An innovative fintech technology services provider and operator of the Cubeler™ Business Hub, Tenet Fintech Group Inc., has announced its financial results and operating highlights for the three-month period ended March 31, 2023. Similar to the fourth quarter of 2022, the first quarter of 2023 was a difficult one in China from an economic standpoint. Tenet generated $9.49 million in revenue in Q1 and had a net loss of $8.7 million as SMEs in China were still struggling to recover following the sporadic government imposed COVID-19 lockdowns as was stated by the Company’s Chinese Operations’ CEO and Director of Finance. All amounts expressed are in Canadian dollars.
Expenses, for the calculation of Adjusted EBITDA, do not include finance costs, interest, taxes, depreciation and amortization (including impairment of goodwill and intangible assets), change in fair value of contingent consideration payable, loss on investment in associate company and gain on bargain purchase.
Adjusted EBITDA equals net income (loss) before finance costs, taxes, depreciation and amortization (including impairment of goodwill and intangible assets), change in fair value of contingent consideration payable, loss on investment in associate company and gain on bargain purchase. Adjusted EBITDA is provided as a non-IFRS financial measure provided to assist readers in determining the Company’s ability to generate cash flows from operations and to cover finance charges. Adjusted EBITDA and EBITDA are also widely used for business valuation purposes. Adjusted EBITDA does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.
The net loss for Q4 2022 includes a combined impairment of $38,433,119 related to the Company’s acquisition of Cubeler Inc. for which forecasted revenues shifted by almost another year due to the delayed launched of the Company’s Canadian Business Hub. The portion of the above-mentioned impairment related to the intangible assets totaling $2,735,229 may be reversed in the future following the launch of the Company’s Canadian operations.
First Quarter Financial And Operating Results Summary
Although the Company has struggled to regain the momentum in revenue growth it had seen in prior quarters, there remains a continued commitment to geographic and industrial vertical expansion of its Chinese operations. The Company has also taken the opportunity to work on customer retention and synergy.
The Company continues to build an ecosystem where it is servicing and gathering data on thousands of SMEs in China operating in various industrial sectors, including retail and wholesale trade, manufacturing, energy, construction and distribution. The Company now has the capability to track metrics such as sales and inventory levels in near real time on Business Hub SME members in China and has been able to show variations across time series, positioning the Company to potentially become a reliable reference of economic activity throughout the country. This will be examined as the Company explores data monetization opportunities.
The largest source of revenue in China is still the supply-chain services, which realized revenues of $6.46 million in the quarter.
The Company’s Canadian operations continued to focus on the recently launched Business Hub in Canada and continues to see seek an increase in membership. The Company continues to expect to begin showcasing the value of the data it has been collecting and will collect from SMEs in the future as it continues to explore opportunities for data monetization.
The Company’s business plan and outlook will continue to focus on the growth of its operations in China and Canada, however the Company plans to take a hybrid approach to growth that reflects these two businesses.
Full details of the Company’s first quarter 2023 financial results can be found in the Unaudited Condensed Interim Consolidated Financial Statements and Management’s Discussion and Analysis (MD&A) for the three-month period ended March 31, 2023, which are available at www.sedar.com.
All amounts are in Canadian dollars unless otherwise indicated.
