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HeartCore Reports Third Quarter 2024 Financial Results
ソース: Nasdaq GlobeNewswire / 14 11 2024 07:30:00 America/Chicago
Q3 2024 Revenues Increased 281% to $17.9 Million
Q3 2024 Net Income Increased 526% to $10.8 Million
NEW YORK and TOKYO, Nov. 14, 2024 (GLOBE NEWSWIRE) -- HeartCore Enterprises, Inc. (Nasdaq: HTCR) (“HeartCore” or “the Company”), a leading enterprise software and consulting services company based in Tokyo, reported financial results for the third quarter ended September 30, 2024.
Third Quarter 2024 and Recent Operational Highlights
- Regained compliance with Nasdaq Listing Requirements
- Expanded CMS platform offering into a SaaS delivery model
- Entered into a sales collaboration with Tosho Computer Systems Co., Ltd.
- Announced transition from annual contracts to multi-year agreements for core software business contracts
- Partnered with NTT Data Business Brains Corporation to enhance website development service capabilities
- Achieved top market share in Japan for nine consecutive years
- Awarded new contract from Fourmix Co., Ltd. to implement CMS platform
- Announced Go IPO Client, SBC Medical Group Holdings Incorporated, began trading on the Nasdaq Stock Exchange
- Partnered with INCUDATA Corp. to enhance corporate digital marketing strategies
- Announced Go IPO Client, BloomZ Inc., began trading on the Nasdaq Stock Exchange
- Authorized second dividend payment of $0.02 per share
- Partnered with Hitachi Systems, Ltd. to offer combined package of HeartCore CMS and GRED Web Security Assessment Cloud
Management Commentary
“I am pleased to announce the strongest quarter of HeartCore’s history, supported by the progress made across our Go IPO business,” said HeartCore CEO Sumitaka Kanno. “The third quarter saw two new Go IPO clients successfully listed on the Nasdaq. The warrants and ordinary shares received from these deals contributed to our highest financial results since the inception of the service, driving us into profitable operations for the quarter and year-to-date. This quarter’s results showcased the immense value of our consulting business, and with an optimistic outlook on the U.S. IPO market for Japanese companies, we anticipate closing additional deals over the next several months that will further support the growth of our Go IPO business. We continue to remain in serious discussions with prospective Go IPO clients and look forward to sharing future wins as they come.”“We also accomplished key developments in our software business, positioning us for sustained and predictable growth in the coming quarters. First, we transitioned towards offering multi-year software licensing agreements to our customers, a move designed to generate recurring revenue streams and enhance our margin profile. Furthermore, we added a SaaS delivery model for our CMS platform designed to support our sales and marketing team to tap into a new pool of prospective customers. While Go IPO contains the prospect of significant upside, our adjustments in the software business model are intended to create more stable, durable, and long-term revenue for future quarters. We look forward to continuing driving growth across both arms of the business and carrying this momentum into 2025.”
Third Quarter 2024 Financial Results
Revenues increased 281% to $17.9 million compared to $4.7 million in the same period last year. The increase was primarily due to revenue from warrants and ordinary shares associated with the successful listing of two Go IPO consulting service clients.Gross profit increased 1,640% to $14.4 million compared to $0.8 million in the same period last year. The increase was primarily due to the aforementioned reason above.
Operating expenses decreased to $2.3 million compared to $2.6 million in the same period last year. The improvement was primarily due to lower selling, general and administrative, and research and development expenses.
Net income increased 526% to $10.8 million or $0.53 per diluted share compared to a net loss of $2.5 million or $(0.11) per diluted share, in the same period last year.
As of September 30, 2024, the Company had cash and cash equivalents of $1.2 million compared to $1.0 million on December 31, 2023.
