Earnings call transcript: Atlasclear Holdings Q4 2025 sees stock plunge despite positive cash flow

Atlasclear Holdings Inc. (ATCH) reported its first quarter of positive cash flow in Q4 2025, alongside a significant reduction in debt and improved stockholder equity. Despite these financial improvements, the company’s stock price plummeted by 21.17% in premarket trading, closing at $0.574, a stark contrast to its 52-week high of $26.94. According to InvestingPro analysis, the stock appears undervalued at current levels, with strong financial health indicators including an 80.6% gross profit margin and 35.7% revenue growth in the last twelve months.

Key Takeaways

• Achieved first quarter of positive cash flow.
• Debt reduced by 83%, enhancing financial stability.
• Stock price dropped by over 21% in premarket trading.
• Focus on technology innovation and market expansion.
• Strategic priorities include debt restructuring and capital raising.

Company Performance

Atlasclear Holdings demonstrated a notable improvement in its financial health by reporting positive cash flow for the first time and reducing its debt by 83% from over $52 million to approximately $8 million. The company also saw an increase in stockholder equity by over $43 million, indicating stronger financial standing. Despite these achievements, the market’s reaction was negative, as evidenced by the substantial drop in stock price.

Financial Highlights

• Revenue sources: Commissions, clearing fees, and vetting fees.
• Debt reduced from $52,643,291 to $8,000,945.
• Stockholder equity improved by over $43,000,000.
• Stock loan revenue growth: July - $258,000; August - $281,000; September - over $400,000.

Outlook & Guidance

For fiscal 2026, Atlasclear Holdings plans to focus on debt restructuring, capital raising, and technology deployment. The company aims to acquire a commercial bank and expand its correspondent clearing client base. These strategic initiatives are designed to enhance operational growth and strengthen its market position.

Executive Commentary

John Shively, Executive Chairman, stated, "We are positioning Atlasclear as a true one-stop platform for fintech-driven financial services." Craig Ridenour, President, emphasized the company’s growth strategy, saying, "Our greatest opportunity to scale is through adding corresponding clients." He also highlighted the importance of the Commercial Bancorp acquisition, describing it as a key component of their strategy.

Risks and Challenges

• The significant drop in stock price may reflect investor concerns about the company’s future prospects.
• The focus on small financial institutions could limit growth potential.
• Ongoing debt restructuring and capital raising efforts may indicate financial instability.
• The competitive landscape in financial services remains challenging, with few competitors serving small institutions.
• The success of new technology products and market expansion efforts remains uncertain.

Atlasclear Holdings faces a challenging market environment despite its financial achievements. The company’s strategic focus on innovation and market expansion will be crucial in overcoming these hurdles and restoring investor confidence.

Full transcript - Atlasclear Holdings Inc (ATCH) Q4 2025:

Conference Operator: Good day, and welcome to Atlas Clear Holdings fourth quarter and full year twenty twenty five earnings conference call. All participants will be in listen only mode. Please note today’s call is being recorded. Today’s call will be led by John Shively, executive chairman, and Craig Ridenour, president of Atlas Clear Holdings. Also joining us is Jeff Rampson, CEO of PCG Advisory, who will provide the safe harbor statement and manage the q and a portion of today’s call.

Jeff Rampson, CEO of PCG Advisory, PCG Advisory: Thank you, operator. Before we begin, I’d like to remind everyone that today’s call may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. For more details, please refer to our annual report on Form 10 k for the fiscal year ended 06/30/2025 and other filings with the SEC. Atlas Clear undertakes no obligation to update forward looking statements except as required by law.

With that, I’ll now turn the call over to John Scheibley, executive chairman.

John Shively, Executive Chairman, Atlas Clear Holdings: Thank you, Jeff, and good morning, everyone. Fiscal twenty twenty five was a pivotal year for Atlas Clear. It was our first full fiscal year as a public company. And while we absorbed significant onetime costs, we also laid the foundation for a business we believe will scale profitably for many years to come. Our vision remains clear, to build a vertically integrated platform for trading, clearing, settlement of financial assets, and ultimately banking services focused on serving small and midsized financial institutions.

These firms have been long underserved by larger clearing providers, and Atlas Clear is stepping in to fill that gap. We are especially proud of the performance of Wilson Davis, our broker dealer subsidiary, which remained profitable throughout the year. That gives us confidence that our model works even as we continue to integrate acquisitions and invest in technology. Let me touch on a few highlights from fiscal twenty twenty five. Wilson Davis delivered steady profitability.

We saw strong commission and clearing revenues as well as meaningful growth in our stock loan business. Our revenue base has become more diversified with securities lending and interest income contributing alongside commissions and clearing, strengthening the company’s resilience and overall financial profile. We’ve made technology progress. We launched our OLA digital account opening solution, which automates much of the onboarding and compliance processes. Additionally, lockbox code rollouts are planned for 2026, which we believe will accelerate stock lending and lending profitability.

