mdf commerce inc. (the “Corporation”) (TSX:MDF), a
SaaS leader in digital commerce technologies, reported first
quarter financial results for the three-month period ended June 30,
2023 (Q1 FY2024). All dollar amounts are expressed in Canadian
dollars unless otherwise indicated.
“I am pleased with our revenue growth and our
Adjusted EBITDA(2) which increased by $3.7 million compared to the
first quarter of prior year, with Q1 FY2024 marking the fourth
sequential quarter with positive Adjusted EBITDA(2). After
factoring out InterTrade(5) revenue of $3.4 million in Q1 FY2023,
since it was sold on October 4, 2022, Q1 year-over-year revenue
grew by $2.2 million or 7.6%. As we advance the integration of our
eprocurement offerings into a unified platform, moving steadily
towards our comprehensive suite of eprocurement technology offered
under Source, Contract, Procure, Connect and Shop, we remain
committed to controlling costs and improving profitability”, said
Luc Filiatreault, President and Chief Executive Officer of mdf
commerce. “This quarter we saw an acceleration in pipeline
conversion of mid-market customers, including the recent
announcements that were made on our eprocurement solutions,
positioning us favorably to capitalize both on the larger State
contracts and on the mid-market opportunities that we believe lie
ahead as public agencies digitize their procurement solutions.”
We are pleased to welcome new clients such as
Anoka County (Minnesota) and Pima County (Arizona) and multiple
other cities, joining over 6,500 public sector buying organizations
in choosing mdf commerce eprocurement solutions. The Commonwealth
of Massachusetts renewed their long-term contract for our full
eprocurement offering for another five years and Maricopa Country
(Arizona) will upgrade its existing suite of products. These
renewals and upgrades represent strong proof points to the value of
our solution to States, counties, cities, municipalities to support
their procurement and is a testament to the enduring trust of our
customers.
First Quarter
Fiscal 2024
Financial Results
Revenues for Q1 FY2024 were $31.0 million, a
decrease of $1.2 million or 3.7% compared to $32.2 million for Q1
FY2023. On a Constant Currency(3) basis, revenues decreased by $2.0
million or 6.0% compared to $33.0 million in Q1 FY2023.
Factoring out the revenue from InterTrade(5), a
subsidiary that contributed $3.4 million of revenue in Q1 FY2023
and was sold on October 4,2022, Q1 year-over-year revenue grew by
$2.2 million or 7.6%.
Recurring Revenue(4) grew to 79.2% of revenues
for Q1 FY2024 compared 77.8% of revenues for Q1 FY2023, trending
positively despite the sale of InterTrade(5) which had Recurring
Revenue as a percentage of revenue in excess of 90%.
In recent quarters, we have prioritized
operational efficiency and streamlined our processes, implementing
significant cost reduction measures. In early Q1 FY2024, we
effected a workforce reduction to lower the operating expenses,
reducing our global workforce by approximately 40 people and we
continued to make substantial progress in improving profitability
and cash flows across all our platforms.
Net loss for Q1 FY2024 improved by $1.2 million
from $6.3 million in Q1 FY2023 to $5.1 million in Q1 FY2024 and we
achieved positive Adjusted EBITDA(2) of $2.6 million in Q1 FY2024,
a significant improvement of $3.7 million from the Adjusted
EBITDA(2) loss of $1.1 million in Q1 FY2023, marking the fourth
sequential quarter with positive Adjusted EBITDA(2).
Our two core platforms, eprocurement and
ecommerce (previously Unified Commerce before the sale of
InterTrade) contributed to revenues of the first quarter as
follows:
- The eprocurement
platform generated revenues of $20.3 million, an increase of $2.4
million or 13.5% compared to $17.9 million in Q1 FY2023. The
Corporation’s US-based eprocurement network represented $15.4
million for Q1 FY2024 and 76.0% of total eprocurement revenue, an
increase of $2.2 million compared to $13.2 million and 73.7% for Q1
FY2023. Recurring Revenue(1) for the eprocurement platform
represented $17.9 million or 88.5% of total revenue for the
eprocurement platform for Q1 FY2024, compared to $16.6 million or
86.8% for Q1 FY2023.In Q1 FY2023, revenues were impacted by a $1.2
million fair value adjustment on Periscope deferred revenues at the
closing date of the acquisition on August 31, 2021.
