OREANDA-NEWS. Goldmoney Inc. (TSX: XAU) (the “Company”), a financial technology company, which operates a global, full-reserve and gold-based financial services group, today announced results for its fiscal year ended March 31, 2016. A copy of the audited consolidated financial statements for the year ended March 31, 2016 prepared in accordance with International Financial Reporting Standards (“IFRS”) and the corresponding management's discussion and analysis will be available under the Company's profile on www.sedar.com. All amounts are in Canadian dollars unless otherwise noted.

·         Consolidated Revenue of $258.7 million in financial 2016, including $108.7 million in Q4, up 35% from $80.8 million for the previous quarter ended December 31, 2015

·         BitGold division (to become Goldmoney Personal and Goldmoney Business) Revenue of $37.3 million for Q4, up 181% quarter-over-quarter

·         GoldMoney division (to become Goldmoney Wealth) Q4 Revenue of $71.4 million, up 6% quarter-over-quarter

·         Consolidated Gross Profit of $4.1 million in financial 2016, including $1.9 million in Q4, up 65% quarter-over-quarter

·         Q4 Total Comprehensive Loss of $4,975,358

·         Q4 Non-IFRS Adjusted Loss of $2,751,075 (calculated as total comprehensive loss less gain on precious metals inventory, foreign exchange movements, and non-cash expenses).  The Company continues to see strong growth in its user base, with 234,789 user signups during Q4, reflecting all-in acquisition cost of $11.72 per user (calculated as Non-IFRS Adjusted Loss per user signup)

·         Working Capital of $58.93 million at March 31, 2016 consisting of cash, precious metals, and short-term marketable securities

·         836,909 user signups with $1.64 billion in customer holdings in including BitGold and GoldMoney as at March 31, 2016

In its first full year of operation, Goldmoney Inc. established itself as a nascent gold-based global payments and savings network, growing organically, and through acquisition, to become one of the largest non-bank custodians of precious metals in the world and the only gold transactional network.

Operational Highlights

  • Launched the BitGold Platform in May 2015
  • Listed on the TSX Venture Exchange in May 2015
  • Acquired, integrated and relaunched the GoldMoney business (to become Goldmoney Wealth)
  • Welcomed Darrell MacMullin, former Managing Director and Head of PayPal Canada, to lead the BitGold division (to become Goldmoney Personal and Goldmoney Business)
  • Launched the BitGold Mobile Application for Android and iOS
  • Launched the Goldmoney® Prepaid MasterCard in Plastic, 18k Silver and 18k Gold for BitGold and GoldMoney clients
  • Launched Goldmoney physical bullion redemptions in collaboration with Dillon Gage Metals
  • Launched BitGold Business Accounts, Invoicing, Payout, and Checkout Tools (to become Goldmoney Business)
  • Integrated over 100 deposit and redemption options
  • Raised over $58 million in capital from leading institutional investors including: Soros Brothers Investments, Friedberg Mercantile Group, Sprott Inc., Robeco, Capital Research Global Investors, and Wellington Management Group
  • Graduated to the Toronto Stock Exchange (subsequent to Q4)
  • Announced upcoming brand unification to Goldmoney Personal, Goldmoney Business, and Goldmoney Wealth, retiring the BitGold brand over coming months (subsequent to Q4).

Financial Highlights

The Company reported revenue for the fourth quarter of $108.7 million, up 35% from $80.8 million for the previous quarter. Gross profit for Q4 was $1.9 million, driven by increased fee revenue, and increased transaction volume on both platforms. In accordance with management’s growth strategy, the Company reports a non-IFRS adjusted loss of $2,751,075, representing an all-in client acquisition cost of $11.72 for the group. Total comprehensive loss for the quarter of $4,975,359, or $0.08 per share.

