[July 29, 2015] |
|
Espial Reports 2015 Second Quarter Results
Transforming the viewing experience worldwide, Espial (News - Alert)® Group Inc.
("Espial" or the "Company"), (TSX:ESP), today announced its second
quarter financial results for the three and six month periods ended June
30, 2015.
Espial Q2 Highlights
-
Record quarterly revenue of $5.5 million
-
Adjusted EBITDA income of $0.4 million
-
Closed $35 million bought-deal financing
-
Acquired Bluestreak (News - Alert) Technologies
-
Mike Hayashi, former Time Warner Cable Executive Vice President,
joined Espial's board of directors
-
Orange (News - Alert), a top-ten worldwide mobile operator, launched Orange TV Stick
To Provide OTT Live TV, On-demand, and Internet Services Across Europe
using Espial's HTML5 Client software
-
Publicly launched Espial G4 STB Client solution at INTX cable show in
Chicago
-
Launched Espial Experience™, a new Professional Services group.
"We had a strong quarter with record revenue and solid EBITDA," said
Jaison Dolvane, CEO, Espial. "In Q2, we continued to make good progress
on delivering our flagship G4 Client software and integration services
to our previously announced RDK service provider customers. To support
further growth, we also completed a significant financing, acquired
Bluestreak which provides us with additional engineering talent and
customers, and launched Espial Experience™ professional services group.
RDK has continued to gain a tremendous amount of interest from operators
worldwide, which together with our recent major operator wins, continues
to strengthen our market position.
Financial Summary
For the three-month period ended June 30, 2015, the Company is reporting
revenue of $5.5 million compared with revenue of $4.7 million for the
three months ended June 30, 2014. Adjusted EBITDA income for the second
quarter of fiscal 2015 was $0.4 million compared to $0.6 million for the
second quarter of fiscal 2014. Net loss for the quarter was $0.3
million, compared with net income of $0.1 million last year. Adjusted
net income for the second quarter was $0.3 million compared to adjusted
net income of $0.4 million last year.
Q2 Financial Results
-
Second quarter revenues were $5,500,255 compared with revenues of
$4,712,514 in the same period a year ago. Second quarter software
license and royalty revenues were $1,709,951 compared to $1,109,268 in
the second quarter of fiscal 2014. Professional services for the
second quarters of 2015 and 2014 were $2,700,101 and $2,411,387
respectively. Maintenance and support revenues for the second quarter
were $1,090,203 compared to $1,191,589 last year.
-
North American revenues were $1,577,798 in the second quarter of 2015
compared to $2,371,417 in 2014. Asia revenues were $528,631 in the
second quarter of 2015 compared to $1,113,030 in 2014. European
revenues were $3,393,826 in the second quarter of 2015 compared to
$1,228,067 in 2014.
-
Gross margin for the second quarter of fiscal 2015 was 73% compared
with 72% in the second quarter of fiscal 2014.
-
Operating expenses in the second quarter of fiscal 2015 were
$4,302,266 compared to $3,157,315 in the second quarter of fiscal 2014.
-
Earnings before interest, foreign exchange, taxes, stock compensation,
depreciation and amortization (adjusted EBITDA income) for the second
quarter of fiscal 2015 was $370,506 compared to $601,951 in fiscal
2014.
-
Net loss, which includes non-cash items like depreciation,
amortization of intangibles and stock compensation, in the second
quarter was $277,835 compared to net income of $90,571 last year.
Cash, restricted cash and cash equivalents on June 30, 2015, was
$48,131,003
A complete set of financial statements and management's discussion and
analysis for the quarter ended June 30, 2015 will be available at http://www.sedar.com.
Conference Call
The Company will be hosting a conference call to discuss the Q2 2015
financial results on July 30, 2015 at 08:30AM EDT and the phone number
to join the results discussion is:
-
Toll Free line (Canada/US) 877-201-0168
-
Toll line (International/Local) 647-788-4901
The playback for the call will be available two hours after the call's
completion and will be available until 11:59pm ET on August 31, 2015, at
the following numbers and passcode:
-
Toll-free line: +1-855-859-2056 or +1-404-537-3406, Passcode: 41436385.
About Espial (www.espial.com)
With Espial, video service providers create responsive and engaging
subscriber viewing experiences incorporating powerful content discovery
and intuitive navigation. Service providers achieve 'Web-speed'
innovation with Espial's flexible, open software leveraging RDK and
HTML5 technologies. This provides competitive advantage through an
immersive and personalized user experience, seamlessly blending advanced
TV services with OTT content. With customers spanning six continents,
Espial is headquartered in Ottawa, Canada, has R&D centers in Silicon
Valley and the UK, and sales/support offices in the U.S., Europe and
Asia. For more information, visit www.espial.com.
