AtlasClear Holdings, Inc. (ATCH) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary presents mixed signals. While revenue increased significantly by 52% YoY, the company reported a net loss and faces challenges in profitability and regulatory compliance. The Q&A section highlights potential growth in digital assets and a strategic acquisition, but lacks specific timelines and faces integration risks. Despite operational improvements, economic uncertainties and competitive pressures remain. The lack of clear guidance on key initiatives tempers optimism, leading to a neutral sentiment.
Key Financial Performance
Revenue $4.25 million, up 52% year-over-year. The increase was driven by commissions of $2.33 million, vetting fees of $0.37 million, clearing fees of $0.71 million, and other revenues of $0.83 million.
Operating Loss $877,000, an improvement from $941,000 last year. The improvement reflects disciplined expense control and scaling operations for growth.
Net Loss $440,000 compared to net income in the prior year period, which benefited from one-time fair value adjustments.
Total Assets $73.6 million, up 21% from June 30, 2025. The growth reflects operational progress and financial strength.
Net Capital at Wilson-Davis $12.28 million, exceeding regulatory requirements by about $2 million, showcasing strong financial health.
Cash and Restricted Cash $32.2 million, up from $29.6 million at June 30, 2025, indicating improved liquidity.
Stockholders' Equity Positive $6.86 million versus a negative $6.8 million deficit 3 months ago, a swing of over $13 million, reflecting balance sheet optimization.
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Operating Highlights
LocBox partnership expansion: Discussions are ongoing to expand the LocBox partnership for potential launch of new product platforms next year.
OLA digital account opening system: Continued rollouts planned, including digital asset and credit capabilities for institutional clients.
Client onboarding and expansion: Third correspondent clearing client signed, onboarding expected in Q1 2026, contributing to fiscal 2026 revenues.
Commercial Bancorp acquisition: Once completed, it will provide low-cost funding and a regulated bank charter to support the clearing and custody ecosystem.
Revenue growth: Revenue for the quarter was $4.25 million, up 52% year-over-year.
Balance sheet improvement: Achieved positive stockholders' equity of $6.9 million, eliminated prior going concern qualification, and reduced de-SPAC liabilities by over 80% from fiscal 2024.
Profitability at Wilson-Davis: Wilson-Davis subsidiary continued growing profitability, delivering strong commission, clearing, and stock loan results.
Institutional financing: Secured $20 million in new institutional financing, split between convertible notes and equity units, to support growth and acquisitions.
Technology integration: Focus on integrating the technology stack to enhance operational efficiency and scalability.
Selective M&A opportunities: Evaluating targets to enhance product capabilities, broaden client reach, or offer complementary technology.
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Risk or Challenges
Liquidity Concerns: Although the $20 million raised in October mitigated liquidity concerns, the company previously faced challenges related to liquidity and going concern qualifications, which could re-emerge if growth funding is not effectively managed.
Operating Loss: The company reported an operating loss of $877,000 for the quarter, indicating ongoing challenges in achieving profitability despite improvements from the prior year.
Net Loss: A net loss of $440,000 was reported, compared to net income in the prior year period, highlighting financial challenges despite revenue growth.
Regulatory Compliance: The company must maintain strong risk management, compliance, and operational oversight to meet the high standards expected of a regulated financial institution, which could pose challenges as operations scale.
Technology Integration: The integration of the technology stack and rollout of new systems like the OLA digital account opening system and LocBox infrastructure are critical but could face delays or technical challenges.
Acquisition Risks: The planned acquisition of Commercial Bancorp is expected to provide low-cost funding and a regulated bank charter, but delays or complications in this process could impact strategic objectives.
Market Competition: The company operates in a competitive market for modern, technology-driven clearing and banking infrastructure, which could pressure margins and client acquisition efforts.
Economic Uncertainty: Broader economic uncertainties could impact the company's growth plans, particularly in areas like client onboarding, stock loan programs, and acquisition activities.
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Guidance & Outlook
Revenue Growth: The company anticipates material contributions to fiscal 2026 revenues from onboarding its third correspondent clearing client in Q1 calendar year 2026.
Capital Utilization: The $20 million raised in October 2025 will fund the integration of the technology stack, expansion of stock loan and margin lending programs, and support acquisition activities.
Acquisition Plans: The company plans to advance the Commercial Bancorp acquisition, which will provide low-cost funding and a regulated bank charter to support its clearing and custody ecosystem.
Technology Deployment: AtlasClear plans to continue rolling out its OLA digital account opening system and LocBox infrastructure, including digital asset and credit capabilities for institutional clients.
Market Positioning: The company aims to capitalize on the growing demand for modern, cost-efficient clearing and banking platforms, particularly among smaller financial institutions.
M&A Strategy: AtlasClear will pursue selective M&A opportunities to enhance product capabilities, broaden client reach, and integrate complementary technologies.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you elaborate on the structure of the $20 million Funicular financing and how it strengthens your ability to execute on near-term client wins and longer-term platform build-out?
A:The $20 million Funicular financing includes a convertible note with an 11% coupon and a 5-year term striking at $0.75 per share, and a unit offering of equity and warrants also striking at $0.75, totaling roughly $10 million. This financing is seen as less dilutive compared to the de-SPAC process and is expected to support company growth effectively.
Q:Can you provide an update on the company's compliance with New York Stock Exchange listing requirements given the share price is currently below $1?
A:The company is in compliance with NYSE American standards, which do not have a dollar threshold as a listing requirement. Management is not concerned about the current share price and is focused on long-term growth and shareholder value.
Q:Can you speak to your digital asset strategy going forward, including near-term revenue goals and the impact of the Commercial Bancorp acquisition?
A:The company views digital assets as a primary focus and plans to integrate crypto trading, lending, and custody into its platform. The Commercial Bancorp acquisition, as a Wyoming state-chartered and Federal Reserve member bank, is expected to enhance crypto-related operations. Management anticipates delivering crypto revenues by Q2 or Q3 of next year and sees crypto as a critical component of future financial products.
Q:Can you provide the latest on regulatory progress and integration planning for the Commercial Bancorp acquisition, and how confident are you in closing within the extended window?
A:The company plans to formally file with the Federal Reserve by January 31, 2026, to begin the approval process. Management is optimistic about receiving approval based on their experience. Near-term integration plans include deposit sweeps and credit extensions, while long-term plans involve expanding the bank's footprint and leveraging its capabilities for digital assets and custody.
Q:Review of Unclear Management Responses
A:Management avoided providing specific near-term revenue goals for the digital asset segment, using broad and forward-looking statements instead. Additionally, while optimistic about the Commercial Bancorp acquisition, they did not provide a clear timeline for regulatory approval or detailed integration steps beyond general plans.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Davis requirement
Executive Chairman
LocBox
President
SPAC
Wilson Davis
acquisition
adjustment
asset
balance sheet
banking
capability client
capital Wilson
cash
clearing client
client calendar
commission
concern qualification
cost
detail
equity
foundation
funding
infrastructure
institution
loss
opportunity
platform
priority
product
profitability
progress
result
scale
statement
technology
today
value
ATCH Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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