BitGold (To become Goldmoney Personal and Goldmoney Business) shows continued growth in revenue, margin and key platform engagement metrics

 

Q1 2016

Q2 2016

Q3 2016

Q4 2016

FY 2016

IFRS Measures

 

 

 

 

 

Revenue

2,856,937

10,532,201

13,260,920

37,305,833

63,955,891

Cost of sales

(2,881,186)

(10,395,146)

(13,084,101)

(36,961,468)

(63,321,901)

Fee revenue

-

-

13,568

41,785

55,353

Gain/(loss) on revaluation of precious metals

37,645

(163,225)

95,055

(93,768)

(124,293)

Gross profit (loss)

13,396

(26,170)

285,442

292,382

565,050

Operating expenses

2,853,294

4,673,971

3,305,668

4,383,591

15,216,524

Non-IFRS Measures

 

 

 

 

 

Margin on precious metal sales

(24,249)

137,055

176,819

344,365

633,990

Gross profit excluding gain/loss on precious metals

(24,249)

137,055

192,387

386,150

691,343

 

“The BitGold platform (soon to be Goldmoney Personal and Goldmoney Business) continued to show exemplary growth over the quarter,” said Darrell MacMullin, CEO of BitGold. “We saw revenue grow from $13.7 million in the prior quarter to $37.3 million, representing a gain of 180%. This growth can be attributed to the network effects and client journey, with new products and increased engagement per client, which also benefited from the increased global demand for gold savings during the quarter. In the year ended March 31, 2016, the company achieved significant transformational milestones, completing a very successful first year for the business operations, and the first phase of the multi-year product strategy to enable gold as the optimal currency for global savings and payments. We wrote over 100,000 lines of code and pushed out nearly 20 different products; this from a team of just 30 employees. On the business side, we have seen over 10,000 merchants join and have successfully transacted in nearly 1,000 invoices paid through the platform. P2P gold transfers are growing at a rate of approximately 10% per month and we continue to maintain minimal outbound sales or marking in many products or features while we complete the core platform. We view year one as a validation of our platform offering, but we believe we are still very early in achieving network effects and are not yet focused on specific levers of margin growth. As we enter year two with a solid and growing base of clients, we enter the next phase of our strategy where we will commence distribution of a gold payment rail for global commerce through key partnerships and integrations."

GoldMoney (to become Goldmoney Wealth division) continues to show positive revenue and margin growth

 

Q2 2016(1)

Q3 2016

Q4 2016

FY 2016

IFRS Measures

 

 

 

 

Revenue

55,787,658

67,563,054

71,398,661

194,749,373

Cost of sales

(55,137,331)

(66,843,362)

(70,472,177)

(192,452,870)

Fee revenue

147,330

487,023

471,782

1,106,134

Gain/(loss) on revaluation of precious metals inventory

277,560

(346,564)

199,645

130,641

Gross profit

1,075,217

860,151

1,597,911

3,533,278

Operating expenses

1,433,092

1,148,339

1,613,664

4,195,095

Non-IFRS Measures

 

 

 

 

Margin on precious metal sales

650,327

719,692

926,484

2,296,503

Gross profit excluding gain/loss on precious metals

797,657

1,206,715

1,398,265

3,402,647

Notes:

(1) Results include only the period following the GoldMoney Acquisition on July 20, 2015.

GoldMoney produced an IFRS net loss of $15,755 on $71.4 million in revenue for the fourth quarter ended March 31, 2016. The IFRS net loss figure includes $445,902 of amortization related to the customer relationship intangible asset, acquired pursuant to the acquisition of GoldMoney on July 20, 2015, and a $199,645 gain on precious metals inventory that has been offset by the loss on the investment portfolio at the group level. When adjusting for this non-cash expense, and precious metal price gain, GoldMoney was profitable and it contributed adjusted net income of $230,503 to the group for the quarter.  For a complete discussion of expenses, please refer to the financial statements and management's discussion and analysis for the year ended March 31, 2016.