Strategic positioning. With Wilson Davis’ licensing, our pending Commercial Bancorp acquisition, and our technology stack, we are positioning Atlas Clear as a true one stop platform for fintech driven financial services. Debt reduction, we’ve made significant progress in reducing obligations incurred during the de SPAC, improving our balance sheet and lowering our interest costs. Capital strength. We closed the fiscal year with 11,200,000.0 in net capital at Wilson Davis, which is well above regulatory requirements, and that underscores the stability of our platform.

These achievements highlight that while 2025 was a transition year, it was also a year of execution financially, strategically, and operationally. Let me now walk through the numbers for q four results. At the consolidated level, we reported our first quarter of positive cash flow but still reported a net loss. This was primarily driven by noncash items, including fair value adjustments on notes and asset write downs as well as elevated regulatory and professional costs related to the DSTAC and ongoing integration. But importantly, at the operating level, Wilson Davis was profitable once again in q four.

That consistency shows the strength of our commission and clearing driven model. For the full year 2025, our revenues came primarily from commissions, clearing fees, vetting fees, with growing contributions from stock loan and interest income. Operating profitability at Wilson Davis was offset at the consolidated level by onetime expenses, interest expense on the outstanding notes, and noncash impairments. To put it simply, we bit the bullet this year on transaction related ex expenses, but the core business showed increasing profitability, growing, and more financially resilient business, thanks to debt reduction and capital strength. I wanna touch on the financial improvements.

As of 06/30/2024, our total debt from the DSTAC and penalties caused by delays in our asset filings following the DSTAC was $52,643,291. As of today, unaudited, those liabilities have been reduced by 83% to $8,000,945.355. We extinguished over $43,000,000 in liabilities, which I think is remarkable. We secured an additional 5,000,000 in notes, the cash from which is helping to support our growth, making our total liabilities approximately 14,900,000.0. As of today, our unaudited improvement in stockholder equity versus year end 2024 is up over $43,000,000.

The net capital for Wilson Davis as of 08/30/2025 was 11,400,000.0. And then with respect to stock loan revenue, our net stock loan revenue continues to grow. In July, it was 258,000. In August, it was 281,000, and month to date, September, is over 400,000. I’ll now turn the call over to Craig.

Craig Ridenour, President, Atlas Clear Holdings: Thank you, John. Looking ahead to fiscal twenty twenty six, our priorities are clear. One, debt restructuring and capital raising. We have successfully eliminated more than 80% of the DSBAC related obligations and have secured 5,000,000 in new capital for growth. With additional capital, we can onboard more introducing brokers and accelerate growth.

Two, technology deployment. We expect further rollouts of technology that will enhance client onboarding, compliance, and lending with a focus on new product development, such as crypto, all of which should translate to higher revenue and margins. Three, begin the commercial bank or effort by acquisition. Once completed, this will give us low cost funding and expanded recurring revenues while strengthening our bank banking capabilities. Four, operational growth.

We anticipate increased profitability at Wilson Davis driven by stock loan, margin lending, commission growth, and most importantly, through the addition of new correspondent clearing customers. Five, identifying and executing strategic acquisitions. We expect to selectively pursue acquisitions that we would believe will create value for our shareholders. We plan to evaluate acquisition opportunities based on a number of strategic parameters, including their ability to, one, enhance our product capabilities, two, broaden our client reach, three, drive further scale, four, increase our presence in new geographies, and five, generate attractive financial returns. Fiscal twenty twenty five was not just about solidifying our foundation.

It was about proving we can execute. We reduced debt, strengthened our balance sheet, launched technology that is already in use, and improved materially the profitability of our operating subsidiary. Those accomplishments give us confidence heading into fiscal twenty twenty six and beyond. Before I hand it back over to John for closing remarks, I’d like to highlight a few key developments that occurred after fiscal year end and have already been made public. In September 2025, we closed a $5,000,000 financing via promissory notes, which provides additional liquidity as we continue to execute our growth and capital plans.

What makes this particularly meaningful is that the final 2,000,000 was provided by two of our own board members. That insider participation underscores the alignment between leadership and shareholders, and it signals the confidence our directors and executives have an Atlas Clear strategy and future. Also in September, we clarified that our fiscal year end remains 06/30/2025 and reaffirmed our commitment to timely file our 10 k by September 29, which we achieved. The release further reflects our progress, particularly in areas like stock lending. In addition, we engaged PCG advisory to lead our investor relations and strategic communication efforts with the goal of enhancing how we communicate our strategy and results to the capital markets and increasing Atlas Clear’s visibility with both institutional and retail investors.

Last week, we were pleased to announce that Steve Carlson, a seasoned Wall Street leader, has rejoined our board as an independent director. His appointment not only reinforces our compliance with NYSE requirements, but also brings valuable expertise and experience that will strengthen our leadership team. Finally, we are proud to announce that our third introducing corresponding client assigned with Atlas Clear to begin migrating its business to our firm. This client’s impact on our profits in 2026 could be material. This is a point we wanna draw focus upon because this is the path to scale.

While not included in the fiscal twenty twenty five audited results, these developments strengthen our balance sheet, improve transparency, bolster our leadership leadership team, and raise it our mark raise our market profile heading into fiscal twenty twenty six. And I’ll pass it off to John for closing remarks. Thank you.

John Shively, Executive Chairman, Atlas Clear Holdings: Thank you, Craig. To summarize, fiscal twenty twenty five was a year of transition and achievement. We took on onetime costs, but we also delivered major wins, debt reduction, capital strength, technology launches, client growth, and consistent operating profitability. We’re confident that our integrated strategy, our experienced leadership team, and expanding technology platform positions Atlas Clear for long term success. Thank our employees, our clients, and, of course, our shareholders for their continued support, and we look forward to updating you on our progress as we move into fiscal twenty twenty six.

Jeff Rampson, CEO of PCG Advisory, PCG Advisory: Thank you, John and Craig. Before this call, we collected and reviewed the questions that came in from investors and analysts. I’ll go through them one by one, directing them to John or Craig for their response, and to add any follow-up remarks were helpful. John, the first question I have, for you is you’ve reduced the leaseback liabilities by more than 80% and repaid $43,000,000 in debt, which is a significant achievement. How does this stronger balance sheet change the way you’re thinking about growth and acquisitions?

John Shively, Executive Chairman, Atlas Clear Holdings: It’s it’s changed the way the world looks at us, and it’s completely changed our opportunities to attract additional capital. Not only did we manage to pay off over 43,000,000 in debt, but we also were able to lift the net income of our operating facility by almost 300%. So we’re showing significant growth while our finances get materially stronger. The consequence of that has been our funds are ringing off the hook, and we’re very excited about our capacity to get more capital at better prices for our shareholders moving forward. K.

Jeff Rampson, CEO of PCG Advisory, PCG Advisory: K. Craig, I have a question for you. It’s, you just announced your third correspondent clearing client. What does your pipeline look like from here, and how quickly can you bring new clients onto the platform?

Craig Ridenour, President, Atlas Clear Holdings: Yeah. Thank you, Jeff. It’s a great question. We get a lot of we got the get these often. You know, our greatest opportunity to scale is through adding corresponding clients as we highlighted earlier in this call.

We are pleased that we just signed our third. But what it means for us is is significant because we have a number of correspondent clearing potential clients in the pipeline in various stages. But we also have to look at the the the actual market that’s out there. Our goal at Atlas Clear Holdings and through Wilson Davis is to target the small institution financial space. So that’s small broker dealers, small family offices, hedge funds, you know.

And and what we’re doing is we’re targeting those because they’ve really been orphaned to get true clearing for their assets, for their financial assets. So the market itself is vast. There are very few that are focusing on this part of the market. We are. So right now, our pipeline is lively.

It’s it’s filling up. And really, the the the restriction or the constraints that we have right now are are two two things. One is capital. Because to this point, although we’re growing our capital base, we really haven’t added a big infusion of capital, which even really makes our our results even more, you know, impressive, I believe. But second, it’s just our capacity.

We have a great staff. We’ve got a seasoned staff to onboard these corresponding clearing clients, but we’re looking to expand our staff greatly to meet the need, which is a good problem to have. Because, you know, as we expand our our ability human bandwidth wise and our capital base, we think we’ve got a very bright future in scaling up on the corresponding clearing client initiative.

Jeff Rampson, CEO of PCG Advisory, PCG Advisory: Great. Thank you. Thank you. Okay. And also, you recently extended the agreement to acquire Commercial Bancorp.

So what do you see as the biggest benefits of combining their banking operations with your clearing platform?

Craig Ridenour, President, Atlas Clear Holdings: Well, you know, I’m glad you brought that up. I mean, one of the things that gets lost often, Jeff, is that we do have Commercial bank or who’ve been tremendous to us. They have stuck with us through a very long and lengthy process. But we’ve always identified commercial bank or as one wonderful people run a very good business. It’s clean.

It’s profitable. It’s over a hundred and ten year old charter. But for us, when we integrate that with a correspondent clearing license, provided we receive a successful approval and we we anticipate beginning the federal approval process here shortly. But let’s assume we get a successful approval by the fed. What it allows us to do is create internal synergies.

