HeartCore Reports 2024 Financial Results
NEW YORK and TOKYO, March 31, 2025 (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 year ended December 31, 2024.
Recent Operational & Financial Highlights
-- 2024 revenue increased 39% to $30.4 million year-over-year
-- HeartCore recorded $7.2 million in impairment of goodwill and intangible
asset related to acquisition of its subsidiary Sigmaways. The losses are
considered as a one-time occurrence that will not affect the Company's
business and financial performance in the future quarters.
-- Established new business development team aimed at strengthening customer
success across HeartCore's CMS business
-- Announced plans to expand the Go IPO consulting business into South
Korea. The Company adjusted its scheduled South Korea IPO seminar event
to September 2025
-- Announced new digital customer experience initiatives and cross-selling
efforts
-- Regained compliance with Nasdaq's continued 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
Management Commentary
HeartCore CEO Sumitaka Kanno commented: "Over the past year, we made several strategic advancements in our software business model, all aimed at driving sustainable and predictable revenue growth, improving margins, and enhancing our ability to effectively cross-sell and upsell to our 1,000+ enterprise customers. While we are confident that the initiatives we have implemented will yield meaningful returns, we have also recognized that strategic acquisitions will be critical to maintaining our market leadership in Japan and sustaining our strong customer retention rate. With a well-established customer base built over the years, our acquisition strategy will primarily focus on deepening wallet share with each client we are engaged with, while seamlessly complementing and enhancing our existing suite of software solutions. This will include acquiring companies with synergistic technologies that align with our core offerings and leveraging effective use of AI to strengthen our value proposition and competitive edge. Outside of acquisitions, another key focus for HeartCore will be to accelerate the development of new products geared for global expansion in 2025, with the target launch aimed for the first half of 2026. Currently, only a small portion of our customer base consists of enterprises outside of Japan. By focusing on creating globally scalable solutions and enhancing our offerings with synergistic technologies through strategic acquisitions, we aim to expand our presence across international markets and drive additional growth in our software business.
"Looking at our financial performance, we recorded approximately $7.2 million in impairment of goodwill and intangible asset, primarily related to our subsidiary, Sigmaways. While these losses impacted our full-year results, they are classified as one-time occurrences and are not expected to affect our financial performance in future quarters. To address this, we have already implemented several corrective measures, including separating Sigmaways' liabilities and suspending all transactions with small venture companies to minimize any non-essential costs. While net loss for the year was $5.2 million, we believe a more relevant measure of our performance is adjusted EBITDA, which totaled $7.3 million for 2024, as it excludes the losses related to Sigmaways. Nevertheless, our subsidiaries continue to deliver synergistic technologies that enable us to effectively upsell and cross-sell to our shared clients. We believe that over the long term, as we continue to develop and innovate our solutions, acquire new technologies through M&A, and tap into mutual client portfolios across our partners and subsidiaries, we will drive positive outcomes for our financial performance.
"Outside of exploring synergistic M&A opportunities within our software business to fuel growth, we are also focused on expanding our Go IPO business. We recently announced our plans to extend our service into South Korea and have formed a strategic partnership with a venture fund in the region. To kick off this initiative, we will be hosting a seminar in September of this year. South Korea will be the first of several markets we aim to expand into across the APAC region, as IPO interests from foreign issuers have steadily increased over the years. Expanding beyond Japan's borders marks a significant milestone for our Go IPO business, opening up new opportunities for us to leverage. To ensure successful market entry, we are actively seeking strategic partnerships, such as in South Korea, to gain access to their clientele portfolio that are interested in our services. We remain dedicated to executing both lines of business and look forward to our growth prospects throughout 2025."
2024 Financial Results
Revenues increased 39% to $30.4 million, compared to $21.8 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 121% to $17.8 million, compared to $8.1 million in the same period last year. The increase was primarily due to the aforementioned reason.
Operating expenses increased 46% to $17.8 million, compared to $12.2 million in the same period last year. The increase was primarily due to impairment of goodwill and intangible asset totaling approximately $7.2 million primarily related to our subsidiary, Sigmaways. The Company anticipates these impairment losses to be a one-time occurrence and does not foresee any material impact on its financial performance in future quarters.
Net loss for 2024 was $5.2 million. Net loss attributable to HeartCore improved to $1.5 million, compared to a loss of $4.2 million in the same period last year.
Adjusted EBITDA for the year totaled $7.3 million compared to $(3.6) million in the same period last year.
