Sat. Feb 22nd, 2020

Goldmoney Inc. Reports Financial Results for Third Quarter 2020 – Yahoo Finance

Goldmoney Inc. Reports Financial Results for Third Quarter 2020  <font color="#6f6f6f">Yahoo Finance</font>

Goldmoney Inc. (TSX:XAU) (US:XAUMF) (“Goldmoney” or the “Company”), a precious metal financial service and technology company, today announced financial results for the third quarter ended December 31, 2019. All amounts are expressed in Canadian dollars unless otherwise noted.

  • IFRS Revenue of $108.1 million, an increase of $24.1 million (29%) Year-over-Year (“YoY”).
  • Gross Margin of $2.5 million, an improvement of $0.9 million (58%) YoY.
  • Gross Margin Percentage expanded by 31 basis points Quarter-over-Quarter (“QoQ”) from 1.97% in Q2 2020 to 2.28% in Q3 2020.
  • IFRS Gross Profit of $4.4 million, compared to $4.2 million in Q3 2019, an improvement of 5% YoY.
  • Tangible Common Equity(2) of $122.3 million, compared to $126 million at March 31, 2019
  • Currency and Precious Metal Loans totaling $23.1 million of balance sheet capital extended to users against their pledged precious metals, earning interest rates up to 4.72%.
  • Total Comprehensive Loss of $5.8 million, a $35.3 million decrease compared to Q3 2019.
  • SchiffGold Revenue increased by 26% YoY to $41.3 million. Net Income rose by 195% due to favourable precious metals prices.
  • Client Asset Under Custody increased by 14% from $1.75 billion as at March 31, 2019 to $2 billion as at December 31, 2019.
  • IFRS Consolidated Income Statement Data

     

     

     

     

     

    ($000s, except earnings per share)

    FY 2020

    FY 2019

     

    Q3

    Q2

    Q1

    Q4

    Q3

    Q2

    Revenue (1)

    108,161

    127,154

    59,116

    64,171

    84,029

    69,550

    Fee Revenue

    719

    599

    606

    591

    580

    610

    Gross margin

    2,469

    2,501

    1,517

    1,393

    1,566

    1,611

    Interest income

    461

    536

    555

    416

    448

    502

    Gross profit Excl. revaluation of precious metals inventories

    3,649

    3,633

    2,682

    2,782

    2,749

    3,092

    Gross profit Incl. revaluation of precious metals inventories(3)

    4,369

    5,636

    4,104

    2,069

    4,152

    2,182

    Fiscal Q3 2020 was a transition quarter because we crossed an important threshold in resolving several regulatory matters that have been lingering for nearly three years. Throughout this process, the Company viewed these events as non-material and within the ordinary course of business. They were headwinds to be expected given our grand ambition to make physical gold accessible to anyone, everywhere.

    Because of this guiding ethos and because we are the sector’s leader, we have been on the front lines and addressed these matters by engaging the best law firms, auditors, and regulatory experts to assist us. The costs we have incurred are approaching $10 million and have been reflected in an abnormally high ‘Professional Fees’ line-item. We have been guiding shareholders that eventually this line-item will begin to decline towards a normalized rate of a regulated public company. We believe that moment has arrived in this transition quarter. Going forward we expect a significantly reduced level of spending on regulatory matters.

    To adapt to the present regulatory environment, we have adjusted our business model in several ways. For example, we exited cryptocurrency, began charging a minimum fee, and augmented our bank-like KYC (know your customer) and AML (anti-money laundering) processes to achieve an industry-leading standard. We estimate that 70% of our payroll costs have been attributed to compliance matters, which reflects the state of financial services today.

    The good news is that we have navigated our company safely through this period, and over the past three years, our brand equity, balance sheet, revenues, and client assets have all grown to new records. We have positioned our long-term business model to deal with the regulatory realities of the day. The future of Goldmoney Inc. is not only bright for clients, but shareholders too. With this transition quarter behind us, they can begin to appreciate the long-term earnings potential of our business when adjusting for non-cash and extraordinary items.

    For example, over the past 9 months, Goldmoney Inc. has generated $14.1 million of Gross Profit on $294.4 million of Revenue vs. $10.3 million of Gross Profit on $217.4 million of Revenue one year ago. Against that Gross Profit ($24.4 million in cash generated over 18 months of operations), Goldmoney Inc. spent $8.8 million on professional fees, of which approximately 80% is attributed to the exceptional regulatory issues referred to above. Adjusting our operating performance for these and other non-cash and extraordinary line items (Stock Based Compensation, Foreign Exchange movements, Depreciation and Amortization) shows a growing business that can produce significant free cash flow (50% or more of Gross Profit).

    Further, these figures include significant R&D and capex spending on innovative ventures within the group that are expensed through the Payroll, Technology and Development Cost line items. We believe that one of these new ventures has the potential to deliver Menē Inc. like returns to the group over the next few years.

    Appreciating this picture of long-term profitability, applying appropriate multiples on such profitability in this current environment, and netting our significant tangible capital, results in a measurable intrinsic value for Goldmoney Inc.

    In conclusion, Goldmoney Inc. is well positioned to deliver long-term returns to shareholders. With this transition quarter behind us, we intend to deliver those results in the near future.

    I would like to thank our team members across five offices around the world for their hard work. It was their work and steadfast morale that has brought our company to our present position.

    I would also like to thank our clients for continuing to trust us with their hard-earned savings. While clients may no longer be able to purchase and sell cryptocurrency, buy gold with every kind of payment processor, or find Goldmoney the most convenient place to make and receive gold payments, Goldmoney remains the gold-standard in physical custody of precious metal savings outside the fractional reserve banking system. Safeguarding the assets owned by our customers is our core business, and it is ultimately the most important service we can provide.

    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.

    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 quarter ended December 31, 2019.

    Media and Investor Relations inquiries: