TORONTO, March 8, 2022 /CNW/ – NexJ Systems Inc. (TSX: NXJ), delivering intelligent customer management software to the financial services industry, today announced financial results for its fourth quarter ended December 31, 2021.
Fourth Quarter Summary
- The Company continued its planned transition from a perpetual license model to a more predictable subscription license model generating $551K in license and subscription revenue for the fourth quarter, an increase of $505K as compared to $46K in the fourth quarter of the previous year
- Unbilled contracted subscription license revenue of $964K will be recognized as revenue in future quarters as compared to zero in the previous year
- $3.6M of revenue for the fourth quarter as compared to $4.2M in the fourth quarter of the previous year
- $225K in Adjusted EBITDA for the fourth quarter as compared to $836K in the fourth quarter of the previous year
- $186K of net loss for the fourth quarter as compared to $417K of net income in the fourth quarter of the previous year
- $1.5M in license and subscription revenue for the year, an increase of $1.3M as compared to $156K in the previous year
- $15.3M in revenue for the year as compared to $16.9M in the previous year
- $821K in Adjusted EBITDA for the year as compared to $985K in the previous year
- $468K in net loss for the year is a $1.0M improvement over $1.5M of net loss in the previous year
- Continued to increase the recurring subscription license revenue by delivering two new subscription license products to a leading bank based in Australia and New Zealand that support multiple cloud deployment options and real-time data streaming for enhanced analytics and reporting
“In 2021 our subscription-based license model continued to grow with subscription software licenses making up approximately 15% of total revenue in Q4 and 10% for 2021,” said Paul O’Donnell, CEO. “The new software pricing model introduced in January 2021 resulted in the deferral of revenue recognition on new software contracts which would otherwise have been recognized as revenue under the previous perpetual license model. Our strategic partnerships in globally recognizable financial services firms, growing subscription license opportunities and prudent management of expenses has established a strong foundation for 2022.”
NexJ Systems Inc.
Fourth Quarter Financial Results
(Expressed in thousands of Canadian dollars)
(Unaudited)
Quarter ended December 31,
Year ended December 31,
2021
2020
Revenue
$
License and subscription fees
551
46
1,528
156
Professional services
1,123
2,058
5,683
7,779
Maintenance and support
1,919
2,143
8,122
8,915
3,593
4,247
15,333
16,850
Cost of revenue
711
921
3,588
4,082
Gross profit
2,882
3,326
11,745
12,768
Operating Expenses
Research and development
1,132
1,082
5,342
5,514
Sales and marketing
491
610
2,145
2,543
General and administrative
1,034
798
3,437
3,726
2,657
2,490
10,924
11,783
Adjusted EBITDA
225
836
821
985
Share-based payment expense
12
(20)
76
164
Depreciation and amortization
249
212
920
862
Deferred share unit expense
–
275
Restructuring costs
(36)
924
Income (loss) from operations
680
(175)
(1,240)
Foreign exchange loss
136
222
220
148
Finance income
(5)
(2)
(47)
Finance expense
19
43
93
144
Net income (loss)
(186)
417
(468)
(1,485)
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, deferred share unit expense, restructuring costs, foreign exchange gain (loss), 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 NexJ Systems Inc.
NexJ Systems provides Intelligent Customer Management to the financial services industry. Our award-winning financial services productivity software is designed to help Wealth Management, Private Banking, Corporate and Commercial Banking firms revolutionize their business. Powered by artificial intelligence, our products help drive productivity, boost client engagement, and help drive increased revenues. With users in over 60 countries, our customers benefit from our deep expertise across financial services sub-verticals, strategic investment in innovation, and commitment to their success.
Based in Toronto, NexJ has clients throughout North America, Asia Pacific and in Europe. For more information about NexJ visit www.nexj.com, e-mail [email protected], or call 416-222-5611. Join us on LinkedIn, follow us on Twitter, subscribe to our YouTube channel, or like us on Facebook.
NexJ Forward-looking StatementCertain 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 NexJ; (ii) the ability of NexJ to protect, maintain and enforce its intellectual property rights; (iii) the acceptance by the Company’s customers and the marketplace of new technologies and solutions; (iv) the Company’s growth and profitability prospects; (v) the estimated size and growth prospects of the CRM market; (vi) the Company’s competitive position in the market and its ability to take advantage of future opportunities in this market; (vii) the Company’s ability to attract new customers and develop and maintain existing customers; and (viii) the demand for the Company’s product and the extent of deployment of the company’s products in the marketplace. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances.
