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NexJ Systems Reports Second Quarter 2020 Results
[July 30, 2020]

NexJ Systems Reports Second Quarter 2020 Results


TORONTO, July 30, 2020 /CNW/ - NexJ Systems Inc. (TSX: NXJ), delivering intelligent customer management software to the financial services industry, today announced financial results for its second quarter ended June 30, 2020.

Second Quarter Summary

  • $4.3M of revenue for the second quarter as compared to $4.4M in the second quarter of the previous year
  • $582K in Adjusted EBITDA profit for the second quarter is a $2.2M improvement over $1.6M in Adjusted EBITDA loss in the second quarter of the previous year
  • $1.2M of net loss for the second quarter is a $1.5M improvement over $2.7M of net loss in the second quarter of the previous year

"We are pleased that we have been able to maintain a consistent revenue stream and improved year on year results through the recent challenges in the financial markets. This consistency is a reflection of the underlying stability of our business and the strong relationships we have with our customers," said Paul O'Donnell, CEO. "This is a strong foundation from which to grow as we continue to focus on bringing real business value to our customers and prospects through accelerated product development and innovation." 
           





NexJ Systems Inc.









Second Quarter Financial Results









(Expressed in thousands of Canadian dollars)









(Unaudited)











 Quarter ended June 30, 


 Six months ended June 30, 



2020


2019


2020


2019










Revenue


$


$


$


$

License and subscription fees


26


212


50


621

Professional services


1 972


1 836


3 643


3 361

Maintenance and support


2 289


2 325


4 575


4 659



4 287


4 373


8 268


8 641

Cost of revenue


872


1 869


2 203


3 724

Gross profit


3 415


2 504


6 065


4 917










Operating Expenses









Research and development, net


1 341


2 470


3 343


5 201

Sales and marketing


566


708


1 353


1 474

General and administrative, net


926


948


2 120


1 985



2 833


4 126


6 816


8 660










Adjusted EBITDA


582


(1 622)


(751)


(3 743)










Share-based payment expense


58


119


129


241

Depreciation and amortization


222


242


433


483

Deferred share unit expense


275


-


275


-

Restructuring costs


960


614


960


614

Loss from operations


(933)


(2 597)


(2 548)


(5 081)










Foreign exchange loss (gain)


239


92


(134)


187

Finance income


(19)


(37)


(43)


(76)

Finance expense


34


38


70


76

Net loss for the period


(1 187)


(2 690)


(2 441)


(5 268)



 

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.

  Condensed Interim Statements of Financial Position

  (Expressed in thousands of Canadian dollars)

  (Unaudited)






June 30, 2020


December 31, 2019





Assets





$


$

Current assets:




Cash and cash equivalents

7 616


5 123

Accounts receivable

1 027


5 475

Prepaid expenses and other assets 

1 844


1 757

Total current assets

10 487


12 355





Non-current assets:




Property and equipment

905


969

Right-of-use assets

1 462


1 747

Goodwill 

1 753


1 753

Investments

272


260

Contract costs

75


136

Other assets 

568


663

Total non-current assets

5 035


5 528





Total assets

15 522


17 883





Liabilities and Shareholders' Equity








Current liabilities:




Accounts payable and accrued liabilities 

3 108


1 969

Deferred revenue

5 326


6 550

Lease liability

942


715

Total current liabilities

9 376


9 234





Non-current liabilities:




Accrued liabilities

84


117

Deferred revenue

370


281

Lease liability

1 568


2 045

Total non-current liabilities

2 022


2 443





Total liabilities

11 398


11 677





Shareholders' equity:




Share capital 

82 915


82 915

Share purchase loans 

(3 598)


(3 598)

Contributed surplus 

9 221


8 874

Accumulated other comprehensive income (loss)

3


(9)

Deficit

(84 417)


(81 976)

Total shareholders' equity

4 124


6 206





Total liabilities and shareholders' equity

15 522


17 883


 

NexJ Systems Inc.

Condensed Interim Statements of Comprehensive loss

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

(Unaudited)










Three months ended June 30,


Six months ended June 30,


2020


2019


2020


2019









Revenue

$


$


$


$

License and subscription fees

26


212


50


621

Professional services

1 972


1 836


3 643


3 361

Maintenance and support

2 289


2 325


4 575


4 659


4 287


4 373


8 268


8 641

Cost of revenue

877


1 894


2 224


3 770

Gross profit

3 410


2 479


6 044


4 871









Expenses:








Research and development, net

1 353


2 489


3 371


5 243

Sales and marketing

568


711


1 358


1 480

General and administrative, net

1 462


1 262


2 903


2 615

Restructuring costs

960


614


960


614


4 343


5 076


8 592


9 952









Loss from operations

(933)


(2 597)


(2 548)


(5 081)









Foreign exchange gain (loss)

(239)


(92)


134


(187)

Finance income 

19


37


43


76

Finance expense 

(34)


(38)


(70)


(76)


(254)


(93)


107


(187)

















Net loss for the period

(1 187)


(2 690)


(2 441)


(5 268)









Other comprehensive income (loss):








Items that will not be reclassified to profit or loss:








     Unrealized gain (loss) on equity securities

(12)


(7)


12


(7)

Loss for the period and comprehensive loss

(1 199)


(2 697)


(2 429)


(5 275)









Loss per share








Basic and diluted

(0,06)


(0,13)


(0,12)


(0,26)









Weighted average number of common shares 








outstanding, in thousands








Basic and diluted

20 664


20 531


20 670


20 531

 

NexJ Systems Inc.

Condensed Interim Statements of Cash Flows

(Expressed in thousands of Canadian dollars)

(Unaudited)






Six months ended


Six months ended


June 30, 2020


June 30, 2019









Cash flows from (used in) operating activities:

$


$

Loss for the period

(2 441)


(5 268)

Adjustments for:




Depreciation and amortization of property and equipment

148


177

Depreciation of right-of-use assets

285


306

Amortization of contract costs

61


109

Share-based payment expense

129


241

Deferred share unit expense

218


-

Finance income

(43)


(76)

Finance expense

70


76

Foreign exchange loss 

31


76

Change in non-cash operating working capital:




Accounts receivable

4 448


2 791

Prepaid expenses and other assets

21


(442)

Accounts payable and accrued liabilities

1 107


-

Deferred revenue

(1 146)


46

Net cash flows from (used in) operating activities

2 888


(1 964)





Cash flows used in financing activities:




Repurchase of common shares

-


(10)

Costs of exercise of stock options

-


(2)

Payment of lease liability (completed contract)

-


(12)

Payment of lease liability (ongoing contract)

(323)


(160)

Net cash flows used in financing activities

(323)


(184)





Cash flows from (used in) investing activities:




Purchase of property and equipment

(84)


(89)

Purchase of equity investments

-


(269)

Interest received

43


76

Net cash flows used in investing activities

(41)


(282)





   Effects of exchange rates on cash and cash equivalents

(31)


(76)





Increase (decrease) in cash and cash equivalents

2 493


(2 506)





Cash and cash equivalents, beginning of period

5 123


10 951





Cash and cash equivalents, end of period

7 616


8 445





Supplemental cash flow information:




Acquisition of property and equipment not yet paid

-


17

 

SOURCE NexJ Systems Inc.


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