Nine-Months 2024 Financial Results
Revenues increased 46% to $27.0 million compared to $18.5 million in the same period last year. The increase was primarily because revenue recognized from warrants and ordinary shares associated with the successful listing of two Go IPO consulting service clients in current periods was greater than that of recognized in the nine months ended September 30, 2023.Gross profit increased 117% to $17.3 million compared to $8.0 million in the same period last year. The increase was primarily due to the aforementioned reason above.
Operating expenses decreased to $7.3 million compared to $8.9 million in the same period last year. The decrease was primarily due to lower selling and general and administrative expenses.
Net income increased 506% to $7.1 million or $0.37 per diluted share compared to a net loss of $1.8 million or $(0.07) per diluted share, in the same period last year.
About HeartCore Enterprises, Inc.
Headquartered in Tokyo, Japan, HeartCore Enterprises is a leading enterprise software and consulting services company. HeartCore offers Software as a Service (SaaS) solutions to enterprise customers in Japan and worldwide. The Company also provides data analytics services that allow enterprise businesses to create tailored web experiences for their clients through best-in-class design. HeartCore’s customer experience management platform (CXM Platform) includes marketing, sales, service and content management systems, as well as other tools and integrations, which enable companies to enhance the customer experience and drive engagement. HeartCore also operates a digital transformation business that provides customers with robotics process automation, process mining and task mining to accelerate the digital transformation of enterprises. HeartCore’s GO IPOSM consulting services helps Japanese-based companies go public in the U.S. Additional information about the Company's products and services is available at and https://heartcore-enterprises.com/.Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, or the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by words such as “believed,” “intend,” “expect,” “anticipate,” “plan,” “potential,” “continue,” or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks, and uncertainties are discussed in HeartCore’s filings with the Securities and Exchange Commission. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond HeartCore’s control which could, and likely will materially affect actual results, and levels of activity, performance, or achievements. Any forward-looking statement reflects HeartCore’s current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to operations, results of operations, growth strategy, and liquidity. HeartCore 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. The contents of any website referenced in this press release are not incorporated by reference herein.HeartCore Investor Relations Contact:
Gateway Group, Inc.
Matt Glover and John Yi
HTCR@gateway-grp.com
(949) 574-3860HeartCore Enterprises, Inc. Consolidated Balance Sheets September 30, December 31, 2024 2023 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,232,117 $ 1,012,479 Accounts receivable 2,578,855 2,623,682 Investments in marketable securities 7,349,575 642,348 Investment in equity securities - 300,000 Prepaid expenses 769,183 536,865 Current portion of long-term note receivable 100,000 100,000 Due from related party 43,852 44,758 Other current assets 177,381 234,761 Total current assets 12,250,963 5,494,893 Non-current assets: Accounts receivable, non-current 766,972 - Property and equipment, net 663,447 763,730 Operating lease right-of-use assets 2,184,344 2,467,889 Intangible asset, net 4,037,500 4,515,625 Goodwill 3,276,441 3,276,441 Long-term investment in SAFE 350,000 - Long-term investment in equity securities 300,000 - Long-term investment in warrants 551,787 2,004,308 Long-term note receivable 200,000 200,000 Deferred