MICT, Inc. (Nasdaq: MICT), (the "Company"), today announced
its financial results for the third quarter ended September 30,
2021.
Q3 2021 Highlights and Recent
Developments
- Insurance business revenues
increased to $18.5 million, up 50% over the second quarter, driven
primarily from B2B sales
- Gross profit increased to $2.7
million, up 312% over the second quarter
- Non-GAAP net loss was $3.1 million,
down from $8.9 million for Q2
- Company obtained further licences,
allowing it to distribute insurance products nationwide for B2B,
and for the first time B2B2C and B2C
- Subsidiary, Magpie Securities,
launched its first product in September, the Magpie mobile stock
trading app
- As of September 30, 2021, cash
position was approximately $105 million
Darren Mercer, MICT’s Chief Executive Officer
commented, “Our insurance business, which launched in late December
2020, has already grown significantly to a revenue run-rate of $75
million per annum. To put this into context, in Q3 we achieved
revenue growth of more than 50% quarter-over-quarter, which was on
the back of a 50% quarter-over-quarter increase in Q2 compared to
Q1. Bearing in mind we remain in the early stages of developing the
insurance business, we are confident we can continue to deliver
strong growth.
“Since obtaining our nationwide license in
February, we have increased our holding of local licenses, to the
extent we are now in around 130 major cities and provinces, which
allow us to process insurance business in almost all of the
developed regions in China. As a result, we are able to start
processing business on a nearly nationwide basis and are well
positioned to develop our strategic relationships into B2B2C
partnerships, which will be followed by expansion into direct B2C
sales channels. This should enable us to cross-sell a wide range of
products with the aim of driving growth and generating higher
margins.
“In addition, we are in ongoing discussions with
a number of nationwide organizations that, if concluded, should
enable us to launch several more specialist insurance products to
be offered on a nationwide basis. We are very excited about the
progress we have made in our insurance business and its future
growth prospects, and whilst we expect recent pressures on
commission levels in the automotive insurance sector to impact on
our short-term rate of growth, this should be largely offset by the
strong underlying performance of our platform and our revenue
growth from other insurance products.
“Further, the combination of a rapidly expanding
insuree database (currently estimated to be more than 0.5 million),
together with a strong portfolio of licenses with nationwide
coverage, and a growing range of insurance products, places us in a
strong position and allows us to benefit from the strategic
advantages we have gained. This, as well as our migration towards
higher margin products sold, through higher margin channels,
provides us confidence as we move towards year end and into
2022.
“On September 15th, we launched our mobile stock
trading app on the proprietary Magpie Securities platform, which
was the culmination of nearly a year of intensive technological
development. We have managed our rollout plan carefully with an
initial focus on a test-and-learn marketing strategy, allowing us
to obtain valuable data and customer feedback so that we could make
appropriate improvements and refinements.
“Notwithstanding the narrow scope of our initial
marketing plan, the number of new client registrations and app
downloads to date has been promising. The technological performance
and functionality of the Magpie app has been enhanced considerably
since launch, as we work towards our aim of delivering a superior
market leading product. Having observed the marked progress
achieved to date, management believes it is now the right time for
a significant marketing push as we look to gain a sizeable market
share.
“In dealing with the market speculation
surrounding the introduction of new regulation with regard to
onboarding clients resident in mainland China, it is important to
note that Magpie has always been fully compliant with all
applicable rules and regulations and as such we believe these
latest changes are not of concern.
“Further, Magpie’s upcoming ability to onboard
overseas clients, anticipated to begin at end of November, fits
with our strategy to target the Chinese diaspora initially in
Southeast Asia, and thereafter expanding into other territories. To
that end, we have been exploring opportunities to acquire the
necessary licenses to operate in relevant jurisdictions and we will
keep the market appraised as to when there are meaningful
developments.
“With regard to our commodities platform, which,
as previously disclosed, has been ready to launch since early
September, we had signed an agreement to launch in partnership with
one of China’s leading commodity exchanges. As a result of the
extreme volatility in oil and gas prices since September, together
with the Chinese government’s introduction of new regulation (which
is ongoing) our partner, to whom we are reliant, wishes to seek
clarification around the new regulation and see a return to normal
market conditions before they proceed with the launch. In this
regard, both we and our partners are currently monitoring the
situation and will keep it under review.
“Importantly, none of our published financial
forecasts include revenue from our commodity business, and
therefore any elongation of timelines does not adversely impact the
revenues nor earnings figures contained in such projections.
