mdf commerce inc. (the “Corporation”) (TSX:MDF), a
SaaS leader in digital commerce technologies, reported Q4 FY2021
financial results for its fourth quarter and the full year ended on
March 31, 2021. Financial references are expressed in Canadian
dollars unless otherwise indicated.
“Fiscal 2021 was the first full year of
implementation of our five-year strategic plan which focuses
operational efforts and investments on our two high-growth
platforms, Unified Commerce and Strategic Sourcing. Tremendous
progress was achieved on many fronts and we’re proud of all that
was accomplished by our employees. Product innovation, accelerated
product development cycles, implementation of our organic growth
plan, attraction and retention of top talent, strengthening of the
executive team, changes on the Board of Directors as well as a
stronger balance sheet are all accomplishments that position us
favorably for the second year of implementation,” said Luc
Filiatreault, CEO of mdf commerce. “The final
quarter of fiscal 2021 continued a trend of exciting growth. We
achieved solid revenue growth while also investing in our
foundation to support our aggressive growth plan. We continue to
win new customers and execute on large customer deployments. We are
encouraged by the solid performance of our US-based Strategic
Sourcing platform, and our overall sales pipeline continues to
expand in tandem with our product offerings.”
Fourth Quarter Fiscal 2021 Financial
Results
Total revenue for the quarter was $22.0M, a
16.5% increase over $18.9M reported for Q4 FY2020. The monthly
recurring revenue (“MRR”)1 portion of total revenue was $16.0M, or
72% of total revenue compared to $15.4M or 81% for the same quarter
of FY2020.
The three business platforms contributed to
revenue for the quarter as follows:
- Revenue from the
Unified Commerce platform, which includes ecommerce and Supply
Chain Collaboration solutions, was $9.7M, a 29.5% increase over
$7.5M reported for the same period last year.
- ecommerce, which
consists of Orckestra and k-ecommerce solutions, represented $6.5M
of Unified Commerce revenue in the quarter, up $2.4M or 59.1% from
$4.1M reported in the corresponding period last year. Professional
services revenue represented $2.9M of ecommerce revenue, an
increase of 143.9% over $1.2M reported for Q4 FY2020. The increase
in professional services during the quarter is related to large
customer deployments.
- The Supply Chain
Collaboration solution represented $3.2M of Unified Commerce
revenue, down 5.8% or $0.2M compared to the fourth quarter of the
previous year. The revenue decline was due mainly to reduced
activities of certain retailers in the context of the COVID-19
pandemic.
Revenue from the Strategic Sourcing platform,
which includes Merx, Bidnet, governmentbids.com and ASC solutions,
was $8.7M, a 15.4% increase over $7.5M reported for the previous
year quarter.
- US-based
Strategic Sourcing, represented revenue of $4.4M, a 32% or $1.1M
increase compared to the previous year corresponding quarter. The
US-based Bidnet solution benefited from additional buying agencies,
which drove an increase in paying suppliers and the acquisition of
Vendor Registry on November 18, 2021.
Revenue from the emarketplaces platform, which
consists of Jobboom, The Broker Forum, Technologies Carrus,
Polygon, Réseau Contact and Power Source Online, was $3.6M,
declining by 6.7% or $0.3M compared to $3.9M reported for the same
quarter of fiscal 2020. Revenues from Jobboom increased by $0.1M,
offset by a decrease in revenues from The Broker Forum,
Technologies Carrus and Polygon totalling $0.3M. The emarketplaces
platform was negatively impacted by the COVID-19 pandemic, as most
of the solutions experienced lower memberships or lower transaction
volumes in their respective industries on a comparative basis.
Gross margin for Q4 FY2021 reached $13.5M or
61.1% compared to $12.7M or 67.2% reported for Q4 FY2020. The
decrease in the gross margin percentage is mainly due to the
investment in the development and implementation of client
solutions, increased salaries and related expenses from additional
headcount, and higher hosting and licencing costs on cloud-based
solutions.
Total operating expenses for Q4 FY2021 were
$16.7M, compared to $14.9M for Q4 FY2020, an increase of $1.8M or
12.2%. The most notable differences are as follows:
- General and
administrative expenses increased to $5.3M during Q4 FY2021 from
$3.4 million for Q4 FY2020 due primarily to higher salary and
related expenses associated with higher headcount, bonus and
share-based compensation expenses totalling $1.4M, and a $0.6M
increase in professional services costs mainly related to the work
of external consultants to support the Corporation in implementing
its strategic initiatives and transformation plan, and also
includes recruiting and restructuring costs. These expense
increases are net of $0.1M in federal wage subsidies in the context
of COVID-19.