tax assets 392,617 369,436 Security deposits 336,117 348,428 Long-term loan receivable from related party 146,354 182,946 Other non-current assets 15,812 71 Total non-current assets 13,221,391 14,128,874 Total assets $ 25,472,354 $ 19,623,767 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 1,779,799 $ 1,757,038 Accounts payable and accrued expenses - related party 28,772 - Accrued payroll and other employee costs 633,514 723,305 Due to related party 1,438 1,476 Short-term debt - 135,937 Current portion of long-term debts 462,121 371,783 Insurance premium financing 65,392 - Factoring liability 305,472 562,767 Operating lease liabilities, current 382,594 396,535 Finance lease liabilities, current 17,375 17,445 Income tax payables 170,453 162,689 Deferred revenue 1,927,582 2,166,175 Other current liabilities 756,766 216,405 Total current liabilities 6,531,278 6,511,555 - Non-current liabilities: Long-term debts 1,382,048 1,770,352 Operating lease liabilities, non-current 1,859,948 2,135,160 Finance lease liabilities, non-current 52,005 66,779 Deferred tax liabilities 1,130,500 1,264,375 Other non-current liabilities 200,818 208,732 Total non-current liabilities 4,625,319 5,445,398 Total liabilities 11,156,597 11,956,953 Shareholders' equity: Preferred shares ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of September 30, 2024 and December 31, 2023) - - Common shares ($0.0001 par value, 200,000,000 shares authorized; 20,864,144 and 20,842,690 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively) 2,085 2,083 Additional paid-in capital 18,997,059 19,594,801 Accumulated deficit (6,990,113 ) (14,763,469 ) Accumulated other comprehensive income 392,397 331,881 Total HeartCore Enterprises, Inc. shareholders' equity 12,401,428 5,165,296 Non-controlling interests 1,914,329 2,501,518 Total shareholders' equity 14,315,757 7,666,814 Total liabilities and shareholders' equity $ 25,472,354 $ 19,623,767
HeartCore Enterprises, Inc. Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) For the nine months ended September 30, For the three months ended September 30, 2024 2023 2024 2023 Revenues $ 26,963,531 $ 18,518,431 $ 17,850,411 $ 4,688,908 Cost of revenues 9,708,074 10,548,245 3,433,024 3,860,241 Gross profit 17,255,457 7,970,186 14,417,387 828,667 Operating expenses: Selling expenses 642,225 1,330,747 243,110 274,043 General and administrative expenses 6,395,429 7,305,392 1,966,717 2,172,298 Research and development expenses 307,931 289,303 107,529 170,071 Total operating expenses 7,345,585 8,925,442 2,317,356 2,616,412 Income (loss) from operations 9,909,872 (955,256 ) 12,100,031 (1,787,745 ) Other income (expenses): Changes in fair value of investments in marketable securities (308,059 ) (500,762 ) 122,272 (271,740 ) Changes in fair value of investment in warrants 1,631,700 (294,565 ) 2,869,407 (460,672 ) Loss on sale of warrants (3,970,628 ) - (3,970,628 ) - Interest income 15,557 64,633 10,933 14,363 Interest expenses (105,094 ) (125,073 ) (31,393 ) (42,619 ) Other income 158,914 176,641 24,040 52,640 Other expenses (131,507 ) (62,701 ) (82,457 ) (25,947 ) Total other expenses (2,709,117 ) (741,827 ) (1,057,826 ) (733,975 ) Income (loss) before income tax provision 7,200,755 (1,697,083 ) 11,042,205 (2,521,720 ) Income tax expense 72,945 58,859 225,275 19,413 Net income (loss) 7,127,810 (1,755,942 ) 10,816,930 (2,541,133 ) Less: net loss attributable to non-controlling interests (645,546 ) (419,211 ) (240,876 ) (233,913 ) Net income (loss) attributable to HeartCore Enterprises, Inc. $ 7,773,356 $ (1,336,731 ) $ 11,057,806 $ (2,307,220 ) Other comprehensive income (loss): Foreign currency translation adjustment 51,678 (85,244 ) 65,503 (90,743 ) Total comprehensive income (loss) 7,179,488 (1,841,186 ) 10,882,433 (2,631,876 ) Less: comprehensive loss attributable to non-controlling interests (654,384 ) (422,352 ) (241,913 ) (235,094 ) Comprehensive income (loss) attributable to HeartCore Enterprises, Inc. $ 7,833,872 $ (1,418,834 ) $ 11,124,346 $ (2,396,782 ) Net income (loss) per common share attributable to HeartCore Enterprises, Inc. Basic $ 0.37 $ (0.07 ) $ 0.53 $ (0.11 ) Diluted $ 0.37 $ (0.07 ) $ 0.53 $ (0.11 ) Weighted average common shares outstanding Basic 20,861,012 20,257,020 20,864,144 20,842,690 Diluted 20,861,012 20,257,020 20,864,144 20,842,690
