrics Changes - The company is transitioning away from a consulting for equity model, which was not scalable, to focus on its core fintech platform and a recently licensed broker-dealer [8][9] - The funding portal is described as a technology business with a generally fixed cost structure, allowing for attractive incremental margins as volume increases [9] Market Data and Key Metrics Changes - The company sees significant opportunities in the tokenized asset market, which is expected to grow, and aims to leverage its existing platform to integrate crypto and blockchain into financing strategies for small businesses [7][10] - The recent success of Coinbase's Monad token sale, which raised $269 million from 86,000 buyers in less than 24 hours, indicates strong demand for U.S. retail participation in utility token offerings [11] Company Strategy and Development Direction - The strategy is to grow volume on a more scalable platform, leverage the broker-dealer for larger transactions, and explore opportunities in digital assets and tokenization [10] - The company aims to create durable value for shareholders while ensuring compliance with regulatory frameworks [10] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about the regulatory environment for tokenized assets and the potential for high-margin revenue streams from successful token sales [11] - The CEO emphasized the importance of patience as the company pivots its strategy and focuses on executing its new plan [18][25] Other Important Information - The company has a network of 100,000 U.S. investors and over 300 successfully funded companies, providing a strong foundation for future growth [11] - The acquisition of Rivetz is seen as critical for executing the strategy shift to tokenized assets, providing necessary expertise and technology [29] Q&A Session Summary Question: Employee Count Justification - The CEO acknowledged the concern regarding the employee count relative to revenues and emphasized the focus on executing the new strategy [17][18] - The CFO indicated that revenues from the broker-dealer might be seen in the next quarter [19][20] Question: Justification for Share Distribution - The CEO explained that giving away 20% of shares was necessary to support the new strategy and that it was part of a broader plan [24][25] - The CFO added that Rivetz's technology is essential for the company's future strategy [29] Question: Acquisition of Defunct Company - The CEO stated that the acquisition fits into the overall strategy and that the technology is valuable for future plans [38] - The CFO noted that the total dollars paid for the acquisition were not significant [39]