NEW YORK and TOKYO, Aug. 13, 2025 (GLOBE NEWSWIRE) -- HeartCore Enterprises, Inc. (Nasdaq: HTCR) (“HeartCore” or the “Company”), a leading enterprise software and consulting services company based in Tokyo, reported financial results for the second quarter and six months ended June 30, 2025.
Second Quarter 2025 and Recent Operational & Financial Highlights
As of June 30, 2025, HeartCore’s total shareholders’ equity totaled $3.5 million. The Company believes that it is now in compliance with the $2.5 million minimum stockholders’ equity requirement set forth in Nasdaq Listing Rule 5550(b) for continued listing on the Nasdaq Capital Market.
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Management Commentary
“I am pleased to report a strong second quarter, marked by our return to profitability,” said HeartCore CEO Sumitaka Kanno. “These results reflect the resilience of our software business, which was bolstered by a significant deal with a major infrastructure company that was closed during the quarter. Our second quarter results were particularly encouraging, especially during a period without any Go IPO client listings. We signed our 15th and 16th Go IPO contract wins late in the second quarter and early in the third quarter, but more notably, 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. In the broader IPO market, there were several other APAC-based companies outside of our pipeline that successfully listed in 2025, which we view as a positive indicator for our Go IPO business. Looking ahead, we are excited to host our Go IPO Korea event next month, which we hope will mark the beginning of a stronger presence in the Korean market. With encouraging signs from the general IPO landscape, we remain focused on expanding our reach to APAC companies seeking to list on U.S. exchanges, while continuing to guide our existing clients throughout the listing process and ultimately, across the finish line as a publicly traded company.”
Second Quarter 2025 Financial Results
Revenues increased by 16.7% to $4.7 million, compared to $4.1 million in the same period last year. The increase was primarily due to (i) the increased sale of on-premise software mainly from multiple large orders of CMS licenses in the second quarter of 2025, compared to the same period last year, (ii) increased software-as-a-service (“SaaS”) revenue due to the Company putting more efforts into expanding and promoting its traditional SaaS business in Japan, and (iii) obtaining more orders, partially offset by (iv) a decrease in customized software development and services revenue in connection with the intense competition of the software market in the U.S., and a decrease in software development and other services, mainly as the Company shifted its business strategies to focus more on development and expansion its on-premise software revenue and SaaS revenue.
Gross profit increased 175.2% to $2.2 million, compared to $0.8 million in the same period last year. The increase was primarily due to (i) an increase in gross profit from sales of on-premise software as the sale increased dramatically while there was not much change in the corresponding costs as the product was developed independently and fixed costs which were not proportional to sales, (ii) an increase in gross profit from customized software development and services as Sigmaways reduced outsourcing costs by ending cooperation with costly vendors, resulting in costs that decreased more dramatically than revenue did, and (iii) an increase in gross profit from the Company’s IPO consulting services.
Operating expenses decreased to $2.1 million, compared to $2.3 million in the same period last year. The decrease was primarily due to a decrease in general and administrative expenses.
Net income was $1.1 million, compared to a net loss of $2.2 million in the same period last year, as a result of the aforementioned increases in revenue and gross profit.
Adjusted EBITDA was $0.1 million for the second quarter of 2025, compared to $(1.2) million in the same period last year.
As of June 30, 2025, the Company had cash and cash equivalents of $2.3 million, compared to $2.1 million on December 31, 2024.
Six Months Ended June 30, 2025 Financial Results
Revenues were $8.3 million, compared to $9.1 million in the same period last year. The decrease was primarily due to (i) a decrease in customized software development and services revenue in connection with a slowdown in Sigmaways revenue, driven by intensified competition in the U.S. software market, (ii) decreased Go IPO consulting services revenue mainly due to fewer ongoing IPO consulting projects, (iii) decreased software development and other services revenue mainly as the Company shifted its business strategies to focus more on development and expansion of its on-premise software and SaaS revenue in the second quarter of 2025, resulting in fewer resources and efforts dedicated to software development and other services, partially offset by (iv) an increase in on-premise software revenue due to the Company obtaining several large CMS license orders in the current period.
