Damon Provides Operational Business Update and Reports FY25 Q2 Results

Rhea-AI Summary

Damon (NASDAQ: DMN) reported its FY25 Q2 results, highlighting significant strategic changes and financial improvements. The company achieved net income of $32.5 million ($2.51 per diluted share), compared to a net loss of $7.1 million in the previous year. The company launched its Damon 2.0 strategy, establishing four core revenue verticals: Data Intelligence, Personal Mobility, Licensing and Engineering Services, and Special Projects.

Key financial metrics include total cash of $789k (up from $396k), reduced total liabilities to $17.2 million (down from $52.2 million), and decreased stockholders' deficit to $974k (from $50.4 million). Operating expenses increased to $5.5 million, up from $2.2 million year-over-year. The company secured a $10 million equity line of credit and is transitioning to an asset-light partnership model.

Positive

• Net income increased significantly to $32.5 million ($2.51 per diluted share) from a loss of $7.1 million
• Total liabilities reduced by 67% to $17.2 million from $52.2 million
• Stockholders' deficit improved substantially from $50.4 million to $974k
• Secured $10 million equity line of credit financing facility

Negative

• Operating expenses increased 150% to $5.5 million from $2.2 million
• Low cash position of $789k despite improved financials
• General and administrative expenses increased to $2.1 million from $1.8 million

Insights

Financial Analyst

The Q2 FY25 results present a complex financial picture for Damon. The headline net income of $32.5 million marks a dramatic swing from last year's loss, but requires careful interpretation. This profit appears largely driven by balance sheet restructuring, particularly the significant reduction in liabilities from $52.2 million to $17.2 million, likely through debt conversion rather than operational excellence.

The company's liquidity position raises concerns. With only $789k in cash against quarterly operating expenses of $5.5 million, the burn rate suggests approximately 1.7 months of runway. While the new $10 million equity line provides a buffer, it's essentially a defensive measure rather than growth capital.

The strategic pivot to an asset-light model through partnerships represents a pragmatic approach to capital constraints. The four revenue verticals - particularly Data Intelligence and Licensing - could provide higher-margin, recurring revenue streams compared to traditional manufacturing. However, this transition period carries execution risks as the company moves from a pure electric motorcycle manufacturer to a diversified mobility technology provider.

The reduction in stockholder deficit from $50.4 million to $974k significantly improves the balance sheet optics, but investors should note this likely resulted from accounting adjustments rather than operational improvements. The 150% increase in operating expenses year-over-year, while concerning for cash burn, suggests investment in the new business model's infrastructure.

The company's strategic repositioning, while necessary, introduces new competitive dynamics and execution challenges. Success will depend on effectively monetizing intellectual property and data assets while managing the cash-intensive transition period. The immediate focus should be on demonstrating revenue generation from the new verticals to validate the business model shift.

VANCOUVER, BC, Feb. 18, 2025 /PRNewswire/ - Damon Inc. (NASDAQ: DMN) ("Damon" or the "Company"), a designer and developer of electric motorcycles and other personal mobility products that seek to empower the personal mobility sector through innovation, data intelligence and strategic partnerships, is providing this operational business update and overview of its financial results for the quarter ended December 31, 2024.

FY25 Q2 Accomplishments and Highlights:

• The Company became publicly traded on NASDAQ under the symbol DMN
  
  
• Co-founder Dominique (Dom) Kwong appointed as interim CEO and Shashi Tripathi appointed as Chairman of the Board to drive operational excellence and accelerate execution of the company's business plans
  
  
• Launched Damon 2.0 strategy focused on expanding total addressable market while accelerating and diversifying potential revenue generation through multiple channels
  
  
• Progressed to asset/capital-light partnership model to support sustainable growth strategy
  
  
• Established four core potential revenue verticals: Data Intelligence, Personal Mobility, Licensing and Engineering Services, and Special Projects
  
  
• Improved Balance Sheet position compared to prior year through conversion of convertible debt
  
  
• Secured $10 million equity line of credit financing facility

"In Q2, Damon executed pivotal strategic shifts, including key leadership transitions and the introduction of our Damon 2.0 strategy," said Dominique Kwong, interim CEO of Damon. "We've established four distinct potential revenue verticals - Data Intelligence, Personal Mobility, Licensing and Engineering Services, and Special Projects - creating multiple pathways for growth. Our proprietary safety systems and electrification technology continue to be core differentiators in the market, supported by an improved balance sheet position," continued Mr. Kwong.

"Moving forward, we're implementing an asset-light business model through strategic partnerships, bolstered by our new $10 million equity line of credit financing facility. This approach optimizes our operational efficiency while advancing our mission in mobility innovation and data intelligence. Our strategic focus on sustainable transportation solutions, combined with our diversified potential revenue streams, positions us strongly for long-term value creation," concluded Mr. Kwong.