Forward Looking Statement
This press release contains information that is forward looking
information with respect to Espial within the meaning of Section
138.4(9) of the Ontario Securities Act (forward looking statements) and
other applicable securities laws. In some cases, forward-looking
information can be identified by the use of terms such as "may", "will",
"should", "expect", "plan", "anticipate", "believe", "intend",
"estimate", "predict", "potential", "continue" or the negative of these
terms or other similar expressions concerning matters that are not
historical facts. In particular, statements or assumptions about, ,
economic conditions, benefits of new customer and partner relationships,
future opportunities for the company and products and any other
statements regarding Espial's objectives (and strategies to achieve such
objectives), future expectations, beliefs, goals or prospects are or
involve forward-looking information.
Forward-looking information is based on certain factors and assumptions.
While the company considers these assumptions to be reasonable based on
information currently available to it, they may prove to be incorrect.
Forward-looking information, by its nature necessarily involves known
and unknown risks and uncertainties. A number of factors could cause
actual results to differ materially from those in the forward-looking
statements or could cause our current objectives and strategies to
change, including but not limited to changing conditions and other risks
associated with the on-demand TV software industry and the market
segments in which Espial operates, competition, Espial's ability to
effectively develop its distribution channels and generate increased
demand for its products, economic conditions, technological change,
unanticipated changes in our costs, regulatory changes, litigation, the
emergence of new opportunities, many of which are beyond our control and
current expectation or knowledge.
Additional risks and uncertainties affecting Espial can be found in
Management's Discussion and Analysis of Results of Operations and
Financial Condition and its Annual Information Form for the fiscal years
ended December 31, 2013 and 2014 filed on SEDAR at www.sedar.com.
If any of these risks or uncertainties were to materialize, or if the
factors and assumptions underlying the forward-looking information were
to prove incorrect, actual results could vary materially from those that
are expressed or implied by the forward-looking information contained
herein and our current objectives or strategies may change. Espial
assumes no obligation to update or revise any forward looking
statements, whether as a result of new information, future events or
otherwise, except as required by law. Readers are cautioned not to place
undue reliance on these forward-looking statements that speak only as of
the date hereof.
Non-IFRS Financial Measures
We use adjusted net income (loss) and adjusted diluted earnings (loss)
per share, which remove the impact of our amortization of intangible
assets and stock based compensation expense, to measure our performance
as these measures align our results and improve comparability against
our peers. We use adjusted EBITDA to provide investors with a
supplemental measure of our operating performance and thus highlight
trends in our core business that may not otherwise be apparent when
relying solely on IFRS financial measures. We believe that securities
analysts, investors and other interested parties frequently use non-IFRS
measures in the evaluation of issuers. Management also uses non-IFRS
measures in order to facilitate operating performance comparisons from
period to period, prepare annual operating budgets and assess our
ability to meet our capital expenditure and working capital requirements.
