TROOPS, Inc. (TROO)

Executive Summary / Key Takeaways

• TROOPS, Inc. (NASDAQ:TROO) is undergoing a significant strategic transformation, evolving from a traditional money lending and property business in Hong Kong and Australia into a diversified financial technology (fintech) and co-living/co-working space operator with global ambitions.
• The company's core investment thesis hinges on its integrated ecosystem, combining lending with property management and an online financial marketplace leveraging AI, big data, and blockchain to enhance efficiency and customer engagement.
• Recent strategic initiatives, including a £40 million UK property acquisition and stakes in Malaysian and Taiwanese co-living/co-working spaces, signal an aggressive global expansion and asset diversification strategy.
• A strategic investment exceeding US$10 million from Wang & Lee Group, Inc. is critical for integrating cutting-edge AI, IoT, and blockchain technologies, aiming to scale smart systems across up to 200 buildings and develop an ESG rewards system.
• While the company reported a significant net loss of $13.41 million in 2024 and negative profitability margins, its substantial revenue growth of 182.24% in 2024 and a strong current ratio of 3.3x suggest a focus on expansion and liquidity management amidst its transformative phase.

The Evolution of TROOPS: From Lending to a Global Fintech Ecosystem

TROOPS, Inc., founded in 2005 and formerly known as SGOCO Group, Ltd., has embarked on a profound strategic metamorphosis. Initially rooted in money lending across Hong Kong, the People's Republic of China, and Australia, offering mortgage, personal, and corporate loans, the company has strategically expanded its purview. Its current identity, adopted in November 2021, reflects a broader ambition: to become a comprehensive financial technology (fintech) and real estate solutions provider. This evolution positions TROOPS within a dynamic industry landscape, where traditional financial services are increasingly converging with digital innovation and flexible living/working solutions.

The company's overarching strategy is to create an integrated ecosystem that leverages technology to enhance its diverse business lines. This includes the development and management of an online financial marketplace, offering one-stop fintech solutions powered by artificial intelligence (AI), big data, blockchain, and cloud computing. Beyond lending and fintech, TROOPS is actively involved in property investment, lease, and management, alongside consultancy services for insurance products and advisory services. This multi-faceted approach aims to capture value across various customer touchpoints, from securing financing to managing living and working spaces.

TROOPS operates in a competitive environment characterized by both established financial giants and agile fintech disruptors. In the traditional lending space, it contends with major players like HSBC Holdings plc (HSBC) and Commonwealth Bank of Australia (CMWAY). These incumbents benefit from immense scale, extensive customer bases, and robust capital reserves. HSBC, with its global network and strong presence in Hong Kong, and CMWAY, a dominant force in Australia, demonstrate stronger profitability margins and cash flow generation due to their diversified operations and economies of scale. TROOPS, as a more specialized, regionally focused entity, differentiates itself through its agility and technology-driven approach, aiming to serve niche markets with greater efficiency.

In the burgeoning fintech sector, TROOPS faces competition from innovators like Upstart Holdings, Inc. (UPST), a U.S.-based company specializing in AI-driven lending platforms. While UPST exhibits rapid revenue growth, TROOPS' unique value proposition lies in its integrated ecosystem, combining lending with real estate and SaaS services. This offers a more holistic solution compared to UPST's pure AI lending focus. TROOPS' strategic emphasis on fintech innovations, such as mobile applications and API consulting, could enable faster processing for loan applications and more tailored user experiences, potentially giving it an edge in customer engagement within its target markets. However, TROOPS' regional focus and smaller scale mean it must continually innovate to compete effectively against the broader reach and deeper pockets of its larger rivals.

Technological Edge: Fueling Efficiency and Expansion

At the heart of TROOPS' strategic pivot is its commitment to technological differentiation. The company is actively developing and integrating advanced technologies, including artificial intelligence, big data, blockchain, and cloud computing, into its online financial marketplace and property management solutions. These technologies are not merely buzzwords but are designed to deliver tangible benefits, creating a competitive moat and driving operational efficiency.

A critical development in this technological roadmap is the strategic investment from Wang & Lee Group, Inc., announced in April 2025, which is expected to exceed US$10 million. This partnership is specifically aimed at integrating cutting-edge AI, Internet of Things (IoT), and blockchain technologies across TROOPS' portfolio. The collaboration focuses on three key areas:

• AI-driven advertising platforms: These are designed to enhance tenant engagement, potentially leading to higher occupancy rates and improved customer loyalty in its co-living and co-working spaces.
• IoT smart home devices: These devices are intended to improve energy efficiency and security across its property assets. While specific quantifiable benefits are not detailed, the strategic intent is to reduce operational costs and enhance the tenant experience, making TROOPS' properties more attractive.
• Blockchain ESG rewards system: This initiative aims to promote sustainable practices among tenants and users. The development of ESG token partnerships and the integration of renewable energy solutions through Wang & Lee's Solar (HK) acquisition underscore a commitment to environmental, social, and governance principles, which can attract a growing segment of socially conscious investors and tenants.

The strategic roadmap includes ambitious goals, such as scaling IoT and AI systems across up to 200 buildings. This expansion is expected to improve building revenue through optimized management and increased tenant satisfaction. While precise performance metrics or target timelines for efficiency gains are not explicitly provided, the strategic intent is clear: to leverage technology for operational excellence, asset value enhancement, and a stronger competitive position. This technological integration is crucial for TROO to counter the scale advantages of traditional banks and to differentiate itself from pure-play fintech lenders by offering a more comprehensive and technologically advanced ecosystem.