Financial Results for FY25 Q2 (ended December 31, 2024)

Financial Performance:

• Net income in the quarter was approximately $32.5 million, or $2.51 per diluted share, compared to a net loss of $7.1 million, or $(2.76) per diluted share, in the same period last year

Cash, Financing, Liabilities:

• Total cash was $789k as at December 31, 2024 compared to $396k year ended June 30, 2024
• Total Liabilities reduced to $17.2 million as at December 31, 2024 compared to $52.2 million year ended June 30, 2024
• Stockholders' Deficit reduced to $974k as at December 31, 2024 compared to $50.4 million year ended June 30, 2024
• Financing activities after the quarter ended in the amount of $7 million compared to $8.7 million in the same period last year

Operating Performance:

• Operating expenses were approximately $5.5 million in the quarter, compared to $2.2 million in the same period last year
• General and administrative expenses were approximately $2.1 million compared to $1.8 million in the same period last year

About Damon

Damon Inc. is a designer and developer of personal mobility products and technology solutions that integrate AI-driven safety systems, smart electrification, and user-driven design to revolutionize sustainable transportation. Operating across four potential revenue verticals - Data Intelligence & Services, Engineering Services, Personal Mobility Products, and Special Projects – Damon believes it is positioned to capture a significant share of the $40B global electric two-wheeler market by 2030¹. The company distinguishes itself through its integrated ecosystem approach, combining advanced data analytics, engineering expertise, and strategic partnerships with OEMs and Tier 1 suppliers. Damon emphasizes accessible mobility solutions while leveraging its proprietary AI-driven safety systems and intelligent energy management technology to deliver superior performance and operational efficiency in the urban and business mobility space. For more information, please visit damon.com.

1 Source McKinsey Report on Micromobility (2022)

FORWARD LOOKING STATEMENTS

This press release contains forward-looking information or forward-looking statements under applicable Canadian and U.S. securities laws (collectively, "forward-looking statements") that reflect current expectations and projections of Damon Inc. ("Damon") about its future development. When used in this press release, forward-looking statements can be identified by the use of words such as "may," or by such words as "will," "intend," "believe," "estimate," "consider," "expect," "anticipate," and "objective" and similar expressions or variations of such words. Forward-looking statements are, by their nature, not guarantees of Damon's future operational or financial performance and are subject to risks and uncertainties and other factors that could cause Damon's actual results, performance, prospects, or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. No representation or warranty is intended with respect to anticipated future results, or that estimates, or projections will be sustained.

Forward-looking statements in this press release include, but are not limited to, statements relating to our strategic initiatives, revenue expansion plans, business model evolution, and expected efficiency improvements and growth.

In developing the forward-looking statements in this press release, we have applied several material assumptions, including the general business and economic conditions of the industries and countries in which Damon operates, and general market conditions. Many risks, uncertainties, and other factors could cause the actual results of Damon to differ materially from the results, performance, achievements, or developments expressed or implied by such forward-looking statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, our history of losses, our ability to implement our growth strategy and achieve profitability, our limited operating history with recent acquisitions, our ability to obtain adequate financing as needed, our ability to continue as a going concern, our status as a foreign private issuer, our ability to maintain compliance with Nasdaq's continued listing requirements, customer demand for or acceptance of our products and services, the impact of competitive or alternative products, technologies, and pricing, emerging competition and rapidly advancing technology that may outpace our own, our ability to manufacture or distribute products and secure strategic supply and manufacturing arrangements, our ability to protect our intellectual property, impact of any changes in existing or future regulatory and tax regimes applying to our business, our ability to successfully consummate strategic transactions and integrate companies or technologies we acquire, our ability to attract and retain management and employees with specialized knowledge and technical skills, our ability to develop and maintain effective internal controls, general economic conditions and events and the impact they may have on us and our customers, including but not limited to increases in inflation rates and rates of interest, supply chain challenges, increased costs for materials and labor, cybersecurity threats, and conflicts such as those in Russia/Ukraine and Israel/Hamas, our success at managing the risks involved in the foregoing items, and other risk factors discussed in our periodic and current reports and registration statements filed with the U.S. Securities and Exchange Commission and the British Columbia Securities Commission.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the press release or as of the date otherwise specifically indicated herein. Due to risks and uncertainties, events may differ materially from current expectations. Damon disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required pursuant to applicable securities law. All forward-looking statements contained in the press release are expressly qualified in their entirety by this cautionary statement. 

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SOURCE DAMON Motors Inc.

FAQ

What was Damon's (DMN) net income for Q2 FY25?

Damon reported a net income of $32.5 million ($2.51 per diluted share) for Q2 FY25, compared to a net loss of $7.1 million in the same period last year.

How much did Damon's (DMN) operating expenses increase in Q2 FY25?

Damon's operating expenses increased to $5.5 million in Q2 FY25, up from $2.2 million in the same period last year, representing a 150% increase.

What are the four revenue verticals in Damon's (DMN) 2.0 strategy?

Damon's 2.0 strategy includes four core revenue verticals: Data Intelligence, Personal Mobility, Licensing and Engineering Services, and Special Projects.

How much did Damon (DMN) reduce its total liabilities in Q2 FY25?

Damon reduced its total liabilities to $17.2 million as of December 31, 2024, down from $52.2 million at the end of June 30, 2024.

What financing facility did Damon (DMN) secure in Q2 FY25?

Damon secured a $10 million equity line of credit financing facility during Q2 FY25.