Adjusted net income (loss), adjusted diluted earnings (loss) per share
and adjusted EBITDA income (loss) are not recognized, defined or
standardized measures under IFRS. Our definition of adjusted net income
(loss), adjusted EBITDA income (loss) and adjusted diluted earnings
(loss) per share will likely differ from that used by other companies
and therefore comparability may be limited. Adjusted net income (loss),
adjusted EBITDA income (loss) and adjusted diluted earnings (loss) per
share should not be considered a substitute for or in isolation from
measures prepared in accordance with IFRS. Investors are encouraged to
review our financial statements and disclosures in their entirety and
are cautioned not to put undue reliance on non-IFRS measures and view
them in conjunction with the most comparable IFRS financial measures. We
have reconciled adjusted net income (loss) and adjusted EBITDA income
(loss) to the most comparable IFRS financial measure as follows:
|
|
Three months ended June 30, 2015
|
|
Three months ended June 30, 2014
|
|
Six months ended June 30, 2015
|
|
Six months ended June 30, 2014
|
|
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(277,835)
|
|
$
|
90,571
|
|
$
|
81,390
|
|
$
|
1,119,145
|
|
Add
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
425,417
|
|
|
150,584
|
|
|
746,280
|
|
|
184,345
|
|
Amortization of intangibles
|
|
|
168,442
|
|
|
160,770
|
|
|
329,662
|
|
|
321,538
|
|
Adjusted net income (loss)
|
|
|
316,024
|
|
|
401,925
|
|
|
1,157,332
|
|
|
1,625,028
|
|
Add(less)
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
51,370
|
|
|
46,115
|
|
|
99,413
|
|
|
85,816
|
|
Net interest income / expense
|
|
|
(88,586)
|
|
|
10,912
|
|
|
(124,976)
|
|
|
94,619
|
|
Foreign exchange gain / loss
|
|
|
(1,750)
|
|
|
92,321
|
|
|
(105,506)
|
|
|
(21,460)
|
|
Income tax
|
|
|
93,448
|
|
|
50,678
|
|
|
130,241
|
|
|
123,765
|
|
Adjusted EBITDA
|
|
$
|
370,506
|
|
$
|
601,951
|
|
$
|
1,156,504
|
|
$
|
1,907,768
|
|
Adjusted diluted net income (loss) per share
|
|
$
|
0.01
|
|
$
|
0.03
|
|
$
|
0.04
|
|
$
|
0.08
|
|
Consolidated Statements of Income and Comprehensive Income (In
Canadian dollars)
|
|
Three Months Ended
|
|
|
|
Six Months Ended
|
|
|
|
June 30, 2015
|
|
June 30, 2014
|
|
|
|
June 30, 2015
|
|
June 30, 2014
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Software
|
|
$ 1,709,951
|
|
$ 1,109,268
|
|
|
|
$ 4,122,978
|
|
$
|
4,536,619
|
|
Professional services
|
|
2,700,101
|
|
2,411,387
|
|
|
|
4,572,807
|
|
|
2,771,781
|
|
Support and maintenance
|
|
1,090,203
|
|
1,191,859
|
|
|
|
2,220,347
|
|
|
2,378,938
|
|
Total revenue
|
|
5,500,255
|
|
4,712,514
|
|
|
|
10,916,132
|
|
|
9,687,338
|
|
Cost of revenue
|
|
1,472,712
|
|
1,310,717
|
|
|
|
2,642,099
|
|
|
2,064,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
4,027,543
|
|
3,401,797
|
|
|
|
8,274,033
|
|
|
7,622,490
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
1,202,748
|
|
924,620
|
|
|
|
2,348,834
|
|
|
1,846,921
|
|
General and administrative
|
|
902,947
|
|
637,026
|
|
|
|
1,692,988
|
|
|
1,180,964
|
|
Research and development
|
|
2,028,129
|
|
1,434,899
|
|
|
|
3,921,400
|
|
|
2,956,995
|
|
Amortization of intangible assets
|
|
168,442
|
|
160,770
|
|
|
|
329,662
|
|
|
321,539
|
|
|
|
4,302,266
|
|
3,157,315
|
|
|
|
8,292,884
|
|
|
6,306,419
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before other income (expense)
|
|
(274,723)
|
|
244,482
|
|
|
|
(18,851)
|
|
|
1,316,071
|
|
Interest income
|
|
88,586
|
|
6,469
|
|
|
|
124,976
|
|
|
11,544
|
|
Foreign exchange gain (loss)
|
|
1,750
|
|
(92,321)
|
|
|
|
105,506
|
|
|
21,458
|
|
Interest expense
|
|
-
|
|
(17,381)
|
|
|
|
-
|
|
|
(106,163)
|
|
Income (loss) before taxes
|
|
(184,387)
|
|
141,249
|
|
|
|
211,631