- Selling and
marketing expenses totalled $5.8M for Q4 FY2021 compared to $4.8M
for Q4 FY2020. The increase is mainly attributable to a $0.6M
increase in salaries and related expenses from higher
headcount.
The operating loss of $3.3M for Q4 FY2021
compares to the operating loss of $2.2M reported for
Q4 FY2020.
The Corporation recorded a net loss of $2.9M or
$0.12 loss per share basic and diluted in Q4 FY2021 compared to a
net loss of $6.8M or $0.45 loss per share basic and diluted in the
same quarter of FY2020.
Adjusted EBITDA2 was $0.2M for Q4 FY2021
compared to $0.7M reported for Q4 FY2021. Adjusted EBITDA2 declined
year-over-year due to increased foundational investments in
operations, sales and marketing, R&D, and professional services
to support large deployment contracts. As deployments accelerate
over the coming quarters, professional services expenses are
expected to remain elevated and the Corporation expects to continue
to make foundational investments to improve scalability as the
Corporation grows.
On March 15, 2021, the Corporation completed a
bought deal offering under which a total of 5,517,242 common
shares of the Corporation were sold at a price of $14.50 per common
share for aggregate gross proceeds of $80M.
“mdf commerce is competing
vigorously to capture emerging opportunities in both of our growth
platforms, Unified Commerce and Strategic Sourcing,” remarked CEO
Luc Filiatreault. “We are finding creative approaches to overcome
scaling friction as we acquire new customers. For example, we are
attracting increasingly scarce tech talent by leveraging our global
footprint, especially in Ukraine where we already have an office
and tech resources.”
Full-year Fiscal 2021
Results
Full-year FY2021 total revenue was $84.7M, a
12.3% increase over $75.4M for FY2020.
The Unified Commerce platform generated revenues
of $37.3M for FY2021, an increase of $11.9M or 47.0% compared to
revenues of $25.4 million for the previous fiscal year. The
ecommerce solutions within Unified Commerce grew by 107% from
$11.7M to $24.5M.
The Strategic Sourcing platform generated
revenues of $32.7M, a 7.8% or a $2.4M increase compared to $30.3M
in FY2020. The acquisition of Vendor Registry in fiscal 2021
increased the Corporation’s geographical footprint in the US-based
strategic sourcing network and contributed positively to revenue
growth, with US-based strategic sourcing representing a
year-over-year increase in revenues of 20.8%.
The emarketplaces platform generated revenues of
$14.7M for fiscal 2021, a decrease of $5.0M or 25.3% compared to
revenues of $19.7M the previous fiscal year. The sale of LesPAC on
June 11, 2019 represents a $2.2 million year-over-year decrease,
while the remaining decrease is primarily due to fewer members
using these marketplaces driven by the negative impact of the
COVID-19 pandemic.
Total FY2021 MRR1 represented $64.4M or 76% of
total revenues for fiscal 2021, compared to $58.7M or 77% of total
revenues for FY2020.
FY2021 net loss was $7.6M or $0.38 loss per
share basic and diluted compared to a net loss of $5.8M or $0.39
loss per share basic and diluted for FY2020.
Total Adjusted EBITDA2 for FY2021 was $5.7M,
compared to $10.3M for FY2020. The decline in Adjusted EBITDA2 is
related to ongoing foundational investments, growth in headcount in
sales, marketing, human resources to support our growth as well as
professional services associated with growth strategies.
During FY2021, salary and related expenses were
offset with $3.4M of wage subsidies from the Canadian government’s
assistance program introduced on March 27, 2020, in the context of
the COVID-19 pandemic.
As at March 31st, 2021 the Corporation had $110M
of cash and equivalents on the balance sheet.
“With the completion of three bought deal equity
financings, a new MRR1-based credit facility, and the repayment of
long-term debt during the year, we significantly strengthened our
financial position, while effectively managing the capital
structure,” remarked CFO Deborah Dumoulin. “We now have available
capital to implement key components of our transformation plan
including our M&A strategy, while remaining focused on
maximizing the return on invested capital for shareholders.”
Outlook
The global trend to online commerce, accelerated
by the COVID-19 pandemic, has changed the pace at which businesses
are implementing new or upgraded digital commerce infrastructure.