As of December 31, 2024, the Company had cash and cash equivalents of $2.1 million, compared to $1.0 million on December 31, 2023.
About HeartCore Enterprises, Inc.
Headquartered in Tokyo, Japan, HeartCore Enterprises is a leading enterprise software and consulting services company. HeartCore offers Software as a Service (SaaS) solutions to enterprise customers in Japan and worldwide. The Company also provides data analytics services that allow enterprise businesses to create tailored web experiences for their clients through best-in-class design. HeartCore's customer experience management platform (CXM Platform) includes marketing, sales, service and content management systems, as well as other tools and integrations, which enable companies to enhance the customer experience and drive engagement. HeartCore also operates a digital transformation business that provides customers with robotics process automation, process mining and task mining to accelerate the digital transformation of enterprises. HeartCore's GO IPO$(SM)$ 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/.
Non-GAAP Financial Measures Disclaimer
This document includes references to adjusted EBITDA, which is a non-GAAP financial measure. For the purposes of this presentation, adjusted EBITDA is calculated by adjusting net loss to exclude depreciation and amortization, impairment of intangible asset, and impairment of goodwill.
This measure is presented as supplemental information and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP.
Management believes that this adjusted EBITDA provides useful information to investors by highlighting the company's core operational performance, excluding non-cash and non-recurring items. However, non-GAAP financial measures have limitations and should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
Item FY24 FY23
------------------------------------------------ ------------- -------------
Net Loss -$5.2 million -$4.9 million
------------------------------------------------ ------------- -------------
(+) Depreciation $0.1 million $0.1 million
------------------------------------------------ ------------- -------------
(+) Impairment loss on goodwill $3.3 million $0.0 million
------------------------------------------------ ------------- -------------
(+) Impairment loss on intangible assets $3.9 million $0.0 million
------------------------------------------------ ------------- -------------
(+) Changes in fair value of investments in
marketable securities $2.4 million $0.6 million
------------------------------------------------ ------------- -------------
(+) Changes in fair value of investment in
warrants -$1.7 million $0.5 million
------------------------------------------------ ------------- -------------
(+) Loss on sale of warrants $4.0 million $0.0 million ------------------------------------------------ ------------- ------------- (+) Impairment of investment in equity securities $0.3 million $0.0 million ------------------------------------------------ ------------- ------------- (+) Loss on forgiveness of note receivable $0.1 million $0.0 million ------------------------------------------------ ------------- ------------- (+) Interest income $0.0 million -$0.1 million ------------------------------------------------ ------------- ------------- (+) Interest expenses $0.1 million $0.2 million ------------------------------------------------ ------------- ------------- (+) Government grants $0.0 million -$0.1 million ------------------------------------------------ ------------- ------------- Adjusted EBITDA $7.3 million -$3.6 million ------------------------------------------------ ------------- -------------
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) 574-3860
HeartCore Enterprises, Inc.
Consolidated Balance Sheets
December 31, December 31,
2024 2023
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,121,089 $ 1,012,479
Accounts receivable 1,950,050 2,623,682
Investments in marketable
securities 4,495,703 642,348
Investment in equity securities - 300,000
Prepaid expenses 458,839 536,865
Current portion of long-term note
receivable 100,000 100,000
Due from related party 40,139 44,758
Other current assets 251,545 234,761
Total current assets 9,417,365 5,494,893
Non-current assets:
Accounts receivable, non-current 752,930 -
Property and equipment, net 584,854 763,730
Operating lease right-of-use assets 1,936,097 2,467,889
Intangible asset, net - 4,515,625
Goodwill - 3,276,441
Long-term investment in warrants 577,786 2,004,308
Long-term note receivable 100,000 200,000
Deferred tax assets 152,300 369,436
Security deposits 307,996 348,428
Long-term loan receivable from
related party 123,928 182,946
Other non-current assets 11,778 71
Total non-current assets 4,547,669 14,128,874
Total assets $ 13,965,034 $ 19,623,767
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $ 2,039,323 $ 1,757,038
Accounts payable and accrued
expenses - related party 47,199 -
Accrued payroll and other employee
costs 675,502 723,305
Due to related parties 932 1,476
Short-term debt - 135,937
Short-term debt - related party 75,000 -
Current portion of long-term debts 401,255 371,783
Insurance premium financing 16,626 -
Factoring liability 172,394 562,767
Operating lease liabilities,
current 371,951 396,535
Finance lease liabilities, current 15,956 17,445
Income tax payables 822,014 162,689
Deferred revenue 1,876,490 2,166,175
Other current liabilities 907,080 216,405
Total current liabilities 7,421,722 6,511,555
Non-current liabilities:
Long-term debts 1,238,813 1,770,352
Operating lease liabilities,
non-current 1,614,996 2,135,160
Finance lease liabilities,
non-current 43,593 66,779
Deferred tax liabilities - 1,264,375
Other non-current liabilities 183,895 208,732
Total non-current liabilities 3,081,297 5,445,398
----------- -----------
Total liabilities 10,503,019 11,956,953
=========== ===========
Shareholders' equity:
Preferred shares ($0.0001 par
value, 20,000,000 shares
authorized, no shares issued and
outstanding as of December 31, 2024
and 2023) - -
Common shares ($0.0001 par value,
200,000,000 shares authorized;
21,937,987 and 20,842,690 shares
issued and outstanding as of
December 31, 2024 and 2023,
respectively) 2,193 2,083
Subscription receivable (103,942) -
Additional paid-in capital 20,656,153 19,594,801
Accumulated deficit (16,244,843) (14,763,469)
Accumulated other comprehensive
income 343,936 331,881
Total HeartCore Enterprises, Inc.
