Third Quarter Summary
- The Company continued its planned transition from a perpetual license model to a more predictable subscription license model generating
$1.47M in license and subscription revenue for the first three quarters of the year, an increase of 50% as compared to$977K in the first three quarters of the previous year $4.03M of revenue for the third quarter as compared to$4.04M in the third quarter of the previous year$840K in Adjusted EBITDA loss for the third quarter as compared to Adjusted EBITDA of$370K in the third quarter of the previous year$658K of net loss for the third quarter as compared to$180K of net income in the third quarter of the previous year$11.47M in revenue for the nine months as compared to$11.74M in the previous year$2.12M in Adjusted EBITDA loss for the nine months as compared to Adjusted EBITDA of$596K in the previous year$2.91M in net loss for the nine months as compared to$282K of net loss in the previous year- For the first three quarters of the year, approximately
$1.9M of expense contributing to the net loss for the same period related to the office lease payments and one time lease termination costs as the Company rationalized its real estate requirements during the second quarter and will realize costs savings in excess of$2.2M per year going forward
On
Third Quarter Financial Results | ||||||||
(Expressed in thousands of Canadian dollars) | ||||||||
(Unaudited) | ||||||||
Quarter ended | Nine months ended | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Revenue | $ | $ | $ | $ | ||||
License and subscription fees | 568 | 539 | 1,468 | 977 | ||||
Professional services | 1,529 | 1,502 | 4,256 | 4,560 | ||||
Maintenance and support | 1,933 | 1,997 | 5,743 | 6,203 | ||||
4,030 | 4,038 | 11,467 | 11,740 | |||||
Cost of revenue | 1,113 | 920 | 3,545 | 2,877 | ||||
Gross profit | 2,917 | 3,118 | 7,922 | 8,863 | ||||
Operating Expenses | ||||||||
Research and development | 1,803 | 1,329 | 5,148 | 4,210 | ||||
Sales and marketing | 547 | 572 | 1,623 | 1,654 | ||||
General and administrative | 1,407 | 847 | 3,269 | 2,403 | ||||
3,757 | 2,748 | 10,040 | 8,267 | |||||
Adjusted EBITDA | (840) | 370 | (2,118) | 596 | ||||
Share-based payment expense | 4 | 10 | 17 | 64 | ||||
Depreciation and amortization | 51 | 229 | 960 | 671 | ||||
Lease termination costs | - | - | 467 | - | ||||
Income (loss from) operations | (895) | 131 | (3,562) | (139) | ||||
Foreign exchange loss (gain) | (233) | (66) | (353) | 84 | ||||
Finance income | (6) | (6) | (38) | (15) | ||||
Finance expense | 2 | 23 | (262) | 74 | ||||
Net income (loss) for the period | (658) | 180 | (2,909) | (282) |
Non-IFRS Measures
This news release includes certain measures that have not been prepared in accordance with International Financial Reporting Standards ("IFRS") such as Adjusted EBITDA and Adjusted EBITDA margin which are used to evaluate the Company's operating performance as a complement to results provided in accordance with IFRS. The Company believes that Adjusted EBITDA and Adjusted EBITDA margin are useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation and the other items listed below.
The term "Adjusted EBITDA" refers to net income (loss) before adjusting for share-based payment expense, depreciation and amortization, lease termination costs, deferred share unit expense, restructuring costs, foreign exchange loss (gain), finance income, finance costs, and income taxes. "Adjusted EBITDA margin" refers to the percentage that Adjusted EBITDA for any period represents as a portion of total revenue for that period.
The term Adjusted EBITDA and Adjusted EBITDA margin are not measures recognized by IFRS and do not have standardized meanings prescribed by IFRS. Therefore, Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similar measures presented by other issuers. Investors are cautioned that Adjusted EBITDA and Adjusted
EBITDA margin should not be construed as an alternative to net income (loss) as determined in accordance with IFRS.
About
Based in
NexJ Forward-looking Statement
Certain statements in this press release, including statements about the financial conditions, and results of operations and earnings, may contain words such as "may", "will", "expect", "anticipate", "aim", "estimate", "intend", "plan", "seek", "believe", "potential", "continue", "is/are likely to", "could", "should", "target", "envision", and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on the Company's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which the Company operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. The Company's assumptions, although considered reasonable by the Company at the date of this press release, may provide to be inaccurate and consequently the Company's actual results could differ materially from the expectations set out herein.
Actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following: (i) the future performance, financial and otherwise, of
The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) out ability to successful integrate and manage acquired businesses, offerings and people; (ii) our dependence on a limited number of customers and large project size; (iii) fluctuation in our quarterly operating results; (iv) our dependence on key personnel, and ability to attract and retain talent; (v) our compensation structure; (vi) risks associated with managing large and complex software implementation projects; (vii) uncertainties and assumptions in our sales forecasts, including the extent to which sales proposals are converted into sales; (viii) risks associated with our ability to design, develop, test, market, license and support our software products on a timely basis; (ix) market acceptance of our products and services; * commercial success of products resulting from our investment in research and development; (xi) our success in expanding sales into new international markets; (xii) competition in our industry; (xiii) failure to protect our intellectual property or infringement of intellectual property rights of third parties; (xiv) reliance upon a limited number of third-party software products to develop our products; (xv) defects or disruptions in our products and services; (xvi) currency exchange rate fluctuations; (xvii) lengthy sales cycles for our software; (xviii) general economic conditions; and (xviii) failure to manage our growth successfully.
