Goldmoney Inc. Reports Financial Results for Second Quarter 2022

TORONTO--(BUSINESS WIRE)--November 09, 2021-- 

Goldmoney Inc. (TSX:XAU) (US:XAUMF) ("Goldmoney" or the "Company"), a precious metal financial service and technology company, today announced financial results for the second quarter ended September 30, 2021. All amounts are expressed in Canadian dollars unless otherwise noted.

Quarterly Highlights

   -- Quarterly Gross Profit of $1.7 million, a decrease of 84% Year-over-Year 
      ("YoY"). 
   -- Quarterly Gross Profit excluding revaluation loss on precious metals of 
      $4.5 million, a decrease of 53% YoY. 
   -- Fee Revenue decreased by 11% YoY to $1.6 million. 
   -- Net and Comprehensive Loss of $2.9 million, a $10.9 million (136%) 
      decrease YoY. 
   -- Basic and Diluted Earnings per share of ($0.04). 
   -- Revenue of $69.0 million, a decrease of 72% YoY. 
   -- Goldmoney.com Gross Profit decreased $7.3 million or 89% YoY and 
      Operating Income decreased $9.6 million or 150% YoY 
   -- SchiffGold Revenue decreased $66.3 million or 60% YoY, and Operating 
      Income decreased $0.9 million or 102% YoY. 
   -- Investee Company Menē Inc. (TSXV:MENE) continued to grow its client 
      and revenue base, reporting Quarterly Revenue of $5.8 million, or 67% 
      increase YoY, for its Quarter ended June 30, 2021. 
   -- Corporate Metal Position consisting of Coins, Bullion, and Bullion 
      Denominated Loan increased by $6.2 million, or 13% from March 31, 2021, 
      to $53.7 million as at September 30, 2021. 
   -- Goldmoney.com Group Client Assets of $2.1 billion as at September 30, 
      2021. 
   -- Tangible Capital decreased 2% QoQ to $125.0 million. 

Business Highlights

   -- On October 7, 2021, Totenpass Inc. ("Totenpass"), a 60% owned subsidiary 
      of Goldmoney Inc., announced the launch of its digital storage drive 
      solution in beta. Totenpass allows for the permanent storage of precious 
      digital data, thereby eliminating any future dependence on the internet 
      and the vast amounts of energy required presently to store content. 
   -- The Company successfully transitioned its operations to Canada in June 
      2021 and has effectively discontinued all operating activity in Jersey 
      during Q2 2022. The Company expects to realize the full benefit of 
      expected cost savings and efficiencies in the subsequent reporting 
      periods. 
IFRS 
Consolidated 
Income 
Statement 
Data 
($000s, 
except 
earnings per 
share)               FY 2022                   FY 2021                   FY 2020 
-------------    ---------------  ---------------------------------  ---------------- 
                    Q       Q1      Q4       Q3      Q2       Q1       Q4       Q3 
-------------    -------  ------  -------  ------  -------  -------  -------  ------- 
Revenue          69,013   94,706  139,709  97,592  243,609  173,500  164,441  108,161 
---------------  -------  ------  -------  ------  -------  -------  -------  ------- 
Gross margin      2,845   3,977    2,453   3,401    7,566    5,981    3,232    2,188 
---------------  -------  ------  -------  ------  -------  -------  -------  ------- 
Fee revenue       1,585   1,412    1,844   2,905    1,776    2,351    2,489     719 
---------------  -------  ------  -------  ------  -------  -------  -------  ------- 
Interest income    100     103      211     195      217      239      374      461 
---------------  -------  ------  -------  ------  -------  -------  -------  ------- 
Gross profit 
 Excl. 
 revaluation of 
 precious 
 metals 
 inventories      4,530   5,492    4,508   6,501    9,558    8,570    6,095    3,368 
---------------  -------  ------  -------  ------  -------  -------  -------  ------- 
Gross profit 
 Incl. 
 revaluation of 
 precious 
 metals 
 inventories      1,661   6,167    2,146   4,917   10,421   10,615    6,999    4,088 
---------------  -------  ------  -------  ------  -------  -------  -------  ------- 
Net income 
 (loss)          (3,284)   951    (5,947)  4,041    7,509    6,049   (7,892)  (2,958) 
---------------  -------  ------  -------  ------  -------  -------  -------  ------- 
Basic earnings 
 (loss) per 
 share           (0.04)    0.01   (0.08)    0.05    0.10     0.08    (0.10)   (0.04) 
---------------  -------  ------  -------  ------  -------  -------  -------  ------- 