- The ecommerce
platform revenues were $5.9 million for Q1 FY2024, a decrease of
$3.8 million or 39.3% compared to $9.8 million for Q1 FY2023,
mainly from the sale of InterTrade which had Q1 FY2023 revenues of
$3.4 million, offset by $0.4 million in other revenue in Q1 FY2024
from post-closing transition services. Professional services
revenues for the Orckestra solution were $1.1 million lower in Q1
FY2024 due to the completion of customer deployments which were
ongoing in Q1 FY2023.Recurring Revenue(1) for the ecommerce
platform was $2.6 million in Q1 FY2024 and represented 43.8% of
platform revenues compared to $5.8 million or 59.6% in Q1 FY2023
which included both ecommerce and InterTrade’s Supply Chain
Collaboration. The $3.2 million decrease in Recurring Revenue(1) in
Q1 FY2024 as compared to Q1 FY2023, is mainly as a result of the
sale of InterTrade which had Recurring Revenue(1) of $3.2 million
in Q1 FY2023. InterTrade had Recurring Revenue(1) as a percentage
of revenue in excess of 90%.
Overall, our emarketplaces platforms performed
well in Q1 FY2024 with revenues of $4.8 million, an increase of
$0.2 million or 5.1% compared to $4.6 million in Q1 FY2023.
Revenues from The Broker Forum, an electronics parts marketplace,
increased by $0.2 million, revenues from Carrus Technologies
increased by $0.1 million, offset by a $0.1 million decrease in
revenues from Jobboom mainly due to a softer labour market compared
to Q1 FY2023. Recurring Revenue(1) for the emarketplaces platform
represented $4.0 million or 83.9% of platform revenues for Q1
FY2024 compared to $3.6 million or 79.4% for Q1 FY2023.
Gross margin for Q1 FY2024 was $17.7 million or 57.1% compared
to $18.5 million or 57.4% for Q1 FY2023.
Operating expenses totalled $20.8 million in Q1
FY2024, a decrease of $4.7 million or 18.5% compared to $25.5
million in Q1 FY2023. General and administrative expenses totalled
$6.2 million in Q1 FY2024, selling and marketing expenses were $6.7
million and technology expenses were $7.9 million, compared to $7.3
million, $8.7 million, and $9.5 million respectively for Q1 FY2023.
The decrease in operating expenses of $4.7 million, compared to Q1
FY2023, is mainly due to salary savings from workforce reductions,
to the sale of InterTrade and to lower transaction-related costs,
partially offset by higher restructuring costs of $1.2 million and
lower e-business tax credits of $0.6 million partially due to the
sale of InterTrade.
The Corporation improved its operating loss by
$3.9 million, from $7.0 million in Q1 FY2023 to $3.1 million during
Q1 FY2024, due to the decrease in operating expenses of $4.7
million explained previously, partially offset by the $1.2 million
decrease in revenues.
Q1 FY2024 net loss includes an impairment loss
of $0.7 million on right-of-use assets and leasehold improvements
related to the Corporation’s office space reduction strategy.
Net loss was $5.1 million or $0.12 per share
(basic and diluted) for Q1 FY2024, compared to a net loss of $6.3
million or $0.14 per share (basic and diluted) for Q1 FY2023, an
improvement of $1.2 million. Adjusted net loss(4) was equal to Net
loss for Q1 FY2024 and Q1 FY2023.
We achieved positive Adjusted EBITDA(2) of $2.6
million for Q1 FY2024, a significant improvement of $3.7 million
compared to an Adjusted EBITDA(2) loss of $1.1 million for Q1
FY2023, and marking the fourth sequential quarter with positive
Adjusted EBITDA(2). Higher Adjusted EBITDA(2) is mainly due to the
decrease in operating expenses following workforce reductions and
other cost savings initiatives, partially offset by a $1.2 million
reduction in revenues and a $0.7 million impairment loss on right
of use assets and leasehold improvements recorded in Q1 FY2024.
The Periscope acquisition accounting adjustment
to the fair value of deferred revenues at the acquisition date
resulted in a reduction of revenue of $1.2 million in Q1 FY2023.
The fair value adjustment, in Q1 FY2023, also had an unfavorable
impact on gross margin, operating loss, net loss, Adjusted Net
Loss(4), Adjusted EBITDA (loss)(2) net loss per share (basic and
diluted) and Adjusted net loss per share(4) (basic and
diluted).
Summary
In Q1 FY2024, we continued to make substantial
progress in improving profitability and cash flows across all our
platforms. Despite some headwinds in top-line revenue growth, we
prioritized operational efficiency and streamlined our processes,
implementing significant cost reduction measures.
Moving forward, we remain focused on simplifying
and optimizing our operations for our two core platforms,
eprocurement and ecommerce. Our objective is to maintain positive
Adjusted EBITDA(2) and continue to improve cash flows from
operations by pursuing profitable growth.