Gross profit increased 16.9% to $3.3 million, compared to $2.8 million in the same period last year. The increase was primarily due to (i) an increase in gross profit from the sale of on-premise software, as sales rose significantly while related costs remained largely unchanged since the product was independently developed with fixed costs not proportional to sales, and (ii) increased gross profit from customized software development and services, as Sigmaways reduced outsourcing costs by ending cooperation with costly vendors in the current period.
Operating expenses decreased to $4.4 million, compared to $5.0 million in the same period last year. The improvement was primarily due to a decrease in general and administrative expenses.
Net loss improved to $2.1 million, compared to a loss of $3.7 million in the same period last year, as a result of the aforementioned increase in gross profit during the period and increase in revenue in the second quarter.
Adjusted EBITDA was $(1.1) million for the six months ended June 30, 2025, compared to $(1.6) million in the same period last year.
About HeartCore Enterprises, Inc.
Headquartered in Tokyo, Japan, HeartCore Enterprises is a leading enterprise software and consulting services company. HeartCore offers Software as a Service (SaaS) solutions to enterprise customers in Japan and worldwide. The Company also provides data analytics services that allow enterprise businesses to create tailored web experiences for their clients through best-in-class design. HeartCore’s customer experience management platform (CXM Platform) includes marketing, sales, service and content management systems, as well as other tools and integrations, which enable companies to enhance the customer experience and drive engagement. HeartCore also operates a digital transformation business that provides customers with robotics process automation, process mining and task mining to accelerate the digital transformation of enterprises. HeartCore’s GO IPOSM consulting services helps Japanese-based companies go public in the U.S. Additional information about the Company’s products and services is available at and https://heartcore-enterprises.com/.
Non-GAAP Financial Measures Disclaimer
This document includes references to adjusted EBITDA, which is a non-GAAP financial measure. For the purposes of this presentation, adjusted EBITDA is calculated by adjusting net loss to exclude depreciation and amortization, changes in fair value of investments in marketable securities, changes in fair value of investment in warrants, interest income, and interest expenses.
This measure is presented as supplemental information and is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”).
Management believes that adjusted EBITDA provides useful information to investors by highlighting the Company’s core operational performance, excluding non-cash and non-recurring items. However, non-GAAP financial measures have limitations and should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.
For the three months ended June 30, | ||
Item | 2025 | 2024 |
Net loss | $1.1 million | -$2.2 million |
(+) Depreciation and amortization expense | $0.0 million | $0.2 million |
(+) Changes in fair value of investments in marketable securities | -$0.9 million | $0.2 million |
(+) Changes in fair value of investment in warrants | -$0.1 million | $0.6 million |
(-) Interest income | -$0.0 million | -$0.0 million |
(+) Interest expenses | $0.0 million | $0.0 million |
Adjusted EBITDA | $0.1 million | -$1.2 million |
For the six months ended June 30, | ||
Item | 2025 | 2024 |
Net loss | -$2.1 million | -$3.7 million |
(+) Depreciation and amortization expense | $0.0 million | $0.4 million |
(+) Changes in fair value of investments in marketable securities | $0.9 million | $0.4 million |
(+) Changes in fair value of investment in warrants | -$0.1 million | $1.2 million |
(-) Interest income | -$0.0 million | -$0.0 million |
(+) Interest expenses | $0.1 million | $0.1 million |
Adjusted EBITDA | -$1.1 million | -$1.6 million |
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, or the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts included in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by words such as “believed,” “intend,” “expect,” “anticipate,” “plan,” “potential,” “continue,” or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks, and uncertainties are discussed in HeartCore’s filings with the Securities and Exchange Commission. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond HeartCore’s control which could, and likely will materially affect actual results, and levels of activity, performance, or achievements. Any forward-looking statement reflects HeartCore’s current views with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to operations, results of operations, growth strategy, and liquidity. HeartCore assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The contents of any website referenced in this press release are not incorporated by reference herein.
