TORONTO--(BUSINESS WIRE)--GoldMoney Inc. (TSX-V:XAU), a full-reserve and gold-based financial service and technology group today announced results for the second quarter ended September 30, 2015, disclosing the group’s first consolidated figures since the acquisition of GoldMoney. GoldMoney and BitGold continued to gain market share and expand their customer base during the quarter, establishing the Company as a leading provider of gold based savings and payments accounts.
The Company reported revenue for the period of $66.2 million, up over 2,000% from $2.8 million for the previous quarter following the July 20, 2015 acquisition of GoldMoney. Gross profit for the quarter was $1.04 million, driven primarily by the inclusion of the GoldMoney business results in the group’s financials. In pursuing an aggressive growth strategy, the Company reports adjusted non-IFRS Net loss of $2,295,941, representing an all-in user acquisition cost of $8.80 for the group, and 65% lower than the previous quarter.
"The group continued to build momentum in the quarter as we added over 260,000 customer relationships at an all-in cost of $8.80,” said Roy Sebag, CEO of GoldMoney. “This 65% reduction in net customer acquisition cost reflects the growing network effect of the BitGold service, which continues to be one of the world’s fastest growing FinTech platforms for 2015. Darrell MacMullin and his team see no indication of these trends abating as they remain focused on the upcoming launch of BitGold business accounts, invoicing, and public APIs, completing the final pillars of the ecosystem. On the GoldMoney side, our financial results reflect the first stage of cost-savings synergies and new trading system implementations, resulting in the first operating performance improvement in many quarters. The GoldMoney business is now producing cash-flow for the group and management continues to identify opportunities to increase growth and operating leverage at GoldMoney. At the group level, our figures show the prudence with which we manage our liquidity, investing in growth methodically and scaling with discipline. This reflects our belief that irrespective of the growth trajectory we are witnessing, these are still very early days for both businesses."
BitGold Exhibiting Strong Growth on All Key Metrics
| In $CAD | Q1 2016 | Q2 2016 | ||||
| Revenue | 2,856,937 | 10,460,316 | ||||
| Cost of gold sold | 2,881,186 | 10,323,261 | ||||
| Margin on sales (gain/(loss)) | (24, 249 | ) | 137,055 | |||
| Gain/(loss) on gold inventory | 37,645 | (163,225)* | ||||
| Gross margin | 13,396 | (26,170 | ) | |||
| Q1 2016 | Q2 2016 | Q1 to Q2 change | |||||||
| Number of users (#) | 62,629 | 323,034 | 260,405 | ||||||
| Transaction volume | $ | 3,479,889 | $ | 16,691,726 | $ | 13,211,837 | |||
| Gold under administration (gold grams) | 63,555 | 245,879 | 182,324 | ||||||
* Group exposure to metals prices, foreign exchange and market volatility managed in conjunction with short term investment account, see MD&A for more information
“The BitGold business exhibited strong growth in our first full quarter of operations, and with just the initial suite set of product offerings,” said Darrell MacMullin, CEO of BitGold. “Momentum is a powerful element for success with any new product offering. We are in the early stages of developing the BitGold network, but the pace at this stage is faster and more global than what I’ve experienced being part of other well-known technology launches. We will continue to grow our gold savings business globally, extend new utility into global payment offerings, and significantly expand the network distribution for consumers and businesses. We are operating in an era where change is sweeping through the financial services industry, driven by the accelerating trend of money becoming more digital, mobile, and increasingly international at all levels P2P, B2C and B2B. Using the world’s oldest and most proven asset, and best performing global money, combined with today’s advanced security and mobile-plus-cloud connectivity, we are creating a global closed-loop debit system that allows anyone to efficiently store and exchange value.”
GoldMoney Turns the Corner, Contributes Cash-Flow to Group
GoldMoney figures represent 72 days of operations*
| In $CAD | Q1 2016 | |
| Revenue | 55,787,658 | |
| Cost of sales | 55,137,331 | |
| Margin on sales (gain/(loss)) | 650,327 | |
| Fee revenue | 147,330 | |
| Gain/(loss) on precious metals inventory | 277,560 | |
| Gross margin | 1,075,217 |
GoldMoney produced an IFRS net loss of $364,887 on $55.8 million in revenue for the 72-day period since the closing of the acquisition. These figures include $530,970 in one-time garden leave and severance payments, and $199,957 in run-off technology payments that are no longer recurring. When adjusting for these legacy and transition expenses, GoldMoney was profitable and contributed cash flow to the group in its first partial quarter of consolidated operations.
Group Financial Highlights Discussion
$4,995,264 in IFRS Loss which includes $1,841,197 of non-cash charges related to stock based compensation and payments, primarily attributed to the hiring of key senior executives during the quarter. The earnings also include approximately $261,387 of legal and professional fees considered to be abnormal, or one-time expenses associated with regulatory licensing, strategic due diligence and one-time transactional maters; $530,970 in garden leave and severance payments discussed above; and $65,769 in depreciation and amortization expense.
