Netcapital Inc. Reports 34% Revenue Growth but Increases Operating Loss in Latest Quarter

Netcapital Inc. reported a significant increase in revenue for the three months ended July 31, 2025, achieving $190,058, a 34% rise from $142,227 in the same period last year. The company attributed this growth primarily to increased portal fees and revenues from services exchanged for equity securities, with one issuer accounting for 73% of total revenues. The gross profit for the quarter was $182,649, compared to $132,007 in the prior year, reflecting a decrease in costs of services from $10,220 to $7,409.

Despite the revenue growth, Netcapital experienced an operating loss of $3,285,648, up from a loss of $2,508,237 in the previous year. This increase in losses was driven by a substantial rise in payroll and related expenses, which surged by 58% to $1,793,450, as well as increased general and administrative costs, which rose by 14% to $1,568,506. The company also reported a notable increase in interest expenses, which rose to $36,067 from $10,464, reflecting higher debt levels.

Operationally, Netcapital's funding portal closed three offerings during the quarter, a decrease from 11 in the same period last year. The average amount raised per offering also declined, from $280,978 to $215,745. The company’s total assets increased to $28.4 million as of July 31, 2025, up from $20.9 million at the end of the previous fiscal year, largely due to a significant increase in cash and cash equivalents, which rose to $4.6 million from $289,428.

Strategically, Netcapital has made several key developments, including the acquisition of a perpetual software license valued at $2.84 million, which is expected to enhance its capital-raising and secondary trading services. The company also engaged in multiple financing activities, raising approximately $8.5 million through the sale of common stock and short-term notes during the quarter. However, the company faces substantial doubt about its ability to continue as a going concern, as it reported negative working capital and significant cash outflows from operations.

Looking ahead, Netcapital plans to focus on its funding portal business, which has shown revenue growth, while seeking additional financing through private placements and public offerings. The company acknowledges the risks associated with its growth strategy and the challenges of maintaining adequate cash flow to support its operations.