HeartCore 2025 Q1 Earnings Misses Targets Amid Net Loss Surge

HeartCore (HTCR) reported its fiscal 2025 Q1 earnings on May 15th, 2025. The company missed expectations, with earnings per share falling short of consensus estimates and net losses widening substantially. Despite the ongoing strategic initiatives, HeartCore's guidance remains unchanged, as it continues to face challenges in improving financial performance. The company's outlook stays cautious, focusing on strategic growth opportunities, particularly in expanding its consulting services into South Korea.

Revenue

HeartCore's total revenue for the first quarter of 2025 was $3.59 million, marking a decline of 28.9% compared to the same period in 2024. Among its various segments, the on-premise software division generated $334,882, while maintenance and support services contributed $567,619. The Software as a Service (SaaS) segment accounted for $172,844. Software development and other miscellaneous services brought in $425,357, and customized software development and services led the revenue streams, totaling $1.84 million. Consulting services added $245,543 to the overall revenue.

Earnings/Net Income

HeartCore's losses deepened significantly, with losses per share increasing from $0.06 in 2024 Q1 to $0.14 in 2025 Q1. The net loss widened to $3.14 million, a substantial increase from the $1.48 million loss recorded in the previous year. This reflects a concerning trend in earnings performance.

Price Action

The stock price of HeartCore has plummeted 15.52% during the latest trading day, has dropped 6.84% during the most recent full trading week, and has tumbled 13.37% month-to-date.

Post-Earnings Price Action Review

HeartCore Enterprises' strategy of buying shares when revenue beats and holding for 30 days appears risky due to the company's current financial health and market sentiment. The recent earnings report, missing the Zacks Consensus Estimate, highlighted a significant decline in profitability with an earnings surprise of -500%. The stock has underperformed the market, losing about 62.8% since the beginning of the year, while the S&P 500 gained 0.2%. HeartCore's historical performance shows only one instance of surpassing consensus EPS estimates over the last four quarters, indicating persistent challenges. The company's earnings outlook remains uncertain, with management's commentary on the earnings call being crucial for future stock movement. Investors should consider the ongoing financial losses, market performance, and lack of positive earnings surprises. A prudent approach would be to monitor HeartCore's strategic initiatives closely, though the near-term prospects appear challenging.

CEO Commentary

HeartCore CEO Sumitaka Kanno highlighted meaningful strategic advancements within the software business, emphasizing the launch of a dedicated business development team to enhance customer success initiatives for their CMS customers. He noted that despite a net loss this quarter, primarily due to SBC Medical Group shares, the performance of the core business remained strong. Kanno also mentioned that Sigmaways is making progress in cost reduction, and several Go IPO clients are expected to begin trading in 2025, providing additional equity. The outlook remains optimistic as the company prepares to expand its presence in the APAC region.

Guidance

HeartCore anticipates continued focus on strategic growth, specifically with the South Korea IPO seminar set for September 2025, which aims to expand its footprint beyond Japan. The company expects that the upcoming public listings of some Go IPO clients will enhance its equity position. Management remains committed to closely monitoring costs while exploring liquidity options related to their investment in SBC Medical Group, indicating a proactive approach toward financial management amidst current challenges.

Additional News

HeartCore Enterprises recently announced a strategic partnership with NEC Solution Innovators to enhance its CMS implementation process. This collaboration aims to integrate HeartCore's platform with NEC's system integration technology, delivering tailored CMS solutions through comprehensive client assessments and ongoing operational support. Additionally, HeartCore is set to present at the Sidoti Micro-Cap Virtual Conference on May 21-22, 2025, where CEO Sumitaka Yamamoto will deliver a webcast presentation. Lastly, HeartCore has established a new Business Development team to expand its CMS business operations, strengthening customer success and addressing growing service demands across various areas.