HTCR: Established software development company poised for strong growth after proposed transformative acquisition.
NASDAQ:HTCR
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HeartCore Enterprises (NASDAQ:HTCR) is an established software development company based in Tokyo, Japan and operates in four core segments. These include 1) Content Management in which the core product is HeartCore CMS, 2) Digital Transformation which includes Controlio, myInvenio, Apromore and HeartCore Robo, 3) GO IPO, a consulting service that helps Japanese companies prepare for a U.S. Nasdaq public listing and 4) the announced acquisition of Sigmaways which is expected to close in January 2023.
HeartCore was founded in 2001 and has 44 employees at this time of which approximately half are devoted to software programming and engineering. The company has an established customer base with over 800 active customers and maintains a very high retention rate of approximately 95%. The company went public through an initial public offering in February 2022 raising $15 million in proceeds. The IPO was priced at $5.00 per share.
In September 2022, HeartCore announced they had entered into an agreement to acquire 51% of Sigmaways, a California based digital technology company. This acquisition would expand the operational footprint in the U.S. and is expected to add significantly to HeartCore’s revenue base. In 2021, Sigmaways generated approximately $8.7 million in revenues. The acquisition is also expected to create complementary cross-sell and upsell opportunities for both organizations. The transaction is expected to close in early 2023.
The company is led by an experience management with deep expertise in software development, technology and corporate finance. Sumitaka Kanno (Yamamoto) is the founder of HeartCore and has served as the Chief Executive Officer and member of the Board of Directors of HeartCore since June 2009.
With $7.8 million in cash on the balance sheet available as of the end of the 3rd quarter of 2022, we believe the company is self-funded to support future operations and does not need to access the debt or equity markets going forward. However, for potential material future acquisitions, the company may access the capital markets to finance a large acquisition.
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