This acceleration is reflected in both the new deployments for
mdf commerce ecommerce solutions and the increase
of revenue for the quarter and for the full year. Management
believes that the trends to online commerce should continue into
the foreseeable future as companies continue to update and
modernize their commerce infrastructure providing the Corporation
with opportunities for pipeline growth and conversion, even as the
COVID-19 pandemic begins to subside.
“We will continue to invest in our focus
platforms, Unified Commerce and Strategic Sourcing, to capture more
market share, and to improve the scalability of operations as we
gain momentum” said CEO Luc Filiatreault.
For fiscal 2021, Adjusted EBITDA2 was $5.7M,
representing a margin of 6.8%, compared to $10.3M and 13.7% margin
respectively for fiscal 2020. Though the pandemic has allowed the
Corporation to capitalize on the acceleration of commerce
digitalization with both of our high-growth platform - Unified
Commerce and Strategic Sourcing - the unforeseen outcome has been
the impact on demand for tech talent. The demand for programmers
and developers has escalated exponentially, reaching unparalleled
levels as businesses seek to accelerate their digital
transformation, their ecommerce capabilities. The competition for
these resources is global, driving up the cost of labour for tech
companies to unforeseen levels. Over the past fiscal year, the
impact of this extraordinary demand for talent has already
contributed to a compression of our margins, which may experience
fluctuations quarter over quarter. As we move forward, our
challenge will be to strike the right balance between managing
salary costs while staying in the race to capitalize on the window
of opportunity brought on by this market acceleration.
Governance
As part of its ongoing review of its governance
practices and like many other public companies, the Corporation’s
Board of Directors has determined to adopt (i) an advance notice
bylaw (the “Advance Notice Bylaw”) and (ii) a forum selection bylaw
(the “Forum Selection Bylaw” and together with the “Advance Notice
Bylaw, the “Bylaws”). The Bylaws are effective and in full force
and effect as of the date hereof and the Advance Notice Bylaw will
apply to the Corporation’s next annual general meeting of
shareholders that will be held on September 15, 2021 (the
“Shareholders Meeting”). In accordance with applicable laws, the
Bylaws will be put to shareholders for approval at the Shareholders
Meeting. If one of the Bylaws (or both) is not confirmed at the
Shareholders Meeting by ordinary resolution of shareholders, such
Bylaw will terminate and be of no further force and effect
following the termination of the Shareholders Meeting. The full
text of the Bylaws will be available on the Corporation’s SEDAR
profile at www.sedar.com and on its website at
www.mdfcommerce.com.
SUMMARY OF CONSOLIDATED RESULTS
|
Quarter ended |
Fiscal year ended |
|
March 31st |
March 31st |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
In thousands of Canadian
dollars, except per share amounts |
$ |
$ |
$ |
$ |
Revenues |
22,030 |
|
18,917 |
|
84,719 |
|
75,428 |
|
Adjusted
EBITDA2 |
221 |
|
660 |
|
5,746 |
|
10,341 |
|
Operating (loss)
profit |
(3,284 |
) |
(2,210 |
) |
(6,791 |
) |
559 |
|
Impairment of assets
net of related taxes |
- |
|
(5,307 |
) |
- |
|
(5,307 |
) |
Net loss |
(2,858 |
) |
(6,758 |
) |
(7,591 |
) |
(5,752 |
) |
Adjusted
loss3 |
(2,858 |
) |
(1,451 |
) |
(7,591 |
) |
(362 |
) |
Adjusted loss per
share3 (basic and
diluted) |
(0.12 |
) |
(0.10 |
) |
(0.38 |
) |
(0.03 |
) |
Loss per share (basic
and diluted) |
(0.12 |
) |
(0.45 |
) |
(0.38 |
) |
(0.39 |
) |
Basic and diluted
weighted average number of shares outstanding (in
thousands) |
23,874 |
|
15,052 |
|
19,752 |
|
14,915 |
|
RECONCILIATION OF ADJUSTED EBITDA2 AND
NET LOSS
|
Quarter ended |
Fiscal year ended |
|
March 31st |
March 31st |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
In thousands of Canadian
dollars |
$ |
$ |
$ |
$ |
Net loss |
(2,858 |
) |
(6,758 |
) |
(7,591 |
) |
(5,752 |
) |
Impairment loss on assets |
- |
|
7,221 |
|
- |
|
7,221 |
|
Income tax recovery |
(704 |
) |
(1,890 |
) |
(1,618 |
) |
(1,515 |
) |
Depreciation of property, plant and equipment and amortization of
intangible assets |
1,155 |
|
1,264 |
|
4,217 |
|
3,474 |
|
Amortization of acquired intangible assets |
1,014 |
|
934 |
|
3,815 |
|
2,816 |
|
Amortization of right-of-use assets |
