- Record Sales of
"I'm very pleased to announce that
Operational Highlights for Q3:
- Market Expansion: Several noteworthy new deals were signed in the quarter:
- Three large distributors, two in the US and one in
Canada ; - Four commercial realty companies, including the company's first REIT in
Canada ; - Four add-on credit card processing contracts with existing clients.
- Strong quarter for ARC™ sales: 13 new ARCTM wins during the quarter that represented over
$1.25 million in new ARCTM ARR, with about 18% of sales coming through channel partners. From a geographic standpoint, 83% of sales came from the U.S. Moreover, the Company signed professional services contracts worth approximately$0.47 million in the quarter representing the highest quarter of such sales to-date. - Healthy conversion of backlog to ARC™ Revenue: The Company converted approximately 52% of its ARCTM subscription backlog (which are contractually signed but unbilled clients) as of
June 30, 2019 to revenue in the quarter, while growing its backlog of clients from$1.18 million at the end of Q2, 2019 to$1.57 million at the end of Q3 2019. This signals a healthy growth in the business, and continued revenue growth in the near term. - Strong growth in ARC™ usage metrics: The usage of ARCTM is an important indicator of the value clients are receiving from the platform and a good predictor of continued sales and revenue growth. As at the end of the quarter, 215,176 end-customers were using ARCTM compared to 129,331 at the end of Q3 2018, approximately 967,000 invoices were delivered to end-customers during the quarter compared to 561,000 invoices in Q3 2018, and finally 309,000 invoices worth
$305 million were paid on ARCTM in Q3 2019, compared to 213,000 invoices worth$179 million in Q3 2018.
Financial Highlights:
- Continued investment in ARCTM: Consistent with its growth strategy, the Company continued to invest in ARCTM to establish itself as the leader in the emerging AR Automation market. The continued investment in Research and Development ("R&D") and Sales & Marketing during the quarter contributed to the Company's continued net loss for the quarter.
- Revenue in Q3 2019 increased by 90% year over year: Revenue for Q3 2019 increased year over year by
$1.06 million to$ 2.23 million (Q3 2018:$1.17 million ), an increase of 90% year over year. Total ARCTM revenue, which has higher margins than the Company's other product, PayPort™, grew to$1.84 million as at the end of Q3 2019, compared to$0.71 million at Q3 2018 (growth of 161% year over year). - Total Operating expenses for Q3 2019 increased by 12% year over year: Operating expenses for Q3 2019 increased by
$0.47 million to$4.28 million (Q3 2018:$3.81 million ), an increase of 12% year over year. A bulk of this was made up of non-cash related expenditures including mark-to-market adjustment of share-based compensation (an increase of$0.21 million year-over-year), and an increase of$0.33 million in amortization due to the new IFRS 16 – Leases accounting standard[1]. Total salaries and benefits, however, were approximately$2.34 million in Q3 2019, a decrease of$0.19 million or 7% from Q3 2018. - ARCTM ARR for Q3 2019 increased by 134% year over year: ARCTM ARR increased to
$5.93 million in Q3 2019 compared to$2.53 million in Q3 2018. This represents an increase of 134% year over year. The increase in ARR is related mainly to ourU.S. expansion plan, vertical focused strategy, and customer-centric messaging.
1 See further details on the new IFRS 16 – Leases accounting standard implementation in the "Financial highlights" section.
The following is a reconciliation of Adjusted EBITDA to total comprehensive (loss) income:
Three months ended | Nine months ended | |||
2019 | 2018 | 2019 | 2018 | |
Recast | Recast | |||
$ | $ | $ | $ | |
Adjusted EBITDA | (1,789,638) | (2,773,100) | (6,430,710) | (7,844,326) |
Share based compensation | (231,543) | (80,683) | (917,673) | (1,093,414) |
Net finance expense (IFRS 16) | (150,446) | - | (429,702) | - |
Other finance income (costs) | 20,570 | 19,067 | 72,100 | 57,386 |
Amortization - RoU assets (IFRS 16) | (275,419) | - | (771,597) | - |
Amortization - other assets | (98,075) | (46,835) | (315,629) | (108,892) |
Other non-operating expenses | (40,000) | - | (40,000) | (155,000) |
Foreign currency translation differences | 33,910 | (13,557) | (40,815) | (13,200) |
Total comprehensive (loss) income | (2,530,641) | (2,895,108) | (8,874,026) | (9,157,446) |
The term Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") is a non-IFRS financial measure which does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. Adjusted EBITDA provides useful information to users as it reflects the net earnings before interest, taxes, depreciation and amortization and adjusted for the effect of non-operating expenses (including M&A and non-recurring restructuring activities), share-based compensation (which includes share-based payments, restricted share units, performance share units, and deferred share units), and unusual items such as discontinued operations and sales tax accrual. Management uses Adjusted EBITDA in measuring the financial performance of the Company as this measure reflects results that are controllable by management in day-to-day operations. Management monitors Adjusted EBITDA against budget and past results on a regular basis.
The term Monthly Recurring Revenue ("MRR") is a non-IFRS measure and includes revenues earned in a given month relating to monthly fixed subscription fee, monthly transaction fees, ARC Lite™ revenue, and PayPort™ revenue. MRR is a common metric used in Software as a Service ("SaaS") companies and its definition is not guided by IFRS standards. Accordingly, MRR is unlikely to be comparable to similar measures presented by other issuers.
The term ARCTM Annualized Recurring Revenue ("ARCTM ARR") is a non-IFRS measure and refers to the MRR value as defined above of fixed subscription fees, monthly transaction fees, and ARC LiteTM revenue multiplied by 12 to represent management's best estimate of forward looking 12 months of recurring revenues that the Company would earn based on the current ARCTM MRR.
The term PayPortTM Annualized Recurring Revenue ("PayPortTM ARR") is a non-IFRS measure and refers to the sum of the trailing twelve months of PayPortTM MRR revenues, as defined above, to represent management's best estimate of forward looking 12 months of PayPortTM recurring revenues that the Company would earn.
The term Operating Expense is the aggregation of general and administrative expenses, research and development expenses, and sales and marketing expenses.
The term Backlog for ARCTM Subscriptions represents the annual recurring amount that customers have contractually committed to but have not yet been billed. The term Backlog for ARCTM Professional Services represents revenue expected to be recognized in the future related to contracted non-recurring implementation services that are yet to be performed.
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This news release contains "forward-looking information" which may include, but is not limited to, statements with respect to the activities, events or developments that the Company expects or anticipates will or may occur in the future. Such forward-looking information is often, but not always, identified by the use of words and phrases such as "plans," "expects," "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved.
These forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business. Management believes that these assumptions are reasonable. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, risks related to the speculative nature of the Company's business, the Company's formative stage of development and the Company's financial position.
Forward-looking statements contained herein are made as of the date of this news release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information.
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