HeartCore Reports First Quarter 2025 Financial Results

Rhea-AI Summary

HeartCore Enterprises (NASDAQ: HTCR) reported its Q1 2025 financial results, showing significant challenges. Revenue decreased to $3.6 million from $5.0 million year-over-year, while net loss widened to $3.1 million from $1.5 million. The company's gross profit declined to $1.1 million from $2.0 million, though operating expenses improved 14% to $2.3 million.

The company's cash position weakened to $0.7 million as of March 31, 2025, down from $2.1 million at the end of 2024. Despite challenges, HeartCore announced strategic initiatives including a partnership with NEC Solutions Innovators, established a new business development team for its CMS business, and plans to expand its Go IPO consulting business into South Korea with a seminar scheduled for September 2025.

The decline in performance was attributed to decreased on-premise software revenue, reduced customized software development, and absence of new IPO consulting orders. The company's subsidiary Sigmaways showed improvement in cost reduction efforts.

[ "Operating expenses decreased 14% to $2.3 million YoY", "Strategic partnership established with NEC Solutions Innovators", "Sigmaways subsidiary showed progress in reducing costs and narrowing losses", "New business development team created to strengthen CMS customer success", "Planned expansion of Go IPO consulting business into South Korea" ]

Positive

• None.

Negative

• Revenue declined 28% YoY to $3.6 million
• Net loss widened to $3.1 million from $1.5 million YoY
• Gross profit decreased to $1.1 million from $2.0 million YoY
• Cash and cash equivalents dropped to $0.7 million from $2.1 million in Q4 2024
• No new IPO consulting orders received in Q1 2025
• Balance sheet deficit due to decline in value of SBC Medical Group shares

Insights

Financial Analyst

HeartCore reports deteriorating financial performance with revenue down 28%, widening net losses, and rapidly diminishing cash reserves.

HeartCore's Q1 2025 results reveal concerning financial deterioration across multiple metrics. Revenue declined 28% year-over-year to $3.6 million, driven by weaknesses in three core segments: on-premise software, customized development services (via subsidiary Sigmaways), and their Go IPO consulting business, which notably secured zero new orders during the quarter.

The company's gross profit fell 45% to $1.1 million, indicating significant margin compression despite a 14% reduction in operating expenses. Most alarming is their cash position, which has plummeted 67% in just three months from $2.1 million (December 2024) to $0.7 million (March 2025). At the current cash burn rate, this raises serious liquidity concerns without immediate revenue improvement or capital injection.

The net loss more than doubled to $3.1 million compared to a $1.5 million loss in Q1 2024, and the adjusted EBITDA loss widened to $1.3 million from $0.3 million. Management attributes part of the balance sheet deficit to holding depreciated SBC Medical Group shares rather than operational issues, suggesting these assets could be liquidated if needed. The company is banking on revenue from clients expected to IPO in 2025 and expansion into South Korea, but with the company's South Korea seminar delayed to September 2025, these initiatives appear to be behind schedule.

While Sigmaways is narrowing losses, the overall trajectory remains negative, with no clear timeline for reversing the downward financial trend. The newly established business development team focused on CMS customer success may help with retention but doesn't address the immediate revenue and cash concerns facing the company.

NEW YORK and TOKYO, May 15, 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 first quarter ended March 31, 2025.

First Quarter 2025 and Recent Operational & Financial Highlights

• Announced strategic partnership with NEC Solutions Innovators, Ltd. to enhance CMS implementation process
• Established new business development team aimed at strengthening customer success across HeartCore’s CMS business
• Announced plans to expand the Go IPO consulting business into South Korea. The Company adjusted its scheduled South Korea IPO seminar event to September 2025
  

