NexJ Systems Reports Third Quarter Fiscal 2013 Results

TORONTO, Nov. 6, 2013 /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 third quarter ended September 30, 2013.

Financial Highlights for Q3 2013

  • Third quarter revenue was $6.6 million, a 9% increase Y/Y
  • Adjusted EBITDA (as defined below) was a loss of $3.9 million or $0.19 per share (basic and diluted) for the quarter ended September 30, 2013 as compared to an adjusted EBITDA loss of $3.8 million or $0.19 per share (basic and diluted) for the comparative period in 2012
  • Net loss was $3.8 million or $0.19 per share (basic and diluted) for the quarter ended September 30, 2013, as compared to a net loss of $4.6 million or $0.23 per share (basic and diluted) for the comparative period in 2012

Financial Highlights Year-to-Date 2013

  • Nine month revenue was $19.9 million, a 3% increase Y/Y
  • Adjusted EBITDA (as defined below) was a loss of $14.6 million or $0.72 per share (basic and diluted) for the nine months ended September 30, 2013 as compared to an adjusted EBITDA loss of $10.6 million or $0.54 per share (basic and diluted) for the comparative period in 2012
  • Net loss was $15.7 million or $0.77 per share (basic and diluted) for the nine months ended September 30, 2013, as compared to a net loss of $12.2 million or $0.62 per share (basic and diluted) for the comparative period in 2012

"NexJ has won business with several new and existing customers in recent months which we are confident will result in increasing revenue for the Company in the coming quarters. We have also completed the restructuring of the Company, reducing our cost by more than $7 Million on an annualized basis," said William M. Tatham, Chief Executive Officer of NexJ.  "In addition to increasing revenue and decreasing cost, our strategic investments in healthcare are approaching completion which will enable us to pursue broader market opportunities and stimulate growth."

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 November 13, 2013 and can be accessed by dialing 416-849-0833 (Toronto local) or toll free at 1-855-859-2056 and using password 75326141.

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, earn-out expense (recovery), finance income, finance costs, foreign exchange gain/loss, depreciation and amortization 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,
2013 2012   2013 2012
  (in thousands of dollars, except percentages)   (in thousands of dollars, except percentages)
           
Total revenue  $6,623 $6,082   $19,935 $19,337
           
Net loss  (3,779) (4,614)   (15,668) (12,249)
Adjust for:          
Share-based payment expense  137 107   582 832
Depreciation and amortization  470 278   1,366 850
Earn-out expense (recovery)  (745)   (310)
Foreign exchange loss (gain)  80 547   (246) 415
Finance income  (90) (154)   (336) (452)
Finance costs    2
           
Adjusted EBITDA  (3,927) (3,836)   (14,612) (10,602)
Adjusted EBITDA margin  (59%) (63%)   (73%) (55%)

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.

NexJ is named as Canada's fastest growing company in the 24th Annual PROFIT 200 ranking by PROFIT Magazine, and ranks in the top 5 of the Deloitte Technology Fast 50™ for the third consecutive year. 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, including the business acquired from Broadstreet.

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 for the year ended December 31, 2012 dated March 6, 2013, 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)      
       
  September 30, 2013   December 31, 2012
       
Assets      
  $   $
Current assets:      
  Cash and cash equivalents 28,284   46,263
  Accounts receivable 8,838   9,513
  Income taxes receivable -   146
  Prepaid expenses and other assets  1,866   992
Total current assets 38,988   56,914
       
Non-current assets:      
  Property and equipment 3,402   3,869
  Intangible assets  1,833   2,400
  Goodwill  3,640   3,640
  Other assets  260   260
Total non-current assets 9,135   10,169
         
Total assets 48,123   67,083
       
Liabilities and Shareholders' Equity      
       
Current liabilities:      
  Accounts payable and accrued liabilities  4,794   7,318
  Deferred revenue 4,301   5,069
  Provisions 304   -
Total current liabilities 9,399   12,387
       
Non-current liabilities:      
  Accrued liabilities 586   801
  Provisions -   428
  Deferred revenue -   268
Total non-current liabilities 586   1,497
       
