TORONTO, Oct. 25, 2019 /CNW/ - NexJ Systems
Inc. (TSX: NXJ), delivering intelligent customer management
software to the financial services industry, today announced
financial results for its third quarter ended September 30, 2019.
Third Quarter Summary
- $4.0M of revenue for the third
quarter as compared to $5.3M in the
third quarter of the previous year
- $1.3M in Adjusted EBITDA loss for
the third quarter as compared to $686K in Adjusted EBITDA loss in the third
quarter of the previous year
- $1.8M of net loss for the third
quarter as compared to $995K of net
loss in the third quarter of the previous year
- Initiated review of strategic and financial alternatives to
explore options to accelerate growth and enhance shareholder
value
"During the quarter we achieved significant product delivery
milestones announcing availability of our new NexJ Nudge-AI product
for intelligent investment recommendations and automated compliance
as well as our next generation CRM for wealth management", said
Paul O'Donnell, CEO, NexJ Systems
Inc. "With early adoption by UBS and ENBD, and other large
customers committed for 2020, our core recurring revenue will
remain solid. In addition, we are excited by the positive
feedback we have received from new prospects and are confident we
will see pipeline traction in the coming quarter."
NexJ Systems
Inc.
|
Third Quarter
Financial Results
|
(Expressed in
thousands of Canadian dollars)
|
(Unaudited)
|
|
|
|
|
Quarter ended
September 30,
|
|
Nine months
ended September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
|
$
|
|
$
|
|
$
|
License
fees
|
391
|
|
615
|
|
950
|
|
1,717
|
Subscription
fees
|
41
|
|
-
|
|
103
|
|
-
|
Professional
services
|
1,279
|
|
2,425
|
|
4,640
|
|
7,904
|
Maintenance and
support
|
2,313
|
|
2,280
|
|
6,972
|
|
6,641
|
|
4,024
|
|
5,320
|
|
12,665
|
|
16,262
|
Cost of
revenue
|
1,290
|
|
1,704
|
|
5,014
|
|
6,065
|
Gross
profit
|
2,734
|
|
3,616
|
|
7,651
|
|
10,197
|
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
Research and
development, net
|
2,092
|
|
2,321
|
|
7,293
|
|
6,840
|
Sales and
marketing
|
880
|
|
788
|
|
2,354
|
|
2,661
|
General and
administrative, net
|
1,023
|
|
1,193
|
|
3,008
|
|
3,840
|
|
3,995
|
|
4,302
|
|
12,655
|
|
13,341
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
(1,261)
|
|
(686)
|
|
(5,004)
|
|
(3,144)
|
|
|
|
|
|
|
|
|
Share-based payment
expense
|
92
|
|
76
|
|
333
|
|
165
|
Depreciation and
amortization
|
235
|
|
92
|
|
718
|
|
284
|
Lease-exit charges,
net
|
-
|
|
-
|
|
-
|
|
103
|
Deferred share unit
expense
|
225
|
|
-
|
|
225
|
|
225
|
Restructuring
costs
|
-
|
|
-
|
|
614
|
|
331
|
Loss from
operations
|
(1,813)
|
|
(854)
|
|
(6,894)
|
|
(4,252)
|
|
|
|
|
|
|
|
|
Foreign exchange loss
(gain)
|
(40)
|
|
171
|
|
147
|
|
(239)
|
Finance
income
|
(21)
|
|
(30)
|
|
(97)
|
|
(107)
|
Finance
expense
|
36
|
|
-
|
|
112
|
|
-
|
Net
loss
|
(1,788)
|
|
(995)
|
|
(7,056)
|
|
(3,906)
|
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 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 info@nexj.com, 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 CRM 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 CRM
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) our dependence on a
limited number of customers and large project size; (ii)
fluctuation in our quarterly operating results; (iii) our
dependence on key personnel and our compensation structure; (iv)
risks associated with managing large and complex software
implementation projects; (v) uncertainties and assumptions in our
sales forecasts, including the extent to which sales proposals are
converted into sales; (vi) risks associated with our ability to
design, develop, test, market, license and support our software
products on a timely basis; (vii) market acceptance of our products
and services; (viii) commercial success of products resulting from
our investment in research and development; (ix) our success in
expanding sales into new international markets; * competition in
our industry; (xi) failure to protect our intellectual property or
infringement of intellectual property rights of third parties;
(xii) reliance upon a limited number of third-party software
products to develop our products; (xiii) defects or disruptions in
our products and services; (xiv) currency exchange rate
fluctuations; (xv) lengthy sales cycles for our software; (xvi)
global financial market conditions; (xvii) failure to manage our
growth successfully; (xviii) failure to successfully manage and
integrate acquisitions; (xix) breach of our security measures and
unauthorized access to data; (xx) employee retention and (xxi)
litigation, including commercial, product liability, employment,
class action and other litigation and claims.
