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NexJ Systems Reports First Quarter 2018 Results
[May 10, 2018]

NexJ Systems Reports First Quarter 2018 Results


Announces CEO and CFO Succession

TORONTO, May 10, 2018 /CNW/ - NexJ Systems Inc. (TSX: NXJ), a provider of intelligent customer management solutions to the financial services industry, today announced financial results for its first quarter ended March 31, 2018.

Financial Summary

  • $5.9 M in revenue for the three month period is down from the $8.8 M reported in the first quarter last year

  • $1.1 M in Adjusted EBITDA loss for the three month period is down from the $0.7 M of Adjusted EBITDA reported in the first quarter last year

  • $1 M of net loss for the three month period is down from $0.3 M of net income reported in the first quarter last year

  • $15 M of cash and cash equivalents at quarter end

NexJ Systems supports the world's largest financial institutions and their use of NexJ technology delivers real business benefit. As recently announced, our intelligent customer management and intelligent agent software combine to deliver a holistic approach to AI culminating in delivery of machine learning cognitive applications. Specifically, NexJ Intelligent Customer Management learns and recommends the best action for the banker or advisor to maximize customer value.

To further our intelligent customer management objectives, NexJ Systems announces changes to its leadership team. Effective June 1, 2018, Paul O'Donnell, currently serving as President, NexJ Systems will be appointed as Chief Executive Officer and Rajneesh Sapra, currently Vice President, Finance, will be appointed as Chief Financial Officer.

In addition, NexJ Systems will be appointing William M. Tatham as Chairman of the Board, David Yach as Lead Independent Director and Errol Singer, outgoing Chief Financial Officer, will become an advisor and observer to the Board.

"Paul's proven track record as an operational leader and my experience working with him directly give me every confidence that he will successfully execute on our intelligent customer management strategy," said William M. Tatham. "Having worked closely with Errol since 2011, Raj is a highly valued member of our finance team with extensive knowledge of all facets of our business and is the appropriate successor for this role."

The Board is pleased with the composition of the new leadership team and fully supports the appointments. As founder and Chairman of the Board, Mr. Tatham will continue to guide the strategic direction of the Company.

Paul O'Donnell – Chief Executive Officer
Mr. O'Donnell is a proven strategic operational leader who has focused on building companies both organically and through strategic acquisition. As an experienced operator he has managed growth through direct sales, reseller partnerships and OEM distribution. Mr. O'Donnell joined NexJ as a strategic advisor in 2017. Prior to that, he held senior executive roles in technology companies including President of OpenText Americas Chief Operating Officer for PEAK Technologies Europe, Chief Revenue Officer of Intelex Technologies and Chief Revenue Officer for 360insights.

Rajneesh Sapra – Chief Financial Officer
With more than 25 years of experience, Mr. Sapra is a finance professional with international experience who brings a wealth of knowledge and expertise to the management and delivery of NexJ's fiscal responsibilities and provides an objective voice on issues impacting operational effectiveness. Prior to joining NexJ, as a Chartered Professional Accountant, Mr. Sapra was Senior Manager at KPMG LLP in their technology audit practice in Toronto. Prior to that he held positions with public accounting firms across the globe. He currently serves as a Board Member for CPA Ontario's Public Accounting Licensing Board and Toronto Chapter of the Institute of Chartered Accountants of India, respectively.

Conference Call Information
NexJ Systems will be hosting an earnings report conference call on May 10, 2018 at 5:00 p.m. ET. The call can be accessed via webcast or by phone by dialing 647-427-7450 (Toronto local or international) or 1-888-231-8191 (North America Toll Free). Investors should dial in approximately 10 minutes before the teleconference is scheduled to begin.

A replay of the call will be available beginning on May 10, 2018 at 8:00 p.m. ET through 11:59 p.m. on May 17, 2018 and can be accessed by dialing 416-849-0833 (Toronto local) or toll-free at 1-855-859-2056 and using password 8081069.





NexJ Systems Inc.





First Quarter Financial Results





(Expressed in thousands of Canadian dollars)





(Unaudited)





 Quarter ended 


 Quarter ended 


 March 31, 2018


 March 31, 2017





Revenue:

$


$


License fees

680


3,183


Professional services

3,026


3,686


Maintenance and support

2,194


1,947


5,900


8,816

Expenses:





Professional services

2,384


2,918


Research and development, net

2,073


1,848


Sales and marketing

922


1,339


General and administrative, net

1,599


1,978


6,978


8,083

Adjusted EBITDA

(1,078)


733






Share-based payment expense

43


95


Depreciation and amortization

98


232


Lease-exit charges, net

103


-

Income (loss) from operations

(1,322)


406






Foreign exchange loss (gain)

(300)


98


Finance income

(39)


(19)

Net income (loss)

(983)


327


 

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-exit charges, net, deferred share unit expense, 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 is a provider of Intelligent Customer Management solutions for the financial services industry. Individually, NexJ Systems' award winning products use artificial intelligence to improve customer service and increase advisor and banker productivity.  Together, the Intelligent Customer Management suite delivers a continuously-learning, cognitive application that recommends the right intelligence-augmented actions for users to deliver personalized customer service at scale and grow their business.

