CAMBRIDGE, ON, March 14, 2019 /CNW/ - exactEarth Ltd. ("the Company"), a leading provider of Satellite-AIS data services, announces its financial results for the three-month period ended January 31, 2019. All financial figures are in Canadian dollars unless otherwise stated.
Q1 Fiscal 2019 Highlights:
- Revenue was $3.5 million in Q1 2019, up 24% compared to $2.8 million in Q1 2018;
- Subscription-based revenue was 88% of total revenue in Q1 2019 compared to 87% in Q1 2018;
- Subscription-based revenue increased 27% in Q1 2019 compared to Q1 2018;
- Order bookings were $3.0 million in Q1 2019 compared to $2.3 million in Q1 2018;
- Revenue backlog was $30.7 million at the end of Q1 2019 compared to $25.5 million at the end of Q1 2018;
- Adjusted EBITDA* was ($0.9) million in Q1 2019 compared to ($1.1) million in Q1 2018;
- Cash and cash equivalents and short-term investments were $14.5 million at the end of Q1 2019 compared to $4.8 million at the end of Fiscal 2018;
- Completed a $13.0 million private placement of convertible debentures to strengthen the balance sheet and support exactView RT growth plans; and
- Subsequent to quarter-end, completed the roll-out of the world's first global, real-time Satellite-AIS service with all 58 payloads in-orbit.
"The momentum we gained in 2018 as the deployment of exactView RT unfolded and our real-time service came to market carried over into Q1, delivering another quarter of solid revenue and orders growth," said Peter Mabson, President & CEO of exactEarth. "Subsequent to quarter-end, the deployment of exactView RT was completed and we now have 58 satellite payloads providing Satellite-AIS data for our customers. With its potential for real-time data delivery, superior vessel detection, rapid update rate, longevity and continuous improvement, we believe that exactView RT is capable of providing us with a measurable and sustainable competitive advantage for many years to come."
Mr. Mabson continued: "Looking forward, the financing we completed in Q1 gives us a solid financial foundation from which to pursue our growth initiatives. With all of the satellite payloads deployed and the constellation for a fully-global real-time service capability in place, we are looking to continue the strong bookings performance we have seen in the last two quarters, sign up new reseller channels and increase our customer base of maritime platform and analytics providers. Working with these customers and partners we are looking to make exactView RT the pre-eminent global vessel location dataset which powers the maritime information and analytics industry."
Q1 Fiscal 2019 Financial Review
Total revenue in the three-month period ended January 31, 2019 ("Q1 2019") was $3.5 million compared to $2.8 million in the three-month period ended January 31, 2018 ("Q1 2018"). Revenue from commercial customers was $2.5 million in Q1 2019, up 37% from Q1 2018. Revenue from government customers was $1.1 million in Q1 2019, up slightly from Q1 2018. The year-over-year growth reflected growing market interest in the Company's real-time Satellite-AIS service, exactView RT.
Order bookings in Q1 2019 were $3.0 million compared to $2.3 million in Q1 2018. Order bookings will fluctuate on a quarter-to-quarter basis reflecting the timing to complete new customer agreements. Revenue backlog at January 31, 2019 was $30.7 million compared to $25.5 million at the end of Q1 2018.
Subscription Services revenue in Q1 2019 was $3.1 million, up 27% compared to $2.5 million in Q1 2018. Subscription Services revenue in Q1 2019 represented 88% of total revenue compared to 87% in Q1 2018. Data Products revenue in Q1 2019 was $0.10 million compared to $0.09 million in Q1 2018. Data Products revenue is generated from on-demand customer requests, which results in some variability in quarter-to-quarter revenue levels. Other Products & Services revenue in Q1 2019 was $0.31 million compared to $0.28 million in Q1 2018.
Gross Margin in Q1 2019 was 39% compared to 25% in Q1 2018. Q1 2019 Gross Margin improved year-over-year due to higher revenue and $0.7 million of SIF funding received from the Canadian government to offset costs related to the development and roll-out of exactView RT. The SIF funding reflected the period from October 31, 2018 through January 31, 2019. Additional SIF funding payments are expected in the 2019, 2020 and 2021 fiscal years. Detailed information regarding the SIF funding can be found on the Company's website in a press release dated October 19, 2018.
