QDM International Reports 299.5% Revenue Increase but Net Loss in Latest Quarter

QDM International Inc. reported significant financial changes in its latest quarterly filing, revealing a substantial increase in revenue and a shift in profitability. For the three months ending September 30, 2025, the company generated $3.97 million in revenue, a 299.5% increase from $993,917 in the same period last year. The six-month revenue also saw a notable rise, reaching $7.57 million compared to $1.96 million in the prior year. However, the company reported a net loss of $1.11 million for the quarter, contrasting with a net income of $488,706 in the same quarter of 2024. This shift in profitability is attributed to a significant increase in costs, particularly in referral fees, which surged due to competitive market conditions.

The company's operational metrics reflect its strategic developments, including an expansion of its collaboration with insurance partners and an increase in the number of insurance policies generating commissions. The cost of sales for the quarter rose dramatically to $4.95 million, a 4,412.1% increase from the previous year, primarily due to higher referral fees. The gross profit margin decreased significantly, indicating the impact of these rising costs on overall profitability. General and administrative expenses also increased by 27.7% to $349,519, driven by hiring more employees and increased operational costs.

In terms of organizational changes, QDM International executed a reverse stock split on September 19, 2025, reducing its outstanding shares from approximately 291.56 million to about 8.64 million. This move was part of a broader strategy to enhance shareholder value and streamline its capital structure. Additionally, the company’s CEO, Huihe Zheng, converted shares of preferred stock into common stock, further consolidating ownership. As of September 30, 2025, the company had $12.52 million in cash and cash equivalents, a significant increase from $8.56 million at the end of the previous fiscal period, indicating improved liquidity.

Looking ahead, QDM International anticipates that referral fee rates will normalize following recent regulatory guidance from the Hong Kong Insurance Authority. The company plans to adjust its referral fee rates to align with industry benchmarks, which may stabilize costs but could also impact the volume of business generated through referrals. Management remains focused on enhancing operational efficiency and expanding its market presence in Hong Kong, where it operates as a licensed insurance broker. The company’s outlook suggests a cautious optimism as it navigates the evolving market landscape while addressing internal control weaknesses identified in its financial reporting processes.