NexJ Systems Reports Third Quarter Fiscal 2011 Results

Revenue up 65% year-to-date

TORONTO, Nov. 3, 2011 /CNW/ - NexJ Systems Inc., (TSX: NXJ), a leading provider of next-generation enterprise customer relationship management solutions (CRM), today announced unaudited financial results for its third quarter ended September 30, 2011.

Total revenue for the second quarter of fiscal 2011 was $7.5 million, up 28% compared to $5.9 million for the same period of the prior fiscal year.  Adjusted EBITDA was a loss of $1.9 million compared to income of $0.2 million in the same period in 2010.  Net loss was to $0.7 million or $0.04 per share (basic and diluted) compared to a loss of $0.8 million or $0.05 per share (basic and diluted), for the same period in 2010.

Total revenue for the nine months ended September 30, 2011 was $23 million, up 65% compared to the $13.9 million for the same period of the prior fiscal year.  Adjusted EBITDA was a loss of $3.6 million compared to a loss of $0.7 million in the same period in 2010.  Net loss increased to $4.6 million or $0.27 per share (basic and diluted) compared to a loss of $1.9 million or $0.15 per share (basic and diluted) for the same period in 2010.

"NexJ's growth continues to be primarily fueled by deployments at blue chip customers in financial services. We believe the opportunity in this market remains substantial and are pleased to have recently been selected by another global wealth management firm," said William M. Tatham, Chief Executive Officer of NexJ.  "In the coming days we will be going live with our first large deployment in the insurance market and look forward to using this account as a reference for further growth in the space. We are also seeing progress within the healthcare vertical with the introduction of new products and a growing pipeline."

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 November 21, 2011 and can be accessed by dialing 416-849-0833 (Toronto local) or toll free at 1-855-859-2056 and using password 18566803.

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 is 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 deducting share-based payment expense, finance income, finance costs, foreign exchange gain/loss, depreciation 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
September 30,
Nine months ended
September 30,
  2011 2010 2011 2010
  (in thousands of dollars, except percentages) (in thousands of dollars, except percentages)
         
Total revenue  $7,510 $5,889 $22,953 $13,904
         
Net loss  (687) (754) (4,566) (1,860)
Add back:        
Share-based payment expense  358 510 1,652 839
Depreciation  199 140 566 326
Foreign exchange loss (gain)  (1,600) 294 (975) 49
Finance income  (130) (9) (240) (53)
Finance costs  1 2 6 6
         
Adjusted EBITDA  (1,859) 183 (3,557) (693)
Adjusted EBITDA margin  (25%) 3% (15%) (5%)

About NexJ Systems Inc.
NexJ is a leading provider of enterprise private cloud software, delivering customer relationship management (CRM) solutions for financial services, insurance, and healthcare.  NexJ's next-generation, people-centered software combines industry-specific functionality with information from multiple applications and data stores to provide comprehensive knowledge of the individual.

NexJ was founded by an executive management team with extensive experience in the successful design and delivery of large-scale, integrated, enterprise software solutions.  For more information about NexJ Systems call 416-222-5611, e-mail info@nexj.com, or visit www.nexj.com.

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; and (xviii) failure to manage our growth successfully.

For additional information with respect to risks and other factors which could occur, see the Company's Management's Discussion and Analysis of Financial Condition and Results of Operations dated June 14, 2011 for the three months ended March 31, 2011 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)

             


September 30, 
2011

December 31, 
 2010

January 1,
 2010
Assets            
             
Current assets:            
  Cash and cash equivalents  $  59,240  $  23,942  $  34
  Short-term investments    -    5,070    3,597
  Accounts receivable     8,301    6,491    1,000
  Investment tax credits receivable    3,312    4,063    3,822
  Prepaid expenses and other assets    1,202    433    459
  Total current assets    72,055    39,999    8,912
             
Non-current assets:            
  Property and equipment     4,428    1,858    631
  Other assets    371    307    260
  Total non-current assets    4,799    2,165    891
             
Total assets  $  76,854  $  42,164  $  9,803


Liabilities and Shareholders' Equity
           
             
Current liabilities:            
  Accounts payable and accrued liabilities  $  5,562  $  4,286  $  1,787
  Current portion of obligations under capital leases     58    67    63
  Deferred revenue    3,092    5,727    831
  Total current liabilities    8,712    10,080    2,681
Non-current liabilities:            
  Accrued liabilities    743    1,513    1,414
  Obligations under capital leases     -    41    108
  Total non-current liabilities    743    1,554    1,522
               
