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HeartCore Enterprises, Inc. (HTCR)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue rose 16.7% year over year to $4.7M, and HeartCore returned to profitability with net income of $1.1M; gross profit increased to $2.2M as mix shifted toward higher-margin on‑premise CMS licenses and SaaS .
  • Q2 revenue modestly beat S&P Global consensus by ~$0.21M (actual $4.74M vs $4.53M, ~+4.7%); EPS came in better than expected at $0.04 vs consensus of -$0.08, reflecting improved execution and mix shift toward software* (Values retrieved from S&P Global).
  • Operating expenses fell to $2.1M from $2.3M YoY, and adjusted EBITDA turned positive to $0.1M from $(1.2)M YoY, signaling stronger operating leverage .
  • Liquidity improved with quarter-end cash of $2.35M; Nasdaq later confirmed compliance with the $2.5M equity requirement (stockholder’s equity $3.56M), while the successful listing of Go IPO client rYojbaba (RYOJ) and associated warrants are expected to be a Q3 catalyst .

What Went Well and What Went Wrong

What Went Well

  • Return to profitability and stronger software execution: “I am pleased to report a strong second quarter, marked by our return to profitability,” supported by a significant infrastructure client deal closed in the quarter .
  • Mix shift to higher-margin products: Gross profit rose 175% YoY to $2.2M, driven by on‑premise CMS license sales and cost improvements at Sigmaways reducing outsourcing costs .
  • Strategic and commercial momentum: Announced NEC Solutions Innovators partnership, Silver Egg recommendation engine integration, and signed 15th/16th Go IPO contracts; Go IPO Korea event planned for September .

What Went Wrong

  • Services softness and U.S. competition: Customized software development and services declined amid intense competition and strategic focus shift toward on‑premise and SaaS .
  • Prior-quarter weakness and cash burn: Q1 revenue fell to $3.6M with net loss of $3.1M; six-month operating cash flow was $(2.67)M despite Q2 improvements .
  • Limited external coverage: Only one estimate in S&P Global for revenue and EPS, limiting statistical confidence in consensus comparisons* (Values retrieved from S&P Global).

Financial Results

P&L vs prior year and prior quarter

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD)$4.1M $3.6M $4.7M
Gross Profit ($USD)$0.8M $1.10M $2.2M
Total Operating Expenses ($USD)$2.3M $2.34M $2.1M
Net Income ($USD)$(2.2)M $(3.09)M $1.1M
Adjusted EBITDA ($USD)$(1.2)M $(1.3)M $0.1M
Diluted EPS ($USD)$(0.09)*$(0.14) $0.04*

Values with * retrieved from S&P Global.

Results vs S&P Global consensus (Q2 2025)

MetricConsensusActualSurprise
Revenue ($USD)$4,531,000*$4,744,246*+$213,246 / +4.7%*
Primary EPS ($USD)$(0.08)*$0.04*+$0.12*

Values with * retrieved from S&P Global.

KPIs and balance highlights

MetricQ1 2025Q2 2025
Cash and Cash Equivalents ($USD)$0.74M $2.35M
Shareholders’ Equity ($USD)$0.60M $3.56M
Deferred Revenue ($USD)$1.44M $1.70M
Adjusted EBITDA ($USD)$(1.3)M $0.1M

Segment/driver commentary (no numeric breakdown disclosed)

Segment/DriverQ2 2025 Commentary
On‑premise CMSMultiple large CMS license orders drove revenue and margin improvement
SaaS (Japan)Increased efforts expanding/promoting traditional SaaS boosted revenue
Customized Dev/Services (Sigmaways)Revenue declined; outsourcing cost reductions improved gross profit
Go IPO ConsultingNo client listings in Q2; pipeline progressed and new contracts signed

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q3None providedNone providedMaintained (no formal guidance)
Margins/OpEx/TaxFY/Q3None providedNone providedMaintained (no formal guidance)
Segment-specificFY/Q3None providedNone providedMaintained (no formal guidance)

Management indicated expectations for a near‑term Go IPO client listing and warrants contributing meaningfully to Q3 revenue but provided no formal numeric guidance ranges .

