Tenet Fintech Group (PKK) Q1 2024 earnings summary

Executive summary

• Q1 2024 revenue was $765,635, a significant decline from $9,493,804 in Q1 2023, due to a shift in the China revenue model and regulatory changes, with a recovery anticipated later in the year as a new data-driven revenue stream is introduced.

• Adjusted EBITDA was ($3.10 million) and net loss was ($5.41 million) for the quarter.

• Operations in China were impacted by new regulations phasing out virtual bank accounts, leading to platform adaptations and temporary disruption.

• The transition to a data revenue model is expected to yield higher profit margins than the previous transaction fee model, aiming to improve earnings per share and overall profitability.

• Expansion of the Business Hub to the U.S. is targeted for the end of 2024, with plans to enable global networking among small and medium-sized businesses in Canada, the U.S., and China.

Financial highlights

• Revenue for Q1 2024: $765,635, a sharp year-over-year decline from over CAD 100 million previously, as the company shifts focus to profitability over top-line growth.

• Adjusted EBITDA: ($3,100,250).

• Net loss: ($5,414,117).

• Revenue dropped sharply year-over-year due to business model transition and regulatory changes in China.

Outlook and guidance

• China revenue is expected to remain slow for the next few months, with a rebound likely in Q3 or Q4 2024 as new data products are launched.

• Regular activity on Chinese platforms expected to resume in Q2 2024 after adapting to new regulations.

• U.S. expansion is considered realistic by year-end, with anticipated revenue from U.S. clients once the Business Hub and data products are launched.

• Canadian launch of ie-Pulse product planned for Q3 2024, with subsequent commercialization in China.

• Networking and advertising features for the Business Hub are nearing completion, with staggered launches planned and further updates expected soon.