Management Commentary
HeartCore CEO Sumitaka Kanno commented: “We continued to make meaningful strategic advancements across our software business this quarter, the cornerstone of HeartCore Enterprises. Building on the foundational improvements implemented last year, we launched a dedicated business development team this past quarter focused on strengthening customer success initiatives to better serve our CMS customers and maintain our strong retention rate. Our subsidiary Sigmaways has also made encouraging progress in reducing costs and has narrowed its losses compared to the same period last year. We will continue to closely monitor and prudently manage costs across Sigmaways’ operations. The deficit on our balance sheet this quarter does not directly reflect the performance of our core business but is rather attributable to the SBC Medical Group shares we hold. The subsequent decline in their stock price has ultimately reduced the value of the assets held by HeartCore. Nevertheless, these shares continue to offer additional liquidity options if needed. Furthermore, a few of our Go IPO clients are expected to begin trading in 2025, which will in turn provide us with additional equity in these companies following their listings. With our upcoming South Korea IPO seminar scheduled for September, we are preparing our efforts to expand our footprint beyond Japan into new APAC regions. We look forward to announcing incremental updates across both businesses throughout the rest of the year.”  

First Quarter 2025 Financial Results
Revenues were $3.6 million compared to $5.0 million in the same period last year. The decrease was primarily due to decreased on-premise software revenue, decreased customized software development and services revenue attributed to the business slowdown of Sigmaways, and decreased Go IPO consulting services revenue as no new IPO consulting orders were entered this quarter.

Gross profit was $1.1 million compared to $2.0 million in the same period last year. The decrease was primarily due to a decrease of gross profit from on-premises software and Go IPO consulting services.

Operating expenses decreased 14% to $2.3 million, compared to $2.7 million in the same period last year. The improvement was primarily due to a decrease in general and administrative expenses.

Net loss was $3.1 million, compared to $1.5 million in the same period last year, as a result of the aforementioned decrease in revenue and gross profit for the quarter.

Adjusted EBITDA for the year totaled a loss of $1.3 million, compared to a loss of $0.3 million in the same period last year.

As of March 31, 2025, the Company had cash and cash equivalents of $0.7 million, compared to $2.1 million on December 31, 2024.

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 IPO^SM 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, impairment of intangible asset, and impairment of goodwill.

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 U.S. GAAP.

Management believes that this 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.

Item	FY25 Q1	FY24 Q1
Net Loss	-$3.1 million	-$1.5 million
(+) Depreciation and amortization expense	$0.0 million	$0.2 million
(+) Changes in fair value of investments in marketable securities	$1.8 million	$0.2 million
(+) Changes in fair value of investment in warrants	$0.1 million	$0.7 million
(+) Interest income	$0.0 million	$0.0 million
(+) Interest expenses	$0.0 million	$0.0 million
Adjusted EBITDA	-$1.3 million	-$0.3 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
			March 31,			December 31,
			2025			2024
			(Unaudited)
	ASSETS
	Current assets:
	Cash and cash equivalents	$	738,984		$	2,121,089
	Accounts receivable		2,114,655			1,950,050
	Investments in marketable securities		2,251,276			4,495,703
	Prepaid expenses		537,970			458,839
	Current portion of long-term note receivable		100,000			100,000
	Due from related party		42,453			40,139
	Other current assets		278,961			251,545
	Total current assets		6,064,299			9,417,365
	Non-current assets:
	Accounts receivable, non-current		694,302			752,930
	Property and equipment, net		438,243			584,854
	Operating lease right-of-use assets		1,830,486			1,936,097
	Long-term investment in warrants		526,165			577,786
	Long-term note receivable		100,000			100,000
	Deferred tax assets		115,802			152,300
	Security deposits		325,441			307,996
	Long-term loan receivable from related party		120,459			123,928
	Other non-current assets		7,810			11,778
	Total non-current assets		4,158,708			4,547,669
	Total assets	$	10,223,007		$	13,965,034
	LIABILITIES AND SHAREHOLDERS' EQUITY
	Current liabilities:
	Accounts payable and accrued expenses	$	1,839,759		$	2,039,323
	Accounts payable and accrued expenses - related party		22,814			47,199
	Accrued payroll and other employee costs		517,436			675,502
	Due to related parties		239			932
	Short-term debt		134,689			-
	Short-term debt - related party		75,000			75,000
	Current portion of long-term debts		367,871			401,255
	Insurance premium financing		127,567			16,626
	Factoring liability		127,053			172,394
	Operating lease liabilities, current		279,840			371,951
	Finance lease liabilities, current		16,932			15,956
	Income tax payables		739,450			822,014
	Deferred revenue		1,437,248			1,876,490
	Other current liabilities		1,009,373			907,080
	Total current liabilities		6,695,271			7,421,722
	Non-current liabilities:
	Long-term debts		1,166,678			1,238,813
	Operating lease liabilities, non-current		1,600,977			1,614,996
	Finance lease liabilities, non-current		41,854			43,593
	Other non-current liabilities		117,940			183,895
	Total non-current liabilities		2,927,449			3,081,297
	Total liabilities		9,622,720			10,503,019
	Shareholders' equity:
	Preferred shares ($0.0001 par value, 20,000,000 shares authorized, no shares issued and outstanding as of March 31, 2025 and December 31, 2024)		-			-
	Common shares ($0.0001 par value, 200,000,000 shares authorized; 22,075,333 and 21,937,987 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively)		2,207			2,193
	Subscription receivable		-			(103,942	)
	Additional paid-in capital		20,835,864			20,656,153
	Accumulated deficit		(19,331,835	)		(16,244,843	)
	Accumulated other comprehensive income		334,685			343,936
	Total HeartCore Enterprises, Inc. shareholders' equity		1,840,921			4,653,497
	Non-controlling interests		(1,240,634	)		(1,191,482	)
	Total shareholders' equity		600,287			3,462,015
	Total liabilities and shareholders' equity	$	10,223,007		$	13,965,034
		��

