Sign in

You're signed outSign in or to get full access.

HE

HeartCore Enterprises, Inc. (HTCR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $3.59M, down 28.9% year over year, with gross margin at 30.7% vs 40.3% a year ago; net loss widened to $3.14M on lower software/consulting revenues and losses from fair value marks on marketable securities .
  • Consensus tracked by S&P Global called for $4.83M revenue and -$0.01 EPS; HeartCore missed with $3.59M revenue and -$0.14 EPS (1 estimate coverage) — a material miss likely to prompt estimate resets in the near term* [GetEstimates].
  • Management emphasized cost control at subsidiary Sigmaways and strategic moves: establishing a BizDev team, a partnership with NEC Solutions, and expanding Go IPO into South Korea; they noted the balance sheet deficit was primarily due to declines in SBC Medical Group shares held by HeartCore .
  • Liquidity declined: cash and equivalents fell to $0.74M from $2.12M at year-end; operating cash flow was -$2.00M, with deferred revenue down $0.50M sequentially .

What Went Well and What Went Wrong

  • What Went Well

    • “We continued to make meaningful strategic advancements across our software business… [launched] a dedicated business development team … to better serve our CMS customers and maintain our strong retention rate.” — CEO Sumitaka Kanno .
    • Sigmaways “has … reduced costs and has narrowed its losses compared to the same period last year,” with management focused on prudent cost control .
    • Strategic initiatives: partnership with NEC Solutions to refine CMS implementation; planning to expand Go IPO into South Korea with seminar rescheduled to September 2025 .
  • What Went Wrong

    • Revenue decline across on-premise software, customized development/services (Sigmaways slowdown), and Go IPO consulting (no new orders) drove YoY contraction; gross profit fell to $1.10M and operating loss increased to $1.24M .
    • Other expenses surged on fair value marks: -$1.78M change in marketable securities and -$0.05M in warrant marks, intensifying the net loss .
    • Liquidity pressure and softer demand: cash fell to $0.74M; deferred revenue decreased by $0.50M; MD&A cites heightened U.S. market uncertainty from rising tariffs impacting Go IPO orders .

Financial Results

  • Quarterly performance vs prior periods and estimates
MetricQ2 2024Q3 2024Q1 2025
Revenue ($USD)$4.10M $17.85M $3.59M
Gross Profit ($USD)$0.80M $14.42M $1.10M
Operating Expenses ($USD)$2.30M $2.32M $2.34M
Operating Income (Loss) ($USD)$(2.19)M $12.10M $(1.24)M
Net Income (Loss) ($USD)$(2.20)M $10.82M $(3.14)M
Diluted EPS ($USD)$(0.09) $0.53 $(0.14)
Cash from Operations ($USD)n/an/a$(2.00)M
  • Q1 2025 vs prior year and vs estimates
MetricQ1 2024Q1 2025 ActualConsensus (S&P Global)Commentary
Revenue ($USD)$5.05M $3.59M $4.83M* [GetEstimates]Significant miss vs YoY and consensus (demand softness, no new Go IPO orders) .
Diluted EPS ($USD)$(0.06) $(0.14) $(0.01)* [GetEstimates]Significant miss; widened loss on fair value marks in securities .
Gross Margin (%)40.3% 30.7% n/aCompression driven by lower on-premise software and Go IPO mix .
  • Disaggregation by revenue stream (Q1 2025 vs Q1 2024)
Revenue StreamQ1 2024 ($USD)Q1 2025 ($USD)
On-premise software$1,078,736 $334,882
Maintenance & support$627,764 $567,619
SaaS$139,700 $172,844
Software development & misc.$447,458 $425,357
Customized dev & services$2,177,593 $1,840,781
Consulting (Go IPO)$575,481 $245,543
Total$5,046,732 $3,587,026
  • Geographic revenue
GeographyQ1 2024 ($USD)Q1 2025 ($USD)
Japan$2,869,139 $1,739,156
United States$2,020,280 $1,736,018
International$157,313 $111,852
Total$5,046,732 $3,587,026
  • KPIs and balance sheet highlights
KPIDec 31, 2024Mar 31, 2025
Cash & Equivalents ($USD)$2,121,089 $738,984
Investments in Marketable Securities ($USD)$4,495,703 $2,251,276
Accounts Receivable (current) ($USD)$1,950,050 $2,114,655
Deferred Revenue ($USD)$1,876,490 $1,437,248
Total Current Assets ($USD)$9,417,365 $6,064,299
Total Current Liabilities ($USD)$7,421,722 $6,695,271
Operating Cash Flow ($USD, Q1)n/a$(2,000,791)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal financial guidance2025None providedNone providedMaintained (no quantitative guidance) .
South Korea IPO seminar2025May 2025September 2025Rescheduled .