437 |
|
483 |
|
1,735 |
|
1,665 |
|
Amortization of deferred financing costs |
57 |
|
10 |
|
135 |
|
39 |
|
Interest on lease
liability |
91 |
|
105 |
|
381 |
|
380 |
|
Interest on long-term
debt |
9 |
|
291 |
|
536 |
|
892 |
|
Interest revenue |
(50 |
) |
- |
|
(61 |
) |
- |
|
EBITDA |
(849 |
) |
1,660 |
|
1,549 |
9,220 |
|
Foreign exchange loss (gain) |
171 |
|
(1,188 |
) |
1,427 |
(788 |
) |
Loss on disposal of a subsidiary |
- |
|
- |
|
- |
83 |
|
Stock-based compensation expense |
124 |
|
- |
|
467 |
- |
|
Restructuring costs |
723 |
|
97 |
|
1,966 |
1,400 |
|
Acquisition-related costs |
52 |
|
91 |
|
337 |
426 |
|
Adjusted
EBITDA2 |
221 |
|
660 |
|
5,746 |
10,341 |
|
RECONCILIATION OF NET LOSS AND ADJUSTED
LOSS3
|
Quarter ended |
Fiscal year ended |
|
March 31st |
March 31st |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
In thousands of Canadian
dollars. |
$ |
$ |
$ |
$ |
Net loss |
(2,858 |
) |
(6,758 |
) |
(7,591 |
) |
(5,752 |
) |
Loss on sale of subsidiary |
- |
|
- |
|
- |
|
83 |
|
Impairment of assets, net of related taxes |
- |
|
5,307 |
|
- |
|
5,307 |
|
Adjusted
loss3 |
(2,858 |
) |
(1,451 |
) |
(7,591 |
) |
(362 |
) |
Loss per share (basic
and diluted) |
(0.12 |
) |
(0.45 |
) |
(0.38 |
) |
(0.39 |
) |
Adjusted loss per
share3 (basic and diluted) |
(0.12 |
) |
(0.10 |
) |
(0.38 |
) |
(0.03 |
) |
About mdf commerce inc.
mdf commerce inc. (TSX:MDF)
enables the flow of commerce by providing a broad set of SaaS
solutions that optimize and accelerate commercial interactions
between buyers and sellers. Our platforms and services empower
businesses around the world, allowing them to generate billions of
dollars in transactions on an annual basis. Our Strategic Sourcing,
Unified Commerce and emarketplace platforms are supported by a
strong and dedicated team of approximately 700 based in Canada, the
United States, Denmark, Ukraine and China. For more information,
please visit us at mdfcommerce.com, follow us on LinkedIn or call
at 1-877-677-9088.
Forward-Looking Statements
In this press release, “mdf commerce”, the
“Corporation” or the words “we”, “our” and “us” refer, depending on
the context, either to mdf commerce inc. or to mdf commerce inc.
together with its subsidiaries and entities in which it has an
economic interest. All dollar amounts refer to Canadian dollars,
unless otherwise expressly stated.
This press release is dated June 9, 2021 and,
unless specifically stated otherwise, all information disclosed
herein is provided as at March 31, 2021, the end of the most recent
fiscal year of the Corporation.
Certain statements in press release and in the
documents incorporated by reference herein constitute
forward-looking statements. These statements relate to future
events or our future financial performance and involve known and
unknown risks, uncertainties and other factors that may cause mdf
commerce’s, or the Corporation’s industry’s actual results, levels
of activity, performance or achievements to be materially different
from those expressed or implied by any of the Corporation’s
statements. Such factors may include, but are not limited to, risks
and uncertainties that are discussed in greater detail in the “Risk
Factors and Uncertainties” section of the Corporation’s Annual
Information Form as of June 9, 2021. Forward-looking statements
generally can be identified by the use of forward-looking
terminology such as “may”, “will”, “should”, “could”, “expects”,
“plans”, “anticipates”, “intends”, “believes”, “estimates”,
“predicts”, “potential” or “continue” or the negatives of these
terms or other comparable terminology. These statements are only
predictions. Forward-looking statements are based on management’s
current estimates, expectations and assumptions, which management
believes are reasonable as of the date hereof, and are inherently
subject to significant business, economic, competitive and other
uncertainties and contingencies regarding future events and are
accordingly subject to changes after such date. Undue importance
should not be placed on forward-looking statements, and the
information contained in such forward-looking statements should not
be relied upon as of any other date. Actual events or results may
differ materially. We cannot guarantee future results, levels of
activity, performance or achievement. We disclaim any intention,
and assume no obligation, to update these forward-looking
statements, except as required by applicable securities laws.
