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BLACKBOXSTOCKS INC. (BLBX)·Q3 2022 Earnings Summary

Executive Summary

  • Q3 2022 revenue was $1.219M, down from $1.399M in Q2 2022 and $1.472M in Q3 2021; gross margin fell to 60% while EBITDA was a loss of $1.076M, reflecting promotions that lowered ARPU and higher operating costs .
  • Revenue landed within management’s pre-announced guidance range of $1.15–$1.25M from Oct 14, 2022; there were no formal consensus estimates available from S&P Global for a beat/miss comparison .
  • Liquidity remained solid with ~$5.3M in cash and marketable securities; the $900k senior secured note was repaid shortly after quarter-end, and the stock buyback continued (615,748 shares repurchased for $1.065M through 9/30; CEO indicated a higher total including additional purchases) .
  • Near-term catalysts: launch timelines reiterated for Stock Nanny (Q1 2023) and Blackbox Pro (Q2 2023), a Black Friday/Cyber Monday promotion, and ongoing buybacks; regulatory overhang from Nasdaq minimum bid price non-compliance notice (Oct 25) remains a watch item .

What Went Well and What Went Wrong

What Went Well

  • Product roadmap momentum: management highlighted pilots with broker-dealers for Blackbox Pro and readiness to launch Stock Nanny, expanding the addressable market beyond day traders; “we are extremely excited about 2023” .
  • Balance sheet resilience and deleveraging: ~$5.3M cash/marketable securities at quarter-end; senior secured note repaid on Nov 14, 2022; no current plans for capital raises .
  • Continued capital return: authorized $2.5M buyback; 615,748 shares repurchased for $1.065M through September, and CEO noted additional purchases and conviction in undervaluation .

What Went Wrong

  • Revenue and margin pressure: Q3 revenue fell to $1.219M; gross margin compressed to 60% (vs 64% in Q2 and 68% YoY) due to lower average revenue per subscriber from promotions and higher moderator/data/chat costs .
  • Operating cost inflation and marketing headwinds: operating expenses rose to $1.924M; higher CPAs in digital marketing (political ad competition) and elevated SG&A/R&D spend weighed on profitability .
  • Profitability deterioration: EBITDA loss of $1.076M and net loss of $1.308M; directional options trader-heavy user base struggled in a volatile market, elevating churn .

Financial Results

MetricQ3 2021Q2 2022Q3 2022
Revenue ($USD Millions)$1.472 $1.399 $1.219
Gross Margin (%)68% 64% 60%
Operating Income (Loss) ($USD Millions)$(0.499) $(1.169) $(1.198)
EBITDA ($USD Millions)$(0.027) $(1.037) $(1.076)
Net Income (Loss) ($USD Millions)$(0.506) $(1.316) $(1.308)
Diluted EPS ($USD)$(0.05) $(0.10) $(0.10)

KPIs

KPIQ3 2021Q2 2022Q3 2022
Average Subscribers (#)5,535 6,181 5,197
Cash + Marketable Securities ($USD Millions)n/a$7.070 $5.357

Segment breakdown

SegmentQ3 2021 RevenueQ2 2022 RevenueQ3 2022 Revenue
Single segment (SaaS subscriptions + other)$1.472M (no segments disclosed) $1.399M (no segments disclosed) $1.219M (no segments disclosed)

Notes:

  • Management attributed lower ARPU to promotions ($1 first month in Labor Day; $5 first month in March) and higher costs for moderators/chat/data feeds; average users were 5,197 vs 5,535 YoY .
  • Non-GAAP EBITDA excludes interest, D&A, stock comp, and investment losses as defined in the 10-Q reconciliation .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q3 2022n/a$1.15–$1.25Lower than prior year; actual $1.219 within range