Earnings Call Themes & Trends

Note: No Q1 2025 earnings call transcript was found in the filings catalog; themes below reflect press releases and 10‑Q commentary .

TopicPrevious Mentions (Q3 2024)Previous Mentions (FY 2024/Q4)Current Period (Q1 2025)Trend
Go IPO pipelineTwo clients listed; warrants/equity drove results; optimistic about more deals .FY revenue +39% driven by Go IPO; adjusted EBITDA $7.3M; seeking APAC expansion .No new orders; plan to expand into South Korea; expect some clients to trade in 2025 .Momentum pause; geographic expansion to restart deal flow.
CMS model shift & SaaSShift to multi‑year licenses and SaaS delivery; recurring revenue focus .Emphasis on recurring revenue, partnerships, and product innovation .BizDev team to strengthen customer success; NEC Solutions integration to streamline implementations .Continuing operational refinement; customer success focus.
AI/technology initiativesPartnerships enhancing offerings (NTT Data, Hitachi) .Plan to leverage AI via acquisitions to strengthen value proposition .Continued CMS enhancements; technology integration via NEC; Global CMS development underway .Building capabilities; R&D investment modestly higher.
Tariffs/macroNot highlighted.Not highlighted.Rising tariffs cited in MD&A as contributing to Go IPO order slowdown .New headwind affecting consulting demand.
Regulatory/NasdaqRegained compliance (Q3 2024) .Regained listing compliance; later FY disclosure .Subsequent notice on minimum bid price non‑compliance; 180‑day window to cure .New listing risk to monitor.
R&D executionn/aNew product roadmaps; global expansion intent .Global CMS development raised R&D vs YoY .Incremental investment despite revenue pressure.

Management Commentary

  • “We launched a dedicated business development team … to better serve our CMS customers and maintain our strong retention rate.”
  • “Sigmaways has … reduced costs and has narrowed its losses compared to the same period last year … we will continue to closely monitor and prudently manage costs.”
  • “The deficit on our balance sheet … is attributable to the SBC Medical Group shares we hold … decline in their stock price has reduced the value of the assets … Nevertheless, these shares continue to offer additional liquidity options.”
  • “A few of our Go IPO clients are expected to begin trading in 2025 … preparing our efforts to expand … into new APAC regions.”

Q&A Highlights

No Q1 2025 earnings call transcript was available in the filings set we reviewed; therefore, Q&A highlights and tone comparisons are not available [Search attempted across HTCR earnings-call-transcript types within May–July 2025; no results] .

Estimates Context

MetricQ1 2025 ActualQ1 2025 Consensus# of Estimates
Revenue ($USD)$3,587,026 $4,827,000* [GetEstimates]1* [GetEstimates]
Primary EPS ($USD)$(0.14) $(0.01)* [GetEstimates]1* [GetEstimates]
  • Result: Miss on revenue and EPS versus Wall Street consensus. Coverage remains very thin (single estimate), increasing volatility in expectation setting*.
  • Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Material miss vs consensus and YoY on both revenue and EPS, driven by weaker on‑premise/software services and no new Go IPO orders; expect near‑term estimate cuts and continued earnings volatility given limited sell‑side coverage* [GetEstimates].
  • Margin compression reflects adverse mix and lower software volumes; gross margin fell to 30.7% (from 40.3% YoY), suggesting limited operating leverage at current scale .
  • Liquidity tightened: cash dropped to $0.74M; operating cash flow -$2.00M; watch deferred revenue and marketable securities monetization for funding flexibility .
  • Securities and warrant fair value marks are a meaningful driver of reported earnings variability (-$1.78M loss in Q1); reported GAAP results are sensitive to market movements of investee shares .
  • Strategic actions (NEC partnership, BizDev team) aim to strengthen CMS execution and retention; near‑term revenue impact depends on sales cycles and implementation throughput .
  • Go IPO expansion into South Korea and expectation that some clients begin trading in 2025 could re‑accelerate consulting revenue, but MD&A flags macro/tariff headwinds impacting orders currently .
  • Listing risk has re‑emerged: subsequent notice of Nasdaq minimum bid price non‑compliance; monitor potential corporate actions (e.g., reverse split) and execution against the 180‑day remediation window .