Right? One, for clients that are sitting at Wilson Davis. Wilson Davis is not a bank. So our cash deposits that we carry on hand actually have to be swept nightly to a bank. In this scenario with Commercial Bank Corp in the fold, we could sweep a band of those deposits directly into Commercial Bank Corp or Farmer State Bank as they operate.

Consequently, we could also extend lines of credit directly out from commercial bank or slash pharma state bank back out into Wilson Davis and out to the clients that we serve. And through that, we’re talking about margin lending, things like that. So we create an internal synergy or a one stop solution where, one, we’re capturing more net interest margin. We can extend better credit. We increase the deposit capabilities of Commercial Bancorp.

But then in the bigger picture of everything, we have to look at it from the perspective of with Commercial Bancorp in the fold, we would then be able to get a Fed master account. We’re able to get go to the Fed window. Also, with with the custody capabilities of Commercial Bancorp, when you talk about crypto and digital assets and the things that we can do longer term, it really just opens up the world when you marry it to the licensing set that we have at Wilson Davis. So when you take those two licensing sets together, you combine them, you create a platform that’s very difficult to replicate, and we think we’ll be in a very unique spot.

Jeff Rampson, CEO of PCG Advisory, PCG Advisory: Excellent. Great. Thank you. John, so you had mentioned the $5,000,000 financing in September, was which included 2,000,000 from the board members some some of the board members, I should say. How should investors interpret that level of insider participation?

Can you expand on that a bit?

John Shively, Executive Chairman, Atlas Clear Holdings: Yeah. Thanks. Thank you for that question, Jeff. It’s a great one. I can’t think of a of a higher compliment than when you have someone like Bob Keeser who runs Dawson James for a a long time and run sixty Capital, which was actually the investor in our fund, for him to come on board, really get to know the company in a way that only a director can, and then decide to put more money in.

And then Sandy Patel, who is a corporate lawyer, was a CPA, tremendously successful individual. He has the same access for information. He had previously invested with us through the DSBAC process for him to come in to have access to every drop of information and stand behind it and say, this is worth more money. I really can’t think of a better endorsement than people who are sophisticated, intelligent, and successful, who know everything about the company to come out and say, we’re putting more money. And so I think that should be something that shareholders look at and think about the fact that every member of our board and our executive management team is cash invested in this business.

We’re all aligned. And so for these qualified people to come in and put more money in, seeing the opportunity, I think that should really resonate with shareholders. Great. Excellent.

Jeff Rampson, CEO of PCG Advisory, PCG Advisory: Last question I think we have here is, we’ve heard references to Hanrae in the context of Atlas Clear strategy. Can you share how Hanrae fits into the broader growth plans and what investors should understand about its contribution going forward?

Craig Ridenour, President, Atlas Clear Holdings: Sure. Absolutely. Jeff, I’ll take that. Yeah. We get a lot of questions about Hannaire.

Obviously, that is a agreement that we signed at the end of last year, and and Hannaire is still alive. Can’t get into the details on why it’s taken as much time as it has, but we’re in regular communication with them. They are they have the desire to make make an investment into us. We understand that the funding is imminent, that they’ll be receive their funding imminent. So, you know, we we we look forward to them being able to come on board and making an investment into us.

But all that being said, you know, as as we’ve seen over the last three or four weeks of people that have filed the stock and filed the, obviously, the volume and the liquidity and all the things we’ve touched on in this call, the world’s kind of opened up for us. It’s changed. It’s changed drastically. The street has now started to recognize the fundamental value that we have contained within Wilson Davis, and then we can extend that out and beyond and all the other things we’re gonna do, including Commercial Bancorp. And with the balance sheet in the position that it is, we have been fielding calls regularly from institutions, from direct investments.

So we have a lot of different opportunities for funding at this point in time to take additional capital in. And we are very excited about the possibility of Hannah and I are coming on board. At the same time, we’ve gotta strike while the iron is hot because all the performance, everything we’ve done has gone with basically no capital going into Wilson Davis, and we need to put an infusion of capital in there. So we’re getting some really neat offers, some great opportunities. We think capital, will be a strong point for us, you know, as we go forward.

And, we’re excited about the opportunity in front of us because, with capital in the engine, we think we’ve got a very bright future.

Jeff Rampson, CEO of PCG Advisory, PCG Advisory: Guys, I I don’t have any more questions, here. Operator, that’s it for the questions. And guys, thank you very much.

John Shively, Executive Chairman, Atlas Clear Holdings: Thank you, Jeff. Thank you, Craig.

Conference Operator: Thank you. And that concludes today’s conference call. Thank you for your participation in Atlas Clear Holdings fourth quarter and full year twenty five earnings. You may now disconnect.

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