|
|
|
1,242,910
|
|
Income tax expense
|
|
(93,448)
|
|
(50,678)
|
|
|
|
(130,241)
|
|
|
(123,765)
|
|
Net income (loss) and comprehensive income (loss)
|
|
$ (277,835)
|
|
$ 90,571
|
|
|
|
$ 81,390
|
|
$
|
1,119,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per common share - basic
|
|
$ (0.01)
|
|
$ 0.00
|
|
|
|
$0.00
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per common share - diluted
|
|
$ (0.01)
|
|
$ 0.00
|
|
|
|
$0.00
|
|
$
|
0.05
|
|
Consolidated Balance Sheets
|
|
|
June 30, 2015
|
|
|
|
December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
48,131,003
|
|
|
|
$
|
18,111,324
|
|
|
|
Accounts receivable
|
|
|
|
6,280,389
|
|
|
|
|
3,861,058
|
|
|
|
Investment tax credits receivable
|
|
|
|
608,507
|
|
|
|
|
312,329
|
|
|
|
Prepaid expenses and other assets
|
|
|
|
715,379
|
|
|
|
|
567,853
|
|
|
|
|
|
|
|
55,735,278
|
|
|
|
|
22,852,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment
|
|
|
|
770,832
|
|
|
|
|
727,626
|
|
|
|
Intangible assets
|
|
|
|
1,953,194
|
|
|
|
|
1,496,794
|
|
|
|
Goodwill
|
|
|
|
3,632,604
|
|
|
|
|
3,340,808
|
|
|
|
|
|
|
$
|
62,091,908
|
|
|
|
$
|
28,417,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
$
|
2,535,233
|
|
|
|
$
|
2,521,480
|
|
|
|
Provisions
|
|
|
|
14,795
|
|
|
|
|
-
|
|
|
|
Deferred revenue
|
|
|
|
3,140,752
|
|
|
|
|
3,557,667
|
|
|
|
|
|
|
|
5,690,780
|
|
|
|
|
6,079,147
|
|
|
|
Provisions
|
|
|
|
176,526
|
|
|
|
|
275,234
|
|
|
|
Total Liabilities
|
|
|
|
5,867,306
|
|
|
|
|
6,354,381
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
|
124,865,795
|
|
|
|
|
91,072,570
|
|
|
|
Warrants
|
|
|
|
764,709
|
|
|
|
|
928,063
|
|
|
|
Share based payments reserve
|
|
|
|
13,436,520
|
|
|
|
|
12,986,590
|
|
|
|
Deficit
|
|
|
|
(82,842,422)
|
|
|
|
|
(82,923,812)
|
|
|
|
|
|
|
|
56,224,602
|
|
|
|
|
22,063,411
|
|
|
|
|
|
|
$
|
62,091,908
|
|
|
|
$
|
28,417,792
|
|
|
|
Statements of Cash Flows
|
|
|
Six months Ended
|
|
|
|
|
June 30, 2015
|
|
|
|
June 30, 2014
|
|
CASH PROVIDED BY (USED IN)
|
|
|
|
|
|
|
|
|
|
OPERATING
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$ 81,390
|
|
|
|
$
|
1,119,145
|
|
Items not affecting cash
|
|
|
|
|
|
|
|
|
|
Depreciation of property and equipment
|
|
|
|
99,413
|
|
|
|
|
85,816
|
|
Amortization of intangible assets
|
|
|
|
329,662
|
|
|
|
|
321,539
|
|
Share-based compensation expense
|
|
|
|
746,280
|
|
|
|
|
184,345
|
|
Interest accretion on long-term debt
|
|
|
|
-
|
|
|
|
|
57,945
|
|
Provisions
|
|
|
|
(83,913)
|
|
|
|
|
(134,488)
|
|
|
|
|
|
1,172,832
|
|
|
|
|
1,634,302
|
|
Changes in non-cash operating
working capital items
|
|
|
|
(2,559,744)
|
|
|
|
|
(1,679,892)
|
|
|
|
|
|
(1,386,912)
|
|
|
|
|
(45,590)
|
|
INVESTING
|
|
|
|
|
|
|
|
|
|
Purchase of equipment
|
|
|
|
(77,848)
|
|
|
|
|
(63,730)
|
|
Purchase of intangibles
|
|
|
|
(42,629)
|
|
|
|
|
(24,669)
|
|
Purchase of business, net of cash acquired
|
|
|
|
(1,806,453)
|
|
|
|
|
-
|
|
|
|
|
|
(1,926,930)
|
|
|
|
|
(88,399)
|
|
FINANCING
|
|
|
|
|
|
|
|
|
|
Repayment of term debt
|
|
|
|
-
|
|
|
|
|
(2,500,000)
|
|
Proceeds from options exercised
|
|
|
|
365,845
|
|
|
|
|
2,960
|
|
Proceeds from warrants exercised
|
|
|
|
350,988
|
|
|
|
|
474,582
|
|
Proceeds from equity financing
|
|
|
|
35,000,000
|
|
|
|
|
10,000,080
|
|
Costs of share issuance
|
|
|
|
(2,383,312)
|
|
|
|
|
(822,741)
|
|
|
|
|
|
33,333,521
|
|
|
|
|
7,154,881
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents inflow
|
|
|
|
30,019,679
|
|
|
|
|
7,020,892
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
18,111,324
|
|
|
|
|
7,407,093
|
|
Cash and cash equivalents, end of period
|
|
|
|
$ 48,131,003
|
|
|
|
$
|
14,427,985
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20150729006712/en/
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