Netcapital Releases Q3 Fiscal 2023 Financial Results Including YTD Revenue Growth of 48%

Netcapital Inc. (Nasdaq: NCPL, NCPLW), a digital private capital markets ecosystem, recently  announced financial results for the third quarter and first nine months of fiscal year 2023 ended January 31, 2023.

Martin Kay, CEO of Netcapital Inc., said:

“Over the past nine months, Netcapital has generated substantial revenue growth while generating positive operating and net income. We have established a number of important strategic partnerships designed to create opportunities for clients and investors, while scaling and advancing our operating platform for continuing growth. Netcapital is executing on the vision for our brand – to break down traditional barriers and offer opportunities for anyone to invest in private companies. Along the way, we are turning customers and communities into owners and brand ambassadors for the businesses they love. We believe this is a powerful symbiotic relationship.”

Third Quarter Fiscal 2023 Financial Highlights

  • Revenue growth of 25% year-over-year to $2.3 million
  • Positive operating income of $571K compared to operating loss of $135K in the year-ago quarter
  • Diluted earnings per share of $0.33

First Nine Months of Fiscal 2023 Highlights

  • Revenue growth of 48% year-over-year to $5.4 million
  • Positive operating income of $912K compared to operating loss of $1.5 million in first nine months of fiscal year 2022
  • Diluted earnings per share of $0.46
  • Paid down $1 million in debt, closed a $5 million underwritten public offering, and
    uplisted to Nasdaq in July 2022

As covered, Netcapital Inc. is “a fintech company with a scalable technology platform that allows private companies to raise capital online and provides private equity investment opportunities to investors.”

The company’s consulting group, Netcapital Advisors, “provides marketing and strategic advice and takes equity positions in select companies with disruptive technologies.”

The Netcapital funding portal is “registered with the U.S. Securities & Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA), a registered national securities association.”

During a conference call, the firm provided a review of their financial results for the third quarter of fiscal 2023.

As noted during the call, the total fiscal year-to-date revenues “increased 48% year-over-year to $5.4 million, compared to $3.6 million in the year ago period.”

For the third quarter, they “delivered revenue growth of 25% to 2.3 million.”

They generated positive operating income “for the third quarter of approximately $571,000, compared to an operating loss of 136,000 in the year ago quarter.”

As mentioned during the call, for the first nine months of fiscal year 2023, operating income “was $912,000 compared to an operating loss of $1.5 million in the year ago period.”

Net income per diluted share “was $0.33 for the third quarter and $0.46 for the nine-month periods.”

At January 31, 2023, the firm “had cash and cash equivalents of $1.8 million as compared to $474,000 at April 30, 2022.”

As of January 31, 2023, equity securities at fair value “totaled $19.3 million compared to $12.9 million at April 30, 2022.”

The firm’s management confirmed that for escrow accounts for Netcapital issuers are held at Silicon Valley Bank. These funds “are fully insured, they are flowing freely, and we have full access to the account.”

As noted in the update:

“Netcapital’s main operating accounts are held at Bank of America, which is designated as a systemically important bank, otherwise known as too big to fail. The company has additional accounts at Citizens Bank. We are currently exploring additional potential Escrow Partners.”

Jason Frishman, Founder of Netcapital, revealed that they established a new ATS or Alternative Trading System’s partnership with Templum Markets’ LLC.

He added that this “brings numerous extended benefits to our funding portal users and issuers.”

He also mentioned that through the ATS, they can “offer investors who purchase stocks through the Netcapital funding portal, the ability to unlock liquidity through a structured regulated alternative trading venue.”

The firm believes that their ability “to facilitate secondary trading and liquidity represents a strong competitive advantage and key differentiator for Netcapital within the digital private markets landscape.”

Next, they formed “a revenue sharing referral agreement with JD Merit Securities LLC, a boutique investment bank focused on serving middle market technology forward company.”

JD Merit mission “to help companies at all stages to build grow and fund their businesses and their client centric approach to strategic advice aligns well with Netcapital’s core values.”

Through their mutually beneficial agreement, their team now reportedly “has a robust solution for entrepreneurial startups, who are SEC registered funding portal, which empowers private companies to raise capital online.”

Collaborations like these are “a key part of our ongoing efforts to exceed clients and portal users’ expectations and deliver services and solutions that are unmatched in the private capital market space.”

Martin Kay, CEO of Netcapital Inc., said that the current economic environment “has many investors and companies exploring new ideas and new strategies.”

He pointed out that recent events in the banking industry “serve as just the latest illustration of how concentrated and insular the traditional venture capital funding model has become.”

In contrast, Netcapital’s platform reportedly “breaks down those traditional barriers and offers opportunities for virtually anyone to invest in private companies.”

Along the way, they’re turning customers and communities “into owners and brand ambassadors for the businesses they love and this is a powerful symbiotic relationship.”

To do this effectively and efficiently, they’ve “built out mature, scalable operations, and an ecosystem that spans the startup advisor and investor communities.”

They’re continuing to extend their value proposition “with a liquidity option.”

Positioned at the intersection of the startup advisor and investor communities, they believe that they “have a significant market opportunity right now for our integrated offerings to create value for both investors and entrepreneurs.”

The firm looks forward to closing out their fiscal year next month “with continued momentum that will further support our long-term business strategy.”


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