NexJ Systems Reports Third Quarter Fiscal 2015 Results

TORONTO, Oct. 29, 2015 /CNW/ - NexJ Systems Inc. (TSX: NXJ), a provider of enterprise customer management solutions for financial services and a cloud-based population health management platform for healthcare, today announced financial results for its third quarter ended September 30, 2015.

Highlights

  • $7.3 M in revenue represents 41% quarter over quarter growth for the Financial Services segment
  • $513,000 in Adjusted EBITDA is the second consecutive profitable quarter for the Financial Services segment
  • Signed a major global bank as a new client for NexJ Customer Relationship Management in the Corporate Banking and Capital Markets industry
  • Sold NexJ Customer Process Management to a major Canadian bank for onboarding clients in their Wealth Management division
  • Completed our first implementation of NexJ Customer Data Management
  • Entered into a strategic alliance agreement with CGI to further scale our delivery capabilities and provide managed applications services for cloud hosting
  • Executing the spin-off of our Healthcare division by plan of arrangement with an accompanying shareholder rights offering

"Our Finance division has shown growth every quarter this year and was profitable again this quarter," said William M. Tatham, Chief Executive Officer of NexJ. "The spin-off of the Healthcare division is well underway and we expect it to close in January 2016."

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 5, 2015 and can be accessed by dialing 416-849-0833 (Toronto local) or toll free at 1-855-859-2056 and using password 62070056.

NexJ Systems Inc.

Third Quarter Financial Results

(Expressed in thousands of Canadian dollars)

(Unaudited)






Three Months ended September 30, 2015


Three Months ended September 30, 2014














 Financial
Services

 Healthcare 

 Corporate 


 Total 


 Financial
Services

 Healthcare 

 Corporate 


 Total 













Revenue:

$

$

$


$


$

$

$


$


License and subscription fees

1,329

107

-


1,436


598

41

-


639


Professional services

4,626

176

-


4,802


3,403

2

-


3,405


Maintenance and support

1,330

10

-


1,340


1,157

14

-


1,171


7,285

293

-


7,578


5,158

57

-


5,215

Expenses:













Professional services

3,081

168

-


3,249


2,395

276

-


2,671


Research and development

1,589

498

-


2,087


1,601

752

-


2,353


Sales and marketing

1,125

280

-


1,405


1,004

585

-


1,589


General and administrative

977

296

268


1,541


1,052

571

167


1,790


6,772

1,242

268


8,282


6,052

2,184

167


8,403













Adjusted EBITDA

513

(949)

(268)


(704)


(894)

(2,127)

(167)


(3,188)














Share-based payment expense

-

-

-


110


-

-

-


80


Depreciation and amortization

-

-

-


523


-

-

-


510

Loss from operations





(1,337)






(3,778)














Foreign exchange gain





139






398


Finance income





23






53


Finance cost





-






50

Net loss for the period





(1,175)






(3,377)






























Nine Months ended September 30, 2015


Nine Months ended September 30, 2014






 Financial
Services

 Healthcare 

 Corporate 


 Total 


 Financial
Services

 Healthcare 

 Corporate 


 Total 













Revenue:

$

$

$


$


$

$

$


$


License and subscription fees

3,699

274

-


3,973


1,950

257

-


2,207


Professional services

13,169

280

-


13,449


11,633

1,485

-


13,118


Maintenance and support

3,821

31

-


3,852


4,037

133

-


4,170


20,689

585

-


21,274


17,620

1,875

-


19,495

Expenses:













Professional services

8,906

496

-


9,402


8,392

1,055

-


9,447


Research and development

5,009

1,604

-


6,613


4,704

2,776

-


7,480


Sales and marketing

3,627

934

-


4,561


3,082

1,761

-


4,843


General and administrative

3,061

916

769


4,746


3,151

1,322

625


5,098


20,603

3,950

769


25,322


19,329

6,914

625


26,868













Adjusted EBITDA

86

(3,365)

(769)


(4,048)


(1,709)

(5,039)

(625)


(7,373)














Share-based payment expense





308






254


Depreciation and amortization





1,574






1,357


Lease-exit charges, net





351






(625)


Earn-out recovery





(398)






-

Loss from operations





(5,883)






(8,359)














Foreign exchange gain





591






455


Finance income





92






204


Finance cost





-






89

Loss before income taxes





(5,200)






(7,789)















Income taxes recovery:














Deferred





16






-






16






-

Net loss for the period





(5,184)






(7,789)

 

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.

About NexJ Systems Inc.
NexJ provides customer management solutions to the financial services, and healthcare industries.

Our Financial Services 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.

In Healthcare, our cloud-based platform for population health management delivers patient engagement for chronic disease management. It is based on research and proven at trial. By engaging and empowering patients to better manage their health and wellness, patients are more likely to achieve their health goals, payers can lower costs, providers can achieve better patient outcomes, and pharmaceutical manufacturers and pharmacies can improve medication adherence and build loyalty.

