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 CommentaryHeartCore 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 ResultsRevenues 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 IPOSM 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 DisclaimerThis 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 StatementsThis 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 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
