MICT, Inc. Reports Strong Performance and Achievement of Major Milestones, Including Revenue Growth of More Than 50% Quarter-over-Quarter and Launch of the Magpie Stock Trading App
Management to Conduct Conference Call Today,
Q3 2021 Highlights and Recent Developments
- Insurance business revenues increased to
$18.5 million , up 50% over the second quarter, driven primarily from B2B sales - Gross profit increased to
$2.7 million , up 312% over the second quarter - Non-GAAP net loss was
$3.1 million , down from$8.9 million for Q2 - Company obtained further licences, allowing it to distribute insurance products nationwide for B2B, and for the first time B2B2C and B2C
- Subsidiary,
Magpie Securities , launched its first product in September, the Magpie mobile stock trading app - As of
September 30, 2021 , cash position was approximately$105 million
“Since obtaining our nationwide license in February, we have increased our holding of local licenses, to the extent we are now in around 130 major cities and provinces, which allow us to process insurance business in almost all of the developed regions in
“In addition, we are in ongoing discussions with a number of nationwide organizations that, if concluded, should enable us to launch several more specialist insurance products to be offered on a nationwide basis. We are very excited about the progress we have made in our insurance business and its future growth prospects, and whilst we expect recent pressures on commission levels in the automotive insurance sector to impact on our short-term rate of growth, this should be largely offset by the strong underlying performance of our platform and our revenue growth from other insurance products.
“Further, the combination of a rapidly expanding insuree database (currently estimated to be more than 0.5 million), together with a strong portfolio of licenses with nationwide coverage, and a growing range of insurance products, places us in a strong position and allows us to benefit from the strategic advantages we have gained. This, as well as our migration towards higher margin products sold, through higher margin channels, provides us confidence as we move towards year end and into 2022.
“On
“Notwithstanding the narrow scope of our initial marketing plan, the number of new client registrations and app downloads to date has been promising. The technological performance and functionality of the Magpie app has been enhanced considerably since launch, as we work towards our aim of delivering a superior market leading product. Having observed the marked progress achieved to date, management believes it is now the right time for a significant marketing push as we look to gain a sizeable market share.
“In dealing with the market speculation surrounding the introduction of new regulation with regard to onboarding clients resident in mainland
“Further, Magpie’s upcoming ability to onboard overseas clients, anticipated to begin at end of November, fits with our strategy to target the Chinese diaspora initially in
“With regard to our commodities platform, which, as previously disclosed, has been ready to launch since early September, we had signed an agreement to launch in partnership with one of China’s leading commodity exchanges. As a result of the extreme volatility in oil and gas prices since September, together with the Chinese government’s introduction of new regulation (which is ongoing) our partner, to whom we are reliant, wishes to seek clarification around the new regulation and see a return to normal market conditions before they proceed with the launch. In this regard, both we and our partners are currently monitoring the situation and will keep it under review.
“Importantly, none of our published financial forecasts include revenue from our commodity business, and therefore any elongation of timelines does not adversely impact the revenues nor earnings figures contained in such projections.
“I am pleased to say that we continue to have a strong balance sheet with approximately
“We are very proud and excited about the progress we have made in Q3, where the foundations and key ingredients for our continued growth have been significantly strengthened. Both our insurance and stock trading businesses are in the nascent stage of development, but already achieving impressive growth in customer registrations and the Company as a whole is generating growing revenues.
Q3 2021 Financial Review
- Revenue in the third quarter was
$18.5 million versus$12.3 million in the prior quarter and$0 in the year-ago period. The Q/Q increase over Q2 was primarily attributable to continued growth in B2B insurance sales, which grew by more than 50% - Gross profit was
$2.7 million in Q3, representing an increase of >312% versus Q2 figure of$0.7 million . Gross margin improved significantly in Q3 to 14.8% from 5.4% in Q2 as the Company reduced its reliance on commission rebates and price incentives to attract new brokers and customers - R&D expenditure in Q3 was
$0.40 million compared to$0.39 million in Q2, as the Company continued to invest in the development of its technology. - Selling & marketing expenses amounted to
$1.5 million in Q3, up marginally from$1.4 million in Q2 - General and administrative expenses fell significantly in Q3 to
$6.6 million from$14.9 million in Q2. The Q3 G&A expenditure included >$1.6m of non-cash costs. - The Net Loss for Q3 was
$5.3 million , representing a significant improvement over the Net Loss for Q2 of$18.4 million . - The Non-GAAP Net Loss for Q3 was
$3.1 million , down from$8.9 million for Q2 - As of
September 30, 2021 , the cash position was approximately$105 million
Conference Call to be Held
Participants are asked to pre-register for the call through the following link: https://dpregister.com/sreg/10162012/efb1f72c34.
Please note that registered participants will receive their dial in number upon registration and will dial directly into the call without delay. Those without internet access or unable to pre-register may dial in by calling: 1-833-953-2437 (domestic) or 1-412-317-5766 (international). All callers should dial in approximately 10 minutes prior to the scheduled start time and ask to be joined into the
The conference call will also be available through a live webcast found here: https://services.choruscall.com/mediaframe/webcast.html?webcastid=ZCUhlrFf.