No formal guidance was provided for margins, OpEx, OI&E, tax rate, or segment metrics in the quarter’s disclosed materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1/Q2)Current Period (Q3 2022)Trend
AI/technology features, platform upgradesMobile app launched Apr; ongoing charting/alerts upgrades; promotion-driven user acquisition Added futures, new charting, additional proprietary alerts; education initiative strengthened Continued feature expansion and education build-out
New products (Stock Nanny, Blackbox Pro)Roadmap detailed; Pro pricing tier and onboarding discussed; Stock Nanny unique alerts for portfolios Timelines: Stock Nanny Q1 2023; Pro Q2 2023; pilots with institutions underway Execution moving from concept to launch planning
Crypto initiativeDeprioritized relative to Stock Nanny/Pro Put on hold given market instability; not abandoned Deferred
Macro environmentInflation ~9%, GDP declines; S&P 500 down ~20.6% H1; promotions to lower barrier Persistent headwinds; directional options traders struggling in high-volatility regime Ongoing pressure
Marketing/CPAsTV ads in Q2; higher CPAs vs prior year Higher CPAs in Q3 (political ad competition); Black Friday/Cyber Monday promotion planned Elevated acquisition costs, leaning on promotions
Regulatory/legaln/aNasdaq minimum bid price non-compliance notice (Oct 25) New overhang introduced
R&D executionR&D up; building new products and infrastructure R&D up to $302k in Q3; YTD $832k Continued investment
International footprintn/aStable presence in ~32 countries; no specific growth concentration Steady

Management Commentary

  • “Approximately 80% of our member base trades options… Current market volatility has made it difficult for this type of option trader to be consistently profitable” — Gust Kepler, CEO .
  • “We are introducing Stock Nanny… to address the broader self-directed investor market... slated to be released in the first quarter of 2023… Pro will come out in the second quarter” .
  • “We bought an additional 116,700 shares this quarter, bringing our total shares repurchased to 728,000… Total authorized program is $2.5 million” .
  • “Revenue for the quarter was approximately $1.2 million… the majority of that decline… was due to a lower average monthly revenue per subscriber… a result of our Labor Day promotion” — Bob Winspear, CFO .
  • “Gross profit margins were 60%… operating expenses were $1.924 million… Advertising… $417,000… higher CPA costs… political ads… EBITDA was negative $1.076 million” — Bob Winspear, CFO .

Q&A Highlights

  • Product timing: Stock Nanny targeted for Q1 2023; Blackbox Pro for Q2 2023; most development costs already incurred due to earlier engineering staffing .
  • Go-to-market: Stock Nanny via digital marketing; Pro via hybrid business development with pilots at institutions/broker-dealers .
  • Capital needs: Management comfortable with cash position; no current plans to raise capital .
  • Retention/churn: Higher churn in volatile/choppy markets among directional options traders; strategy to grow with products less reliant on day trading (Pro, Stock Nanny) .
  • International and futures: Stable international user base (~32 countries); adding a curated futures set first .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2022 EPS and revenue was unavailable at the time of analysis due to request limits; as a result, a formal beat/miss vs consensus cannot be provided [SPGI retrieval error].
  • Management’s revenue guidance ($1.15–$1.25M) was met with actual revenue of $1.219M; absent Street consensus, internal guidance alignment is the best benchmark this quarter .

Key Takeaways for Investors

  • Revenue and margins compressed due to deliberate promos (lower ARPU) and cost inflation, but revenue landed within guidance; near-term profitability depends on normalizing ARPU and improving CPA efficiency .
  • The user base is sensitive to volatility given 80% directional options traders; diversification into Pro and Stock Nanny is strategically important to stabilize churn and broaden TAM .
  • Liquidity and deleveraging provide runway: ~$5.3M cash/marketable securities and post-quarter debt repayment reduce financial risk despite EBITDA losses .
  • Buyback program remains an active capital allocation lever; note the discrepancy between 10-Q (615,748 shares, $1.065M) and CEO commentary (728,000 shares), suggesting continued execution beyond quarter-end .
  • Marketing CPAs were elevated (political ad competition); focus on promotions and education may continue near term—investors should watch ARPU and subscriber trends through Q4 seasonality (Black Friday/Cyber Monday) .
  • Regulatory overhang: Nasdaq minimum bid price non-compliance notice introduces risk; management may consider actions (e.g., reverse split) to regain compliance if needed .
  • Execution milestones (Stock Nanny/Pro launch) are key catalysts for sentiment and a potential re-rating if adoption drives revenue mix shift and margin improvement .