"With all 58 exactView RT payloads now in orbit, certain elements of our agreement with Harris Corporation are expected to put pressure on our Gross Margin in the short- to mid-term," said Sean Maybee, CFO of exactEarth. "However, as a reminder, the Harris Agreement was established, in part, to give exactEarth access to the multi-billion-dollar Iridium NEXT infrastructure without incurring significant capital expenditure and having achieved this goal, we are now operating the only fully-global real-time Satellite-AIS service on the market. We think this service represents a unique competitive advantage that will be the primary driver of our growth potential and margin expansion over the long-term." A description of the Harris Agreement can be found in the Company's Annual Information Form filed at www.exactearth.com or www.sedar.com.
Selling, general and administrative ("SG&A") expense in Q1 2019 was $2.0 million compared to $1.5 million in Q1 2018. SG&A expense increased year-over-year due primarily to the change in bad debt expense ($0.2 million bad debt expense was incurred in Q1 2019 compared to a $0.3 million bad debt recovery in Q1 2018) and certain payroll-related accruals.
Product development and research and development ("R&D") expense in Q1 2019 was $0.3 million compared to $0.4 million in Q1 2018. The Company's product development and R&D activities are focused primarily on the development of web-based functionality, data processing capabilities and analytics-based product offerings.
Adjusted EBITDA for Q1 2019 was ($0.9) million compared to ($1.1) million in Q1 2018. The year-over-year improvement in Adjusted EBITDA was due primarily to higher revenue, the $0.7 million in SIF funding, lower product development and R&D expense, and offset in part by higher SG&A. (Adjusted EBITDA is a non-IFRS measure and is defined below)
Net loss for Q1 2019 was ($1.3) million, or ($0.06) per share, compared to ($1.6) million, or ($0.07) per share, in Q1 2018. Net loss improved year-over-year due primarily to the same reasons outlined above regarding Adjusted EBITDA. Of note, the Q1 2019 net loss included $0.2 million of interest expense related to the $13.0 million convertible debenture financing closed in the quarter.
exactEarth used $2.2 million of cash in operations in Q1 2019 compared with $0.9 million of cash used in operations in Q1 2018. The increase in cash used in operations was primarily due to working capital changes. The Company's cash balance at January 31, 2019 was $14.5 million compared to $4.8 million at October 31, 2018. The increase was due primarily to the completion of a Convertible Debenture financing in Q1 2019.
On December 13, 2018, exactEarth completed an offering of Convertible Debentures at a price of $1,000 per Convertible Debenture for gross proceeds of $13.0 million. Each Convertible Debenture is convertible into 2,000 Common Shares of the Company, being an effective conversion price of $0.50 per share at the option of the holder (subject to customary adjustments from time to time), at any time prior to the fifth anniversary of the closing date. For additional information on this financing, see the Company's press releases dated December 4, 2018, and December 13, 2018, and/or refer to note 9 in the Notes to the Consolidated Financial Statements, which can be found on the Company's website and the SEDAR website.
As at January 31, 2019, the Company had 21,646,417 shares outstanding on a non-diluted basis.
*Non-IFRS Measures
We measure Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization ("EBITDA"), plus offering related expenses, unrealized foreign exchange losses, share-based compensation costs, restructuring costs and impairment losses, less unrealized foreign exchange gains and gains from insurance settlements. We believe that Adjusted EBITDA provides useful supplemental information as it provides an indication of the income generated by our main business activities before taking into consideration how they are financed or taxed and exclude the impact of items that are considered by management to be outside of the Company's ongoing operating results. Adjusted EBITDA should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indicator of our performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows.
We define Subscription Revenue as the dollar sum of fully executed contracts for our products and/or services to our customers that are subscription-based, typically sold with a one-year period of service and recognized in our "Subscription Services" segmented revenue.
Adjusted EBITDA (000's)
Three months ended January 31 |
||||
2019 |
2018 |
|||
Net loss |
$ |
(1,235) |
$ |
(1,599) |
Interest income |
(26) |
(16) |
||
Interest expense |
223 |
23 |
||
Income tax expense |
60 |
5 |
||
Depreciation and amortization |
168 |
404 |
||
Unrealized foreign exchange gain |
(111) |
(90) |
||
Share-based compensation |
66 |
169 |
||
Restructuring expense (recovery) |
- |
(7) |
||
Adjusted EBITDA |
$ |
(855) |
$ |
(1,111) |
About exactEarth Ltd.
exactEarth is a leading provider of global maritime vessel data for ship tracking and maritime situational awareness solutions. Since its establishment in 2009, exactEarth has pioneered a powerful new method of maritime surveillance called Satellite AIS ("S-AIS") and has delivered to its clients a view of maritime behaviours across all regions of the world's oceans unrestricted by terrestrial limitations. exactEarth has deployed an operational data processing supply chain involving a constellation of satellites, receiving ground stations, patented decoding algorithms and advanced "big data" processing and distribution facilities. This ground-breaking system provides a comprehensive picture of the location of AIS equipped maritime vessels throughout the world and allows exactEarth to deliver data and information services characterized by high performance, reliability, security and simplicity to large international markets. For more information, visit exactearth.com.