“I am pleased to say that we continue to have a
strong balance sheet with approximately $105 million of cash as of
the end of Q3, which provides the resources needed to grow our
different verticals and execute on our business plan. Our strong
balance sheet will also assist us in making strategic acquisitions
as and when we identify suitable value accretive opportunities, to
which end our recently filed preliminary proxy statement and
proposal to increase our authorized share capital will also help us
facilitate such potential transactions in the short, medium, and
long-term horizons.
“We are very proud and excited about the
progress we have made in Q3, where the foundations and key
ingredients for our continued growth have been significantly
strengthened. Both our insurance and stock trading businesses are
in the nascent stage of development, but already achieving
impressive growth in customer registrations and the Company as a
whole is generating growing revenues.
Q3 2021 Financial Review
- Revenue in the third quarter was
$18.5 million versus $12.3 million in the prior quarter and $0 in
the year-ago period. The Q/Q increase over Q2 was primarily
attributable to continued growth in B2B insurance sales, which grew
by more than 50%
- Gross profit was $2.7 million in
Q3, representing an increase of >312% versus Q2 figure of $0.7
million. Gross margin improved significantly in Q3 to 14.8% from
5.4% in Q2 as the Company reduced its reliance on commission
rebates and price incentives to attract new brokers and
customers
- R&D expenditure in Q3 was $0.40
million compared to $0.39 million in Q2, as the Company continued
to invest in the development of its technology.
- Selling & marketing expenses
amounted to $1.5 million in Q3, up marginally from $1.4 million in
Q2
- General and administrative expenses
fell significantly in Q3 to $6.6 million from $14.9 million in Q2.
The Q3 G&A expenditure included > $1.6m of non-cash
costs.
- The Net Loss for Q3 was $5.3
million, representing a significant improvement over the Net Loss
for Q2 of $18.4 million.
- The Non-GAAP Net Loss for Q3 was
$3.1 million, down from $8.9 million for Q2
- As of September 30, 2021, the cash
position was approximately $105 million
Conference Call to be Held November 15,
2021 at 8:30AMParticipants are asked to pre-register for
the call through the following link:
https://dpregister.com/sreg/10162012/efb1f72c34.
Please note that registered participants will
receive their dial in number upon registration and will dial
directly into the call without delay. Those without internet access
or unable to pre-register may dial in by calling: 1-833-953-2437
(domestic) or 1-412-317-5766 (international). All callers should
dial in approximately 10 minutes prior to the scheduled start time
and ask to be joined into the MICT call.
The conference call will also be available
through a live webcast found here:
https://services.choruscall.com/mediaframe/webcast.html?webcastid=ZCUhlrFf.
A webcast replay of the call will be available
here approximately one hour after the end of the call through
February 15, 2022. A telephonic replay of the call will be
available through November 29, 2021 and may be accessed by calling
1-877-344-7529 (domestic) or 1-412-317-0088 (international) and
using access code 10162012.
About MICT, Inc.MICT, Inc.
(NasdaqCM: MICT) operates through its wholly-owned subsidiary, GFH
Intermediate Holdings Ltd ("GFHI"), GFHI’s various fully-owned
subsidiaries or VIE structures. GFHI's versatile proprietary
trading technology platform is designed to serve a large number of
high growth sectors in the global fintech space. Primary areas of
focus include online brokerage for equities trading and sales of
insurance products in several high-growth foreign markets including
Asia.
