HeartCore 2025 Q3 Earnings Net Income Plummets 96.8% Amid Revenue Collapse

HeartCore (HTCR) reported Q3 2025 earnings marked by a sharp decline in revenue and net income. The company’s results significantly underperformed expectations, with a 96.2% drop in EPS to $0.02 and a 96.8% decline in net income to $351,175. The guidance remains unadjusted, reflecting ongoing strategic shifts and operational challenges.

Revenue

HeartCore’s Q3 revenue plummeted 81.6% to $2.99 million, driven by the absence of a prior-year $13 million signature warrant payment from a Go IPO deal. Software development services generated $9,008, while customized software and consulting services contributed $1.74 million and $1.24 million, respectively. The steep decline underscores the company’s pivot away from its former business segments.

Earnings/Net Income

The company’s EPS nose-dived 96.2% to $0.02, and net income contracted 96.8% to $351,175, reflecting a dramatic erosion of profitability. This performance highlights the risks of relying on one-off revenue streams and underscores the challenges of transitioning to a new business model.

Post-Earnings Price Action Review

The strategy of buying HeartCore shares on revenue beat announcements and holding for 30 days showed inconsistent results. In 2024, a 19.34% revenue increase led to a 10.2% gain, but 2025’s revenue beat coincided with a 13.4% loss amid broader market volatility. Success hinged on investor sentiment and macroeconomic conditions, with 2025’s negative reaction likely tied to economic uncertainty and company-specific headwinds. This lack of consistency suggests the strategy may not reliably generate returns for HeartCore or similar stocks.

CEO Commentary

CEO Sumitaka Kanno emphasized the strategic shift to Go IPO consulting services following the divestiture of HeartCore Japan. He highlighted 16 signed Go IPO contracts, one client’s Nasdaq listing, and optimism about Korean client discussions. The pivot is framed as transformative, with cost reductions and a one-time shareholder distribution aimed at improving operating efficiency.

Guidance

HeartCore anticipates growth in its Go IPO business, including new client onboarding and listings, with a second client expected to trade soon. The CEO aims to leverage Korea seminar momentum and maintain Japanese demand. However, no specific revenue or EPS guidance was provided, reflecting the early stage of this strategic transition.

Additional News

HeartCore executed an all-cash divestiture of its software subsidiary, HeartCore Co., Ltd., reclassifying it as discontinued operations under US GAAP. This move funded a one-time $0.38 million distribution to shareholders and redirected focus to its Go IPO consulting services. The company also disclosed a $1.5 million cash balance as of September 30, 2025, and a pro forma $2.5 million balance post-distribution. Management remains assessing strategic alternatives for Sigmaways, another subsidiary, to enhance bottom-line performance.