	HeartCore Enterprises, Inc.
	Unaudited Consolidated Statements of Operations and Comprehensive Loss
			For the three months ended March 31,				For the three months ended March 31,
			2025				2024
	Revenues	$	3,587,026			$	5,046,732
	Cost of revenues		2,486,742				3,014,543
	Gross profit		1,100,284				2,032,189
	Operating expenses:
	Selling expenses		291,160				219,707
	General and administrative expenses		1,929,388				2,406,303
	Research and development expenses		123,893				89,134
	Total operating expenses		2,344,441				2,715,144
	Loss from operations		(1,244,157	)			(682,955	)
	Other income (expenses):
	Changes in fair value of investments in marketable securities		(1,781,664	)			(234,082	)
	Changes in fair value of investment in warrants		(51,621	)			(678,887	)
	Interest income		3,020				2,594
	Interest expenses		(29,133	)			(36,661	)
	Other income		35,359				97,016
	Other expenses		(12,549	)			(25,194	)
	Total other expenses		(1,836,588	)			(875,214	)
	Loss before income tax expense (benefit)		(3,080,745	)			(1,558,169	)
	Income tax expense (benefit)		56,636				(80,167	)
	Net loss		(3,137,381	)			(1,478,002	)
	Less: net loss attributable to non-controlling interests		(50,389	)			(144,652	)
	Net loss attributable to HeartCore Enterprises, Inc.	$	(3,086,992	)		$	(1,333,350	)
	Other comprehensive income (loss):
	Foreign currency translation adjustment		(8,014	)			10,295
	Total comprehensive loss		(3,145,395	)			(1,467,707	)
	Less: comprehensive loss attributable to non-controlling interests		(49,152	)			(149,563	)
	Comprehensive loss attributable to HeartCore Enterprises, Inc.	$	(3,096,243	)		$	(1,318,144	)
	Net loss per common share attributable to HeartCore Enterprises, Inc.
	Basic	$	(0.14	)		$	(0.06	)
	Diluted	$	(0.14	)		$	(0.06	)
	Weighted average common shares outstanding
	Basic		22,054,029				20,854,714
	Diluted		22,054,029				20,854,714

