EPS of $-1.27 decreased by 477.3% from previous year
Gross margin of 96.1%
Net income of -3.64M
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Netcapital Inc (NCPLW) QQ1 2026 Results — Fintech Funding Portal Facing High Operating Losses Despite Very Strong Gross Margin
Executive Summary
Netcapital Inc (NCPLW) reported QQ1 2026 results that underscore a stark profitability challenge even as the underlying platform exhibits a high gross margin. Revenue for QQ1 2026 was 190,058 (USD) with gross profit of 182,649, yielding a gross margin of 96.10%. However, operating expenses dominated the P&L, totaling 3,460,888 and driving an EBITDA loss of 3,278,239 and a net income loss of 3,642,052. Earnings per share stood at -1.27 on 2,873,379 diluted shares. The quarter shows a pronounced YoY revenue decline of 45.3% but a QoQ rebound of 24.5% in revenue, while gross margin remains elevated. The company continues to incur substantial G&A and selling/marketing expenses alongside other operating costs, resulting in continued negative cash flow.
From a liquidity perspective, near-term resilience remains a concern: current ratio and quick ratio are both around 0.27 and cash ratio near 0.25, signaling tight short-term liquidity despite a very modest leverage profile (debt ratio ~0.0584; debt/equity ~0.0645). Cash per share is approximately 1.73, and FCF metrics are negative (operating cash flow per share and free cash flow per share both at -3.96). Management guidance is not disclosed in the provided dataset; thus, the forward path hinges on monetization of the platform, cost discipline, and expanding cross-sell opportunities within the advisory and valuation services stack.
Compared with select fintech peers in the dataset, Netcapital shows a superior gross margin but significantly weaker profitability and liquidity metrics, underscoring the gap between product-market fit and the economics required for sustainable cash generation. The investment thesis remains highly contingent on execution: accelerating revenue growth, improving operating leverage, and converting platform usage into durable fee-based revenue.
Net Income: -3,642,052; YoY: -39.72%; QoQ: -21.14%; Net Margin: -19.16%
EBITDA: -3,278,239; EBITDARatio: -17.25%
Financial Highlights
Revenue and profitability highlights:
- Revenue: 190,058; YoY change: -45.26%; QoQ change: +24.48%
- Gross Profit: 182,649; YoY: +132.97%; QoQ: +25.51%; Gross Margin: 96.10%
- Operating Income: -3,278,239; YoY: -111.59%; QoQ: -94.24%; Operating Margin: -17.25%
- Net Income: -3,642,052; YoY: -39.72%; QoQ: -21.14%; Net Margin: -19.16%
- EBITDA: -3,278,239; EBITDARatio: -17.25%
- Earnings per Share (EPS): -1.27; Diluted EPS: -1.27; Weighted average shares: 2,873,379
Cost structure indicators:
- General and Administrative Expenses: 1,568,506
- Selling, General and Administrative Expenses: 1,579,944
- Other Expenses: 1,880,944
- Total Operating Expenses: 3,460,888; Cost and Expenses: 3,468,297
Balance sheet and liquidity:
- Current ratio: 0.27; Quick ratio: 0.27; Cash ratio: 0.249
- Debt ratio: 0.0584; Debt to Equity: 0.0645; Long-term debt to capitalization: 0.0132; Total debt to capitalization: 0.0606
- Cash per share: 1.73; Operating cash flow per share: -3.96; Free cash flow per share: -3.96
- Payables turnover and receivables turnover are inconsistent with a positive liquidity runway; weighted average shares outstanding: 2,873,379
Industry comparables and benchmark notes:
- The dataset provides several peers with divergent metrics; Netcapital’s gross margin is markedly higher than peers (e.g., gross margins in the 0.3–0.95 range for peers in the set), but net profitability and liquidity are substantially weaker for Netcapital versus more mature fintech franchises. This suggests a high-cost, early-stage monetization pathway rather than a mature, cash-generative model.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
190.06K
-45.26%
24.48%
Gross Profit
182.65K
132.97%
25.51%
Operating Income
-3.28M
-111.59%
-94.24%
Net Income
-3.64M
-39.72%
-21.14%
EPS
-1.27
-477.27%
19.11%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript data provided in the dataset. As a result, management-specific thematic highlights and quotes could not be extracted.