Refer to "Use of Non-IFRS Financial Measures" and "Reconciliation of Non-IFRS Financial Measures" in the MD&A

Statement from Roy Sebag, Chairman and Chief Executive Officer:

Last quarter, I discussed the important milestone which our group achieved in exiting and transitioning from our Jersey operations. I had also noted that the financial impact from this important development would be fully captured in the subsequent two quarters. In this past quarter (Fiscal Q2 2022), we can see the final charges associated with the unwinding of the Jersey business throughout our financial statements. When we report our next quarter (Fiscal Q3 2022), investors will be able to analyse our improved business model and perceive with significant clarity into our long-term operational expenditures and earnings power.

I would like now to turn to another essential aspect of Goldmoney Inc. that I believe long-term shareholders should be aware of when thinking of our company, its results and its future prospects. As a company that is, for the most part, entirely focused on the precious metals industry, it is necessary that our operating results be viewed within the wider context of the industry. Irrespective of our ability to outperform industry trends over the long-run due to our innovative business model, it is nevertheless to be naturally expected that our core activity of precious metal retailing (both via online accounts and coins) will be tethered to the state and health of the wider industry. We must also consider another feature of our company when examining the quarterly results, and that is our growing precious metal position. The accounting treatment of this position requires that we mark these positions to market, even when we do not sell; as such, this position will naturally fluctuate alongside the precious metal markets. As I mentioned in the prior shareholder letter, our Board of Directors has made the wise decision to grow our precious metal position over time from our earnings, thereby pursuing a return on metal weight strategy as the guiding metric for our company's performance. We must consider the results of this quarter in the light of these wider features of our parent industry in addition to the one-off final charges associated with the Jersey exit. There was a decline in top-line revenue and trading activity on the platform because of the attenuation of the precious metal markets. Similarly, the decline of precious metal prices is the primary cause of the mark-to-market loss on our precious metal position of nearly $3 million.

Before moving onto the topic of our growth businesses, I would like to articulate my opinion of this quarter from my perspective as a long-term shareholder. First, the weakness of the precious metal market this past quarter does not cause me any great concern. I see it as a normal feature of the dynamics of the wider industry which we tend to see from time to time. Precious metals have always been and will continue to remain in great demand by both investors and industry in the future. Moreover, I do not believe that even the novel turn to cryptocurrencies will have any significant impact on the sustained demand for precious metals. With regard to this point, I am further consoled by the fact that, in spite of such a weak quarter, our core business performed well, excluding the movement of our precious metal position and the one-time costs associated with the Jersey exit. Second, I pay little attention to mark-to-market fluctuations in our precious metal position, as I remain convinced that this position will appreciate in fiat money terms over the long-run, especially in the face of rising inflation. It is important that during this quarter, in spite of the declines in mark-to-market movements, we still grew our precious metal position by weight; likewise, we will continue to grow our precious metal position by weight year-over-year. In short, it is my opinion that this quarter gives the appearance of looking far worse than it actually is, and that the health of our business as well as our ability to generate sustainable earnings remains wholly intact.

Turning to the subject of our growth businesses, Menē continued to perform exceptionally well, reporting another strong quarter. Note that Menē does not seem to be directly correlatable to the overall movements in the precious metal industry. This is a promising indicator that Menē is growing organically by disrupting the jewelry industry. Menē now enters its most important and lucrative period of the year, the holiday season, and it is prepared and well-stocked with a record amount of inventory. We hope that Menē will close this year with record revenues and impressive year-over-year growth figures.

Our second growth business, Totenpass, has now finally moved from the R&D phase to Beta launch. We are optimistic about what we have seen so far in response to this highly unique business. Customers are testifying to the infinitely interesting possibilities of the Totenpass and some have reported use cases that have already expanded our own understanding of the product's capability. This is only the first test of establishing a good and sustainable business. We are not yet certain if Totenpass will succeed, although I believe this will become more evident over the course of 2022-2023. We will continue to notify shareholders of the development of Totenpass and will begin to report its financial results as they become material.