Forward-looking Statement
This press release contains express or implied
forward-looking statements within the Private Securities Litigation
Reform Act of 1995 and other U.S. Federal securities laws. All
statements other than statements of historical fact contained in
this press release are forward-looking statements. The words
“believe,” “may” “will,” “estimate,” “continue,” “anticipate,”
“intend,” “expect” and similar expressions, as they relate to us,
are intended to identify forward-looking statements. We have based
these forward-looking statements on our current expectations and
projections about future events and financial trends that we
believe may affect our financial condition, results of operations,
business strategy, business prospectus, growth strategy and
liquidity. Such forward-looking statements and their implications
involve known and unknown risks, uncertainties and other factors
that may cause actual results or performance to differ materially
from those projected. The forward-looking statements contained in
this press release are subject to other risks and uncertainties,
including those discussed in the “Risk Factors” section and
elsewhere in the Company’s annual report on Form 10-K for the year
ended December 31, 2020 and in subsequent filings with the
Securities and Exchange Commission. Except as otherwise required by
law, the Company is under no obligation to (and expressly disclaims
any such obligation to) update or alter its forward-looking
statements whether as a result of new information, future events or
otherwise.Contact information:
Tel: (201) 225-0190info@mict-inc.com
MICT, INC. AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS(USD In Thousands, Except Share and
Par Value Data)
|
|
September 30, 2021 |
|
|
December 31,2020 |
|
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash |
|
$ |
105,289 |
|
|
$ |
29,049 |
|
Trade accounts receivable, net |
|
|
20,644 |
|
|
|
523 |
|
Inventories |
|
|
- |
|
|
|
2,002 |
|
Other current assets |
|
|
10,214 |
|
|
|
1,756 |
|
Related parties |
|
|
2,167 |
|
|
|
- |
|
Held for sales assets |
|
|
- |
|
|
|
350 |
|
Total current assets |
|
|
138,314 |
|
|
|
33,680 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
631 |
|
|
|
417 |
|
Intangible assets, net |
|
|
18,808 |
|
|
|
17,159 |
|
Goodwill |
|
|
19,788 |
|
|
|
22,405 |
|
Investment and loan to Magpie (formerly: Huapei) |
|
|
- |
|
|
|
3,038 |
|
Right-of-use assets |
|
|
2,657 |
|
|
|
291 |
|
Long-term deposit and prepaid expenses |
|
|
188 |
|
|
|
266 |
|
Micronet Ltd. equity method investment |
|
|
1,764 |
|
|
|
- |
|
Restricted cash escrow |
|
|
- |
|
|
|
477 |
|
Total long-term assets |
|
|
43,836 |
|
|
|
44,053 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
182,150 |
|
|
$ |
77,733 |
|
The accompanying notes are an integral part of
the unaudited condensed consolidated financial statements
MICT, INC. AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS(USD In Thousands, Except Share and
Par Value Data)
|
|
September 30,2021 |
|
|
December 31,2020 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current maturity of long term bank loans |
|
$ |
- |
|
|
$ |
884 |
|
Trade accounts payable |
|
|
18,520 |
|
|
|
838 |
|
Related party |
|
|
- |
|
|
|
163 |
|
Lease liabilities- current portion |
|
|
1,573 |
|
|
|
|
|
Other current liabilities |
|
|
5,241 |
|
|
|
5,102 |
|
Total current liabilities |
|
|
25,334 |
|
|
|
6,987 |
|
|
|
|
|
|
|
|
|
|
Long term escrow |
|
|
- |
|
|
|
477 |
|
Lease liabilities |
|
|
1,132 |
|
|
|
164 |
|
Deferred tax liabilities |
|
|
3,323 |
|
|
|
4,256 |
|
Accrued severance pay |
|
|
54 |
|
|
|
153 |
|
Total long-term liabilities |
|
|
4,509 |
|
|
|
5,050 |
|
Total liabilities |
|
|
29,843 |
|
|
|
12,037 |
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
|
|
|
|
|
Common stock; $0.001 par value, 250,000,000 shares authorized,
122,435,576 and 68,757,450 shares issued and
outstanding as of September 30, 2021 and December 31, 2020,
respectively |
|
|
122 |
|
|
|
68 |
|
Additional paid in capital |
|
|
220,660 |
|
|
|
102,333 |
|
Capital reserve related to transaction with the minority
shareholder |
|
|
- |
|
|
|
(174 |
) |
Accumulated other comprehensive loss |
|
|
(323 |
) |
|
|
(196 |
) |
Accumulated deficit |
|
|
(68,151 |
) |
|
|
(39,966 |
) |
MICT, Inc. stockholders’ equity |
|
|
152,308 |
|
|
|
62,065 |
|
|
|
|
|
|
|
|
|
|
Non-controlling interests |
|
|
(1 |
) |
|
|
3,631 |
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
152,307 |
|
|
|
65,696 |
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
182,150 |
|
|
$ |
77,733 |
|
The accompanying notes are an integral part of
the unaudited condensed consolidated financial statements
MICT, INC. AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(USD In Thousands, Except
