Goldmoney Inc. Reports Financial Results for Second Quarter 2018Nov 14, 2017
TORONTO – (November 14, 2017) – 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.
- 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
- 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.
* 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 ColdBlockstm 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 Information
The Company will be hosting its semi-annual conference call to discuss earnings, and provide a general corporate update at 11 a.m. ET today. 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
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.
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: [email protected].
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, visit goldmoney.com.
Media and Investor Relations Inquiries:
Director of Global Communications
Chief Strategy Officer & CFO
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.