Goldmoney Inc. (TSX:XAU) (“Goldmoney”), a precious metal financial
service and technology company, today announced financial
results for the quarter ended September 30, 2017. All amounts are
expressed in Canadian dollars unless otherwise noted.
Financial Highlights
- Consolidated Revenue of $126.3 million, an increase of $1.1
million (+1%) quarter over quarter (“QoQ”)
- Group Gross Operating Profit of $1.6 million, an increase of
$0.37 million (+29%) QoQ
- Client metal weight under custody growth in all four precious
metals
- Basic and diluted net loss per share of ($0.01)
- Non-IFRS Adjusted Gain1 of $0.04 million
- Non-IFRS Cash and Tangible Common Equity2 of $61.1 million at
September 30, 2017 vs. $61.2 million at June 30, 2017
- Cryptocurrencies position primarily of Bitcoin Cash of $1.3
million at September 30, 2017
- Currency loans totaling $13.7 million of balance sheet capital
extended to users against their fully-reserved
metal
Operational Highlights
- Launched consolidated Goldmoney Holding account with combined
Goldmoney Wealth and Network features.
- Subsequently integrated 20 new global deposit and redemption
options into unified Holding, including WeChat Pay, Alipay, SEPA,
UnionPay, and 16 additional payment integrations.
- Completed build-out and subsequent launch of first
brick-and-mortar Goldmoney Branch in Toronto.
- Completed investment in Menē 24 karat jewelry subsidiary and
subsequent private beta launch.
- Initiated New York Stock Exchange (NYSE) listing process.
- Launched BlockVault Inc. subsidiary and
ColdBlocks™: custodial cold storage technology for
cryptocurrency assets.
The Company made several key advancements following the close of
the first quarter, including the closing of a $30 million private
placement to new institutional investors.
IFRS Consolidated Income Statement Data(expressed
in $000s except loss per share) |
FY 2018 |
FY 2017 |
FY 2016 |
|
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
Revenue |
126,274 |
125,211 |
131,851 |
139,149 |
140,391 |
112,409 |
108,705 |
80,824 |
Fee Revenue |
645 |
661 |
713 |
633 |
711 |
655 |
513 |
501 |
Gross margin |
958 |
1,320 |
1,284 |
1,401 |
1,543 |
1,361 |
1,271 |
897 |
Gross profit (excludes precious metal inventory P&L) |
1,602 |
1,981 |
1,997 |
2,034 |
2,254 |
2,016 |
1,785 |
1,398 |
* Refer to “Use of Non-IFRS Financial Measures” and
“Reconciliation of Non-IFRS Financial Measures” in the
MD&A.
Please visit our SEDAR profile to view the
consolidated financial statements and MD&A.
“The second quarter was a transitional quarter for the group
with higher than ordinary professional, service, general and
administrative costs as we consolidated the Goldmoney Holding into
one unified account with reduced transaction fees. This unification
is what ultimately paved the way for our official foray into
cryptocurrency assets, which will be launched as a buy-sell feature
within days. We also began to invest and capitalize our new
BlockVault subsidiary, which will employ our proprietary
ColdBlocks™ technology for institutional-grade custody of
crypto assets. Lastly, we completed and fully paid for our capital
investments in the first brick-and-mortar branch in Toronto, and
the Menē 24 karat jewelry venture which has now launched and is
generating revenue. In that light, breaking even while maintaining
our tangible capital, seems fair," said Goldmoney CEO Roy Sebag.
“With that said, I am disappointed in these results as we narrowly
missed on achieving our second consecutive net income quarter due
to an operational mistake. When we transitioned to the lower fees
in June, our dealing desk in Jersey did not properly update certain
metal price feeds from incoming counterparties. The result was that
we were executing at a disadvantageous price against one specific
counterparty, and in some cases losing on platinum, palladium, and
silver against certain client order-flows. In what was a bad
quarter for all precious metal businesses, Goldmoney actually saw
growth in both revenue, client deposits, and even margin, but this
error might have cost us up to $0.5-$0.7 million based on initial
calculations. We have since corrected this personnel error, and the
gross margin has now normalized and should even grow next quarter
with the launch of crypto-assets. I believe we have a better brand
and infrastructure to aggressively compete with the incumbent
cryptocurrency custodians who now oversee tens of billions of such
assets under custody. Over the next few quarters we will allocate
free cash flow and growth capital towards that objective hiring
engineers, compliance, customer service, and marketing staff. This
process has in fact already begun with our head-count growing every
week since quarter-end.”
