Netcapital Inc. Q4 FY2024 earnings call

• Financial results: Revenue decline due to reduced consulting services, but portal fees increased. Operating and net losses occurred.
• Positive metrics: Average amount raised per offering on the portal increased from $128,170 to $280,978, total successful offerings rose from 50 to 53, and portal fees saw significant growth.
• Significant deals: Avadain (graphene tech) raised $4.5M and EarthGrid PBC (plasma boring tech) raised $3.3M.
• Strategic priorities: Launched beta secondary trading platform with Templum Markets, applied for broker-dealer license for Netcapital Securities to expand revenue via Reg A+ and Reg D offerings.

Revenues for fiscal 2024 were $4,951,435, a 42% decrease from $8,493,985 in fiscal 2023. Consulting services for equity securities dropped by $3,665,000 (52%) to $3.44 million in fiscal 2024, compared to $7.1 million in 2023, with only 3 clients in 2024 vs. 6 in 2023. Portal fees increased by $455,855 (109%) to $874,368 in fiscal 2024. Cost of revenues increased by $23,000 (27%) to ~$108,000. Operating loss for fiscal 2024 was $3,442,388 vs. operating income of $2,271,876 in 2023, and net loss was $4,986,317 vs. $2,954,972 in 2023.

• Secondary trading platform: Beta launched to closed group, expect to open to broader users by end of 2024.
• Broker-dealer license: Application filed to expand revenue base through Reg A+ and Reg D offerings.

• Impairment of intangible assets: Valuation consulting assets from MSG and one-on-one fans website were impaired due to key personnel leaving and inability to transition work.
• Unrealized loss in equity securities: A $2.7 million unrealized loss in equity securities value, mainly from KingsCrowd common stock.

Q: What sort of initiatives are you doing to maintain and/or increase portal fee growth?

A: Focus on innovating to connect with new suitable companies, leveraging learnings on successful issuers' digital marketing and community engagement, targeting newer and potentially bigger issuers, especially with Reg A+ business.

Q: Do you have any sort of timeline as far as the progression of the ATS platform?

A: Beta launched to closed group, expect to open to broader users before the end of this year, being careful to ensure a good user experience when opening to everyone.