Adjusted Non-IFRS Net Loss of $2,295,941 when excluding non-cash and one-time cash expenditures results in an all-in group customer acquisition cost of $8.80, calculated as adjusted loss divided by users acquired.
“We are very pleased with the results and trends seen in this first stage of our business, growing a globally scaleable buy-sell gold network,” said Katie Sokalsky, CFO of GoldMoney. “We do not expect our costs to rise proportionately to our customer and revenue growth and we will continue to add products and features that can increase network effect, thus lowering unit-growth costs and driving higher revenue and margin. In upcoming quarters, our results will include additional contributions and growth from new product offerings and new marketing strategies and distribution. In the BitGold business we expect to see the initial contributions from the recently launched MasterCard prepaid program before year end, with additional payment and business services in 2016, and in the GoldMoney business we will be launching Precious Metal Card products, GoldMoney Institutional Prime Services, GoldMoney Wealth Services, and new GoldMoney Insights Research Distribution to drive thought leadership in the global gold market.”
“With the first full quarter of BitGold operations now behind us, it is increasingly clear that our investment thesis was correct,” said Josh Crumb, Chief Strategy Officer. “We empower our clients by democratizing access to a permanent store of value, while currently growing a secure global network for value exchange within the regulatory system, but absent high-friction cross-border banking and transaction expenses. This quarter demonstrates to our fellow shareholders that building out our platform and investing in our customers, within a framework of long-term focused shareholder returns, have all been achieved with a very effective allocation of capital. A fortunate but not unexpected surprise is the caliber of the talent BitGold is attracting. We will continue to nurture a culture of excellence among the most talented developers, designers and operations team members.”
“Looking at what the entire team has accomplished over the past five months by any measure is outstanding,” said James Turk, Director of GoldMoney Inc. “The rapid account growth in BitGold and the turnaround in GoldMoney’s operating results are particularly noteworthy achievements. It is clear to me that the benefits from combining BitGold and GoldMoney are being realized, which is what I had hoped but also expected would happen from our transaction.”
Non-IFRS Measures
This news release contains non-IFRS financial measures, specifically Adjusted Non-IFRS Profit and Adjusted Non-IFRS Net Loss. The Corporation believes these non-IFRS financial measures will provide investors with useful supplemental information about the financial performance of its business, enables comparison of financial results between periods where certain items may vary independent of business performance, and allows 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 GoldMoney, 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. They are not recognized measures under IFRS and do not have standardized meanings prescribed by IFRS. These measures may be different from non-IFRS financial measures used by other companies, limiting its usefulness for comparison purposes. 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 Corporation's operating results.
About GoldMoney
GoldMoney Inc. is a global, full-reserve and gold-based financial services group. GoldMoney provides financial services as a trusted, limited third-party, combining the unique attributes of gold with technology-driven innovation. Through GoldMoney® the company offers precious metals custody and wealth services, trading and execution, and independent research to individual investors and institutions. Through BitGold™ the company operates a self-directed savings platform and a payments network allowing individuals and businesses to make or receive online, in-store or mobile payments. GoldMoney Inc. has over 525,000 clients from over 150 countries and $1.5 billion in client assets under administration. GoldMoney is regulated by the Jersey Financial Services Commission (JFSC) as a Money Services Business. The JFSC is the main supervisory body that oversees and regulates Jersey's large financial services industry. For more information on BitGold, visit bitgold.com. For more information on GoldMoney, visit ir.goldmoney.com.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. Neither the TSX-V nor its Regulation Services Provider (as that term is defined in the policies of the TSX-V) accepts responsibility for the adequacy of this release.
Forward-Looking Statements
This news release contains certain “forward-looking information” within the meaning of applicable Canadian securities laws that are based on expectations, estimates and projections as at the date of this news release. Any statements that involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information and are intended to identify forward-looking information. This forward-looking information is based on reasonable assumptions and estimates of management of the Company at the time it was made, and involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. Such factors include, among others: the Company’s limited operating history; future capital needs and uncertainty of additional financing; the competitive nature of the industry; unproven markets for the Company’s product offering; volatility of gold prices & public interest in gold investment; lack of regulation and customer protection; the need for the Company to manage its planned growth and expansion; the effects of product development and need for continued technology change; protection of proprietary rights; the effect of government regulation and compliance on the Company and the industry; network security risks; the ability of the Company to maintain properly working systems; foreign currency and gold trading risks; use and storage of personal information and compliance with privacy laws; use of the Company’s services for improper or illegal purposes; global economic and financial market conditions; uninsurable risks; and those risks set out in the Company’s public documents filed on www.sedar.com. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company undertakes no obligation to revise or update any forward-looking information other than as required by law.