Strategic Expansion and Financial Performance

Financially, TROOPS, Inc. reported total revenue of $10.07 million in 2024, marking a significant 182.24% growth from the previous year. This revenue expansion is a testament to its strategic initiatives and evolving business model. However, the company recorded a net loss of $13.41 million in 2024, translating to a diluted EPS of -$0.13. Profitability metrics reflect this challenge, with a TTM gross profit margin of 26.75%, an operating profit margin of -56.92%, and a net profit margin of -51.97%. The TTM EBITDA margin stands at -16.37%. These figures indicate that while TROOPS is generating substantial revenue growth, it is currently in an investment phase, incurring significant costs associated with its expansion and technological integration.

Despite the current unprofitability, the company's balance sheet shows signs of strategic liquidity management. As of 2024, total assets stood at $79.19 million, with current assets of $19.55 million. The company maintains a healthy current ratio of 3.31, suggesting strong short-term liquidity. Cash and cash equivalents were $5.17 million in 2024. Furthermore, TROOPS initiated a stock repurchasing plan in July 2025, agreeing to repurchase 4,400,000 shares for $3.96 million, with the stated intention to bolster shareholder value by reducing outstanding shares and strengthening its capital structure. The strategic investment from Wang & Lee Group, Inc. also provides a capital injection exceeding US$10 million, further bolstering liquidity for its growth initiatives.

Operational cash flow for 2024 was positive at $1.96 million, and free cash flow was $1.70 million. This indicates that despite net losses, the company's core operations are generating cash, which is crucial for funding its ongoing expansion and technology development without solely relying on external financing.

TROOPS' strategic initiatives in 2025 underscore its aggressive pursuit of global expansion and asset diversification. In August 2025, the company signed a non-binding Memorandum of Understanding to acquire a portfolio of UK property assets valued at approximately £40 million, aiming to diversify its asset mix with income-generating international real estate and expand its co-living/co-working footprint across Asia and Europe. This follows Letters of Intent in July 2025 by its subsidiary, Giant Connection Limited, to acquire a 49% equity interest in Y Concept Holding Limited, a Malaysian co-living and co-working space operator, and a 49% share ownership of WORK, Inc., a British Virgin Islands co-working space operator with operations in Taiwan. The Taiwan deal includes a put option for the vendor to sell the remaining 51% share ownership, indicating a path to full control. These moves demonstrate a clear strategic direction towards capitalizing on the growing demand for flexible living and working solutions globally.

Risks and Outlook

While TROOPS, Inc. presents a compelling growth narrative, investors must consider several pertinent risks. The company recently addressed a Nasdaq compliance issue, successfully regaining compliance with the minimum bid price requirement in September 2025. This resolution removes a significant overhang, but the underlying volatility that led to the deficiency remains a factor to monitor.

A more substantial risk stems from a Hong Kong High Court ruling on June 23, 2025, which demanded TROOPS and its subsidiaries pay HK$404.8 million (US$51.9 million) in damages for alleged fraudulent restructuring and conspiracy. TROOPS has vehemently rejected this ruling as "meritless" and has vowed to appeal, also announcing plans to launch a U.S. class-action lawsuit against FTI (FCN), claiming malicious prosecution. If the appeal fails, this judgment could severely impact TROOPS' liquidity and financial position, as the sum represents a significant portion of its financial resources.

The company's aggressive global expansion into co-living and co-working spaces, while strategically sound, also introduces execution risks associated with integrating new assets, managing diverse international operations, and navigating varying regulatory environments. The success of its technological integration with Wang & Lee Group, Inc. is also crucial. While the stated goals of AI, IoT, and blockchain integration are promising, the actual quantifiable benefits and the timeline for achieving them will be key determinants of future profitability and competitive advantage.

Looking ahead, TROOPS' outlook is heavily tied to the successful execution of its strategic transformation. The company's focus on integrating fintech solutions with its expanding real estate portfolio, particularly in the co-living/co-working sector, positions it to capitalize on evolving market trends. The ongoing investment in AI, IoT, and blockchain technologies, supported by the Wang & Lee partnership, is expected to enhance operational efficiency, improve tenant engagement, and diversify revenue streams. While specific quantitative guidance figures are not publicly available, the strategic initiatives suggest a clear intent to drive revenue growth and ultimately improve profitability as these investments mature. The ability to effectively appeal the Hong Kong court ruling and successfully integrate its new acquisitions will be critical catalysts for its future performance.

Conclusion

TROOPS, Inc. stands at a pivotal juncture, transforming from a regional lender into an ambitious global fintech and real estate ecosystem player. The core investment thesis is built upon its integrated business model, leveraging advanced technologies to drive efficiency and expand its footprint in the high-growth co-living and co-working sectors. The company's strategic acquisitions in the UK, Malaysia, and Taiwan, coupled with a significant technological investment from Wang & Lee Group, Inc., underscore a clear vision for growth and diversification.

While TROOPS currently faces profitability challenges, reflected in its net losses and negative margins, its robust revenue growth and healthy liquidity position provide a foundation for its transformative journey. The successful integration of AI, IoT, and blockchain technologies is paramount to realizing its competitive advantages, enabling faster loan processing, enhanced property management, and stronger customer engagement. Investors should closely monitor the outcome of the Hong Kong High Court appeal, the execution of its global expansion plans, and the tangible benefits derived from its technological roadmap. TROOPS' ability to navigate these operational and legal complexities while delivering on its technological promise will ultimately determine its long-term success and its ability to carve out a sustainable, profitable niche in the evolving financial and real estate landscapes.