By Thomas Kerr, CFA

 NASDAQ:NWTG

READ THE FULL NWTG RESEARCH REPORT

4th Quarter 2024 Financial Results

On March 31, 2025, Newton Golf Company (NASDAQ:NWTG) reported 4th quarter and full year 2024 financial results which show strong revenue growth and a substantial increase in gross margins. Revenues in the 4th quarter increased to $1.07 million, an 817% increase from $117,000 in the 4th quarter of 2023. Gross margins in the 4th quarter increased to 73% from 36% in the prior year. This was driven by enhanced manufacturing efficiencies and an increase in the mix of shafts being sold, which carry higher gross margins when compared to putters.

Full Year 2024 Financial Results

Revenues for the full year 2024 were $3.45 million, which was an 887% increase from 2023. Gross margins for the year improved to 67% compared to 35% in the prior year period. Approximately 92% of revenues were derived from the sale of Newton Shafts. Approximately 84% of revenues were direct-to-consumer through the company’s websites. The large net loss in 2024 was significantly impacted by the accounting for a warrant liability (explained below).

Warrant Liability

On Dec. 12, 2024, the company issued 7,000,000 common shares along with 8,050,000 Series A warrants and 8,050,000 Series B warrants. Under GAAP accounting guidelines, the company recorded corresponding warrant liabilities at fair value as of Dec. 31, 2024 that amounted to $1,805,000 for Series A warrants and $12,456,000 for Series B warrants. These warrant-related liabilities materially contributed to financing expenses of $7,326,000. This was a substantial portion of the net loss reported in fiscal 2024.

As of March 31, 2025, approximately 92% of the Series B warrants had been exercised, which extinguished most of the Series B warrant liability balance of $11,750,000 while increasing stockholders’ equity.

The reversal of the warrant liability by $11,750,000 will improve Newton Golf’s profitability and strengthen the balance sheet by significantly lowering total liabilities in 2025. Furthermore, as the remaining outstanding warrants are exercised, additional liability reductions will help improve the company’s financial stability and performance in 2025 and beyond.

Balance Sheet & Liquidity

As of December 31, 2024, the company had current assets of approximately $9.0 million and current liabilities of approximately $14.9 million. Current liabilities contained the large warrant liability of $14.3 million which is expected to reverse in 2025. Cash balances at year-end were $7.7 million compared to $5.3 million at the end of 2023.

We believe the company is fully funded to support its business operations for the next 12-14 months. It’s possible the company could reach cash flow breakeven in late 2025 or early 2026.

Business Highlights

• Successfully rebranded from Sacks Parente Golf to Newton Golf Company, reinforcing its physics-driven approach to golf equipment innovation.

• Expanded product portfolio, launching Newton Fairway Motion Shafts, five new Newton Gravity putter models, and the new Fast Motion shaft line, a lighter-weight shaft available in a distinct new color.

• Broadened global presence, securing distribution in 50 of Japan’s largest golf retail locations.

• Increased tour adoption, with over 30 players putting the Newton Motion Shaft in play on the PGA TOUR Champions during 2024. Newton Golf continues to expand its presence, with growing traction on both the PGA Tour and LPGA Tour.

• Doug Barron captured a major victory at the Regions Tradition on the PGA TOUR Champions using a Newton Motion shaft, validating Newton’s performance on the sport’s biggest stages.

• In April 2025, the company announced the appointment of Andy Harris and Jeff Opheim as Tour representatives for the PGA TOUR, PGA TOUR Champions and Korn Ferry Tour. Company Founder and Chief Technology Officer, Aki Yorihiro will take on a key role as Tour Representative for the LPGA and PGA TOUR Champions.

Greg Campbell, chairman and CEO of Newton Golf Company stated, "2024 was a transformative year for Newton Golf, as we successfully executed our strategic vision and delivered exceptional financial and operational performance. Our tenfold revenue growth, substantial margin expansion, and increasing tour adoption demonstrate the effectiveness of our innovation and market strategy. With expanding tour presence, including players on the PGA Tour and LPGA Tour, and the launch of our new Fast Motion shaft line, we continue to drive industry-leading performance and brand recognition. With a strong foundation in place, we are focused on scaling operations, expanding global distribution, and driving sustained growth in 2025 and beyond."

Valuation and Estimates

Our primary valuation tool utilizes a Discounted Cash Flow process. Based on growth and profitability projections, our DCF-based valuation target is approximately $12.00 per share. Our target price may be conservative as it utilizes a high discount rate of 15.0% due to the unpredictability of earnings, higher prevailing interest rates, and the timeline for reaching net profitability on an annual basis.

The company provided a total revenue outlook for 2025 in the range of $6.5-$7.0 million. Our 2025 full year revenue estimate is $6.8 million due to global economic uncertainties in the 1st half of 2025. Our 2025 GAAP EPS estimate is $1.79, however that figure takes into account the reversal of the warrant liability in 2025. Our non-GAAP EPS estimate for 2025 is a loss of ($0.46). For 2026, we believe the company can continue to generate strong double-digit revenue growth and our revenue estimate for 2026 is $10.2 million and our 2026 EPS estimate is $0.17.

We expect the company to reach cash flow breakeven in calendar year 2026.

The current market cap appears to be irrational and more reflective of the ongoing microcap stock malaise as opposed to company fundamentals.

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