shareholders' equity 4,653,497 5,165,296
Non-controlling interests (1,191,482) 2,501,518
Total shareholders' equity 3,462,015 7,666,814
=========== ===========
Total liabilities and
shareholders' equity $ 13,965,034 $ 19,623,767
=========== ===========
HeartCore Enterprises, Inc.
Consolidated Statements of Operations and Comprehensive
Loss
For the year ended For the year ended
December 31,2024 December 31, 2023
Revenues $ 30,407,229 $ 21,845,830
Cost of revenues 12,579,359 13,778,416
------------------ --- ------------------ ---
Gross profit 17,827,870 8,067,414
Operating expenses:
Selling expenses 1,255,368 1,516,247
General and
administrative
expenses 8,623,587 9,651,381
Research and
development
expenses 729,584 1,019,141
Impairment of
intangible
asset 3,878,125 -
Impairment of
goodwill 3,276,441 -
Total operating
expenses 17,763,105 12,186,769
------------------ --- ------------------ ---
Income (loss) from
operations 64,765 (4,119,355)
------------------ --- ------------------
Other income
(expenses):
Changes in fair
value of
investments in
marketable
securities (2,412,385) (615,520)
Changes in fair
value of
investment in
warrants 1,657,699 (501,445)
Loss on sale of
warrants (3,970,628) -
Impairment of
investment in
equity
securities (300,000) -
Loss on
forgiveness of
note receivable (100,000) -
Interest income 18,835 70,624
Interest expenses (144,033) (162,968)
Government grants - 76,612
Other income 260,918 366,283
Other expenses (424,893) (124,595)
------------------ ------------------
Total other
expenses (5,414,487) (891,009)
Loss before income
tax benefit (5,349,722) (5,010,364)
Income tax benefit (136,822) (133,664)
------------------ ------------------
Net loss (5,212,900) (4,876,700)
Less: net loss
attributable to
non-controlling
interests (3,731,526) (686,810)
------------------ ------------------
Net loss
attributable to
HeartCore
Enterprises, Inc. $ (1,481,374) $ (4,189,890)
================== ==================
Other comprehensive
loss:
Foreign currency
translation
adjustment (16,614) (34,628)
------------------ ------------------
Total comprehensive
loss (5,229,514) (4,911,328)
Less: comprehensive
loss attributable
to non-controlling
interests (3,760,195) (688,482)
------------------ ------------------
Comprehensive loss
attributable to
HeartCore
Enterprises, Inc. $ (1,469,319) $ (4,222,846)
================== ==================
Net loss per common
share attributable
to HeartCore
Enterprises, Inc.
Basic $ (0.07) $ (0.21)
================== ==================
Diluted $ (0.07) $ (0.21)
================== ==================
Weighted average
common shares
outstanding
Basic 20,940,956 20,404,642
================== === ================== ===
Diluted 20,940,956 20,404,642
================== === ================== ===
HeartCore Enterprises, Inc.
