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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
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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 .
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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
- Q1 2025 vs prior year and vs estimates
- Disaggregation by revenue stream (Q1 2025 vs Q1 2024)
- Geographic revenue
- KPIs and balance sheet highlights
Guidance Changes
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 .
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
- 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 .