NexJ Systems Reports Second Quarter 2022 Results

TORONTO, Aug. 6, 2022 /CNW/ – NexJ Systems Inc. (TSX: NXJ), delivering intelligent customer management software to the financial services industry, today announced financial results for its second quarter ended June 30, 2022.

Second Quarter Summary
  • The Company continued its planned transition from a perpetual license model to a more predictable subscription license model generating $900K in license and subscription revenue for the first half of the year, an increase of 105% as compared to $438K in the first half of the previous year
  • Unbilled contracted subscription license revenue of $982K will be recognized as revenue in future quarters as compared to zero in the first half of the previous year
  • $3.40M of revenue for the second quarter as compared to $3.77M in the second quarter of the previous year
  • $872K in Adjusted EBITDA loss for the second quarter as compared to $130K in the second quarter of the previous year
  • $1.69M of net loss for the second quarter as compared to $179K of net loss in the second quarter of the previous year
  • $7.44M in revenue for the six months as compared to $7.70M in the previous year
  • $1.28M in Adjusted EBITDA loss for the six months as compared to $226K in the previous year
  • $2.25M in net loss for the six months as compared to $462K of net loss in the previous year
  • For the first half 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 quarter and will realize costs savings in excess of $2.2M per year going forward

“As a result of the macro economic conditions during the quarter we experienced a delay in key opportunities impacting our license and subscription revenue which we fully expect to pick up in the second half. Nevertheless, the Company has achieved a growth of 105% in its subscription license revenue year to date over the same period last year,” said Paul O’Donnell, CEO of NexJ Systems. “We have prudently managed our financial resources in response to market conditions and we expect to grow our license and subscription revenue this year and stabilize the volatility as we continue our transition to a subscription-based license model”

 

NexJ Systems Inc.









Second Quarter Financial Results









(Expressed in thousands of Canadian dollars)







(Unaudited)











 Quarter ended June 30, 


 Six months ended June 30, 



2022


2021


2022


2021










Revenue


$


$


$


$

License and subscription fees


209


395


900


438

Professional services


1,283


1,258


2,727


3,058

Maintenance and support


1,911


2,113


3,810


4,206



3,403


3,766


7,437


7,702

Cost of revenue


1,182


894


2,432


1,957

Gross profit


2,221


2,872


5,005


5,745










Operating Expenses









Research and development


1,677


1,486


3,345


2,881

Sales and marketing


532


517


1,076


1,082

General and administrative


884


739


1,862


1,556



3,093


2,742


6,283


5,519










Adjusted EBITDA


(872)


130


(1,278)


226










Share-based payment expense


6


17


13


54

Depreciation and amortization


498


224


909


442

Lease termination costs


467



467


Loss from operations


(1,843)


(111)


(2,667)


(270)










Foreign exchange loss (gain)


(149)


50


(120)


150

Finance income


(17)


(6)


(32)


(9)

Finance expense


9


24


(264)


51

Net loss for the period


(1,686)


(179)


(2,251)


(462)

 

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 NexJ Systems Inc.

NexJ Systems provides Intelligent Customer Management to the financial services industry. Our award-winning CRM is designed to help Wealth Management, Private Banking, Corporate and Commercial Banking, and Insurance firms revolutionize their business. Powered by artificial intelligence, our products help drive productivity, boost client engagement, and increase revenue. With users in over 60 countries, our customers benefit from our deep expertise across financial services 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 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 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 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 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.