HeartCore Investor Relations Contact:
Gateway Group, Inc.
Matt Glover and John Yi
HTCR@gateway-grp.com
(949) 574-3860
HeartCore Enterprises, Inc. | |||||||
Consolidated Balance Sheets | |||||||
June 30, | December 31, | ||||||
2025 | 2024 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,347,622 | $ | 2,121,089 | |||
Accounts receivable | 3,000,337 | 1,950,050 | |||||
Investments in marketable securities | 2,495,016 | 4,495,703 | |||||
Prepaid expenses | 503,171 | 458,839 | |||||
Current portion of long-term note receivable | 100,000 | 100,000 | |||||
Due from related party | 44,148 | 40,139 | |||||
Deferred offering costs | 250,000 | - | |||||
Other current assets | 186,944 | 251,545 | |||||
Total current assets | 8,927,238 | 9,417,365 | |||||
Non-current assets: | |||||||
Accounts receivable, non-current | 1,058,539 | 752,930 | |||||
Property and equipment, net | 442,475 | 584,854 | |||||
Operating lease right-of-use assets | 1,853,466 | 1,936,097 | |||||
Long-term investment in warrants | 650,446 | 577,786 | |||||
Long-term note receivable | 100,000 | 100,000 | |||||
Deferred tax assets | 138,263 | 152,300 | |||||
Security deposits | 225,649 | 307,996 | |||||
Long-term loan receivable from related party | 114,230 | 123,928 | |||||
Other non-current assets | 15,014 | 11,778 | |||||
Total non-current assets | 4,598,082 | 4,547,669 | |||||
Total assets | $ | 13,525,320 | $ | 13,965,034 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 1,758,084 | $ | 2,039,323 | |||
Accounts payable and accrued expenses - related party | 22,924 | 47,199 | |||||
Accrued payroll and other employee costs | 752,787 | 675,502 | |||||
Due to related parties | 590 | 932 | |||||
Short-term debt - related party | 75,000 | 75,000 | |||||
Current portion of long-term debts | 382,494 | 401,255 | |||||
Insurance premium financing | 90,869 | 16,626 | |||||
Factoring liability | 226,212 | 172,394 | |||||
Operating lease liabilities, current | 290,886 | 371,951 | |||||
Finance lease liabilities, current | 17,666 | 15,956 | |||||
Income tax payables | 716,263 | 822,014 | |||||
Deferred revenue | 1,702,068 | 1,876,490 | |||||
Derivative liability | 236,141 | - | |||||
Other current liabilities | 821,858 | 907,080 | |||||
Total current liabilities | 7,093,842 | 7,421,722 | |||||
Non-current liabilities: | |||||||
Long-term debts | 1,097,263 | 1,238,813 | |||||
Operating lease liabilities, non-current | 1,613,378 | 1,614,996 | |||||
Finance lease liabilities, non-current | 39,085 | 43,593 | |||||
Asset retirement obligations | 122,735 | 183,895 | |||||
Total non-current liabilities | 2,872,461 | 3,081,297 | |||||
Total liabilities | 9,966,303 | 10,503,019 | |||||
Shareholders' equity: | |||||||
Preferred shares, $0.0001 par value, 20,000,000 shares authorized; Series A convertible preferred shares, 2,000 and no shares designated, issued and outstanding as of June 30, 2025 and December 31, 2024, respectively; aggregate liquidation preference of $2,200,611 and nil as of June 30, 2025 and December 31, 2024, respectively | - | - | |||||
Common shares, $0.0001 par value, 200,000,000 shares authorized, 23,310,770 and 21,937,987 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively | 2,331 | 2,193 | |||||
Subscription receivable | - | (103,942 | ) | ||||
Additional paid-in capital | 22,676,912 | 20,656,153 | |||||
Accumulated deficit | (18,231,933 | ) | (16,244,843 | ) | |||
Accumulated other comprehensive income | 393,124 | 343,936 | |||||