For additional information with respect to risks and other factors which could occur, see the Company's most recently filed Annual Information Form for the year ended
| |||
Condensed Interim Statements of Financial Position | |||
(Expressed in thousands of Canadian dollars) | |||
(Unaudited) | |||
Assets | |||
$ | $ | ||
Current assets: | |||
Cash and cash equivalents | 4,511 | 5,489 | |
Accounts receivable | 1,087 | 5,457 | |
Prepaid expenses and other assets | 852 | 1,334 | |
Total current assets | 6,450 | 12,280 | |
Non-current assets: | |||
Property and equipment | 381 | 612 | |
Right-of-use assets | 245 | 951 | |
Goodwill | 1,753 | 1,753 | |
Contract assets | 33 | 88 | |
Total non-current assets | 2,412 | 3,404 | |
Total assets | 8,862 | 15,684 | |
Liabilities and Shareholders' Equity | |||
Current liabilities: | |||
Accounts payable and accrued liabilities | 2,299 | 2,023 | |
Deferred revenue | 3,740 | 6,592 | |
Lease liabilities | 114 | 1,152 | |
Total current liabilities | 6,153 | 9,767 | |
Non-current liabilities: | |||
Accrued liabilities | 68 | 62 | |
Deferred revenue | 5 | 328 | |
Lease liabilities | 84 | 83 | |
Total non-current liabilities | 157 | 473 | |
Total liabilities | 6,310 | 10,240 | |
Shareholders' equity: | |||
Share capital | 83,485 | 83,485 | |
Share purchase loans | (3,598) | (3,598) | |
Contributed surplus | 8,752 | 8,735 | |
Accumulated other comprehensive income | 751 | 751 | |
Deficit | (86,838) | (83,929) | |
Total shareholders' equity | 2,552 | 5,444 | |
Total liabilities and shareholders' equity | 8,862 | 15,684 |
Condensed Interim Statements of Comprehensive Income (Loss) | |||||||
(Expressed in thousands of Canadian dollars, except per share amounts) | |||||||
(Unaudited) | |||||||
Three months ended | Nine months ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
Revenue | $ | $ | $ | $ | |||
License and subscription fees | 568 | 539 | 1,468 | 977 | |||
Professional services | 1,529 | 1,502 | 4,256 | 4,560 | |||
Maintenance and support | 1,933 | 1,997 | 5,743 | 6,203 | |||
4,030 | 4,038 | 11,467 | 11,740 | ||||
Cost of revenue | 1,113 | 919 | 3,546 | 2,874 | |||
Gross profit | 2,917 | 3,119 | 7,921 | 8,866 | |||
Expenses: | |||||||
Research and development | 1,803 | 1,328 | 5,149 | 4,223 | |||
Sales and marketing | 547 | 573 | 1,623 | 1,657 | |||
General and administrative | 1,462 | 1,087 | 4,244 | 3,125 | |||
Lease termination costs | - | - | 467 | - | |||
3,812 | 2,988 | 11,483 | 9,005 | ||||
Income (loss) from operations | (895) | 131 | (3,562) | (139) | |||
Foreign exchange gain (loss) | 223 | 66 | 353 | (84) | |||
Finance income | 6 | 6 | 38 | 15 | |||
Finance expense | (2) | (23) | 262 | (74) | |||
227 | 49 | 653 | (143) | ||||
Net income (loss) for the period | (668) | 180 | (2,909) | (282) | |||
Other comprehensive income (loss): | |||||||
Items that will not be reclassified to profit or loss: | |||||||
Unrealized income (loss) on equity securities | - | 6 | - | (1) | |||
Income (loss) for the period and | |||||||
comprehensive income (loss) | (668) | 186 | (2,909) | (283) | |||
Earnings (loss) per share | |||||||
Basic and diluted | (0.03) | 0.01 | (0.14) | (0.01) | |||
Weighted average number of common shares | |||||||
outstanding, in thousands | |||||||
Basic | 21,076 | 21,067 | 21,076 | 21,059 | |||
Diluted | 21,076 | 21,105 | 21,076 | 21,059 |
Condensed Interim Statements of Cash Flows | |||
(Expressed in thousands of Canadian dollars) | |||
(Unaudited) | |||
Nine month ended | Nine month ended | ||
Cash flows from (used in) operating activities: | $ | $ | |
Loss for the period | (2,909) | (282) | |
Adjustments for: | |||
Depreciation and amortization of property and equipment | 112 | 156 | |
Depreciation of right-of-use assets | 848 | 515 | |
Changes in contract assets | 55 | (46) | |
Share-based payment expense | 17 | 64 | |
Loss on disposal of fixed assets | 71 | - | |
Finance income | (38) | (15) | |
Finance expense | (262) | 74 | |
Foreign exchange loss (gain) | (133) | 22 | |
Change in non-cash operating working capital: | |||
Accounts receivable | 4,370 | 2,112 | |
Prepaid expenses and other assets | 482 | 184 | |
Accounts payable and accrued liabilities | 282 | 171 | |
Deferred revenue | (3,175) | (1,793) | |
Net cash flows from (used in) operating activities | (280) | 1,162 | |
Cash flows from (used in) financing activities: | |||
Payment of lease liabilities | (910) | (839) | |
Interest paid | (7) | (4) | |
Proceeds from exercise of stock options | - | 9 | |
Net cash flows used in financing activities | (917) | (834) | |
Cash flows from (used in) investing activities: | |||
Purchase of property and equipment | (5) | (32) | |
Proceeds from disposal of fixed assets | 53 | - | |
Interest received | 38 | 15 | |
Net cash flows from (used in) investing activities | 86 | (17) | |
Effects of exchange rates on cash and cash equivalents | 133 | (22) | |
Increase in cash and cash equivalents | (978) | 289 | |
Cash and cash equivalents, beginning of period | 5,489 | 5,426 | |
Cash and cash equivalents, end of period | 4,511 | 5,715 | |
Supplemental cash flow information: | |||
Acquisition of property and equipment not yet paid | - | 10 |
SOURCE
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