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, 2018 dated February 14, 2019, 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)
|
|
|
|
|
|
|
|
|
September 30,
2019
|
|
December 31,
2018
|
|
|
|
|
Assets
|
|
|
|
|
$
|
|
$
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
6,678
|
|
10,951
|
Accounts
receivable
|
2,286
|
|
4,876
|
Prepaid expenses and
other assets
|
2,362
|
|
1,688
|
Total current
assets
|
11,326
|
|
17,515
|
|
|
|
|
Non-current
assets:
|
|
|
|
Property and
equipment
|
1,044
|
|
1,181
|
Right-of-use
assets
|
2,075
|
|
-
|
Goodwill
|
1,753
|
|
1,753
|
Investments
|
265
|
|
-
|
Contract
costs
|
152
|
|
227
|
Other
assets
|
563
|
|
260
|
Total non-current
assets
|
5,852
|
|
3,421
|
|
|
|
|
Total
assets
|
17,178
|
|
20,936
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
2,326
|
|
2,689
|
Deferred
revenue
|
4,921
|
|
4,786
|
Provisions
|
-
|
|
51
|
Lease
liabilities
|
692
|
|
12
|
Total current
liabilities
|
7,939
|
|
7,538
|
|
|
|
|
Non-current
liabilities:
|
|
|
|
Accrued
liabilities
|
140
|
|
-
|
Provisions
|
-
|
|
13
|
Lease
liability
|
2,335
|
|
-
|
Total non-current
liabilities
|
2,475
|
|
13
|
|
|
|
|
Total
liabilities
|
10,414
|
|
7,551
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Share
capital
|
82,915
|
|
82,905
|
Share purchase
loans
|
(3,598)
|
|
(3,598)
|
Contributed
surplus
|
8,795
|
|
8,366
|
Accumulated other
comprehensive income (loss)
|
(4)
|
|
-
|
Deficit
|
(81,344)
|
|
(74,288)
|
Total shareholders'
equity
|
6,764
|
|
13,385
|
|
|
|
|
Total liabilities and
shareholders' equity
|
17,178
|
|
20,936
|
NexJ Systems
Inc.
|
Condensed Interim
Statements of Comprehensive loss
|
(Expressed in
thousands of Canadian dollars, except per share amounts)
|
(Unaudited)
|
|
|
|
|
|
Quarter ended
September 30,
|
|
Nine months ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
|
$
|
|
$
|
|
$
|
License
fees
|
391
|
|
615
|
|
950
|
|
1,717
|
Subscription
fees
|
41
|
|
-
|
|
103
|
|
-
|
Professional
services
|
1,279
|
|
2,425
|
|
4,640
|
|
7,904
|
Maintenance and
support
|
2,313
|
|
2,280
|
|
6,972
|
|
6,641
|
|
4,024
|
|
5,320
|
|
12,665
|
|
16,262
|
Cost of
revenue
|
1,310
|
|
1,716
|
|
5,080
|
|
6,080
|
Gross
profit
|
2,714
|
|
3,604
|
|
7,585
|
|
10,182
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
Research and
development, net
|
2,100
|
|
2,332
|
|
7,343
|
|
6,861
|
Sales and
marketing
|
884
|
|
790
|
|
2,364
|
|
2,665
|
General and
administrative, net
|
1,543
|
|
1,336
|
|
4,158
|
|
4,577
|
Restructuring
costs
|
-
|
|
-
|
|
614
|
|
331
|
|
4,527
|
|
4,458
|
|
14,479
|
|
14,434
|
|
|
|
|
|
|
|
|
Loss from
operations
|
(1,813)
|
|
(854)
|
|
(6,894)
|
|
(4,252)
|
|
|
|
|
|
|
|
|
Foreign exchange gain
(loss)
|
40
|
|
(171)
|
|
(147)
|
|
239
|
Finance
income
|
21
|
|
30
|
|
97
|
|
107
|
Finance
expense
|
(36)
|
|
-
|
|
(112)
|
|
-
|
|
25
|
|
(141)
|
|
(162)
|
|
346
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the