Consolidated Statements of Cash Flows
For the year ended For the year ended
December 31, 2024 December 31, 2023
Cash flows from
operating
activities:
Net loss $ (5,212,900) $ (4,876,700)
Adjustments to
reconcile net loss
to net cash flows
used in operating
activities:
Depreciation and
amortization
expenses 749,639 683,019
Loss (gain) on
disposal of
property and
equipment 1,894 (4,514)
Amortization of
debt issuance
costs 4,567 3,733
Non-cash lease
expense 365,531 346,070
Loss (gain) on
termination of
lease (469) 76
Impairment of
intangible
asset 3,878,125 -
Impairment of
goodwill 3,276,441 -
Deferred income
taxes (1,076,600) (291,596)
Stock-based
compensation 368,744 1,430,513
Marketable
securities
received as
noncash
consideration (572,010) -
Warrants
received as
noncash
consideration (12,969,683) (3,763,621)
Changes in fair
value of
investments in
marketable
securities 2,412,385 615,520
Changes in fair
value of
investment in
warrants (1,657,699) 501,445
Loss on sale of
warrants 3,970,628 -
Impairment of
investment in
equity
securities 300,000 -
Impairment of
investment in
SAFE 75,000 -
Loss on
forgiveness of
note
receivable 100,000 -
Changes in assets
and liabilities:
Accounts
receivable (193,369) (338,312)
Prepaid expenses 210,477 359,310
Other assets (38,336) (133,550)
Accounts payable
and accrued
expenses 331,685 532,790
Accounts payable
and accrued
expenses -
related party 47,955 -
Accrued payroll
and other
employee costs 3,623 152,101
Due to related
parties (1,338) 1,123
Operating lease
liabilities (371,877) (327,877)
Income tax
payables 669,142 162,045
Deferred revenue (156,527) 553,130
Other
liabilities 710,001 64,086
Net cash flows
used in operating
activities (4,774,971) (4,331,209)
Cash flows from
investing
activities:
Purchases of
property and
equipment (7,446) (526,260)
Proceeds from
disposal of
property and
equipment - 24,814
Advance on note
receivable - (600,000)
Purchase of
investment in
SAFE (75,000) -
Net proceeds from
sale of warrants 5,640,000 -
Proceeds from sale
of marketable
securities 749,546 -
Repayment of loan
provided to
related party 42,104 45,404
Payment for
acquisition of
subsidiary, net
of cash acquired - (724,910)
Net cash flows
provided by (used
in) investing
activities 6,349,204 (1,780,952)
Cash flows from
financing
activities:
Payments for
finance leases (16,766) (22,422)
Proceeds from
short-term and
long-term debts 68,138 710,107
Proceeds from
related party
debt 75,000 -
Repayment of
short-term and
long-term debts (554,553) (711,395)
Repayment of
insurance premium
financing (156,063) (389,035)
Net proceeds from
factoring
arrangement - 562,767
Net repayment of
factoring
arrangement (390,373) -
Payments for debt
issuance costs - (13,828)
Distribution of
dividends (834,566) -
Capital
contribution from
non-controlling
shareholder 67,195 -
Proceeds from
issuance of
common shares 1,423,342 -
Net cash flows
provide by (used
in) financing
activities (318,646) 136,194
Effect of exchange
rate changes (146,977) (188,880)
Net change in cash
and cash
equivalents 1,108,610 (6,164,847)
Cash and cash
equivalents -
beginning of the
year 1,012,479 7,177,326
Cash and cash
equivalents - end
of the year $ 2,121,089 $ 1,012,479
================= === ================== ===
Supplemental cash
flow disclosures:
Interest paid $ 143,101 $ 85,634
================= === ================== ===
Income taxes paid $ 298,466 $ 91,707
================= === ================== ===
Non-cash investing
and financing
transactions
Finance lease
right-of-use
assets obtained
in exchange for
finance lease
liabilities $ - $ 93,217
================= === ================== ===
Operating lease
right-of-use
assets obtained
in exchange for
operating lease
liabilities $ 125,735 $ 317,040
================= === ================== ===
Remeasurement of
operating lease
liabilities and
right-of-use
assets due to
lease
modification $ 23,956 $ 30,186
================= === ================== ===
Insurance premium
financing $ 172,689 $ 389,035
================= === ================== ===
Common shares
issued for
acquisition of
subsidiary $ - $ 3,150,000
================= === ================== ===
Warrants converted
to marketable
securities $ 6,443,276 $ 1,257,868
================= === ================== ===
Note receivable
converted to
investment in
equity
securities $ - $ 300,000
================= === ================== ===
(END) Dow Jones Newswires
March 31, 2025 08:30 ET (12:30 GMT)
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