Based in Toronto, NexJ Systems has clients throughout North America, Asia Pacific and in Europe. For more information about NexJ Systems 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, like us on Facebook or hang out with us on Google+.

NexJ Forward-looking Statement
Certain information in this press release contains forward-looking information within the meaning of applicable securities laws (also known as forward-looking statements), including, among others, statements about the financial conditions, and results of operations and earnings, with respect to ability for machine learning and AI technology to address issues faced by the financial services industry, NexJ's benefits from expansion of artificial intelligence capabilities, and changes to NexJ's management structure. Forward-looking statements generally can be identified by words such as "could", "expects", "may", "should", "will", "anticipates", "believes", "intends", "estimates", "targets", "plans", "envisions", "seeks" and other similar language.  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; and (xiii) failure to successfully manage and integrate acquisitions.

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, 2017 dated February 21, 2018, 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)









March 31, 2018


December 31, 2017





Assets





$


$

Current assets:





Cash and cash equivalents

15,043


14,784


Accounts receivable

5,295


5,028


Prepaid expenses and other assets 

1,133


1,901

Total current assets

21,471


21,713





Non-current assets:





Property and equipment

1,307


1,374


Goodwill 

1,753


1,753


Contract costs

228


-


Other assets

260


260

Total non-current assets

3,548


3,387





Total assets

25,019


25,100





Liabilities and Shareholders' Equity








Current liabilities:





Accounts payable and accrued liabilities 

2,645


3,356


Deferred revenue

6,096


4,601


Provisions

52


-


Current portion of finance lease liability

123


148

Total current liabilities

8,916


8,105





Non-current liabilities:





Accrued liabilities

1


-


Provisions

51


-


Finance lease liability

-


12


Deferred revenue

-


68

Total non-current liabilities

52


80





Total liabilities

8,968


8,185





Shareholders' equity:





Share capital 

82,379


82,445


Share purchase loans 

(3,598)


(3,622)


Contributed surplus 

8,650


8,663


Deficit

(71,380)


(70,571)

Total shareholders' equity

16,051


16,915









Total liabilities and shareholders' equity

25,019


25,100

 

NexJ Systems Inc.

Condensed Interim Statements of Comprehensive Income (loss)

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

(Unaudited)






Quarter ended 


Quarter ended


 March 31, 2018


 March 31, 2017









Revenue:

$


$


License fees

680


3,183


Professional services

3,026


3,686


Maintenance and support

2,194


1,947


5,900


8,816





Expenses:





Professional services

2,387


2,936


Research and development, net

2,079


1,881


Sales and marketing

923


1,345


General and administrative, net

1,833


2,248


7,222


8,410





Income (loss) from operations

(1,322)


406






Foreign exchange gain (loss)

300


(98)


Finance income 

39


19


339


(79)









Income (loss) for the period and




comprehensive income (loss)

(983)


327





Earnings (loss) per share:





Basic and Diluted

(0.05)


0.02





Weighted average number of common shares 

outstanding, in thousands:





Basic

20,532


20,052


Diluted                                                                     

20,532


21,270

 

NexJ Systems Inc.




Condensed Interim Statements of Cash Flows




(Expressed in thousands of Canadian dollars)




(Unaudited)









Quarter ended 


Quarter ended


 March 31, 2018


 March 31, 2017









Cash flows from (used in) operating activities:

$


$


Net Income (Loss)

(983)


327


Adjustments for:






Depreciation and amortization

98


232



Amortization of contract costs

14


-



Share-based payment expense

43


95



Finance income

(39)


(19)



Foreign exchange loss (gain)

(120)


6


Change in non-cash operating working capital:






Accounts receivable

(267)


(1,318)



Prepaid expenses and other assets

768


(48)



Accounts payable and accrued liabilities and provisions

(692)


(486)



Deferred revenue

1,427


321

Net cash flows from (used in) operating activities

249


(890)





Cash flows from (used in) financing activities:






Repayment of share repurchase

24


-



Repurchase of common shares

(101)


(104)



Proceeds (costs) from exercise of stock options

(21)


135



Payment of finance lease liability

(37)


(37)

Net cash flows used in financing activities

(135)


(6)





Cash flows from (used in) investing activities:





Purchase of property and equipment

(14)


(140)



Interest received

39


19

Net cash flows from (used in) investing activities

25


(121)







Effects of exchange rates on cash and cash equivalents

120


(6)







Increase (decrease) in cash and cash equivalents

259


(1,023)







Cash and cash equivalents, beginning of year

14,784


14,678





Cash and cash equivalents, end of year

15,043


13,655





Supplemental cash flow information:






Acquisition of property and equipment not yet paid

17


20

 

SOURCE NexJ Systems Inc.


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