MICT (MICT) Stock: Reports 50% QoQ Revenue Growth

MICT Inc (NASDAQ: MICT) is setting the stage for a strong trading session this morning, and for good reason. The company just released its financial results for the second quarter, outlining significant growth. Here’s what’s going on:

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MICT Announces Q2 Results

As mentioned above, MICT reported its financial and operational results for the second quarter, and the report proved to be overwhelmingly positive. 

First and foremost, revenue in the second quarter came in at $12.3 million, showing dramatic growth over the $8.9 million that was reported last quarter. The growth in revenue was primarily the result of the company’s efforts surrounding its insurance product, which saw revenues grow 50% on a quarter over quarter basis. Total consolidated revenues were up 38% quarter over quarter. 

MICT also said that it’s in the final stages of testing for the Magpie stock trading platform. In fact, a full launch is expected to take place in mid-September. At the same time, the company’s commodities trading platform is expected to launch by the end of September. 

Furthermore, MICT reminded investors that it was added to the MSCI USA MicroCap Index in late-May and that it has approved the capitalization of Magpie Securities to finance the launch and growth of the stock trading platform. 

Finally, at the close of the quarter, the company had about $114 million in cash on the books, which is plenty of money to get it through the launch of Magpie and well into profitability.

Management Commentary

In a statement, Darren Mercer, CEO at MICT, had the following to offer:

We have delivered significant quarter on quarter growth from our B2B insurance business, despite having only launched in December 2020 and being still at the very early stage of executing on our long-term business plan. We grew our insurance brokerage business by 50% over Q1, aided by the acquisition of the nationwide insurance license throughout China.  What is particularly exciting about this achievement we are only at the beginning of the development of our insurance business. The revenue ramp to date has been exclusively from B2B sales.  We are now poised to expand the business into B2B2C products that will be distributed via one or more on-line channels, which will be followed by further expansion into direct B2C products, many of which are custom designed and have significantly higher margins compared to our B2B offerings.  

Another important part of our insurance business growth strategy is to secure more licenses at a local level, which alongside our development of strategic partnerships and alliances in China, enables us to penetrate the higher margin B2B2C market more quickly, and ultimately create and leverage relationships with key partners to create the highest margin penetration into the B2C market, including through the potential offering of health insurance products.

We are eagerly awaiting the launch of Magpie, our stock trading app, which has reached the final stages of testing and now anticipated to launch in mid-September. We have also put in place all the components necessary to create a successful business around our commodities trading platform, partnering with Shanghai Petroleum and Natural Gas, whose clients account for 20% of China’s oil and gas trade.  Following our diligent efforts building this platform, we are expecting to launch it by end of September, following the Magpie launch, which we believe will place MICT at the forefront of the financial technology sector in Asia.  

Of note, our Micronet stake was reduced to approximately 37%, which means we are no longer required to consolidate the results of this entity into our P&L. By removing Micronet from our consolidated income statement we will now be able to provide investors with a clear view of our core segments, enabling them to better monitor our progress.  

Given all of these developments, we believe we are well positioned to continue our momentum and, as a result, expect further growth in revenues in both the third and fourth quarters of 2021. 

Finally, and perhaps most significantly, we have, following our two placings in Q1 2021, amassed significant cash resulting in approximately $114M on our balance sheet at June 30 2021.  This strong cash position has multiple advantages throughout our business segments, including in funding the expedited build-out of our new businesses while also providing significant runway to support our various trading segments.

We are merely at the beginning of each of the development and growth of our business verticals and the feedback we have already received has been very positive, I believe there is reason for optimism, and I am very excited about our future prospects.  Not just for second half of 2021, particularly the fourth quarter, but 2022 and beyond.  In the meantime, we look forward to providing continued updates to our stockholders as we progress with all of our businesses.

These Results Are Incredible

There are a few things I’d like to point out about the results:

  • Revenues. First and foremost, the company did $12.3 million in the second quarter and $8.9 million in the first. That works out to total revenues of $21.2 million so far for 2021. This figure is incredible when you consider that the company was pre-revenue under a year ago. 
  • Trading Platforms. The revenues generated in the second quarter were largely the result of the insurance platform, which is growing quickly. However, the Magpie Securities platform, and commodities trading platform are both expected to go live in September. When this happens, we can expect to see even more significant growth in revenue. 
  • Data. The vast majority of the company’s revenue comes from the insurance arm, which isn’t just proving to be a revenue machine, it’s a data machine. MICT offers a wide range of insurance products, and as soon as a customer signs up, they are entered into the ecosystem, where MICT has quite a bit of data on each customer. This data can be used to upsell the customers time and time again. For example, a customer that signs up for life insurance can later be sold health, auto, home, and a wide range of other products,  which means that growth, while impressive as it stands, will likely continue to improve. 
  • Margin. It’s also important to pay close attention to the company’s strategy on upselling insurance products. As new clients are brought in through third parties, much of the profitability is shared with that third party. However, once that client is in the ecosystem, new sales will come with significantly higher margins, allowing for increased profitability.
  • Cash. Finally, don’t forget, we’re talking about a company with a market cap of around $240 million, nearly half of which is sitting in cash on hand!

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The Bottom Line

The bottom line here is that the results released by MICT proved to be overwhelmingly positive. Not only did the company announce compelling revenue growth, it has set the stage for the launch of two high value products in September, which is just around the corner. 

At the same time, the compelling revenue growth as a result of the insurance arm isn’t just a one-time revenue growth story. The data collected sets the stage for more tremendous growth ahead, not just with new customers, but through the upselling of existing customers. 

All told, MICT’s strategy seems to be falling in place perfectly, setting the stage for further significant growth ahead. At the same time, with plenty of cash on hand the company has the runway it needs to make all the pieces of the puzzle fall together.

CNA Finance is not an investment advisor or broker dealer. This article is the result of a financial relationship between CNA Finance and MICT. Trading in penny stocks involves significant risk and can result in the loss of capital.