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 investments in research and development; (xi) our success in expanding sales into new international markets; (xi) competition in our industry; (xii) failure to protect our intellectual property or infringement of intellectual property rights of third parties; (xiii) reliance upon a limited number of third-party software products to develop our products; (xiv) defects or disruptions in our products and services; (xv) currency exchange rate fluctuations; (xvi) lengthy sales cycles for our software; (xvii) 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 December 31, 2021 dated March 8, 2022, and other securities filings with the Canadian securities regulators available on www.sedar.com. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
NexJ Systems Inc.
Statements of Financial Position
(Expressed in thousands of Canadian dollars)
(Unaudited)
December 31, 2021
December 31, 2020
Assets
Current assets:
Cash and cash equivalents
5,489
5,426
Accounts receivable
5,457
3,546
Prepaid expenses and other assets
1,334
1,320
Total current assets
12,280
10,292
Non-current assets:
Property and equipment
612
768
Right-of-use assets
951
1,280
Goodwill
1,753
Investments
255
Contract costs
88
51
Other assets
403
Total non-current assets
3,404
4,510
Total assets
15,684
14,802
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities
2,023
1,874
Deferred revenue
6,592
5,374
Lease liabilities
1,152
967
Total current liabilities
9,767
8,215
Non-current liabilities:
Accrued liabilities
62
101
328
346
Lease liabilities
83
1,078
Total non-current liabilities
473
1,525
Total liabilities
10,240
9,740
Shareholders’ equity:
Share capital
83,485
83,471
Share purchase loans
(3,598)
Contributed surplus
8,735
8,664
Accumulated other comprehensive income (loss)
751
(14)
Deficit
(83,929)
(83,461)
Total shareholders’ equity
5,444
5,062
Total liabilities and shareholders’ equity
Statements of Comprehensive Income (Loss)
(Expressed in thousands of Canadian dollars, except per share amounts)
Quarter ended December 31,
Year ended December 31,
712
926
3,586
4,116
2,881
3,321
11,747
12,734
Expenses:
1,134
1,091
5,357
5,556
2,148
2,551
1,292
976
4,417
4,943
2,917
2,641
11,922
13,974
(136)
(222)
(220)
(148)
Finance income
5
2
20
47
Finance expense
(19)
(43)
(93)
(144)
(150)
(263)
(293)
(245)
Income (loss) for the year
Other comprehensive income (loss):
Items that will not be reclassified to profit or loss:
Unrealized gain (loss) on equity securities
1
(11)
Realized gain on sale of equity securities
765
Net income (loss) for the year and comprehensive income (loss)
580
406
297
(1,490)
Earnings (loss) per share
Basic and diluted
(0.01)
0.02
(0.02)
(0.07)
Weighted average number of common shares
outstanding, in thousands
21,076
21,100
21,064
20,888
Statements of Cash Flows
Year ended
Cash flows from (used in) operating activities:
Loss for the year
Adjustments for:
Depreciation and amortization of property and equipment
202
284
Depreciation of right-of-use assets
718
578
Changes in contract costs
(37)
85
218
77
214
Change in non-cash operating working capital:
(1,911)
1,929
Prepaid expenses and other assets
231
598
Accounts payable and accrued liabilities and provisions
110
(111)
1,192
(1,132)
Net cash flows from operating activities
263
1,439
Cash flows from (used in) financing activities:
Payment of lease liabilities
(1,120)
(850)
Interest paid
(6)
Proceeds from exercise of stock options
9
Costs of exercise of deferred share units
Net cash flows used in financing activities
(1,117)
(886)
Cash flows from (used in) investing activities:
Purchase of property and equipment
(46)
(83)
Sales of equity investment
1,020
Interest received
Net cash flows from (used in) investing activities
994
Effects of exchange rates on cash and cash equivalents
(77)
(214)
Increase in cash and cash equivalents
63
303
Cash and cash equivalents, beginning of year
5,123
Cash and cash equivalents, end of year
SOURCE NexJ Systems Inc.
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