Share and Earnings Per Share Data)
|
|
Nine months
endedSeptember 30, |
|
|
Three months
endedSeptember 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
39,791 |
|
|
$ |
349 |
|
|
$ |
18,515 |
|
|
$ |
349 |
|
Cost of revenues |
|
|
34,436 |
|
|
|
347 |
|
|
|
15,769 |
|
|
|
347 |
|
Gross profit |
|
|
5,355 |
|
|
|
2 |
|
|
|
2,746 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
1,015 |
|
|
|
230 |
|
|
|
396 |
|
|
|
230 |
|
Selling and marketing |
|
|
3,874 |
|
|
|
69 |
|
|
|
1,521 |
|
|
|
69 |
|
General and
administrative |
|
|
26,039 |
|
|
|
6,337 |
|
|
|
6,618 |
|
|
|
4,899 |
|
Amortization of intangible
assets |
|
|
2,301 |
|
|
|
820 |
|
|
|
732 |
|
|
|
820 |
|
Total operating expenses |
|
|
33,229 |
|
|
|
7,456 |
|
|
|
9,267 |
|
|
|
6,018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(27,874 |
) |
|
|
(7,454 |
) |
|
|
(6,521 |
) |
|
|
(6,016 |
) |
Gain (loss) from equity
investment |
|
|
636 |
|
|
|
(786 |
) |
|
|
799 |
|
|
|
- |
|
Other income (expenses),
net |
|
|
70 |
|
|
|
138 |
|
|
|
(13 |
) |
|
|
138 |
|
Financial
income (expenses), net |
|
|
61 |
|
|
|
(8,803 |
) |
|
|
336 |
|
|
|
(8,960 |
) |
Gain (loss) of control in
equity investment held in Micronet |
|
|
(1,934 |
) |
|
|
665 |
|
|
|
- |
|
|
|
- |
|
Income (loss) before provision
for income taxes |
|
|
(29,041 |
) |
|
|
(16,240 |
) |
|
|
(5,399 |
) |
|
|
(14,838 |
) |
Tax benefit |
|
|
(410 |
) |
|
|
(219 |
) |
|
|
(70 |
) |
|
|
(225 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(28,631 |
) |
|
|
(16,021 |
) |
|
|
(5,329 |
) |
|
|
(14,613 |
) |
Net loss attributable to
non-controlling interests |
|
|
(446 |
) |
|
|
(462 |
) |
|
|
(1 |
) |
|
|
(462 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to MICT,
Inc. |
|
$ |
(28,185 |
) |
|
$ |
(15,559 |
) |
|
$ |
(5,328 |
) |
|
$ |
(14,151 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share attributable to MICT, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.26 |
) |
|
$ |
(1.03 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.61 |
) |
Diluted |
|
$ |
(0.26 |
) |
|
$ |
(1.03 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.61 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
109,222,674 |
|
|
|
15,048,644 |
|
|
|
121,419,308 |
|
|
|
22,832,683 |
|
Diluted |
|
|
109,222,674 |
|
|
|
15,048,644 |
|
|
|
121,419,308 |
|
|
|
22,832,683 |
|
The accompanying notes are an integral part of
the unaudited condensed consolidated financial statements
Non-GAAP Financial Measures
In addition to providing financial measurements
based on generally accepted accounting principles in the U.S., or
GAAP, we provide additional financial metrics that are not prepared
in accordance with GAAP, or non-GAAP financial measures. Management
uses non-GAAP financial measures, in addition to GAAP financial
measures, to understand and compare operating results across
accounting periods, for financial and operational decision making,
for planning and forecasting purposes and to evaluate our financial
performance.
Management believes that these non-GAAP
financial measures reflect our ongoing business in a manner that
allows for meaningful comparisons and analysis of trends in our
business, as they exclude expenses and gains that are not
reflective of our ongoing operating results. Management also
believes that these non-GAAP financial measures provide useful
information to investors in understanding and evaluating our
operating results and future prospects in the same manner as
management and in comparing financial results across accounting
periods and to those of peer companies.
The non-GAAP financial measures do not replace
the presentation of our GAAP financial results and should only be
used as a supplement to, not as a substitute for, our financial
results presented in accordance with GAAP.
The non-GAAP adjustments, and the basis for
excluding them from non-GAAP financial measures, are outlined
below:
|
● |
Amortization of acquired intangible assets - We
are required to amortize the intangible assets, included in our
GAAP financial statements, related to the Transaction and the
Acquisition. The amount of an acquisition’s purchase price
allocated to intangible assets and term of its related amortization
are unique to these transactions. The amortization of acquired
intangible assets are non-cash charges. We believe that such
charges do not reflect our operational performance. Therefore, we
exclude amortization of acquired intangible assets to provide
investors with a consistent basis for comparing pre- and
post-transaction operating results. |
|
|
|
|
● |
Expenses related to the settlement agreements -
These expenses relate to a settlement agreement as described in
part III -Item 1. Legal Proceedings of this reports. We believe
that these expenses do not reflect our operational performance.