Forward-Looking Statements
This news release contains statements that, to the extent they are not recitations of historical fact, may constitute "forward-looking statements" within the meaning of applicable Canadian securities laws. Forward-looking statements may include financial and other projections, as well as statements regarding exactEarth's future plans, our ability to continue as a going concern, objectives or economic performance, or the assumptions underlying any of the foregoing, including statements regarding, among other things, expectations of our exactView RT offering relative to competitors, timing of the achievement of real-time global vessel tracking via our second-generation constellation, timing expectations with respect to launch of satellites, expectations of the exactView RT capabilities driving growth, growth opportunities for the Company in the maritime information services market and the cost and revenue share in connection with the Harris Agreement. exactEarth uses words such as "may", "would", "could", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "project", "estimate" and similar expressions to identify forward-looking statements. Any such forward-looking statements are based on assumptions and analyses made by exactEarth in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors exactEarth believes are appropriate under the relevant circumstances. However, whether actual results and developments will conform to exactEarth's expectations and predictions is subject to any number of risks, assumptions and uncertainties. Many factors could cause exactEarth's actual results, historical financial statements, or future events to differ materially from those expressed or implied by the forward-looking statements contained in this news release. These factors include, without limitation: uncertainty in the global economic environment; fluctuations in currency exchange rates; delays in the purchasing decisions of exactEarth's customers; the competition exactEarth faces in its industry and/or marketplace; the further delayed launch of satellites; the reduced scope of significant existing contracts; and the possibility of technical, logistical or planning issues in connection with the deployment of exactEarth's products or services.
exactEarth™ Ltd Interim Condensed Consolidated Statements of Financial Position (in thousands of Canadian dollars) unaudited |
|||||
As at 2019 |
As at 2018 |
||||
$ |
$ |
||||
ASSETS |
|||||
Current assets |
|||||
Cash and cash equivalents |
14,469 |
4,774 |
|||
Short-term investments |
49 |
49 |
|||
Trade accounts receivable |
3,676 |
3,491 |
|||
Unbilled revenue |
1,146 |
911 |
|||
Prepaid expenses |
254 |
307 |
|||
Other assets |
395 |
347 |
|||
Total current assets |
19,989 |
9,879 |
|||
Property, plant and equipment |
4,236 |
4,009 |
|||
Intangible assets |
1,678 |
1,720 |
|||
Other long-term assets |
188 |
16 |
|||
Total assets |
26,091 |
15,624 |
|||
LIABILITIES & SHAREHOLDERS' EQUITY |
|||||
Current liabilities |
|||||
Accounts payable and accrued liabilities |
4,723 |
4,780 |
|||
Deferred revenue |
1,830 |
2,412 |
|||
Loans payable - current |
469 |
459 |
|||
Long-term incentive plan liability - current |
18 |
11 |
|||
Total current liabilities |
7,040 |
7,662 |
|||
Loans payable |
9,567 |
498 |
|||
Long-term incentive plan liability |
133 |
162 |
|||
Other long-term liabilities |
203 |
95 |
|||
Total liabilities |
16,943 |
8,417 |
|||
Shareholders' equity |
|||||
Share capital |
123,794 |
123,794 |
|||
Contributed surplus |
4,434 |
1,451 |
|||
Accumulated other comprehensive loss |
(90) |
(11) |
|||
Deficit |
(118,990) |
(118,027) |
|||
Total shareholders' equity |
9,148 |
7,207 |
|||
Total liabilities and shareholders' equity |
26,091 |
15,624 |
|||
exactEarth™ Ltd Interim Condensed Consolidated Statements of Changes in Shareholders' Equity (in thousands of Canadian dollars) unaudited |
||||||||||
For the three months Ended January 31, 2019 |
Total |
Deficit |
Accumulated |
Share |
Contributed |
|||||
$ |
$ |
$ |
$ |
$ |
||||||
Balance at October 31, 2018 |