“While the second quarter proved to be another transition
quarter for the newly consolidated Goldmoney Holding platform, we
continued to show consistent client activity and slight nominal
growth despite record low advertising and client acquisition
expenditures, as well strong macroeconomic headwinds in the retail
precious metal sector. It’s been widely reported that many of our
competitors have seen sales volumes and client activity drop as
much as 20 to 40 per cent or more year over year in this period of
exceptionally low realized price volatility; overall, we see the
consistent top line activity – despite lower growth and advertising
spend – as a strong signal that our reduced fees and continuous
launch of new technology and products has been seeding early client
network effects and gains in market share,” said Goldmoney CFO Josh
Crumb. “Looking ahead, our third quarter should be the final
quarter of our intentionally-reduced marketing spend during this
platform transition and ramp up phase, and we plan to market the
launch of our new branches, new crypto asset offering, and other
broader momentum building initiatives more aggressively into
calendar year end. Turning specifically to our recently announced
crypto asset launch and BlockVault subsidiary, both initiatives are
progressing well and we look forward to at least one month of new
crypto asset-related revenue in Q3, and the launch and
institutional market entry of BlockVault in Q4.”
The selected financial information included in this release is
qualified in its entirety by, and should be read together with, the
Company's unaudited condensed consolidated interim financial
statements for the three months and six months ended September 30,
2017, prepared in accordance with International Financial Reporting
Standards ("IFRS") and corresponding management's discussion and
analysis, which are available under the Company's profile on SEDAR
at www.sedar.com.
Conference Call InformationThe company will be
hosting its annual conference call to discuss earnings, and a
general corporate update. The call is open to investors and will be
held by Josh Crumb, CFO of Goldmoney Inc. and Roy Sebag CEO of
Goldmoney Inc.
PARTICIPANT ACCESS CODE: 362764
DIAL-IN NUMBERS:
Toronto: +1 647 478 7145 New York: +1 917 962 0650 London: +44
203 7696819
To view additional local dial-in numbers, please
click here.
QUESTIONS: Please note that the conference line will be muted to
all callers. Questions to be answered during the call can be
emailed ahead of time to: ir@goldmoney.com.
Non-IFRS Measures
This news release contains non-IFRS financial measures; the
Company believes that these measures provide investors with useful
supplemental information about the financial performance of its
business, enable comparison of financial results between periods
where certain items may vary independent of business performance,
and allow for greater transparency with respect to key metrics used
by management in operating its business. Although management
believes these financial measures are important in evaluating the
Company's performance, they are not intended to be considered in
isolation or as a substitute for, or superior to, financial
information prepared and presented in accordance with IFRS. These
non-IFRS financial measures do not have any standardized meaning
and may not be comparable with similar measures used by other
companies. For certain non-IFRS financial measures, there are no
directly comparable amounts under IFRS. These non-IFRS financial
measures should not be viewed as alternatives to measures of
financial performance determined in accordance with IFRS. Moreover,
presentation of certain of these measures is provided for
year-over-year comparison purposes, and investors should be
cautioned that the effect of the adjustments thereto provided
herein have an actual effect on the Company's operating
results.
Non-IFRS Adjusted Loss1 is a non IFRS financial measure. This
figure excludes from comprehensive loss the impact of the following
amounts: (i) any gains or losses on precious metals inventory, (ii)
non-cash items, including the amortization of intangible assets or
stock based compensation, (iii) the impact of foreign exchange
gains or losses, and (iv) unrealized gains or losses on investments
held for sale. Refer to the MD&A for a detailed breakdown of
these items.
Non-IFRS Cash Loss is a non IFRS financial measure. This figure
excludes from comprehensive loss the impact of non-cash items,
including the amortization of intangible assets or stock based
compensation. Refer to the MD&A for a detailed breakdown of
these items.