Therefore, we exclude them to provide the investors with a
consistent basis for comparing pre- and post-transaction operating
results. |
|
|
|
|
● |
Stock-based compensation - is share based awards
granted to certain individuals. They are non-cash and affected by
our historical stock prices which are irrelevant to forward-looking
analyses and are not necessarily linked to our operational
performance. |
|
|
|
|
● |
Options-based compensation – Refers to
compensation components which includes stock options awards granted
to certain employees, officers, directors or consultants of the
Company. This is a non cash personal compensation component for our
employees, officers, directors or consultants and its cost to the
Company is calculated based on B&S. This these costs attributed
to the grant of stock options are irrelevant to the forward-looking
analyses and are not necessarily linked to our operational
performance. |
The following table reconciles, for the periods
presented, GAAP net loss attributable to MICT to non-GAAP net
income attributable to MICT. and GAAP loss per diluted share
attributable to MICT to non-GAAP net loss per diluted share
attributable to MICT.:
|
|
Nine months
endedSeptember 30, |
|
|
|
(Dollars in Thousands, other than share
andper share amounts) |
|
|
|
2021 |
|
|
2020 |
|
GAAP net loss attributable to
MICT, Inc. |
|
$ |
(28,185 |
) |
|
$ |
(15,559 |
) |
Amortization of acquired
intangible assets |
|
|
2,301 |
|
|
|
778 |
|
Expenses related to settlement
agreements |
|
|
566 |
|
|
|
- |
|
Expenses related to beneficial
conversion feature expense |
|
|
- |
|
|
|
8,482 |
|
Expenses related to purchase
of a business |
|
|
- |
|
|
|
1,295 |
|
Options- based
compensation |
|
|
585 |
|
|
|
- |
|
Stock-based compensation |
|
|
9,869 |
|
|
|
2,675 |
|
Income tax-effect of above
non-GAAP adjustments |
|
|
(604 |
) |
|
|
(199 |
) |
Total Non-GAAP net loss
attributable to MICT, Inc. |
|
$ |
(15,468 |
) |
|
$ |
(2,528 |
) |
|
|
|
|
|
|
|
|
|
Non-GAAP net loss per diluted
share attributable to MICT, Inc. |
|
$ |
(0.15 |
) |
|
$ |
(0.16 |
) |
Weighted average common shares
outstanding used in per share calculations |
|
|
109,222,674 |
|
|
|
15,048,644 |
|
GAAP net loss per diluted
share attributable to MICT, Inc. |
|
$ |
(0.26 |
) |
|
$ |
(1.03 |
) |
Weighted average common shares
outstanding used in per share calculations |
|
|
109,222,674 |
|
|
|
15,048,644 |
|
|
|
Three months
endedSeptember 30, |
|
|
|
(Dollars in Thousands, other than share
andper share amounts) |
|
|
|
2021 |
|
|
2020 |
|
GAAP net loss attributable to MICT, Inc. |
|
$ |
(5,328 |
) |
|
$ |
(14,151 |
) |
Amortization of acquired intangible assets |
|
|
733 |
|
|
|
788 |
|
Expenses related to beneficial conversion feature expense |
|
|
- |
|
|
|
8,482 |
|
Expenses related to purchase of a business |
|
|
- |
|
|
|
935 |
|
Expenses related to settlement agreements |
|
|
34 |
|
|
|
- |
|
Options- based compensation |
|
|
127 |
|
|
|
- |
|
Stock-based compensation |
|
|
1,501 |
|
|
|
2,584 |
|
Income tax-effect of above non-GAAP adjustments |
|
|
(190 |
) |
|
|
(199 |
) |
Total Non-GAAP net loss attributable to MICT, Inc. |
|
$ |
(3,123 |
) |
|
$ |
(1,561 |
) |
|
|
|
|
|
|
|
|
|
Non-GAAP net loss per diluted share attributable to MICT, Inc. |
|
$ |
(0.03 |
) |
|
$ |
(0.07 |
) |
Weighted average common shares outstanding used in per share
calculations |
|
|
121,419,308 |
|
|
|
22,832,683 |
|
GAAP net loss per diluted share attributable to MICT,
Inc. |
|
$ |
(0.05 |
) |
|
$ |
(0.61 |
) |
Weighted average common shares outstanding used in per share
calculations |
|
|
121,419,308 |
|
|
|
22,832,683 |
|
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