7,207 |
(118,027) |
(11) |
123,794 |
1,451 |
|||||
Impact of change in accounting policy |
272 |
272 |
- |
- |
- |
|||||
Adjusted balance at October 31, 2018 |
7,479 |
(117,755) |
(11) |
123,794 |
1,451 |
|||||
Stock-based compensation expense |
58 |
- |
- |
- |
58 |
|||||
Restricted share unit expense |
8 |
- |
- |
- |
8 |
|||||
Convertible debenture |
2,917 |
- |
- |
- |
2,917 |
|||||
Comprehensive loss |
(1,314) |
(1,235) |
(79) |
- |
- |
|||||
Balance at January 31, 2019 |
9,148 |
(118,990) |
(90) |
123,794 |
4,434 |
|||||
For the three months Ended January 31, 2018 |
||||||||||
Balance at October 31, 2017 |
23,003 |
(101,804) |
(44) |
123,781 |
1,070 |
|||||
Stock-based compensation expense |
92 |
- |
- |
- |
92 |
|||||
Comprehensive loss |
(1,640) |
(1,599) |
(41) |
- |
- |
|||||
Balance at January 31, 2018 |
21,455 |
(103,403) |
(85) |
123,781 |
1,162 |
|||||
exactEarth™ Ltd Interim Condensed Consolidated Statements of Loss and Comprehensive Loss (in thousands of Canadian dollars except for per share figures) unaudited |
||||||
Quarter Ended |
||||||
January 31, 2019 |
January 31, 2018 |
|||||
$ |
$ |
|||||
Revenue |
3,522 |
2,836 |
||||
Cost of revenue |
2,144 |
2,064 |
||||
Gross profit |
1,378 |
772 |
||||
Operating expenses |
||||||
Selling, general and administrative |
1,996 |
1,453 |
||||
Product development and research and development |
293 |
417 |
||||
Depreciation and amortization |
168 |
404 |
||||
Loss from operations |
(1,079) |
(1,502) |
||||
Other expenses |
||||||
Restructuring recovery |
- |
(7) |
||||
Foreign exchange (gain) loss |
(101) |
92 |
||||
Interest income |
(26) |
(16) |
||||
Interest expense |
223 |
23 |
||||
Total other expenses |
96 |
92 |
||||
Income tax expense |
60 |
5 |
||||
Net loss |
(1,235) |
(1,599) |
||||
Other comprehensive loss |
||||||
Item that may be subsequently reclassified to net loss: |
||||||
Foreign currency translation, net of income tax expense of nil |
(79) |
(41) |
||||
Total other comprehensive loss |
(79) |
(41) |
||||
Comprehensive loss |
(1,314) |
(1,640) |
||||
Loss per share |
||||||
Basic and diluted loss per share |
(0.06) |
(0.07) |
||||
exactEarth™ Ltd. |
|||||
Quarter Ended |
|||||
January 31, 2019 |
January 31, 2018 |
||||
$ |
$ |
||||
Net loss |
(1,235) |
(1,599) |
|||
Add (deduct) items not involving cash |
|||||
Non-cash interest |
21 |
23 |
|||
Depreciation and amortization |
168 |
404 |
|||
Operating grant recognized on SIF loan |
(692) |
- |
|||
Technology demonstration program recovery |
- |
(95) |
|||
Long-term incentive plan expense |
9 |
79 |
|||
Stock-based compensation |
58 |
92 |
|||
Restructuring reserve - revaluation |
- |
(7) |
|||
Net change in non-cash working capital balances |
(495) |
221 |
|||
Other operating cash flows |
|||||
Technology demonstration program funding received |
- |
132 |
|||
Settlement of deferred share units |
(24) |
- |
|||
Restructuring provision - payment of salary continuance |
- |
(160) |
|||
Cash flows used in operations |
(2,190) |
(910) |
|||
Investing activities |
|||||
Acquisition of property, plant and equipment |
(167) |
(228) |
|||
Reimbursement of acquisition costs of property, plant and equipment |
288 |
231 |
|||
Acquisition of intangible assets |
- |
(4) |
|||
Cash flows from (used in) investing activities |
121 |
(1) |
|||
Financing activities |
|||||
Government loan repayment |
(123) |
(123) |
|||
Long-term debt repayment |
- |
(88) |
|||
Convertible debenture advance |
13,000 |
- |
|||
Issue costs |
(1,146) |
- |
|||
Cash flows from (used in) financing activities |
11,731 |
(211) |
|||
Effect of exchange rate changes on cash |
33 |
3 |
|||
Net increase (decrease) in cash |
9,695 |
(1,119) |
|||
Cash, beginning of the period |
4,774 |
8,117 |
|||
Cash, end of the period |
14,469 |
6,998 |
|||
Supplemental cash flow information |
|||||
Interest received |
24 |
16 |
|||
Income taxes paid |
60 |
5 |
|||
SOURCE exactEarth Ltd.
For further information: INVESTORS: Dave Mason, Investor Relations, Tel: +1 416-247-9652, [email protected]
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