Business Context and Reporting Period
Fingermotion, Inc. filed this Form 8-K on January 15, 2021, to disclose financial results for the third fiscal quarter ended November 30, 2020. The Company operates in the SMS & MMS and Telecommunications Products & Services sectors, with emerging divisions in Big Data Insights, Rich Communication Services (RCS), and Insurtech.
Key Financial Metrics
- Revenue: Q3 2020 revenue was $4.88 million; nine-month revenue totaled $11.25 million.
- Profitability: Q3 gross profit was $0.62 million. The Company reported a net loss from operations of $0.68 million for Q3 2020.
- Per Share Data: Basic and diluted loss per share was $0.02.
- Cash and Liquidity: As of November 30, 2020, cash on hand was $989,103 with a working capital surplus of $803,638.
- Balance Sheet: Total Assets were $9.42 million; Total Current Liabilities were $8.61 million; Total Liabilities were $9.80 million.
- Capital Structure: 36,200,557 common shares were issued and outstanding as of November 30, 2020.
Material Changes vs. Prior Period
- Revenue Growth: Q3 revenue increased 81% year-over-year. SMS & MMS revenue grew $1.96 million (81%), and Telecommunications Products & Services revenue grew $0.22 million (84%). Nine-month revenue increased 98% compared to the prior year.
- Cost of Revenue: Q3 cost of revenue rose to $4.26 million, an increase of $2 million (89%) compared to Q3 2020.
- Gross Profit: Q3 gross profit increased $0.18 million (42%) to $0.62 million. Nine-month gross profit increased $0.45 million (62%) to $1.17 million.
- Operating Loss: Net loss from operations widened to $0.68 million in Q3 2020 compared to $0.56 million in Q3 2020.
Guidance, Outlook, and Management Commentary
CEO Martin Shen projected that revenue growth is on track to exceed $19.5 million for fiscal 2021. Management attributes growth to increased prepaid deposits held in trust at telecommunications partners. The Company noted that operating expenses increased due to new hires in actuarial, data science, and programming roles to advance the Insurtech division. Additionally, Big Data Insights and RCS platforms are transitioning from R&D to beta testing. The Company highlighted its upgrade to the OTCQX market tier.
Investor Verification Checklist
- Verify the full Q3 2020 Form 10-Q filing referenced in the news release for audited financial details.
- Confirm the sustainability of the 81% revenue growth rate given the 89% increase in cost of revenue.
- Assess the impact of increased operating expenses on future net loss trends.
- Review the status of the beta testing phase for Big Data Insights and RCS platforms.
- Validate the $19.5 million fiscal 2021 revenue projection against current market conditions.