Executive Summary
Netcapital Inc (NCPLW) reported a challenging QQ2 2025, characterized by a stark revenue decline and a substantial burn on operating activities. Revenue for the quarter stood at 170,528 (USD) with a gross profit of 150,747, but the company incurred total operating expenses of 2,353,178, resulting in EBITDA of -2,202,031 and a net loss of -2,220,501. The quarterly results yield an EBITDAR of -12.91% and an operating income of -2,202,431, underscoring a cost-heavy environment that has not yet translated into meaningful revenue scale. EPS came in at -2.34 for Q2, reflecting heavy dilution risk and a negative earnings trajectory that magnifies the equity burden on existing shareholders.
From a balance sheet perspective, Netcapital maintains a substantial asset base (total assets of 41.94 million) and a solid stockholders’ equity position (about 37.40 million), with intangible assets accounting for a meaningful portion of non-current assets (approximately 14.72 million). The company’s liquidity profile remains modest, with cash and cash equivalents of 1.35 million and a current ratio of 0.351, signaling working capital tightness. The company financed part of its ongoing cash burn through equity issuance (common stock issued of 1.98 million) and corresponding financing activity, which provides near-term liquidity but introduces further dilution risk for existing holders.
Operationally, Netcapital continues to invest in platform infrastructure and regulatory/compliance capabilities aligned with its SEC-registered funding portal (Netcapital.com). While the gross margin remains robust at about 88.4%, the revenue decline and outsized operating costs imply that current scale is insufficient to achieve profitability. Absent a material improvement in top-line funding activity or a meaningful reduction in operating expenses, the path to profitability remains uncertain in the near term. Investors should closely monitor the trajectory of funding volumes on the platform, cost containment efforts, and any new strategic partnerships or product developments that could drive revenue growth while moderating burn.
Key Performance Indicators
QoQ: 19.90% | YoY:-94.52%
QoQ: 14.20% | YoY:-95.12%
QoQ: 12.19% | YoY:-262.01%
QoQ: 12.13% | YoY:-319.66%
QoQ: 54.12% | YoY:-1 214.29%
Key Insights
Revenue and profitability: Revenue for QQ2 2025 was 170,528 with a gross profit of 150,747 and a gross margin of 88.40%. YoY revenue change: -94.52%; QoQ revenue change: +19.90%.
Gross profit and margin: Gross profit declined in line with revenue but gross margin remained high at 0.884. YoY gross profit change: -95.12%; QoQ gross profit change: +14.20%.
Operating performance: Operating income -2,202,431; EBITDA -2,202,031; EBITDAR -12.91%; Operating margin -12.92%. YoY operating income chan...
Financial Highlights
Revenue and profitability: Revenue for QQ2 2025 was 170,528 with a gross profit of 150,747 and a gross margin of 88.40%. YoY revenue change: -94.52%; QoQ revenue change: +19.90%.
Gross profit and margin: Gross profit declined in line with revenue but gross margin remained high at 0.884. YoY gross profit change: -95.12%; QoQ gross profit change: +14.20%.
Operating performance: Operating income -2,202,431; EBITDA -2,202,031; EBITDAR -12.91%; Operating margin -12.92%. YoY operating income change: -262.01%; QoQ: +12.19%.
Net income and earnings: Net income -2,220,501; net income margin -13.02%. YoY net income change: -319.66%; QoQ: +12.13%.
Earnings per share: EPS -2.34; QoQ: +54.12%; YoY: -1214.29% (large deterioration in YoY earnings per share).
Balance sheet health and liquidity: Cash and cash equivalents 1,346,739; Total current assets 1,416,010; Total assets 41,937,918; Total current liabilities 4,031,595; Total liabilities 4,531,595; Total stockholders’ equity 37,406,323. Current ratio 0.351; Quick ratio 0.351; Cash ratio 0.334. Compound leverage metrics indicate very limited liquidity headroom with substantial non-current asset base (intangible assets 14,715,267). Net debt is negative (-846,739) as cash exceeds reported debt. Free cash flow -1,487,447; Operating cash flow -1,487,442.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
170.53K |
-94.52% |
19.90% |
| Gross Profit |
150.75K |
-95.12% |
14.20% |
| Operating Income |
-2.20M |
-262.01% |
12.19% |
| Net Income |
-2.22M |
-319.66% |
12.13% |
| EPS |
-2.34 |
-1 214.29% |
54.12% |
Key Financial Ratios
operatingProfitMargin
-1292%
operatingCashFlowPerShare
$-1.57
freeCashFlowPerShare
$-1.57
Management Commentary
Transcript availability: The earnings transcript for QQ2 2025 is not provided in the data set. As a result, there are no management quotes or thematic highlights to extract. When the transcript becomes available, a thematically grouped synthesis (strategy, operations, market conditions) with direct quotes should be added here and cross-referenced to the quarterly results.
Forward Guidance
No formal forward guidance was disclosed in the QQ2 2025 materials. Given the current burn rate and revenue trajectory, management would likely need to articulate a path to profitability, including: (i) accelerating funding activity on Netcapital’s portal to drive higher top-line growth, (ii) cost containment measures to reduce operating expenses (particularly G&A and SG&A), and (iii) potential strategic partnerships or product extensions that monetize current platform usage more efficiently. Investors should monitor: (a) quarterly funding volumes and average deal sizes on Netcapital.com, (b) quarterly burn rate and any variances in operating costs (especially non-cash items like stock-based compensation), (c) cadence of any additional equity financing and its expected impact on dilution, and (d) progress in any regulatory or product initiatives that could improve conversion or retention on the platform.