  Condensed Interim Statements of Financial Position




  (Expressed in thousands of Canadian dollars)




  (Unaudited)









June 30, 2022


December 31, 2021





Assets





$


$

Current assets:




Cash and cash equivalents

5,557


5,489

Accounts receivable

759


5,457

Prepaid expenses and other assets 

1,320


1,334

Total current assets

7,636


12,280





Non-current assets:




Property and equipment

406


612

Right-of-use assets

266


951

Goodwill 

1,753


1,753

Contract assets

57


88

Total non-current assets

2,482


3,404





Total assets

10,118


15,684





Liabilities and Shareholders’ Equity








Current liabilities:




Accounts payable and accrued liabilities 

2,461


2,023

Deferred revenue

4,147


6,592

Lease liabilities 

113


1,152

Total current liabilities

6,721


9,767





Non-current liabilities:




Accrued liabilities

68


62

Deferred revenue

10


328

Lease liabilities

113


83

Total non-current liabilities

191


473





Total liabilities

6,912


10,240





Shareholders’ equity:




Share capital 

83,485


83,485

Share purchase loans 

(3,598)


(3,598)

Contributed surplus 

8,748


8,735

Accumulated other comprehensive loss

751


751

Deficit

(86,180)


(83,929)

Total shareholders’ equity

3,206


5,444





Total liabilities and shareholders’ equity

10,118


15,684

 

NexJ Systems Inc.








Condensed Interim Statements of Comprehensive loss








(Expressed in thousands of Canadian dollars, except per share amounts)







(Unaudited)

















Three months ended June 30,


Six months ended June 30,


2022


2021


2022


2021









Revenue

$


$


$


$

License and subscription fees

209


395


900


438

Professional services

1,283


1,258


2,727


3,058

Maintenance and support

1,911


2,113


3,810


4,206


3,403


3,766


7,437


7,702

Cost of revenue

1,182


887


2,433


1,955

Gross profit

2,221


2,879


5,004


5,747









Expenses:








Research and development

1,678


1,492


3,346


2,895

Sales and marketing

532


518


1,076


1,084

General and administrative

1,387


980


2,782


2,038

Lease termination costs

467



467



4,064


2,990


7,671


6,017









Loss from operations

(1,843)


(111)


(2,667)


(270)









Foreign exchange gain (loss)

149


(50)


120


(150)

Finance income 

17


6


32


9

Finance expense 

(9)


(24)


264


(51)


157


(68)


416


(192)

















Net loss for the period

(1,686)


(179)


(2,251)


(462)









Other comprehensive loss:








Items that will not be reclassified to profit or loss:








     Unrealized loss on equity securities


(4)



(7)

Loss for the period and comprehensive loss

(1,686)


(183)


(2,251)


(469)









Loss per share








Basic and diluted

(0.08)


(0.01)


(0.11)


(0.02)









Weighted average number of common shares 








outstanding, in thousands








Basic and diluted

21,076


21,055


21,076


21,055

 

NexJ Systems Inc.




Condensed Interim Statements of Cash Flows




(Expressed in thousands of Canadian dollars)




(Unaudited)









Six month ended


Six month ended


June 30, 2022


June 30, 2021









Cash flows from (used in) operating activities:

$


$

Loss for the period

(2,251)


(462)

Adjustments for:




Depreciation and amortization of property and equipment

82


108

Depreciation of right-of-use assets

827


334

Changes in contract assets

31


(19)

Share-based payment expense

13


54

Loss on disposal of fixed assets

71


Finance income

(32)


(9)

Finance expense

(264)


51

Foreign exchange loss (gain)

(106)


81

Change in non-cash operating working capital:




Accounts receivable

4,698


2,648

Prepaid expenses and other assets

14


362

Accounts payable and accrued liabilities

443


(38)

Deferred revenue

(2,763)


(1,494)

Net cash flows from operating activities

763


1,616





Cash flows used in financing activities:




Payment of lease liabilities

(882)


(557)

Interest paid

(4)


(3)

Net cash flows used in financing activities

(886)


(560)





Cash flows from (used in) investing activities:




Purchase of property and equipment


(32)

Proceeds from disposal of fixed assets

53


Interest received

32


9

Net cash flows from (used in) investing activities

85


(23)





Effects of exchange rates on cash and cash equivalents

106


(81)





Increase in cash and cash equivalents

68


952





Cash and cash equivalents, beginning of period

5,489


5,426





Cash and cash equivalents, end of period

5,557


6,378

 

SOURCE NexJ Systems Inc.

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