GBT Technologies Inc. (GTCH)·Q2 2018 Earnings Summary

Executive Summary

• Q2 2018 revenue scaled to $13.47M, driven by the fully integrated fintech division (ECS/UGO); gross profit was $0.55M and net loss narrowed sequentially to $(7.50)M from $(14.11)M in Q1 as OpEx declined from elevated stock/warrant-based expenses in Q1 .
• ECS platform integration was the operational highlight: 1.13M transactions across ~9.9K terminals generated $13.42M gross revenue in Q2; ACH cost per transaction fell from $0.14 to $0.02, supporting ~4% gross margin and >$0.5M gross profit in the fintech platform .
• No formal guidance or earnings call was provided; management emphasized continued processing alignments, AT&T SIM activations, and improving product margins to sustain the trajectory .
• Balance sheet and cash needs remain key: working capital deficit was $1.75M at 6/30/18; the company relied on equity/debt raises (Eagle, Bellridge) through Q1–Q2 to fund operations and acquisitions .

What Went Well and What Went Wrong

• What Went Well

  • ECS integration scaled volume: 1,134,725 transactions across 9,855 terminals (9,604 billable) and $13.42M gross revenue in Q2 .
  • Cost-to-serve improved: “UGO…now using the ECS platform reducing ACH transaction costs from $0.14 to $0.02,” expected to lift margins; “ECS platform…gross margins of approximately 4%…more than $500,000 in gross profits” (Kevin Pickard, CFO) .
  • Sequential loss improvement: net loss narrowed from $(14.11)M in Q1 to $(7.49)M in Q2 as OpEx fell from $14.11M to $7.62M quarter-over-quarter .

• What Went Wrong

  • Margins remain thin despite scale: Q2 gross profit was $0.55M on $13.47M sales; Q1 gross profit was $0.20M on $7.90M sales, underscoring low gross margin profile .
  • Heavy non-cash OpEx persists: material stock/warrant issuance tied to deals and services created elevated expenses, particularly in Q1 ($14.11M OpEx) and still sizable in Q2 ($7.62M) .
  • Liquidity/controls: working capital deficit ($1.75M) and reliance on Bellridge/Eagle financings; disclosure controls deemed “not effective” in Q1 and Q2 .

Financial Results

Income statement highlights

Operational KPIs (Fintech/ECS)

Segment breakdown: The company did not provide GAAP segment reporting; operations are primarily fintech processing (ECS/UGO) and IoT/AI R&D and related projects .

Guidance Changes

No formal quantitative guidance (revenue, margins, OpEx, tax) was provided in the filings/press materials for Q2 2018.

Earnings Call Themes & Trends

No earnings call transcript was found for Q2 2018. Thematically, filings and the press release indicate:

Management Commentary

• “The UGO platform…is now using the ECS platform reducing ACH transaction costs from $0.14 to $0.02, which is expected to increase our profit margins. Our ECS platform was able to generate gross margins of approximately 4% for the platform, amounting to more than $500,000 in gross profits.” — Kevin Pickard, CFO .
• Management intends to sustain revenue momentum through “processing alignments, the addition of AT&T SIM Activation program, and increased product margins on existing core products” .

Q&A Highlights

No earnings call transcript was available for Q2 2018; no Q&A highlights to report [results of documents search showed no transcript].

Estimates Context

• Wall Street consensus estimates (EPS, revenue) for Q2 2018 were not available in S&P Global for GTCH at the time of this analysis; attempted retrieval returned no usable data (rate-limited and no coverage evident). As such, no beat/miss analysis vs consensus can be provided.

Key Takeaways for Investors

• Fintech scale is real; Q2 processed 1.13M transactions across ~9.9K terminals, yielding $13.4M revenue. Execution focus should be on throughput and take-rate optimization to lift gross margin from ~4% .
• Margin trajectory improved sequentially with ECS integration and ACH cost cuts, but remains structurally thin; sustained product/price mix improvements are needed to expand gross profit dollars meaningfully .
• OpEx normalized from Q1’s stock/warrant-heavy quarter but remains substantial; continued non-cash compensation tied to deals/services could keep operating losses elevated near term .
• Liquidity risk is non-trivial: working capital deficit ($1.75M) and reliance on equity/convertible debt financings (Eagle, Bellridge) continued into Q2; monitor dilution and financing terms/leak-out provisions .
• No guidance or call limits near-term visibility; trading catalysts hinge on further processing partnerships (e.g., AT&T SIM activations), evidence of sustained margin gains, and capital structure de-risking .
• Controls remain a watch item; disclosure controls were “not effective” in Q1 and Q2—any improvement could support investor confidence .
• Without Street coverage, stock may trade more on company updates and financing developments than on consensus beats/misses.

Sources

• Q2 2018 10-Q and MD&A: income statement, expenses, losses, liquidity, controls .
• Q1 2018 10-Q: baseline revenue/gross profit, OpEx, financing .
• FY 2017 10-K: business/segments, FY margin, RWJ acquisition footprint .
• Q2 2018 8-K/Press Release (Ex. 99.1): ECS/UGO integration, transactions, terminals, ACH cost reduction, gross margin commentary .