Four Canadian crypto companies released their quarterly earnings today, demonstrating that the sector is as equally as volatile as any other current tech stock. Tokens.com Corp. perhaps expressed it best: “While we remain frustrated by our share price performance, we are not unique in the current sell-off in small-cap tech stocks.”
WonderFi Technologies Inc., Bitfarms Ltd., Tokens.com, and CoinSmart Financial Inc. are all trading well below their 52-week highs at time of publication. WonderFi’s stock currently sits at 51 cents, down from a 52-week high of $3.30. Bitfarms’ is at $2.41, down from a 52-week high of $11.60, while Tokens.com’s hovered at 5 cents USD, down from $4.05.
WonderFi posts a $14 million CAD loss
Of the three crypto companies reporting today, WonderFi was the most optimistic about its prospects. Reporting its second-quarter 2022 results, the Kevin O’Leary-backed WonderFi posted $245,000 in revenue for the three and six months ended March 21, 2022, compared to the same periods in 2021. The company attributed the increase in revenue to its acquisition of crypto trading platform Bitbuy, and subsequent Bitbuy activity.
WonderFi’s operating expenses were $14.1 million and $19.4 million for the three and six months ended March 31, 2022, respectively, compared to $439,000 for the period from January 30, 2021, the company’s incorporation date, to March 31, 2021.
WonderFi said the increased operating expenses represented spending on labour, marketing, and software development supporting the company’s business expansion.
The company incurred one-time expenses of $7.9 million and $10.2 million for professional and consulting fees for the three and six months ended March 31, 2022, respectively, related to the acquisition of Bitbuy, as well as for its $45 million “bought deal” financing.
Out of the one-time costs for the Bitbuy acquisition, $5.5 million was paid through shares. Finally, non-cash share-based payments of $2.6 million and $3.5 million, respectively, for the three and six months ended March 31, 2022, were related to the issuance of stock options and restricted stock units to employees, directors, and external consultants.
It’s a rocky time in the markets for every sector. WonderFi is well positioned to weather the storm and we remain focused on executing on our plan and growing our revenue generating assets so we can come out stronger than before.
— WonderFi (@WonderFi) May 16, 2022
The company also signed a definitive agreement to acquire crypto trading platform Coinberry for $38.5 million in WonderFi stock in late April.
“The signing of the definitive agreement to acquire Coinberry so soon after the closing of the Bitbuy transaction will further add to the company’s leadership position within the industry, and we are excited for what the future holds as we integrate all of our businesses to continue our rapid user acquisition growth and explore ways to unlock cost synergy opportunities,” said Ben Samaroo, WonderFi’s CEO.
Bitfarms feels Bitcoin’s sell-off
Bitfarms, the blockchain company that topped this year’s TSX Venture Exchange tech rankings, reported that its financial results for the first quarter of 2022 were substantially impacted by Bitcoin’s decline in market price during the quarter.
The company reported increased total revenues to $40 million, up 40 percent, from $28 million in Q1 2021, and decreased from $60 million in Q4 2021.
Bitfarms also posted a first-quarter 2022 net income of $5 million, up from a net loss of $8 million in Q1 2021, but decreased from $10 million in Q4 2021.
But with heavy investments in Bitcoin, and the currency taking a beating in the market, it’s not difficult to see why Bitfarms felt the brunt of the cryptocurrency’s sell-off.
As of March 31, Bitfarms held $77 million in cash and Bitcoin valued at approximately $239 million. That is based upon a Bitcoin price of approximately $45,500 as reported by Coinmarketcap.com as of March. The company had working capital of $181 million.
In January, Bitfarms purchased 1,000 Bitcoins for $43 million, adding to its Bitcoin treasury holdings.
The company also added to its debt, with a $32 million equipment financing agreement in February, and an expanded credit facility from $60 million to $100 million.
Even so, Geoff Morphy, Bitfarms’ president and COO, noted: “We delivered another profitable quarter in Q1 2022, even with the decline in the price of BTC [Bitcoin], and revenues were up 42 percent compared to Q1 2021.”
Bitfarms owns and operates blockchain farms that power the global decentralized financial economy. It provides computing power to cryptocurrency networks such as Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Dash, earning fees from each network for securing and processing transactions.
During the quarter, the firm launched its revamped internal miner management system that has been in Beta for the last nine months. The new management software enables Bitfarms to individually manage hundreds of thousands of miners across its globally decentralized mining farms.
Tokens.com disappointed over share price
Tokens.com reported a net income of $9.7 million in its first-quarter 2022 earnings call, compared to a loss of $176,00 for the same time period in 2021. Even so, the company was muted about the quarter.
“Q1 was a mixed quarter for Tokens.com,” said the company’s CEO, Andrew Kiguel. “While we have been successful in building beyond the staking business in the Metaverse and gaming, our share price has not performed to our expectations.”
Tokens.com invests in Web3 crypto assets and businesses linked to the Metaverse and NFTs. During the quarter, the company said it successfully rolled out Hulk Labs, a new Tokens.com subsidiary focused on the play-to-earn crypto gaming sector.
But the company noted in the last quarter and during the current quarter it has “rebalanced its portfolio,” selling off certain cryptocurrencies.
Noted the company: “During these volatile times, management is focused on making sure Tokens.com is in a strong cash position and focused on diversifying its business activities beyond just crypto staking, to operating businesses such as Metaverse Group and Hulk Labs. While volatile crypto pricing does impact the value of the assets within these businesses, we continue to see operational growth and do not see the volatility as an impediment to further operational growth in 2022.”
CoinSmart posts results, acquires new users
At market close today, Coinsmart announced its Q1 2022 results, posting gross revenue of $4.2 million, growing 15 percent year over year, with a $1.7 million loss. The crypto trading platform claimed it acquired 33,700 new users, expanded its retail and over-the-counter trading to additional European countries, and launched new mobile apps.
“Q1 2022 saw continued year over year growth during a quarter that experienced high volatility,” said CoinSmart CEO Justin Hartzman. “I am extremely proud that our team was able to execute and continue growing our user base, ship new products and help the crypto curious enter the market.”
CoinSmart’s stock told a similar story, however, to its fellow crypto companies reporting today: at press time, it sat at 41 cents, down from a lofty 52-week high of $1.18.
Feature image courtesy WonderFi.