eResearch | On June 29, Goldmoney Inc. (TSX: XAU), released its F2020 results, for the year ended on March 31.
Goldmoney is a global leader in precious metal custody and the world’s largest precious metals network. The Company safeguards more than $2 billion in assets for clients in over 150 countries.
Goldmoney has three divisions focused on precious metals:
- SchiffGold: a dealer in precious metals headquartered in the United States. The platform allows its clients to purchase and sell physical precious metals.
- Lend & Borrow Trust Company Limited (LBT): a lending and borrowing platform headquartered in the United Kingdom. The platform uses precious metals as collateral.
- Menē Inc. (TSXV: MENE): headquartered in Paris, France, Menē designs, manufactures and sells 24-karat gold and platinum jewelry on its own e-commerce platform. Spun out of Goldmoney in 2018, Goldmoney owns almost 37% of the outstanding common stock of Menē.
F2020 Financial Results – Record Quarterly Revenue Led to Record Annual Revenue
Based on strong growth in metal trading revenues, fee revenue and a reduction in operating expenses, Goldmoney reported a revenue record in FQ4/2020 and F2020.
Goldmoney reported record quarterly Revenue of $164.4 million in Q4/2020, an increase of 156% compared to Q4/2019.
In F2020, reported Revenue increased to $458.9 million representing an increase of 63% on a year-over-year comparison. Gross profit rose by 80% to $22.3 million in F2020 from $12.3 million in F2019. Additionally, fee revenue went up to $4.4 million in F2020, from $2.1 million in F2019, indicating an 87% increase.
According to Goldmoney, precious metals went through a strong demand for gold and palladium and a modest demand for platinum and silver. This demand brought on an increase of 18% in assets under storage to $2.07 billion in F2020 versus $1.75 billion in F2019.
SchiffGold, the physical and bar division presented strong results in F2020 with revenues of $161.5 million and operating income of $0.85 million, growing 78% and 355%, respectively. According to the Company that was due to strong precious metal demand and favorable prices.
Accounting for a reduction of $3.7 million in operating expenses, the loss of control (spin off) of Menē led Goldmoney to lower its operating expenses by 15% percent ($3.5 million), totaling $20.6 million.
Source: Capital IQ; eResearch Corp.
Although setting record revenue numbers in the fiscal quarter & year, Goldmoney reported a net loss of $9.7 million in F2020, compared with a net income of $21.7 million in F2019. F 2019 financial results benefited from two non-recurring events: (1) a gain of $31.8 million from the loss of control of Menē Inc. (TSXV: MENE), and (2) a one-off gain of $1.5 million from the sale of crypto assets. Both non-recurring gains explain the bulk of the discrepancy between F2020 and F2019 net results.
For F2020, Operating cash flow reached $2.5 million with the $7 million improvement over the previous year. However, even with higher Revenue, Net Income for FQ4/2020 was a loss of $7.9 million and a loss of $9.7 million for the year.
Strategy
After several years of strategic investments in R&D and other business areas, the Company took the F2020 to focus on the normalization of its core operations.
Goldmoney also stated that they continue to add new features to Goldmoney.com with a focus on new customer acquisition and on encouraging users to apply for Goldmoney.com accounts. There were also investments on cost management, platform growth, and investments in its business lines such as LBT.
The Company opened two new vault locations in Singapore and Germany and is now present in eight countries in North America, Europe, and Asia.
Additionally, a minimum monthly storage fee and an optimized fee schedule were launched while new features were enabled on the Goldmoney Global Vault Network.
COVID-19 Precautions
The company explained that there was an increased demand for precious metals as they were seen as a safe haven amid economic growth concerns and higher stock market volatility.
Since March 2020, the Company undertook several measures to protect its clients and staff from a physical and financial standpoint, as follows: Remote work, maintenance of security and client confidentiality, improved technology to support higher trading volumes, 0.5% buy and sell fees charge, and temporary closing of branch locations, among others.
The Annual Goldmoney Letter to shareholders can be read here: https://www.goldmoney.com/corporate/news/goldmoney-fiscal-2020-shareholder-letter
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