	HeartCore Enterprises, Inc.
	Unaudited Consolidated Statements of Cash Flows
			For the three months ended March 31,			For the three months ended March 31,
			2025			2024
	Cash flows from operating activities:
	Net loss	$	(3,137,381	)	$	(1,478,002	)
	Adjustments to reconcile net loss to net cash flows
	used in operating activities:
	Depreciation and amortization expenses		26,907			188,085
	Loss on disposal of property and equipment		117,305			-
	Amortization of debt issuance costs		1,222			1,173
	Non-cash lease expense		90,508			93,133
	Gain on termination of lease		(9,059	)		(469	)
	Deferred income taxes		43,932			(80,780	)
	Stock-based compensation		32,280			91,712
	Changes in fair value of investments in marketable securities		1,781,664			234,082
	Changes in fair value of investment in warrants		51,621			678,887
	Gain on settlement of asset retirement obligations		(45,873	)		-
	Changes in assets and liabilities:
	Accounts receivable		(14,678	)		(523,110	)
	Prepaid expenses		78,792			102,028
	Other assets		(13,759	)		(18,618	)
	Accounts payable and accrued expenses		(219,830	)		295,799
	Accounts payable and accrued expenses - related party		(24,224	)		-
	Accrued payroll and other employee costs		(178,339	)		(149,603	)
	Due to related parties		(702	)		(1,161	)
	Operating lease liabilities		(84,948	)		(90,035	)
	Income tax payables		(84,284	)		(2,387	)
	Deferred revenue		(496,079	)		(300,011	)
	Other liabilities		84,134			60,658
	Net cash flows used in operating activities		(2,000,791	)		(898,619	)
	Cash flows from investing activities:
	Net proceeds from sale of warrants		-			1,640,000
	Proceeds from sale of marketable securities		462,763			-
	Repayment of loan provided to related party		10,298			10,814
	Net cash flows provided by investing activities		473,061			1,650,814
	Cash flows from financing activities:
	Payments for finance leases		(4,071	)		(4,474	)
	Proceeds from short-term debt		134,689			68,138
	Repayment of short-term and long-term debts		(165,165	)		(207,486	)
	Repayment of insurance premium financing		(28,559	)		(14,772	)
	Net repayment of factoring arrangement		(45,341	)		(383,353	)
	Capital contribution from non-controlling shareholder		-			67,195
	Proceeds from issuance of common shares		30,445			-
	Proceeds from collection of subscription receivable		103,942			-
	Proceeds from exercise of stock options		117,000			-
	Net cash flows provide by (used in) financing activities		142,940			(474,752	)
	Effect of exchange rate changes		2,685			(70,671	)
	Net change in cash and cash equivalents		(1,382,105	)		206,772
	Cash and cash equivalents - beginning of the period		2,121,089			1,012,479
	Cash and cash equivalents - end of the period	$	738,984		$	1,219,251
			-
	Supplemental cash flow disclosures:
	Interest paid	$	22,857		$	37,098
	Income taxes paid	$	93,586		$	117,524
	Non-cash investing and financing transactions
	Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	-		$	125,735
	Insurance premium financing	$	139,500		$	172,689

FAQ

What were HeartCore's (HTCR) Q1 2025 revenue and net loss?

HeartCore reported Q1 2025 revenue of $3.6 million (down from $5.0 million YoY) and a net loss of $3.1 million (increased from $1.5 million YoY).

How much cash does HeartCore (HTCR) have as of March 2025?

HeartCore had cash and cash equivalents of $0.7 million as of March 31, 2025, down from $2.1 million at the end of December 2024.

What strategic initiatives did HeartCore (HTCR) announce in Q1 2025?

HeartCore announced a partnership with NEC Solutions Innovators, established a new business development team for CMS business, and plans to expand Go IPO consulting into South Korea with a September 2025 seminar.

Why did HeartCore's (HTCR) revenue decline in Q1 2025?

The revenue decline was due to decreased on-premise software revenue, reduced customized software development services, and no new IPO consulting orders during the quarter.

What is affecting HeartCore's (HTCR) balance sheet in Q1 2025?

The balance sheet deficit is primarily attributed to the decline in value of SBC Medical Group shares held by HeartCore.