Total HeartCore Enterprises, Inc. shareholders' equity | 4,840,434 | 4,653,497 | |||||
Non-controlling interests | (1,281,417 | ) | (1,191,482 | ) | |||
Total shareholders' equity | 3,559,017 | 3,462,015 | |||||
Total liabilities and shareholders' equity | $ | 13,525,320 | $ | 13,965,034 | |||
HeartCore Enterprises, Inc. | ||||||||
Unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||||||
For the six months ended June 30, | ||||||||
2025 | 2024 | |||||||
Revenues | $ | 8,331,272 | $ | 9,113,120 | ||||
Cost of revenues | 5,013,393 | 6,275,050 | ||||||
Gross profit | 3,317,879 | 2,838,070 | ||||||
Operating expenses: | ||||||||
Selling expenses | 676,782 | 399,115 | ||||||
General and administrative expenses | 3,492,415 | 4,428,712 | ||||||
Research and development expenses | 285,374 | 200,402 | ||||||
Total operating expenses | 4,454,571 | 5,028,229 | ||||||
Income (loss) from operations | (1,136,692 | ) | (2,190,159 | ) | ||||
Other income (expenses): | ||||||||
Changes in fair value of investments in marketable securities | (928,955 | ) | (430,331 | ) | ||||
Changes in fair value of investment in warrants | 72,660 | (1,237,707 | ) | |||||
Interest income | 4,861 | 4,624 | ||||||
Interest expenses | (61,798 | ) | (73,701 | ) | ||||
Other income | 56,920 | 134,874 | ||||||
Other expenses | (29,797 | ) | (49,050 | ) | ||||
Total other income (expenses) | (886,109 | ) | (1,651,291 | ) | ||||
Income (loss) before income tax expense (benefit) | (2,022,801 | ) | (3,841,450 | ) | ||||
Income tax expense (benefit) | 53,074 | (152,330 | ) | |||||
Net income (loss) | (2,075,875 | ) | (3,689,120 | ) | ||||
Less: net loss attributable to non-controlling interests | (88,785 | ) | (404,670 | ) | ||||
Net income (loss) attributable to HeartCore Enterprises, Inc. | (1,987,090 | ) | (3,284,450 | ) | ||||
Dividends accrued on Series A convertible preferred shares | (611 | ) | - | |||||
Net income (loss) attributable to HeartCore Enterprises, Inc. common shareholders | $ | (1,987,701 | ) | $ | (3,284,450 | ) | ||
Other comprehensive income (loss): | ||||||||
Foreign currency translation adjustment | 48,038 | (13,825 | ) | |||||
Total comprehensive income (loss) | (2,027,837 | ) | (3,702,945 | ) | ||||
Less: comprehensive loss attributable to non-controlling interests | (89,935 | ) | (412,471 | ) | ||||
Comprehensive income (loss) attributable to HeartCore Enterprises, Inc. | $ | (1,937,902 | ) | $ | (3,290,474 | ) | ||
Net income (loss) per common share attributable to HeartCore Enterprises, Inc. | ||||||||
Basic | $ | (0.09 | ) | $ | (0.16 | ) | ||
Diluted | $ | (0.09 | ) | $ | (0.16 | ) | ||
Weighted average common shares outstanding | ||||||||
Basic | 22,072,324 | 20,859,429 | ||||||
Diluted | 22,072,324 | 20,859,429 | ||||||
HeartCore Enterprises, Inc. | |||||||
Unaudited Consolidated Statements of Cash Flows | |||||||
For the six months ended June 30, | |||||||
2025 | 2024 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (2,075,875 | ) | $ | (3,689,120 | ) | |
Adjustments to reconcile net loss to net cash flows | |||||||
used in operating activities: | |||||||
Depreciation and amortization expenses | 42,437 | 374,946 | |||||
Loss on disposal of property and equipment | 117,305 | 1,894 | |||||
Amortization of debt issuance costs | 2,194 | 2,296 | |||||
Non-cash lease expense | 163,354 | 182,546 | |||||
Gain on termination of lease | (9,059 | ) | (469 | ) | |||
Deferred income taxes | 28,008 | (153,531 | ) | ||||
Stock-based compensation | 60,204 | 147,754 | |||||