Total liabilities    9,455    11,634    4,203
             
Shareholders' equity:            
  Share capital    79,072    35,455    10,372
  Share purchase loans    (3,826)    -    -
  Contributed surplus    3,840    2,196    480
  Deficit    (11,687)    (7,121)    (5,252)
Total shareholders' equity    67,399   30,530    5,600
Total liabilities and shareholders' equity  $  76,854  $  42,164  $  9,803

NEXJ SYSTEMS INC.
Condensed Interim Statements of Comprehensive Income
(Expressed in thousands of Canadian dollars)
(Unaudited)

    Three-month periods ended    Nine-month periods ended
    September 30,   September 30,
    2011    2010    2011    2010
Revenue:                
  License fees  $  1,217  $  2,542  $  7,082  $  4,787
  Professional services    5,409    2,839    13,596    7,590
  Maintenance and support    884    508    2,275    1,527
    7,510    5,889    22,953    13,904
Expenses:                
  Professional service costs    2,771    1,308    7,292    3,309
  Research and development, net    3,425    2,374    9,885    5,697
  Sales and marketing    1,818    1,503    5,916    3,754
  General and administrative    1,912    1,171    5,635    3,002
    9,926    6,356   28,728    15,762
                 
Loss before the undernoted    (2,416)    (467)    (5,775)    (1,858)
Foreign exchange gain (loss)    1,600    (294)    975   (49)
Finance income    130    9    240    53
Finance costs    (1)    (2)    (6)    (6)
    1,729    (287)    1,209    (2)
Loss before income taxes    (687)    (754)    (4,566)    (1,860)
Income taxes    -   -    -    -
Loss and comprehensive loss for the period  $  (687)  $  (754)  $  (4,566)  $  (1,860)
Loss per share:                
  Basic  $  (0.04)  $  (0.05)  $  (0.27)  $  (0.15)
  Diluted    (0.04)   (0.05)    (0.27)    (0.15)
Share-based payment expense has been included in expenses as follows:                
  Professional service costs  $  60  $  156  $  222  $  257
  Research and development, net    101   153    408    252
  Sales and marketing    71    97   512   159
  General and administrative    126    104    510    171
  $  358  $  510  $  1,652  $  839

NEXJ SYSTEMS INC.
Condensed Interim Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
(Unaudited)

  Nine-month periods ended
  September 30,
    2011    2010
Cash flows from operating activities:        
  Loss for the period  $  (4,566)  $  (1,860)
  Adjustments for:        
    Depreciation    566    326
    Share-based payment expense    1,652    839
    Finance income    (240)    (53)
    Finance costs    6    6
    Foreign exchange loss (gain)    (695)    78
  Change in non-cash operating working capital:        
    Accounts receivable    (1,810)    (4,625)
    Prepaid expenses and other assets    (770)    (88)
    Investment tax credits receivable    752    266
    Accounts payable and accrued liabilities    (869)    989
    Deferred revenue    (2,636)    4,090
  Net cash flows used in operating activities    (8,610)    (32)
Cash flows from financing activities:        
  Repayment of obligations under capital leases    (49)    (47)
  Proceeds from exercise of stock options    22    20
  Proceeds from repayment of share purchase loans    16    -
  Issuance of common shares    43,650    23,249
  Financing costs    (3,905)    (1,291)
  Interest paid    (6)    (6)
  Net cash flows from financing activities    39,728    21,925
Cash flows from investing activities:        
  Purchase of property and equipment    (1,760)    (1,399)
  Redemption of short-term investments    5,090    3,597
  Interest received    240    53
  Decrease (increase) in other assets    (64)    5
  Net cash flows from investing activities    3,506    2,256
Effects of exchange rates on cash and cash equivalents    674    (78)
Increase in cash and cash equivalents    35,298    24,071
Cash and cash equivalents, beginning of period    23,942    34
Cash and cash equivalents, end of period  $  59,240  $  24,105
Supplemental cash flow information:        
  Acquisition of property and equipment not yet paid for  $  1,375  $  130

 

SOURCE NexJ Systems Inc.

For further information:

Media Contact: Matthew Bogart
416-222-5611
matt.bogart@nexj.com


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