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Forward Guidance
No formal forward guidance was disclosed in the provided data. Given the current quarter's results, any near-term guidance would likely focus on cost containment, platform monetization, and progress toward sustainable unit economics. Investors should monitor: (1) revenue growth trajectory and monetization of Netcapital’s funding portal and value-added services (valuation, advisory, and incubation offerings); (2) operating expense normalization to achieve positive operating leverage; (3) liquidity evolution (current ratio and cash burn rate); and (4) platform adoption metrics and regulatory/compliance cost trajectories that could impact margin expansion. In the absence of explicit targets, the achievability of any implied guidance hinges on accelerating issuer onboarding, increasing investor participation, and converting rolling closes into fee-generating activity while maintaining strict cost discipline.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
NCPLW Focus
96.10%
N/A
N/A
N/A
BZFDW
34.80%
-38.20%
-13.50%
0.00%
NCPL
92.80%
-17.64%
-6.74%
-23.80%
SHFSW
94.90%
8.02%
5.54%
33.70%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Given the QQ1 2026 results, Netcapital represents a high-risk, high-uncertainty investment. The business exhibits a strong gross margin on a very small revenue base, but earnings quality remains weak due to outsized operating expenses and negative cash flow. The stock’s appeal rests on a potential turnaround in monetization and efficiency—if the company can convert platform growth into meaningful fee-based revenue and achieve operating leverage, the long-run opportunity could be meaningful in the niche of fintech-enabled private fundraising. In the near term, investors should adopt a cautious stance with a focus on liquidity development, cost control, and evidence of revenue acceleration. A watchful eye should be kept on issuer and investor onboarding rates, take-rate improvements, and any explicit guidance from management on cost discipline and growth targets.
Key Investment Factors
Growth Potential
Potential growth drivers include expanding Netcapital's reach in the private markets space, cross-selling advisory and valuation services to issuers, and monetizing rolling closes for liquidity access. The platform could achieve higher take rates as issuer onboarding and investor participation scale, supported by ongoing regulatory compliance and automation improvements.
Profitability Risk
Key risks include sustained negative cash flow and earnings, limited liquidity with current ratio around 0.27, potential dilution if additional capital is raised, and dependence on market conditions for private market fundraising. Regulatory shifts, competitive pressure from other fintech funding portals, and platform reliability/security risks also pose threats to long-run profitability.
Financial Position
Low leverage with minimal long-term debt, but fragile liquidity and negative operating cash flow. Gross margin is robust (96.1%), yet operating and net losses dominate, indicating substantial fixed cost absorption and the need for scale to achieve operating leverage. Cash per share (~1.73) and a very low price-to-book ratio (~0.064) imply a discount to tangible assets, but earnings quality remains precarious.
SWOT Analysis
Strengths
Very high gross margin (96.1%) indicating low cost of revenue relative to revenue
Diversified service offering beyond the core portal (advisory, valuation, and incubation services)
Low leverage and modest debt footprint
Regulatory-compliant platform with global reach via Netcapital.com
Weaknesses
Sustained negative EBITDA and net losses driven by high operating expenses
Weak near-term liquidity (current ratio ~0.27) and negative cash flow
Small scale with limited revenue base, increasing vulnerability to market cyclicality
Limited visibility into monetization trajectory and customer concentration
Opportunities
Monetization of the platform through higher take rates and new fee-based services
Expanded cross-sell of advisory, valuation, and incubation services to issuers and investors
International investor onboarding and expanded private market fundraising activity
Product enhancements and automation to improve efficiency and margins over time
Threats
Regulatory risk and potential tightening of private fundraising regimes
Competitive pressure from larger fintech platforms and traditional capital markets channels
Macro headwinds affecting private market liquidity and deal flow
Operational risk from platform outages, cyber threats, and onboarding quality