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; * 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, 2014 dated February 19, 2015, 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, 2015



December 31, 2014









Assets












$



$

Current assets:









Cash and cash equivalents




11,575



18,298


Accounts receivable




10,223



7,853


Prepaid expenses and other assets




1,783



1,448

Total current assets




23,581



27,599









Non-current assets:









Property and equipment




2,184



2,472


Intangible assets




733



1,756


Goodwill




2,617



2,617


Other assets




260



260

Total non-current assets




5,794



7,105









Total assets




29,375



34,704









Liabilities and Shareholders' Equity
















Current liabilities:









Accounts payable and accrued liabilities




5,289



4,619


Deferred revenue




3,887



4,726


Provisions




183



121


Earn-out liability




280



678

Total current liabilities




9,639



10,144









Non-current liabilities:









Accrued liabilities




613



391


Provisions




320



234


Deferred tax liability




-



16


Deferred revenue




-



238

Total non-current liabilities




933



879









Total liabilities




10,572



11,023









Shareholders' equity:









Share capital




83,304



83,306


Share purchase loans




(3,622)



(3,622)


Contributed surplus




6,091



5,783


Deficit




(66,970)



(61,786)

Total shareholders' equity




18,803



23,681









Total liabilities and shareholders' equity




29,375



34,704









 

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 30,


Nine Months ended
September 30,





2015


2014


2015


2014
















Revenue:




$


$


$


$


License and subscription fees





1,436



639



3,973



2,207


Professional services





4,802



3,405



13,449



13,118


Maintenance and support





1,340



1,171



3,852



4,170






7,578



5,215



21,274



19,495
















Expenses*:
















Professional services





3,285



2,710



9,490



9,567


Research and development, net





2,130



2,378



6,740



7,522


Sales and marketing





1,421



1,595



4,605



4,886


General and administrative, net





2,079



2,310



6,720



5,879


Earn-out recovery





-



-



(398)



-






8,915



8,993



27,157



27,854
















Loss from operations:





(1,337)



(3,778)



(5,883)



(8,359)

















Foreign exchange gain





139



398



591



455


Finance income





23



53



92



204


Finance costs





-



50



-



89






162



401



683



570
















Loss before income taxes





(1,175)



(3,377)



(5,200)



(7,789)
















Income tax recovery
















Current





-



-



-



-


Deferred





-



-



(16)



-
















Net Loss and comprehensive loss 





(1,175)



(3,377)



(5,184)



(7,789)
















Loss per share:
















Basic and diluted





(0.06)



(0.17)



(0.25)



(0.38)































Weighted average number of 















common shares outstanding:
















Basic and diluted





20,459



20,458



20,459



20,385
















*Share-based payment expense has 















been included in expenses as follows:
















Professional services




$

36


$

39


$

88


$

120


Research and development, net





43



25



127



42


Sales and marketing





16



6



44



43


General and administrative, net





15



10



49



49




















$

110


$

80


$

308


$

254
















 

NexJ Systems Inc.

Condensed Interim Consolidated Statements of Cash Flows

(Expressed in thousands of Canadian dollars)

(Unaudited)








Nine Months ended September 30, 2015 and 2014












2015


2014












Cash flows from (used in) operating activities:




$


$


Loss for the period:






(5,184)




(7,789)


Adjustments for:













Depreciation and amortization






1,574




1,357



Share-based payment expense






308




254



Finance income






(92)




(204)



Finance costs






-




89



Deferred tax recovery






(16)




-



Foreign exchange gain






(426)




(310)



Earn-out recovery






(398)




-


Change in non-cash operating working capital:













Accounts receivable






(2,370)




582



Prepaid expenses and other assets






(335)




303



Accounts payable and accrued liabilities and provisions






786




(1,419)



Deferred revenue






(1,077)




(1,308)

Net cash flows used in operating activities






(7,230)




(8,445)












Cash flows from (used in) financing activities:













Repurchase of common shares






(2)




(218)



Repayment of bank indebtedness






-




(66)



Repayment of loan






-




(496)



Interest paid






-




(3)

Net cash flows used in financing activities






(2)




(783)












Cash flows from (used in) investing activities:













Purchase of property and equipment






(9)




(269)



Interest received






92




204

Net cash flows from (used in) investing activities






83




(65)













Effects of exchange rates on cash and cash equivalents






426




310














Decrease in cash and cash equivalents






(6,723)




(8,983)












Cash and cash equivalents, beginning of period






18,298




29,293












Cash and cash equivalents, end of period




$


11,575


$


20,310












Supplemental cash flow information:













Acquisition of property and equipment not yet paid for




$


254


$


13

 

SOURCE NexJ Systems Inc.

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

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