A webcast replay of the call will be available here approximately one hour after the end of the call through
About MICT, Inc.
Forward-looking Statement
This press release contains express or implied forward-looking statements within the Private Securities Litigation Reform Act of 1995 and other
Contact information:
Tel: (201) 225-0190
[email protected]
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(USD In Thousands, Except Share and Par Value Data)
2021 |
2020 |
|||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 105,289 | $ | 29,049 | ||||
Trade accounts receivable, net | 20,644 | 523 | ||||||
Inventories | - | 2,002 | ||||||
Other current assets | 10,214 | 1,756 | ||||||
Related parties | 2,167 | - | ||||||
Held for sales assets | - | 350 | ||||||
Total current assets | 138,314 | 33,680 | ||||||
Property and equipment, net | 631 | 417 | ||||||
Intangible assets, net | 18,808 | 17,159 | ||||||
19,788 | 22,405 | |||||||
Investment and loan to Magpie (formerly: Huapei) | - | 3,038 | ||||||
Right-of-use assets | 2,657 | 291 | ||||||
Long-term deposit and prepaid expenses | 188 | 266 | ||||||
Micronet Ltd. equity method investment | 1,764 | - | ||||||
Restricted cash escrow | - | 477 | ||||||
Total long-term assets | 43,836 | 44,053 | ||||||
Total assets | $ | 182,150 | $ | 77,733 |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(USD In Thousands, Except Share and Par Value Data)
2021 |
2020 |
|||||||
LIABILITIES AND EQUITY | ||||||||
Current maturity of long term bank loans | $ | - | $ | 884 | ||||
Trade accounts payable | 18,520 | 838 | ||||||
Related party | - | 163 | ||||||
Lease liabilities- current portion | 1,573 | |||||||
Other current liabilities | 5,241 | 5,102 | ||||||
Total current liabilities | 25,334 | 6,987 | ||||||
Long term escrow | - | 477 | ||||||
Lease liabilities | 1,132 | 164 | ||||||
Deferred tax liabilities | 3,323 | 4,256 | ||||||
Accrued severance pay | 54 | 153 | ||||||
Total long-term liabilities | 4,509 | 5,050 | ||||||
Total liabilities | 29,843 | 12,037 | ||||||
Stockholders’ Equity: | ||||||||
Common stock; |
122 | 68 | ||||||
Additional paid in capital | 220,660 | 102,333 | ||||||
Capital reserve related to transaction with the minority shareholder | - | (174 | ) | |||||
Accumulated other comprehensive loss | (323 | ) | (196 | ) | ||||
Accumulated deficit | (68,151 | ) | (39,966 | ) | ||||
152,308 | 62,065 | |||||||
Non-controlling interests | (1 | ) | 3,631 | |||||
Total equity | 152,307 | 65,696 | ||||||
Total liabilities and equity | $ | 182,150 | $ | 77,733 |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(USD In Thousands, Except Share and Earnings Per Share Data)
Nine months ended |
Three months ended |
|||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Net revenues | $ | 39,791 | $ | 349 | $ | 18,515 | $ | 349 | ||||||||
Cost of revenues | 34,436 | 347 | 15,769 | 347 | ||||||||||||
Gross profit | 5,355 | 2 | 2,746 | 2 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 1,015 | 230 | 396 | 230 | ||||||||||||
Selling and marketing | 3,874 | 69 | 1,521 | 69 | ||||||||||||
General and administrative | 26,039 | 6,337 | 6,618 | 4,899 | ||||||||||||
Amortization of intangible assets | 2,301 | 820 | 732 | 820 | ||||||||||||
Total operating expenses | 33,229 | 7,456 | 9,267 | 6,018 | ||||||||||||
Loss from operations | (27,874 | ) | (7,454 | ) | (6,521 | ) | (6,016 | ) | ||||||||
Gain (loss) from equity investment | 636 | (786 | ) | 799 | - | |||||||||||
Other income (expenses), net | 70 | 138 | (13 | ) | 138 | |||||||||||
Financial income (expenses), net | 61 | (8,803 | ) | 336 | (8,960 | ) | ||||||||||
Gain (loss) of control in equity investment held in Micronet | (1,934 | ) | 665 | - | - | |||||||||||
Income (loss) before provision for income taxes | (29,041 | ) | (16,240 | ) | (5,399 | ) | (14,838 | ) | ||||||||
Tax benefit | (410 | ) | (219 | ) | (70 | ) | (225 | ) | ||||||||
Net loss | (28,631 | ) | (16,021 | ) | (5,329 | ) | (14,613 | ) | ||||||||
Net loss attributable to non-controlling interests | (446 | ) | (462 | ) | (1 | ) | (462 | ) | ||||||||
Net loss attributable to |
$ | (28,185 | ) | $ | (15,559 | ) | $ | (5,328 | ) | $ | (14,151 | ) | ||||
Loss per share attributable to |
||||||||||||||||
Basic | $ | (0.26 | ) | $ | (1.03 | ) | $ | (0.05 | ) | $ | (0.61 | ) | ||||
Diluted | $ | (0.26 | ) | $ | (1.03 | ) | $ | (0.05 | ) | $ | (0.61 | ) | ||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 109,222,674 | 15,048,644 | 121,419,308 | 22,832,683 | ||||||||||||
Diluted | 109,222,674 | 15,048,644 | 121,419,308 | 22,832,683 |
The accompanying notes are an integral part of the unaudited condensed consolidated financial statements
Non-GAAP Financial Measures
In addition to providing financial measurements based on generally accepted accounting principles in the
Management believes that these non-GAAP financial measures reflect our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in our business, as they exclude expenses and gains that are not reflective of our ongoing operating results. Management also believes that these non-GAAP financial measures provide useful information to investors in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.