HeartCore Enterprises, Inc. Unaudited Consolidated Statements of Cash Flows For the nine months ended September 30, 2024 2023 Cash flows from operating activities Net income (loss) $ 7,127,810 $ (1,755,942 ) Adjustments to reconcile net income (loss) to net cash flows used in operating activities: Depreciation and amortization expenses 561,659 495,200 Loss (gain) on disposal of property and equipment 1,894 (4,737 ) Amortization of debt issuance costs 3,791 2,257 Non-cash lease expense 272,208 254,876 Loss (gain) on termination of lease (469 ) 76 Deferred income taxes (163,199 ) (109,690 ) Stock-based compensation 236,826 1,267,699 Marketable securities received as noncash consideration (572,010 ) - Warrants received as noncash consideration (12,969,683 ) (4,009,335 ) Changes in fair value of investments in marketable securities 308,059 500,762 Changes in fair value of investment in warrants (1,631,700 ) 294,565 Loss on sale of warrants 3,970,628 - Changes in assets and liabilities: Accounts receivable (685,531 ) (322,583 ) Prepaid expenses (72,315 ) 187,269 Other assets 40,761 (23,982 ) Accounts payable and accrued expenses 34,752 597,247 Accounts payable and accrued expenses - related party 28,315 - Accrued payroll and other employee costs (68,323 ) 7,471 Due to related party (7 ) 7,562 Operating lease liabilities (275,850 ) (231,499 ) Income tax payables 17,971 101,058 Deferred revenue (205,109 ) 200,256 Other liabilities 540,008 83,809 Net cash flows used in operating activities (3,499,514 ) (2,457,661 ) Cash flows from investing activities Purchases of property and equipment (4,134 ) (516,658 ) Proceeds from disposal of property and equipment - 24,935 Advance on note receivable - (600,000 ) Purchase of long-term investment in SAFE (350,000 ) - Net proceeds from sale of warrants 5,640,000 - Repayment of loan provided to related party 31,457 34,823 Payment for acquisition of subsidiary, net of cash acquired - (724,910 ) Net cash flows provided by (used in) investing activities 5,317,323 (1,781,810 ) Cash flows from financing activities Payments for finance leases (12,568 ) (16,537 ) Proceeds from short-term and long-term debts 68,138 219,427 Repayment of short-term and long-term debts (453,048 ) (584,779 ) Repayment of insurance premium financing (107,297 ) (266,756 ) Net proceeds from factoring arrangement - 217,250 Net repayment of factoring arrangement (257,295 ) - Payments for debt issuance costs - (656 ) Distribution of dividends (834,566 ) - Capital contribution from non-controlling shareholder 67,195 - Net cash flows used in financing activities (1,529,441 ) (432,051 ) Effect of exchange rate changes (68,730 ) (306,239 ) Net change in cash and cash equivalents 219,638 (4,977,761 ) Cash and cash equivalents - beginning of the period 1,012,479 7,177,326 Cash and cash equivalents - end of the period $ 1,232,117 $ 2,199,565 Supplemental cash flow disclosures: Interest paid $ 104,880 $ 59,290 Income taxes paid $ 201,035 $ 91,657 Non-cash investing and financing transactions Operating lease right-of-use assets obtained in exchange for operating lease liabilities $ 125,735 $ 317,040 Finance lease right-of-use assets obtained in exchange for finance lease liabilities $ - $ 93,117 Remeasurement of operating lease liabilities and right-of-use assets due to lease modification $ - $ 12,579 Insurance premium financing $ 172,689 $ 389,035 Liabilities assumed in connection with purchase of property and equipment $ - $ 9,602 Common shares issued for acquisition of subsidiary $ - $ 3,150,000 Warrants converted to marketable securities $ 6,443,276 $ 1,257,868 