Total liabilities 9,985   13,884
       
Shareholders' equity:      
  Share capital  83,099   83,061
  Share purchase loans  (3,622)   (3,622)
  Contributed surplus  5,428   4,859
  Deficit (46,767)   (31,099)
Total shareholders' equity 38,138   53,199
       
       
Total liabilities and shareholders' equity 48,123   67,083

 

NexJ Systems Inc.          
Condensed Interim Consolidated Statements of Comprehensive Loss          
(Expressed in thousands of Canadian dollars, except per share amounts)          
(Unaudited)          
           
  Three Months ended September   Nine Months ended September
  2013 2012   2013 2012
           
Revenue: $ $   $ $
  License fees 283 1,051   858 3,225
  Net license reseller fees 53 -   103 -
  Professional services 4,757 3,712   14,514 12,336
  Maintenance and support 1,530 1,319   4,460 3,776
  6,623 6,082   19,935 19,337
           
Expenses*:          
  Professional service costs 3,573 2,401   11,893 7,638
  Research and development, net 3,326 3,865   10,756 11,223
  Sales and marketing 1,412 1,912   6,519 6,139
  General and administrative 2,101 2,125   7,017 6,621
  10,412 10,303   36,185 31,621
           
Loss from operations: (3,789) (4,221)   (16,250) (12,284)
           
  Foreign exchange gain (loss) (80) (547)   246 (415)
  Finance income  90 154   336 452
  Finance costs - -   - (2)
  10 (393)   582 35
           
Loss before income taxes (3,779) (4,614)   (15,668) (12,249)
           
  Income taxes - -   - -
           
Net Loss and comprehensive loss  (3,779) (4,614)   (15,668) (12,249)
           
Loss per share:          
  Basic and diluted (0.19) (0.23)   (0.77) (0.62)
           
           
Weighted average number of common shares
outstanding:
         
  Basic and diluted 20,378 19,814   20,372 19,814
           
           
*Share-based payment expense has been
included in expenses as follows:
         
  Professional service costs 59 54   184 181
  Research and development, net 5 85   140 307
  Sales and marketing 34 (122)   124 44
  General and administrative 39 90   134 300
           
  137 107   582 832

 

NexJ Systems Inc.      
Condensed Interim Consolidated Statements of Cash Flows      
(Expressed in thousands of Canadian dollars)      
(Unaudited)      
       
Nine Months ended September 30, 2013 and 2012      
       
  2013   2012
       
Cash flows from (used in) operating activities:  $     $ 
  Loss for the period: (15,668)   (12,249)
  Adjustments for:      
    Depreciation and amortization 1,366   850
    Share-based payment expense 582   832
    Finance income (336)   (452)
    Finance costs -   2
    Foreign exchange loss (gain) (190)   198
  Change in non-cash operating working capital:      
    Accounts receivable 675   (3,654)
    Prepaid expenses and other assets (874)   2,857
    Income tax receivable 146   -
    Accounts payable and accrued liabilities and provisions (2,863)   (876)
    Deferred revenue (1,036)   3,617
Net cash flows used in operating activities (18,198)   (8,875)
       
Cash flows from (used in) financing activities:      
    Obligations under capital leases -   (41)
    Exercise of employee stock options 25   47
    Exercise of agent stock options -   635
    Repayment of share purchase loans -   143
    Interest paid -   (2)
Net cash flows from financing activities 25   782
       
Cash flows from (used in) investing activities:      
    Purchase of property and equipment (332)   (275)
    Redemption of short-term investments -   4,005
    Interest received 336   452
Net cash flows from investing activities 4   4,182
       
  Effects of exchange rates on cash and cash equivalents 190   (135)
       
    Decrease in cash and cash equivalents (17,979)   (4,046)
       
Cash and cash equivalents, beginning of period 46,263   56,218
       
Cash and cash equivalents, end of period 28,284   52,172
       
Supplemental cash flow information:      
    Acquisition of property and equipment not yet paid for -   51

SOURCE: NexJ Systems Inc.

For further information:

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


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