Summary of
consolidated results
|
Financial HighlightsIn thousands of Canadian
dollars, except number of shares and per share data |
Q1FY2024 |
|
Q4FY2023 |
|
Q1FY2023 |
|
|
Revenues |
31,004 |
|
31,231 |
|
32,196 |
|
|
Recurring Revenue(1) |
24,557 |
|
24,444 |
|
26,023 |
|
|
Gross margin |
17,713 |
|
17,546 |
|
18,496 |
|
|
Operating loss |
(3,054 |
) |
(5,034 |
) |
(6,975 |
) |
|
Net loss |
(5,115 |
) |
(3,995 |
) |
(6,323 |
) |
|
Adjusted Net Loss(4) |
(5,115 |
) |
(4,175 |
) |
(6,323 |
) |
|
Adjusted EBITDA(2) (loss) |
2,640 |
|
2,191 |
|
(1,085 |
) |
|
Net loss per share (basic and diluted) (in $) |
(0.12 |
) |
(0.09 |
) |
(0.14 |
) |
|
Adjusted Net Loss per share(4) (basic and diluted) (in $) |
(0.12 |
) |
(0.09 |
) |
(0.14 |
) |
|
Basic and diluted weighted average number of shares outstanding (in
thousands) |
43,971 |
|
43,971 |
|
43,971 |
|
Reconciliation
of net earnings
(loss),
EBITDA(2)
(loss) and
Adjusted
EBITDA(2)
(loss)
|
In thousands of Canadian dollars |
Q1 |
|
Q4 |
|
Q1 |
|
|
FY2024 |
|
FY2023 |
|
FY2023 |
|
|
Net loss |
(5,115 |
) |
(3,995 |
) |
(6,323 |
) |
| Income tax recovery |
(284 |
) |
(1,237 |
) |
(669 |
) |
| Depreciation of property and
equipment and amortization of intangible assets |
847 |
|
950 |
|
967 |
|
| Amortization of acquired
intangible assets |
3,098 |
|
3,116 |
|
2,966 |
|
| Amortization of right-of-use
assets |
813 |
|
817 |
|
559 |
|
| Finance
expenses |
256 |
|
298 |
|
623 |
|
|
EBITDA(2)
(loss) |
(385 |
) |
(51 |
) |
(1,877 |
) |
|
Gain on disposal of a subsidiary |
- |
|
(180 |
) |
- |
|
| Foreign exchange loss
(gain) |
1,428 |
|
169 |
|
(607 |
) |
| Share-based compensation |
141 |
|
(1 |
) |
221 |
|
| Restructuring costs |
1,421 |
|
1,621 |
|
271 |
|
|
Transaction-related costs |
35 |
|
633 |
|
907 |
|
|
Adjusted
EBITDA(2)
(loss) |
2,640 |
|
2,191 |
|
(1,085 |
) |
Reconciliation of net earnings (loss)
and Adjusted net
loss(4)
|
In thousands of Canadian dollars, unless otherwise noted |
Q1 |
|
Q4 |
|
Q1 |
|
|
FY2024 |
|
FY2023 |
|
FY2023 |
|
|
Net loss |
(5,115 |
) |
(3,995 |
) |
(6,323 |
) |
|
Gain on disposal of a subsidiary |
- |
|
(180 |
) |
- |
|
|
Adjusted net
loss(4) |
(5,115 |
) |
(4,175 |
) |
(6,323 |
) |
| Weighted average number of
shares outstanding: |
|
|
|
| Basic
and diluted (in thousands) |
43,971 |
|
43,971 |
|
43,971 |
|
|
Net loss per share – basic
and diluted (in $) |
(0.12 |
) |
(0.09 |
) |
(0.14 |
) |
|
Adjusted net loss per share – basic
and diluted (4)
(in $) |
(0.12 |
) |
(0.09 |
) |
(0.14 |
) |
Reconciliation
of revenues on
a Constant
Currency
basis(3)
|
In thousands of Canadian dollars |
Q1FY2024 |
|
Q1FY2023 |
|
Var.$ |
|
Var.% |
|
Q1FY2024 |
|
Q4FY2023 |
|
Var.$ |
|
Var.-% |
|
|
Revenues |
31,004 |
|
32,196 |
|
(1,192 |
) |
(3.7 |
) |
31,004 |
|
31,231 |
|
(227 |
) |
(0.7 |
) |
|
Constant Currency impact |
- |
|
804 |
|
(804 |
) |
- |
|
- |
|
(115 |
) |
115 |
|
- |
|
|
Revenues in Constant
Currency(3) |
31,004 |
|
33,000 |
|
(1,996 |
) |
(6.0 |
) |
31,004 |
|
31,116 |
|
(112 |
) |
(0.4 |
) |
(1) Recurring Revenue and Monthly Recurring
Revenue (“MRR”) are key performance indicators. Refer to section
“10 - Non-IFRS Financial Measures and Key Performance Indicators”
of the Management’s Discussion and Analysis (MD&A) for the
first quarter ended June 30, 2023.