Changes in fair value of investments in marketable securities | 928,955 | 430,331 | |||||
Changes in fair value of investment in warrants | (72,660 | ) | 1,237,707 | ||||
Gain on settlement of asset retirement obligations | (45,873 | ) | - | ||||
Changes in assets and liabilities: | |||||||
Accounts receivable | (1,145,166 | ) | (823,402 | ) | |||
Prepaid expenses | 126,001 | 158,110 | |||||
Other assets | 182,063 | (7,526 | ) | ||||
Accounts payable and accrued expenses | (320,566 | ) | 272,375 | ||||
Accounts payable and accrued expenses - related party | (23,386 | ) | 21,956 | ||||
Accrued payroll and other employee costs | 31,589 | (278,361 | ) | ||||
Due to related parties | (370 | ) | (1,246 | ) | |||
Operating lease liabilities | (159,030 | ) | (183,047 | ) | |||
Income tax payables | (108,943 | ) | (152,697 | ) | |||
Deferred revenue | (282,704 | ) | 165,073 | ||||
Other liabilities | (113,370 | ) | 558,667 | ||||
Net cash flows used in operating activities | (2,674,892 | ) | (1,735,744 | ) | |||
Cash flows from investing activities: | |||||||
Purchases of property and equipment | (1,235 | ) | (4,134 | ) | |||
Prepayment for property and equipment | - | (35,209 | ) | ||||
Purchase of investment in SAFE | - | (75,000 | ) | ||||
Net proceeds from sale of warrants | - | 5,640,000 | |||||
Proceeds from sale of marketable securities | 1,071,732 | - | |||||
Repayment of loan provided to related party | 21,139 | 21,166 | |||||
Net cash flows provided by investing activities | 1,091,636 | 5,546,823 | |||||
Cash flows from financing activities: | |||||||
Payments for finance leases | (8,375 | ) | (8,526 | ) | |||
Proceeds from short-term debt | 134,689 | 68,138 | |||||
Repayment of short-term and long-term debts | (395,495 | ) | (281,451 | ) | |||
Repayment of insurance premium financing | (65,257 | ) | (60,201 | ) | |||
Net proceeds from factoring arrangement | 53,818 | - | |||||
Net repayment of factoring arrangement | - | (242,008 | ) | ||||
Capital contribution from non-controlling shareholder | - | 67,195 | |||||
Distribution of dividends | - | (417,283 | ) | ||||
Proceeds from issuance of common shares | 30,445 | - | |||||
Proceeds from collection of subscription receivable | 103,942 | - | |||||
Proceeds from exercise of stock options | 117,000 | - | |||||
Proceeds from issuance of Series A convertible preferred shares and common shares related to securities purchase agreement, net of share issuance costs | 1,800,000 | - | |||||
Net cash flows provided by (used in) financing activities | 1,770,767 | (874,136 | ) | ||||
Effect of exchange rate changes | 39,022 | (143,073 | ) | ||||
Net change in cash and cash equivalents | 226,533 | 2,793,870 | |||||
Cash and cash equivalents - beginning of the period | 2,121,089 | 1,012,479 | |||||
Cash and cash equivalents - end of the period | $ | 2,347,622 | $ | 3,806,349 | |||
- | |||||||
Supplemental cash flow disclosures: | |||||||
Interest paid | $ | 63,320 | $ | 74,063 | |||
Income taxes paid | $ | 131,118 | $ | 117,524 | |||
Non-cash investing and financing transactions: | |||||||
Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | 23,495 | $ | 125,735 | |||
Insurance premium financing | $ | 139,500 | $ | 172,689 | |||
Warrants converted to marketable securities | $ | - | $ | 223,481 | |||
Issuance of common shares related to equity purchase agreement | $ | 250,000 | $ | - | |||
Dividends accrued on Series A convertible preferred shares | $ | 611 | $ | - | |||