Additional information about mdf commerce,
including the Corporation’s most recent annual audited consolidated
financial statements, Management’s Discussion and Analysis and its
latest Annual Information Form are available on www.mdfcommerce.com
and have been filed with SEDAR at www.sedar.com.
Non-IFRS Financial Measures and Key
Performance Indicators
The Corporation’s annual consolidated financial
statements for the years ended March 31, 2021 and March 31, 2020
are prepared in accordance with International Financial Reporting
Standards (“IFRS”).
In Q4 FY2021, the Corporation amended the
definition of Adjusted EBITDA to adjust for acquisition related
costs and restructuring costs. Comparative figures prior to March
31, 2021 have been restated to be consistent with the current
presentation. Adjusted EBITDA is calculated as profit (loss) before
interest, taxes, depreciation and amortization (“EBITDA”), adjusted
for foreign exchange gain (loss), gain (loss) on the sale of a
subsidiary, compensation under the stock option plan, acquisition
related costs and restructuring costs. Refer to the “Non-IFRS
Financial Measures and Key Performance Indicators” in Management’s
Discussion and Analysis for the fourth quarter ended March 31,
2021.
The Corporation presents non-IFRS financial
performance measures and key performance indicators to assess
operating performance. The Corporation presents Adjusted profit
(loss), Adjusted profit (loss) per share, net profit (loss) before
interest, taxes, depreciation and amortization (“EBITDA”) and
Adjusted EBITDA as a non-IFRS measure and Monthly Recurring
Revenues as a key performance indicator. These non-IFRS measures
and key performance indicators do not have standardized meanings
under IFRS standards and are not likely to be comparable to
similarly designated measures reported by other corporations. The
reader is cautioned that these measures are being reported in order
to complement, and not replace, the analysis of financial results
in accordance with IFRS standards. Management uses both measures
that comply with IFRS standards and non-IFRS measures, in planning,
overseeing and assessing the Corporation’s performance. The terms
and definitions associated with non-IFRS measures as well as a
reconciliation to the most comparable IFRS measures, and key
performance indicators are presented in the section “Non-IFRS
Financial Measures and Key Performance Indicators” in Management’s
Discussion and Analysis for the fourth quarter ended March 31,
2021.
Conference call for fourth quarter of fiscal 2021
financial results
Date: Thursday, June 10, 2021Time: 8:30 a.m. Eastern TimeLength:
30 minutesDial-in: (833) 732-1201 (toll-free) or (720) 405-2161
(international)Live webcast: register hereMore details
For further information:
mdf commerce inc.Luc Filiatreault, President
& CEO Toll free: 1-877-677-9088, ext. 2004Email:
luc.filiatreault@mdfcommerce.com
Deborah Dumoulin, Chief Financial OfficerToll free:
1-877-677-9088, ext. 2134Email:
deborah.dumoulin@mdfcommerce.com
André Leblanc, Vice President, Marketing and Public AffairsToll
Free: 1 877 677-9088, ext. 8220Email:
andre.leblanc@mdfcommerce.com
1 MRR is a key performance indicator and is
composed of subscription and support revenues that are recurring in
nature. Therefore, they exclude onetime fees and professional fees
and other types of non-recurring revenues. Refer to the “Non-IFRS
Financial Measures and Key Performance Indicators” section.2
Adjusted EBITDA is a non-IFRS measure. In the fourth quarter of
fiscal 2021, the definition of adjusted EBITDA was amended, and
certain comparative figures have been restated to conform with the
current presentation. Refer to the “Non-IFRS Financial Measures and
Key Performance Indicators” section.3 Adjusted loss and Adjusted
loss per share (basic and diluted) are non-IFRS financial measures.
Refer to the “Non-IFRS Financial Measures and Key Performance
Indicators” section.
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