Tangible Common Equity is a non-IFRS measure. This figure
excludes from total shareholder equity (i) intangibles, and (ii)
goodwill, and is useful to demonstrate the tangible capital
employed by the business.
For a full reconciliation of non-IFRS financial measures used
herein to their nearest IFRS equivalents, please see the section
entitled "Reconciliation of Non-IFRS Financial Measures" in the
Company's MD&A for the year ended March 31, 2017.
About Goldmoney Inc.
Goldmoney Inc., a financial service company traded on the
Toronto Stock Exchange (TSX:XAU), is a global leader in precious
metal investment services and the world's largest precious metals
payment network. Safeguarding $1.8 billion in assets for clients
located in more than 150 countries, Goldmoney is focused on a
singular mission to make precious metals-backed savings accessible
to all. Powered by Goldmoney’s patented technology, the
Goldmoney® Holding is an online account that enables clients
to invest, earn, or spend gold, silver, platinum, palladium and
cryptocurrencies that are securely stored in insured vaults in
seven countries. All bullion assets are fully allocated and
physically redeemable property. Goldmoney Wealth Limited is
regulated by the Jersey Financial Services Commission (JFSC) as a
Money Services Business. Goldmoney Network is a reporting entity to
the Financial Transactions and Reports Analysis Centre of Canada
(FINTRAC), and is registered with the Financial Crimes Enforcement
Network (FinCEN) in the U.S. For more information about Goldmoney,
visitgoldmoney.com.
Media and Investor Relations Inquiries:
Jacquelyn HumphreyDirector of Global
Communications Goldmoney Inc. jac@goldmoney.com
Josh Crumb Chief Strategy Officer &
CFO Goldmoney Inc. +1 647-499-6748
Forward-Looking Statements
This news release contains or refers to certain forward-looking
information. Forward-looking information can often be identified by
forward-looking words such as "anticipate", "believe", "expect",
"plan", "intend", "estimate", "may", "potential" and "will" or
similar words suggesting future outcomes, or other expectations,
beliefs, plans, objectives, assumptions, intentions or statements
about future events or performance. All information other than
information regarding historical fact, which addresses activities,
events or developments that the Goldmoney Inc. (the "Company")
believes, expects or anticipates will or may occur in the future,
is forward looking information. Forward-looking information does
not constitute historical fact but reflects the current
expectations the Company regarding future results or events based
on information that is currently available. By their nature,
forward-looking statements involve numerous assumptions, known and
unknown risks and uncertainties, both general and specific, that
contribute to the possibility that the predictions, forecasts,
projections and other forward-looking information will not occur.
Such forward-looking information in this release speak only as of
the date hereof.
Forward-looking information in this release includes, but is not
limited to, statements with respect to: service times for
transactions on the Goldmoney network; growth of the Company's
business, expected results of operations, and the market for the
Company's products and services and competitive conditions. This
forward-looking information is based on reasonable assumptions and
estimates of management of the Company at the time it was made, and
involves known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of
the Company to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking information. Such factors include, among others:
the Company's limited operating history; history of operating
losses; future capital needs and uncertainty of additional
financing; fluctuations in the market price of the Company's common
shares; the effect of government regulation and compliance on the
Company and the industry; legal and regulatory change and
uncertainty; jurisdictional factors associated with international
operations; foreign restrictions on the Company's operations;
product development and rapid technological change; dependence on
technical infrastructure; protection of intellectual property; use
and storage of personal information and compliance with privacy
laws; network security risks; risk of system failure or inadequacy;
the Company's ability to manage rapid growth; competition;
effectiveness of the Company's risk management and internal
controls; use of the Company's services for improper or illegal
purposes; uninsured and underinsured losses; theft & risk of
physical harm to personnel; precious metal trading risks; and
volatility of precious metals prices & public interest in
precious metals investment; and those risks set out in the
Company's most recently filed annual information form, available
on SEDAR. Although the Company has attempted to identify
important factors that could cause actual results to differ
materially, there may be other factors that cause results not to be
as anticipated, estimated or intended. There can be no assurance
that such statements will prove to be accurate as actual results
and future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking information. The Company undertakes no
obligation to update or revise any forward-looking information,
except as required by law.
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