Earnings Call Themes & Trends

Note: No Q2 2025 earnings call transcript found for HTCR; themes sourced from company 8‑K/press releases.

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
AI/tech initiativesFocus on acquisitions with strong AI capabilities; building globally scalable solutions Silver Egg recommendation engine integrated into CMS; NEC partnership to enhance implementation Improving execution partnerships
IPO market/Go IPO pipelineTwo 2024 listings drove revenue; expansion to South Korea with seminar planned Signed 15th/16th contracts; expect near‑term Nasdaq listing; rYojbaba began trading in August Pipeline progressing; monetization visible
Sigmaways/U.S. competition2024 impairments; Q1 2025 services slowdown and cost control initiatives Services revenue down; cost actions improved gross profit Stabilizing cost base
Partnerships & channelTosho, NTT Data collaborations in 2024 NEC Solutions Innovators partnership; Silver Egg integration Broader ecosystem
Liquidity/Nasdaq complianceRegained compliance and equity actions in 2024 Cash improved to $2.35M; Nasdaq confirmed compliance post‑Q2 Strengthened balance
M&A strategyTarget recurring revenue and AI‑centric assets; cross‑sell to >1,000 customers Financing with Crom to support M&A and equity compliance Positioned to pursue targets

Management Commentary

  • “I am pleased to report a strong second quarter, marked by our return to profitability.” CEO highlighted resilience of software business and a significant infrastructure deal closed in the quarter .
  • “We expect one of our existing Go IPO clients to successfully list on the Nasdaq Stock Market in the near‑term… This is expected to further strengthen our results in the third quarter.” .
  • Financing strategy: “M&A remains central to our strategy as we target companies with recurring revenue, complementary technologies, and strong AI capabilities… value through cross‑sell and upsell opportunities to our base of more than 1,000 software customers.” .

Q&A Highlights

No Q2 2025 earnings call transcript or public Q&A session was available in the document set; therefore, no Q&A highlights or clarifications beyond press release commentary could be sourced.

Estimates Context

  • S&P Global consensus revenue for Q2 2025 was $4.53M with one estimate; reported revenue modestly exceeded at $4.74M (~+4.7% surprise)*.
  • S&P Global consensus EPS was $(0.08) with one estimate; actual EPS was $0.04, reflecting better margin mix and cost control than expected*.
  • Coverage depth is limited (1 estimate), but given return to profitability and expected near‑term monetization of Go IPO warrants/listings, forward estimates may need upward revision to reflect improved run‑rate operating profile and potential Q3 upside from securities proceeds and warrant valuations .

Values with * retrieved from S&P Global.

Key Takeaways for Investors

  • The quarter marks a pivot back to profitability, driven by high‑margin on‑premise CMS licenses and SaaS growth, with gross profit up 175% YoY and opex down YoY .
  • Revenue and EPS outperformed thin consensus, suggesting underappreciated operating leverage as mix shifts toward software and Sigmaways costs are reduced* (Values retrieved from S&P Global).
  • Liquidity improved and Nasdaq compliance was reaffirmed, reducing listing risk and supporting capital markets access .
  • Near‑term catalysts include monetization from rYojbaba’s Nasdaq listing and warrant position, plus potential additional listings from Go IPO clients in late 2025/early 2026 .
  • Strategic financing with Crom provides capacity to pursue AI‑aligned, recurring‑revenue acquisitions to deepen cross‑sell into >1,000 customers .
  • Services softness and U.S. competition remain watch points; continued execution on software pipeline and partnerships will be key to sustaining margin gains .
  • With limited sell‑side coverage, incremental disclosures (e.g., segment metrics) and consistent beat‑and‑raise cadence could be stock catalysts; monitor Q3 for warrant-driven revenue and Go IPO progress .