“In less than a year since acquiring GoldMoney, we have seen the business generate over $3.5 million in gross profit, and we are now producing free cash flow from the division to be contributed towards the growth of the soon-to-be unified platform,” said Katie Sokalsky, CFO of Goldmoney Inc. “We have worked hard over the past seven months to streamline and improve the GoldMoney business. We see the results of this effort over the quarter, with adjusted net income of $230,503, before we take into consideration the favourable gain we realized on precious metals inventory. Accounting for the GoldMoney acquisition, we now amortize a substantial customer relationship intangible asset, with an expected quarterly cost of approximately $160,000 going forward.  While this will continue to appear on our financial statements for the next ten years, this is a non-cash expenditure, and we will assess the cash contributions of the GoldMoney business net of any amortization. At a group level, we also see significant non-cash expenditures in our financial statements. We believe that the Non-IFRS Adjusted Loss figure ($2.7 million for Q4), which is discussed in our MD&A, gives investors a better picture of our normalized cash expenditures and the ongoing investment in the growth of the business. On the BitGold side of the business, we have seen very strong revenue and transaction volume growth, increased revenue and utilization of the platform per client, and we are still solely focused on investment and growth before optimizing any margins through operating levers.”

“Reflecting on our first year of operations, I believe that the accomplishments achieved on our first approximately $10 million in cash invested—combined with a prescient acquisition and integration of GoldMoney—has been truly remarkable,” said Roy Sebag, CEO. “We have proven out the significant global demand for a savings and payments network backed by physical gold bullion, and we have quickly established ourselves as one of the primary leaders in the sector. Our team of employees from Toronto, Milan, and Jersey have developed a platform to secure savings across 13 global vaults—accessible via desktop and mobile—signing up over 1 million clients from over 150 countries, and now safeguarding nearly $1.7 billion in assets. For the remainder of calendar year 2016, we are focused on the brand unification of the platforms and adding additional savings and wealth features, in addition to the distribution of payments and business tools. As we’ve been building and growing the platform, we have welcomed the support and confidence of some of the world’s most noted investment managers. As stewards of this capital, we have effectively demonstrated our approach to capital allocation: first, by executing a well-timed acquisition of the most reputable custodian in the business, and second, by preserving our liquidity during a high growth phase of the business and reinforcing our assurance of integrity and financial stability to our clients.”

“We are encouraged by this first year, first-stage validation of our long term vision,” said Josh Crumb, Chief Strategy Officer. “Having anticipated a major inflection point in the gold market, and the now dominant trend toward financial technology and money innovation, our platform is well positioned with what we believe are two pillars of secular growth. In addition to the investment in technology and innovation we bring to the gold sector, we will also invest in research, education, and thought leadership around gold as a global currency and savings asset, enhancing our brand while advancing the democratization of gold savings. Looking ahead, over the next 18 months, we will continue to invest in software development, expanding the tools and features that add utility for our clients, and we will look to pursue strategic acquisitions and partnerships to grow and distribute our platform as we achieve network effects. While we will remain prudent with our capital and liquidity, we continue to guide shareholders towards a multi-year investment and growth strategy focused on long-term value maximization for stakeholders.”              


“It has been a remarkable year for Goldmoney,” said James Turk, founder of GoldMoney. “My high expectations for the combined GoldMoney and BitGold have been well exceeded. The dynamic management and operating team has taken the company to a new level by achieving phenomenal growth. And by pioneering an array of new products and services, Goldmoney with its strong balance sheet has earned its place at the forefront of the increasingly important financial technology sector.”


“The Board and Management are committed to a long-term development and growth strategy, and sincerely believe that the journey has only just begun,” added James Turk, who is also Lead Director. “As we look to the future, existing and prospective investors should be assured that we will not fall prey to short-term thinking in relation to our goals or outcomes, and will continue to focus upon a multi-year growth strategy regardless of quarterly results or short-term market volatility. Though some of our innovations may not succeed, we will not be distracted from focusing on the requirements of our growing base of clients by improving our services and increasing their adoption rate. As custodians of a public company, with its regulatory framework that adds trust and transparency, we recognize that the interests of our customers are paramount. Our mission is to provide a choice in money. Gold is money, and we have the technology to deliver that choice to the world.”