Netcapital Inc. Q4 FY2025 earnings call

• Shifted business strategy in fiscal 2025 away from equity-based consulting revenue to focus on scalable growth.
• Netcapital Securities received a broker-dealer license, positioning the company to serve a broader base of issuers and investors.
• Highlighted platform success stories: Zelgor acquired Spellbook Studio, MAGFAST raised over $10 million, and Avadain raised over $1.275 million on the Netcapital platform.
• Committed to democratizing access to private capital markets and disciplined execution for long-term value creation.

In fiscal year 2025, Netcapital reported revenues of $869,460 with cost of services of $40,344, resulting in a gross profit of $829,116. In comparison, fiscal year 2024 had revenues of approximately $4.9 million, cost of services of approximately $108,000, and gross profit of approximately $4.8 million. The funding portal fee payable in securities decreased to $72,090 in 2025 from $97,700 in 2024. The company recorded an impairment expense of approximately $19.9 million in 2025 due to evaluating equity investments for impairment. The operating loss for fiscal 2025 was approximately $8.3 million compared to $3.4 million in 2024. The net loss for 2025 was approximately $28.3 million vs. $4.9 million in 2024, and the loss per share was $20.39 in 2025 vs. $28.83 in 2024.

• Broadening the platform to participate more fully in Reg A capital raisings, which are typically larger, to access associated capital raising fees.
• Exploring integration of blockchain, digital assets, and crypto with traditional finance while evaluating opportunities for long-term value creation.
• Focusing on scalable cash-generating products and services after transitioning away from equity-based consulting.

• Regulatory challenges, as the company operates in a new and evolving fintech space with complex regulations.
• High G&A expenses due to educating regulators about the company's operations and the nature of its portfolio companies.
• Difficulty in achieving liquidity in the secondary market for private capital, which is a challenge for the industry.

Q: Could you shed light on your transition and future plans?

A: We're broadening the platform, secured a broker-dealer license for Netcapital Securities to participate in Reg A, and exploring integration of blockchain, digital assets, and crypto.

Q: Was the consulting business a major cost factor, and what's your plan with crypto?

A: The funding portal is scalable, consulting wasn't as scalable and was paid in equity. For crypto, we're evaluating opportunities for long-term value creation, focusing on integrating blockchain into capital formation.

Q: Are you evaluating new strategies in light of recent performance?

A: We continue to explore opportunities to democratize access to capital, expanding across Reg A and integrating blockchain/digital assets.

Q: Do you see a need for a strategic pivot given current business unsustainability?

A: We believe in a path to sustainability, incorporating blockchain is an extension, and we're committed to scaling and navigating the regulatory environment.

Q: Why are G&A expenses so high, and are you exploring going private?

A: High G&A due to regulatory education; we don't see going private as an immediate step, valuing benefits of being a public company for exposure and opportunities.