(2) EBITDA, Adjusted EBITDA (loss) and Adjusted
EBITDA margin are non-IFRS financial measures. Refer to section “10
- Non-IFRS Financial Measures and Key Performance Indicators” of
the MD&A for the first quarter ended June 30, 2023.
(3) Certain revenue figures and changes from
prior period are analyzed and presented on a Constant Currency
basis and are obtained by translating revenues from the comparable
period of the prior year denominated in foreign currencies at the
foreign exchange rates of the current period. Refer to section “10
- Non-IFRS Financial Measures and Key Performance Indicators” of
the MD&A for the first quarter ended June 30, 2023.
(4) Adjusted net earnings (loss) and Adjusted
net earnings (loss) per share (basic and diluted) are non-IFRS
financial measures. Refer to section “10 - Non-IFRS Financial
Measures and Key Performance Indicators” of the MD&A for the
first quarter ended June 30, 2023.
(5) InterTrade Systems Inc. (InterTrade), a
wholly-owned subsidiary of the Corporation, our Supply Chain
Collaboration solution was sold on October 4, 2022. For comparative
purposes, the Corporation has provided information on the disposed
entity prior to the sale, by excluding Q1 FY2023 revenue for
InterTrade which was $3.4 million and Recurring Revenue (1) of $3.2
million.
About mdf
commerce inc.
mdf commerce inc. (TSX:MDF)
enables the flow of commerce by providing a broad set of software
as a service (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 eprocurement, ecommerce and emarketplaces solutions are
supported by a strong and dedicated team of approximately 650
employees based in Canada, the United States, 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.
This press release is dated August 8, 2023, and
unless specifically stated otherwise, all information disclosed
herein is provided as at June 30, 2023 and for the first quarter of
fiscal 2024.
Certain statements in this 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 at March 31, 2023, as well as in the “Risk
Factors and Uncertainties” section of the MD&A for the first
quarter ended June 30, 2023 and elsewhere in the Corporation’s
filings with the Canadian securities regulators, as applicable.
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 interim condensed consolidated
financial statements as at June 30, 2023 and 2022, MD&A for the
first quarter ended June 30, 2023 and its latest Annual Information
Form as at March 31, 2023 are available on the Corporation’s
website www.mdfcommerce.com and have been filed with SEDAR+ at
www.sedarplus.com.
Non-IFRS
Financial Measures
and Key
Performance Indicators
The Corporation’s unaudited interim condensed
consolidated financial statements for the three-month periods ended
June 30, 2023 and 2022 have been prepared in accordance with
International Accounting Standard (“IAS”) 34, Interim Financial
Reporting, through the application of accounting principles that
are compliant with International Financial Reporting Standards
(“IFRS”). The unaudited interim condensed consolidated financial
statements do not include all of the information required for
complete financial statements under IFRS, including the notes.
The Corporation presents non-IFRS financial
measures and key performance indicators to assess operating
performance. The Corporation presents Adjusted net earnings
(loss)(4), Adjusted net earnings (loss) (4) per share, net earnings
(loss) before interest, taxes, depreciation and amortization
(“EBITDA”) (2) , Adjusted EBITDA (loss) (2), Adjusted EBITDA
margin(2), and certain Revenues presented on a Constant Currency
basis(3) as a non-IFRS financial measures and Recurring Revenue(1)
and Monthly Recurring Revenues (“MRR”)(1) as key performance
indicators.
These non-IFRS measures and key performance
indicators do not have standardized meanings under IFRS 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. Management
uses both measures that comply with IFRS and non-IFRS measures, in
planning, overseeing and assessing the Corporation’s performance.
Certain additional disclosures including the definitions associated
with non-IFRS financial measures as well as a reconciliation to the
most comparable IFRS measures, and key performance indicators have
been incorporated by reference and can be found in the MD&A for
the first quarter ended June 30, 2023, as presented in the section
“10 - Non-IFRS Financial Measures and Key Performance Indicators”.
The MD&A for the first quarter ended June 30, 2023, is
available on SEDAR+ at www.sedarplus.com and on the Corporation’s
website www.mdfcommerce.com under the Investors section.
Conference
call for First
quarter fiscal
2024 financial
results
Date: Wednesday, August 9, 2023Time: 9:00 a.m.
Eastern Daylight Time
To dial-in: 1 833 630-1956 or 412 317-1837 (for
international)Live webcast: Click here to register
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 Officer Toll
free: 1-877-677-9088, ext. 2134Email:
deborah.dumoulin@mdfcommerce.com
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