NexJ Systems Reports First Quarter Fiscal 2014 Results

TORONTO, May 6, 2014 /CNW/ - NexJ Systems Inc. (TSX: NXJ), a provider of cloud-based software, delivering enterprise solutions for the financial services, insurance, and healthcare industries, today announced financial results for its first quarter ended March 31, 2014.

Financial Highlights for Q1 2014

  • First quarter revenue was $7.3 million, increased 12% Y/Y
  • Adjusted EBITDA (as defined below) was a loss of $2.3 million or $0.11 per share (basic and diluted) for the quarter ended March 31, 2014 as compared to an adjusted EBITDA loss of $5.9 million or $0.29 per share (basic and diluted) for the comparative period in 2013
  • Net loss was $1.9 million or $0.09 per share (basic and diluted) for the quarter ended March 31, 2014, as compared to a net loss of $6.7 million or $0.33 per share (basic and diluted) for the comparative period in 2013

"Our revenue increase is due to continuing work at major finance and healthcare customers," said William M. Tatham, Chief Executive Officer of NexJ.  "Looking ahead, product development targeted at corporate banking and the acquisition of Liberate Ideas Inc. for point-of-care education are receiving significant market interest."

Conference Call Information
NexJ will be hosting an earnings report conference call today 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 today at 8:00 p.m. ET through 11:59 p.m. on May 13, 2014 and can be accessed by dialing 416-849-0833 (Toronto local) or toll free at 1-855-859-2056 and using password 27767650.

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, earn-out expense (recovery), 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.

The following table reconciles Adjusted EBITDA to net income (loss):

  Three months ended
March 31,
2014 2013
  (in thousands of dollars, except percentages)
     
Total revenue  $ 7,305 $ 6,535
     
Net loss  (1,886) (6,674)
Add back:    
Share-based payment expense  131 222
Depreciation and amortization  404 452
Lease-exit charges, net  (625)
Earn-out expense (recovery)  384
Foreign exchange gain  (212) (112)
Finance income  (83) (136)
     
Adjusted EBITDA  (2,271) (5,864)
Adjusted EBITDA margin  (31%) (90%)

About NexJ Systems Inc.

NexJ is a provider of cloud-based software, delivering enterprise solutions for the financial services, insurance and healthcare industries. Our next-generation, people-centered software combines industry-specific functionality with information from multiple applications and data stores to provide comprehensive knowledge of the individual.

Based in Toronto, NexJ has clients throughout North America 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, like us on Facebook or hang out with us on Google+.

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 "could", "expects", "may", "should", "will", "anticipates", "believes", "intends", "estimates", "targets", "plans", "envisions", "seeks" 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; * risks associated with expansion into healthcare and other new industry verticals; (xi) competition in our industry; (xii) failure to protect our intellectual property or infringement of intellectual property rights of third parties; (xiii) reliance upon a limited number of third-party software products to develop our products; (xiv) defects or disruptions in our products and services; (xv) currency exchange rate fluctuations; (xvi) lengthy sales cycles for our software; (xvii) global financial market conditions; (xviii) failure to manage our growth successfully; and (xix) 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, 2013 dated February 27, 2014, 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 Consolidated Statements of Financial Position    
(Expressed in thousands of Canadian dollars)      
(Unaudited)      
       
       
  March 31, 2014   December 31, 2013
Assets      
  $   $
Current assets:      
  Cash and cash equivalents 27,412   29,293
  Accounts receivable 5,266   7,246
  Prepaid expenses and other assets  1,105   1,727
Total current assets 33,783   38,266
       
Non-current assets:      
  Property and equipment 2,800   3,014
  Intangible assets  1,454   1,643
  Goodwill  3,640   3,640
  Other assets  260   260
Total non-current assets 8,154   8,557
       
Total assets 41,937   46,823
       
Liabilities and Shareholders' Equity      
       
Current liabilities:      
  Accounts payable and accrued liabilities  3,975   4,677
  Deferred revenue 3,878   5,021
  Provisions 178   572
Total current liabilities 8,031   10,270
       
Non-current liabilities:      
  Accrued liabilities 450   596
  Provisions 323   742
  Deferred revenue -   212
Total non-current liabilities 773   1,550
       
Total liabilities 8,804   11,820
       
Shareholders' equity:      
  Share capital  82,903   83,018
  Share purchase loans  (3,622)   (3,622)
  Contributed surplus  5,646   5,515
  Deficit (51,794)   (49,908)
Total shareholders' equity 33,133   35,003
       
       
Total liabilities and shareholders' equity 41,937   46,823

 


NexJ Systems Inc.      
Condensed Interim Consolidated Statements of Comprehensive Loss      
(Expressed in thousands of Canadian dollars, except per share amounts)      
(Unaudited)      
       
Three Months ended March 31, 2014 and 2013      
       
  2014   2013
       
Revenue: $   $
  License fees 291   433
  Professional services 5,502   4,764
  Maintenance and support 1,512   1,338
  7,305   6,535
       
Expenses*:      
  Professional service costs 3,775   4,300
  Research and development, net 2,675   3,871
  Sales and marketing 1,560   2,662
  General and administrative, net 1,476   2,624
  9,486   13,457
       
Loss from operations: (2,181)   (6,922)
       
  Foreign exchange gain  212   112
  Finance income  83   136
  295   248
       
Loss before income taxes (1,886)   (6,674)
       
  Income taxes -   -
       
       
Net Loss and comprehensive loss  (1,886)   (6,674)
       
Loss per share:      
  Basic and diluted (0.09)   (0.33)
       
       
Weighted average number of common shares outstanding:      
  Basic and diluted 20,280   20,368
       
       
*Share-based payment expense has been included
in expenses as follows:
 
 
 
 
 
 
  Professional service costs 45   59
  Research and development, net 50   61
  Sales and marketing 14   39
  General and administrative, net 22   63
       
  131   222

 

 

NexJ Systems Inc.      
Condensed Interim Consolidated Statements of Cash Flows      
(Expressed in thousands of Canadian dollars)      
(Unaudited)      
       
Three Months ended March 31, 2014 and 2013      
       
  2014   2013
       
Cash flows from (used in) operating activities:  $     $ 
 Loss for the period: (1,886)   (6,674)
 Adjustments for:      
  Depreciation and amortization 404   452
  Share-based payment expense 131   222
  Finance income (83)   (136)
  Foreign exchange loss (gain) (67)   42
 Change in non-cash operating working capital:      
  Accounts receivable 1,980   1,894
  Prepaid expenses and other assets 622   (609)
  Accounts payable and accrued liabilities and provisions (1,661)   (1,376)
  Deferred revenue (1,355)   (938)
Net cash flows used in operating activities (1,915)   (7,123)
       
Cash flows from (used in) financing activities:      
  Repurchase of common shares (115)   -
Net cash flows used in financing activities (115)   -
       
Cash flows from (used in) investing activities:      
  Purchase of property and equipment (1)   (10)
  Interest received 83   136
Net cash flows from investing activities 82   126
       
 Effects of exchange rates on cash and cash equivalents 67   (42)
       
   Decrease in cash and cash equivalents (1,881)   (7,039)
       
Cash and cash equivalents, beginning of period 29,293   46,263
       
Cash and cash equivalents, end of period 27,412   39,224
       
Supplemental cash flow information:      
   Acquisition of property and equipment not yet paid for -   47

 

 

 

SOURCE NexJ Systems Inc.

For further information:

Media Contact: Matthew Bogart
416-227-3708
matthew.bogart@nexj.com