Netcapital Inc (NCPL) Q4 2024 Earnings Report

Netcapital Inc (NCPL) reported a challenging QQ4 2024 and a difficult full-year in 2024, underscored by a steep revenue decline and meaningful impairment charges, while simultaneously advancing a suite of strategic initiatives that could unlock growth over the medium term. In Q4 2024, revenue was $347,175 with a gross loss of $553,938 and an operating loss of $1.55 million, culminating in a net loss of $2.61 million and basic earnings per share (EPS) of -$0.22. For the full-year ended April 30, 2024, revenue declined 42% year over year to $4.95 million, hit by a sharp drop in consulting services for equity securities (down 52% to $3.44 million) as the firm served only three clients versus six in the prior year. The company also recognized an unrealized loss of about $2.7 million on KingsCrowd equity securities and recorded an impairment charge of about $1.05 million related to acquired intangible assets (MSG-related and One-on-One sites). These factors contributed to a full-year net loss of $4.99 million and a per-share loss of $0.41, contrasting with a net income of $2.95 million and EPS of $0.63 in the prior year.\n\nDespite the near-term profitability pressures, Netcapital recorded meaningful portal monetization momentum: portal fees rose 109% year over year to $874,368 in fiscal 2024, aided by a higher average offering size and a greater number of issuers completing fundings. Management attributed this to more deals on the Netcapital Funding Portal and a higher capital raise per offering, with the average raise climbing to about $280,978 (vs. $128,170 in the prior year). The company reported 30 clients using the portal to raise equity securities and earned 1% in portal-derived equity from those activities, while expanding ownership across 22 portfolio companies. Management also highlighted two notable deals that closed in the year (Avadain and EarthGrid PBC, totaling roughly $8 million) and reiterated strategic priorities: (i) launching a beta secondary trading platform with Templum Markets (an ATS in production with broader rollout expected by year-end), and (ii) pursuing a broker-dealer license via Netcapital Securities to unlock Reg A+ and Reg D opportunities (up to $75 million annually under Reg A+, and unlimited capital under Reg D 506(c)). Overall, management stressed a long-term growth orientation anchored in platform expansion, liquidity enhancements, and diversified fee revenue, even as near-term profitability remains constrained by ongoing operating under MAT-like dynamics in a small-cap fintech platform. Investors should monitor (1) progress on the secondary trading platform and ATS, (2) the broker-dealer license timeline and Reg A+/D revenue pipeline, (3) issuer pipeline and portal monetization momentum, and (4) continued impairment risk related to equity investments and intangibles.}