NexJ Systems Reports Fourth Quarter and Full Year Fiscal 2016 Results

Record quarter with 21% revenue growth and improved profitability

TORONTO, Feb. 15, 2017 /CNW/ - NexJ Systems Inc. (TSX: NXJ), a provider of enterprise customer management solutions to the financial services industry, today announced financial results for its fourth quarter ended December 31, 2016.

Highlights

  • $9.6M of revenue for the fourth quarter represents 21% growth over the same period in the prior year

  • $2.0M in Adjusted EBITDA for the fourth quarter is a $1.7M improvement over the Adjusted EBITDA of $386K for the comparative period

  • $1.9M in net income for the fourth quarter is a $3.9M improvement over the net loss of $2.0M for the comparative period

  • $33.5M in revenue for the year represents 17% growth over the prior year

  • $4.2M in Adjusted EBITDA for the year is a $4.5M improvement over the Adjusted EBITDA loss of $297K for the comparative period

  • $334K in net income for the year is a $7.5M improvement over the net loss of $7.1M for the comparative period

"NexJ committed to a path to profitability two years ago and we have delivered.  Our results have led to a shareholder return on investment of more than a 150% over the past two years," said William M. Tatham, Chief Executive Officer of NexJ Systems. "The financial services industry requires software that assists firms to improve their customers' experience and drive global collaboration. In this environment, our differentiated offerings will continue to be in demand."

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 February 22, 2017 and can be accessed by dialing 416-849-0833 (Toronto local) or toll free at 1-855-859-2056 and using password 46362164.


NexJ Systems Inc.
Fourth Quarter Financial Results
(Expressed in thousands of Canadian dollars)
(Unaudited)


 Quarter ended December 31, 


 Year ended December 31, 


2016

2015


2016

2015

Revenue:

$

$


$

$


License fees

2,367

1,190


5,821

4,889


Professional services

5,234

5,122


20,087

18,290


Maintenance and support

1,975

1,579


7,613

5,401


9,576

7,891


33,521

28,580

Expenses:







Professional services

2,626

3,260


11,594

12,166


Research and development, net

1,727

1,761


7,388

6,770


Sales and marketing

1,484

1,247


4,828

4,874


General and administrative, net

1,691

1,237


5,522

5,067


7,528

7,505


29,332

28,877

Adjusted EBITDA

2,048

386


4,189

(297)








Loss from discontinued operation

-

2,244


252

5,382


Impairment of loan receivable and shared services

170

-


1,630

-


Share-based payment expense

146

202


923

510


Depreciation and amortization

213

276


857

1,663


Lease-exit charges, net

-

-


-

351

Income (loss) from operations

1,519

(2,336)


527

(8,203)








Foreign exchange loss (gain)

(404)

(356)


270

(947)


Finance income

(27)

(24)


(77)

(116)

Net income (loss)

1,950

(1,956)


334

(7,140)

 

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 loss from discontinued operation, share-based payment expense, depreciation and amortization, impairment charge on non-financial assets, impairment of loan receivable and shared services, lease-exit charges, net, earn-out expense (recovery), foreign exchange loss (gain), 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 enterprise customer management solutions to the financial services industry. Our solutions include industry-specific customer relationship management (CRM) for multi-channel engagement and collaboration; customer process management (CPM) for client onboarding and KYC; and customer data management (CDM) to deliver a holistic view of customers across line of business and regional data silos. Our solutions integrate information from multiple systems into a unified view to help firms better understand and share information about their customers to increase loyalty, drive cross-sell and improve the customer experience.

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, 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; * 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) global financial market conditions; (xvii) failure to manage our growth successfully; and (xiii) 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, 2016 dated February 15, 2017, 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.
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)
(Unaudited)


December 31, 2016


December 31, 2015

Assets





$


$

Current assets:





Cash and cash equivalents

14,678


14,699


Accounts receivable

12,573


8,274


Prepaid expenses and other assets

1,094


968


Assets held for distribution

-


962

Total current assets

28,345


24,903





Non-current assets:





Property and equipment

1,965


2,102


Goodwill

1,753


1,753


Other assets

260


260

Total non-current assets

3,978


4,115





Total assets

32,323


29,018





Liabilities and Shareholders' Equity








Current liabilities:





Accounts payable and accrued liabilities

5,871


5,424


Deferred revenue

7,137


4,382


Provisions

224


223


Current portion of finance lease liability

148


-


Liabilites held for distribution

-


964

Total current liabilities

13,380


10,993





Non-current liabilities:





Accrued liabilities

1,259


658


Provisions

-


224


Finance lease liability

160


-


Deferred revenue

-


304

Total non-current liabilities

1,419


1,186





Total liabilities

14,799


12,179





Shareholders' equity:





Share capital

82,648


83,094


Share purchase loans

(3,622)


(3,622)


Contributed surplus

7,139


6,293


Deficit

(68,641)


(68,926)

Total shareholders' equity

17,524


16,839









Total liabilities and shareholders' equity

32,323


29,018

 

NexJ Systems Inc.
Consolidated Statements of Comprehensive Income (Loss)
(Expressed in thousands of Canadian dollars, except per share amounts)
(Unaudited)


Quarter ended December 31,


Year ended December 31,


2016

2015


2016

2015













Revenue:

$

$


$

$


License fees

2,367

1,190


5,821

4,889


Professional services

5,234

5,122


20,087

18,290


Maintenance and support

1,975

1,579


7,613

5,401


9,576

7,891


33,521

28,580







Expenses*:







Professional services

2,664

3,317


11,850

12,311


Research and development, net

1,774

1,837


7,693

6,973


Sales and marketing

1,492

1,263


4,876

4,934


General and administrative, net

1,957

1,566


6,693

7,183


Impairment of loan receivable and shared services

170

-


1,630

-


8,057

7,983


32,742

31,401







Income (loss) from operations:

1,519

(92)


779

(2,821)








Foreign exchange gain (loss)

404

356


(270)

947


Finance income

27

24


77

116


431

380


(193)

1,063







Loss before income taxes

1,950

288


586

(1,758)







Income taxes

-

-


-

-







Income (loss) from continuing operations:

1,950

288


586

(1,758)

Loss from discontinued operation:

-

(2,244)


(252)

(5,382)







Net Income (loss) and comprehensive income (loss):

1,950

(1,956)


334

(7,140)







Earnings (loss) per share:







Basic from continuing operations

0.10

0.01


0.03

(0.09)


Diluted from continuing operations

0.09

0.01


0.03

(0.09)


Basic and diluted from discontinued operation

-

(0.11)


(0.01)

(0.26)


Basic

0.10

(0.10)


0.02

(0.35)


Diluted

0.09

(0.10)


0.02

(0.35)







Weighted average number of 
common shares outstanding, in thousands:







Basic

20,048

20,450


20,206

20,457


Diluted

20,761

20,450


20,697

20,457







*Share-based payment expense has 
been included in expenses as follows:







Professional services

38

57


256

145


Research and development, net

47

76


305

203


Sales and marketing

8

16


48

60


General and administrative, net

53

53


314

102


146

202


923

510

 

NexJ Systems Inc.
Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
(Unaudited)


Year ended December 31,


2016


2015





Cash flows from (used in) operating activities:

$


$

Net Income (loss)

334


(7,140)

Adjustments for:





Impairment of loan receivable and shared services

1,630


-


Depreciation and amortization

857


1,663


Share-based payment expense

923


510


Finance income

(77)


(116)


Foreign exchange loss (gain)

164


(495)


Loss from discontinued operation

252


5,382

Change in non-cash operating working capital:





Accounts receivable

(4,225)


(761)


Prepaid expenses and other assets

(130)


(109)


Accounts payable and accrued liabilities and provisions

765


1,814


Deferred revenue

2,431


294

Net cash flows from continuing operations

2,924


1,042

Net cash flows used in discontinued operation

(270)


(4,888)


2,654


(3,846)





Cash flows from (used in) financing activities:





Repurchase of common shares

(689)


(22)


Proceeds from exercise of stock options

166


-


Payment of finance lease liability

(136)


-


Net settlement of earn-out liabilitiy

-


(22)

Net cash flows used in financing activities

(659)


(44)





Cash flows from (used in) investing activities:





Purchase of property and equipment

(259)


(306)


Advances to NexJ Health Inc.

(1,630)


-


Distribution, net of cash

(40)


-


Interest received

77


116

Net cash flows used in investing activities

(1,852)


(190)





   Effects of exchange rates on cash and cash equivalents

(164)


495





Decrease in cash and cash equivalents

(21)


(3,585)





Cash and cash equivalents, reclassified to held for distribution

-


(14)





Cash and cash equivalents, beginning of year

14,699


18,298





Cash and cash equivalents, end of year

14,678


14,699





Supplemental cash flow information:





Acquisition of property and equipment not yet paid

57


59


Acquisition of property and equipment under finance lease

444


-

 

SOURCE NexJ Systems Inc.

For further information: Media Contact: Matthew Bogart, 416-227-3708, matthew.bogart@nexj.com

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