The non-GAAP financial measures do not replace the presentation of our GAAP financial results and should only be used as a supplement to, not as a substitute for, our financial results presented in accordance with GAAP.
The non-GAAP adjustments, and the basis for excluding them from non-GAAP financial measures, are outlined below:
● | Amortization of acquired intangible assets - We are required to amortize the intangible assets, included in our GAAP financial statements, related to the Transaction and the Acquisition. The amount of an acquisition’s purchase price allocated to intangible assets and term of its related amortization are unique to these transactions. The amortization of acquired intangible assets are non-cash charges. We believe that such charges do not reflect our operational performance. Therefore, we exclude amortization of acquired intangible assets to provide investors with a consistent basis for comparing pre- and post-transaction operating results. | |
● | Expenses related to the settlement agreements - These expenses relate to a settlement agreement as described in part III -Item 1. Legal Proceedings of this reports. We believe that these expenses do not reflect our operational performance. Therefore, we exclude them to provide the investors with a consistent basis for comparing pre- and post-transaction operating results. | |
● | Stock-based compensation - is share based awards granted to certain individuals. They are non-cash and affected by our historical stock prices which are irrelevant to forward-looking analyses and are not necessarily linked to our operational performance. | |
● | Options-based compensation – Refers to compensation components which includes stock options awards granted to certain employees, officers, directors or consultants of the Company. This is a non cash personal compensation component for our employees, officers, directors or consultants and its cost to the Company is calculated based on B&S. This these costs attributed to the grant of stock options are irrelevant to the forward-looking analyses and are not necessarily linked to our operational performance. |
The following table reconciles, for the periods presented, GAAP net loss attributable to
Nine months ended |
||||||||
(Dollars in Thousands, other than share and per share amounts) |
||||||||
2021 | 2020 | |||||||
GAAP net loss attributable to |
$ | (28,185 | ) | $ | (15,559 | ) | ||
Amortization of acquired intangible assets | 2,301 | 778 | ||||||
Expenses related to settlement agreements | 566 | - | ||||||
Expenses related to beneficial conversion feature expense | - | 8,482 | ||||||
Expenses related to purchase of a business | - | 1,295 | ||||||
Options- based compensation | 585 | - | ||||||
Stock-based compensation | 9,869 | 2,675 | ||||||
Income tax-effect of above non-GAAP adjustments | (604 | ) | (199 | ) | ||||
Total Non-GAAP net loss attributable to |
$ | (15,468 | ) | $ | (2,528 | ) | ||
Non-GAAP net loss per diluted share attributable to |
$ | (0.15 | ) | $ | (0.16 | ) | ||
Weighted average common shares outstanding used in per share calculations | 109,222,674 | 15,048,644 | ||||||
GAAP net loss per diluted share attributable to |
$ | (0.26 | ) | $ | (1.03 | ) | ||
Weighted average common shares outstanding used in per share calculations | 109,222,674 | 15,048,644 |
Three months ended |
||||||||
(Dollars in Thousands, other than share and per share amounts) |
||||||||
2021 | 2020 | |||||||
GAAP net loss attributable to |
$ | (5,328 | ) | $ | (14,151 | ) | ||
Amortization of acquired intangible assets | 733 | 788 | ||||||
Expenses related to beneficial conversion feature expense | - | 8,482 | ||||||
Expenses related to purchase of a business | - | 935 | ||||||
Expenses related to settlement agreements | 34 | - | ||||||
Options- based compensation | 127 | - | ||||||
Stock-based compensation | 1,501 | 2,584 | ||||||
Income tax-effect of above non-GAAP adjustments | (190 | ) | (199 | ) | ||||
Total Non-GAAP net loss attributable to |
$ | (3,123 | ) | $ | (1,561 | ) | ||
Non-GAAP net loss per diluted share attributable to |
$ | (0.03 | ) | $ | (0.07 | ) | ||
Weighted average common shares outstanding used in per share calculations | 121,419,308 | 22,832,683 | ||||||
GAAP net loss per diluted share attributable to |
$ | (0.05 | ) | $ | (0.61 | ) | ||
Weighted average common shares outstanding used in per share calculations | 121,419,308 | 22,832,683 |
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