period
|
(1,788)
|
|
(995)
|
|
(7,056)
|
|
(3,906)
|
|
|
|
|
|
|
|
|
Other
comprehensive income:
|
|
|
|
|
|
|
|
Items that will not
be reclassified to profit or loss:
|
|
|
|
|
|
|
|
Unrealized gain (loss) on
equity securities
|
3
|
|
-
|
|
(4)
|
|
-
|
Comprehensive loss
for the period
|
(1,785)
|
|
(995)
|
|
(7,060)
|
|
(3,906)
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
|
Basic and
diluted
|
(0.09)
|
|
(0.05)
|
|
(0.34)
|
|
(0.19)
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares
|
|
|
|
|
|
|
|
outstanding, in
thousands
|
|
|
|
|
|
|
|
Basic and
diluted
|
20,557
|
|
20,586
|
|
20,540
|
|
20,551
|
NexJ Systems
Inc.
|
|
|
|
Condensed Interim
Statements of Cash Flows
|
|
|
|
(Expressed in
thousands of Canadian dollars)
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Nine months
ended
|
|
Nine months
ended
|
|
September 30,
2019
|
|
September 30,
2018
|
|
|
|
|
|
|
|
|
Cash flows from
(used in) operating activities:
|
$
|
|
$
|
Net loss for the
period
|
(7,056)
|
|
(3,906)
|
Adjustments
for:
|
|
|
|
Depreciation and
amortization of property, equipment
|
|
|
|
and right-of-use
assets
|
718
|
|
284
|
Amortization of
contract costs
|
162
|
|
31
|
Share-based payment
expense
|
333
|
|
165
|
Equity-settled
deferred share unit expense
|
118
|
|
225
|
Finance
income
|
(97)
|
|
(107)
|
Finance
expense
|
112
|
|
-
|
Foreign exchange gain
(loss)
|
42
|
|
(20)
|
Change in non-cash
operating working capital:
|
|
|
|
Accounts
receivable
|
2,590
|
|
374
|
Prepaid expenses and
other assets
|
(505)
|
|
321
|
Accounts payable and
accrued liabilities and provisions
|
(117)
|
|
(329)
|
Deferred
revenue
|
135
|
|
378
|
Net cash flows
used in operating activities
|
(3,565)
|
|
(2,584)
|
|
|
|
|
Cash flows from
(used in) financing activities:
|
|
|
|
Proceeds from
repayment of share purchase loans
|
-
|
|
24
|
Repurchase of common
shares
|
(10)
|
|
(117)
|
Costs of exercise of
stock options
|
(2)
|
|
(26)
|
Costs of exercise of
deferred share units
|
-
|
|
(205)
|
Payment of finance
lease liability (completed contract)
|
(12)
|
|
(111)
|
Payment of finance
lease liability (ongoing contract)
|
(367)
|
|
-
|
Net cash flows
used in financing activities
|
(391)
|
|
(435)
|
|
|
|
|
Cash flows from
(used in) investing activities:
|
|
|
|
Purchase of property
and equipment
|
(103)
|
|
(75)
|
Purchase of equity
investments
|
(269)
|
|
-
|
Interest
received
|
97
|
|
106
|
Net cash flows
from (used in) investing activities
|
(275)
|
|
31
|
|
|
|
|
Effects of exchange
rates on cash and cash equivalents
|
(42)
|
|
20
|
|
|
|
|
Decrease in cash and
cash equivalents
|
(4,273)
|
|
(2,968)
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
10,951
|
|
14,784
|
|
|
|
|
Cash and cash
equivalents, end of period
|
6,678
|
|
11,816
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
Acquisition of
property and equipment not yet paid
|
18
|
|
76
|
SOURCE NexJ Systems Inc.