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NexJ Systems Reports Fourth Quarter 2019 Results
[March 26, 2020]

NexJ Systems Reports Fourth Quarter 2019 Results


TORONTO, March 26, 2020 /CNW/ - NexJ Systems Inc. (TSX: NXJ), delivering intelligent customer management software to the financial services industry, today announced financial results for its fourth quarter ended December 31, 2019.

Fourth Quarter Summary

  • $4.6M of revenue for the fourth quarter as compared to $6.2M in the fourth quarter of the previous year

  • $164K in Adjusted EBITDA loss for the fourth quarter as compared to $170K in Adjusted EBITDA loss in the fourth quarter of the previous year

  • $632K of net loss for the fourth quarter as compared to $15K of net income in the fourth quarter of the previous year

  • $17.2M in revenue for the year represents 23% decrease over the prior year

  • $5.2M in Adjusted EBITDA loss for the year as compared to Adjusted EBITDA loss of $3.3M in the prior year

  • $7.7M in net loss for the year as compared to net loss of $3.9M in the prior year

"In 2019 we realized material gains in productivity that resulted in accelerated product development to underpin our strategic business objectives," said Paul O'Donnell, CEO of NexJ. "Our highly valued customer base continues to provide a predictable baseline revenue contribution and we have introduced a vertical specific, easy to consume cloud-native CRM for Wealth Management product and an exciting CRM agnostic AI product suite to improve client engagement to expand our addressable market for 2020 and beyond. As this transition continues, we remain focused on concluding our strategic alternative initiative and positioning ourselves to deliver against the demand for vertical specific intelligent customer management products."





NexJ Systems Inc.








Fourth Quarter Financial Results








(Expressed in thousands of Canadian dollars)








(Unaudited)









 Quarter ended December 31, 


 Year ended December 31, 


2019


2018


2019


2018









Revenue

$


$


$


$

License and subscription fees

399


1,612


1,452


3,329

Professional services

1,860


2,257


6,500


10,161

Maintenance and support

2,304


2,303


9,276


8,944


4,563


6,172


17,228


22,434

Cost of revenue

1,185


1,675


6,199


7,740

Gross profit

3,378


4,497


11,029


14,694









Operating Expenses








Research and development, net

1,813


2,385


9,106


9,225

Sales and marketing

822


960


3,176


3,621

General and administrative, net

907


1,322


3,915


5,162


3,542


4,667


16,197


18,008

Adjusted EBITDA

(164)


(170)


(5,168)


(3,314)









Share-based payment expense

79


121


412


286

Depreciation and amortization

230


89


948


373

Lease-exit charges, net

-


-


-


103

Deferred share unit expense

-


-


225


225

Restructuring costs

-


71


614


402

Loss from operations

(473)


(451)


(7,367)


(4,703)









Foreign exchange loss (gain)

149


(428)


296


(667)

Finance income

(23)


(38)


(120)


(145)

Finance expense

33


-


145


-

Net income (loss)

(632)


15


(7,688)


(3,891)


 

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) general economic 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, 2019 dated March 26, 2020, 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.




  Statements of Financial Position




  (Expressed in thousands of Canadian dollars)



  (Unaudited)









December 31, 2019


December 31, 2018





Assets





$


$

Current assets:




Cash and cash equivalents

5,123


10,951

Accounts receivable

5,475


4,876

Prepaid expenses and other assets 

1,757


1,688

Total current assets

12,355


17,515





Non-current assets:




Property and equipment

969


1,181

Right-of-use assets

1,747


-

Goodwill 

1,753


1,753

Investments

260


-

Contract costs

136


227

Other assets 

663


260

Total non-current assets

5,528


3,421





Total assets

17,883


20,936





Liabilities and Shareholders' Equity








Current liabilities:




Accounts payable and accrued liabilities 

1,969


2,689

Deferred revenue

6,550


4,786

Provisions

-


51

Lease liabilities

715


12

Total current liabilities

9,234


7,538





Non-current liabilities:




Accrued liabilities

117


-

Provisions

-


13

Lease liability

2,045


-

Deferred revenue

281


-

Total non-current liabilities

2,443


13





Total liabilities

11,677


7,551





Shareholders' equity:




Share capital 

82,915


82,905

Share purchase loans 

(3,598)


(3,598)

Contributed surplus 

8,874


8,366

Accumulated other comprehensive loss

(9)


-

Deficit

(81,976)


(74,288)

Total shareholders' equity

6,206


13,385





Total liabilities and shareholders' equity

17,883


20,936

 

NexJ Systems Inc.








Statements of Comprehensive loss








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






(Unaudited)

















Quarter ended December 31,


Year ended December 31,


2019


2018


2019


2018









Revenue

$


$


$


$

License and subscription fees

399


1,612


1,452


3,329

Professional services

1,860


2,257


6,500


10,161

Maintenance and support

2,304


2,303


9,276


8,944


4,563


6,172


17,228


22,434

Cost of revenue

1,201


1,693


6,281


7,773

Gross profit

3,362


4,479


10,947


14,661









Expenses:








Research and development, net

1,828


2,408


9,171


9,269

Sales and marketing

824


962


3,188


3,627

General and administrative, net

1,183


1,489


5,341


6,066

Restructuring costs

-


71


614


402


3,835


4,930


18,314


19,364









Loss from operations

(473)


(451)


(7,367)


(4,703)









Foreign exchange gain (loss)

(149)


428


(296)


667

Finance income 

23


38


120


145

Finance expense 

(33)


-


(145)


-


(159)


466


(321)


812

















Net income (loss) for the period

(632)


15


(7,688)


(3,891)









Other comprehensive income:








Items that will not be reclassified to profit or loss:








     Unrealized gain (loss) on equity securities

(5)


-


(9)


-

Comprehensive income (loss) for the period

(637)


15


(7,697)


(3,891)









Earnings (loss) per share








Basic and diluted

(0.03)


-


(0.37)


(0.19)









Weighted average number of common shares 








outstanding, in thousands








Basic

20,677


20,530


20,575


20,546

Diluted

20,677


20,994


20,575


20,546

 

NexJ Systems Inc.




Statements of Cash Flows




(Expressed in thousands of Canadian dollars)




(Unaudited)









Year ended


Year ended


December 31, 2019


December 31, 2018









Cash flows from (used in) operating activities:

$


$

Loss for the year

(7,688)


(3,891)

Adjustments for:




Depreciation and amortization of property, equipment




     and right-of-use assets

948


373

Amortization of contract costs

211


104

Share-based payment expense

412


286

Equity-settled deferred share unit expense

118


225

Finance income

(120)


(145)

Finance expense

145


-

Foreign exchange gain

(100)


(177)

Change in non-cash operating working capital:




Accounts receivable

(599)


152

Prepaid expenses and other assets

149


213

Accounts payable and accrued liabilities and provisions

(349)


(760)

Deferred revenue

2,045


117

Net cash flows used in operating activities

(4,828)


(3,503)





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)


(148)

Payment of finance lease liability (ongoing contract)

(805)


-

Net cash flows used in financing activities

(829)


(472)





Cash flows from (used in) investing activities:




Purchase of property and equipment

(122)


(180)

Purchase of equity investments

(269)


-

Interest received

120


145

Net cash flows used in investing activities

(271)


(35)





Effects of exchange rates on cash and cash equivalents

100


177





Decrease in cash and cash equivalents

(5,828)


(3,833)





Cash and cash equivalents, beginning of year

10,951


14,784





Cash and cash equivalents, end of year

5,123


10,951

 

SOURCE NexJ Systems Inc.


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