Solium Releases 2017 Second Quarter Financial Results

  • Quarterly revenue increased by 9%
  • Quarterly adjusted EBITDA decreased by 15%
  • Cash position strong at $67.0 million

CALGARY, Aug. 9, 2017 /CNW/ - Solium Capital Inc. (TSX: SUM) ("Solium" or the "Company") today announced its financial results for the three and six month periods ended June 30, 2017.

Financial and operating highlights for the three and six month period ended June 30, 2017, compared to the same periods in 2016:

  • In the second quarter, the Company entered into a license agreement with UBS Financial Services Inc. ("UBS") whereby UBS customers will transition to a UBS branded version of the plan administration modules of Shareworks;

  • Revenue increased by 9% to $21.6 million in the second quarter of 2017 and by 12% to $42.8 million for the six month period ended June 30, 2017;

  • Adjusted EBITDA1 decreased by 15% to $3.1 million in the second quarter of 2017 and increased by 7% to $7.5 million for the six month period ended June 30, 2017;

  • Earnings from operations increased by 86% to $2.1 million in the second quarter of 2017 and by 61% to $5.5 million for the six month period ended June 30, 2017;

  • Net earnings increased from $nil to $1.7 million in the second quarter of 2017 and by 221% to $4.2 million for the six month period ended June 30, 2017;

  • For the six month period ended June 30, 2017, Solium incurred capital expenditures of $2.2 million, primarily relating to the build out of the Company's new Calgary headquarters, as well as expansion of its data centre.

Key factors affecting financial results in the three and six month periods ended June 30, 2017:

  • License revenue License and subscription fees increased by $1.4 million or 11% during the second quarter of 2017 and $1.5 million or 6% for the six months ended June 30, 2017, as compared to the same periods in 2016. Based on local currencies, the growth was 12% during the second quarter and 7% for the six months ended June 30, 2017. Growth in license revenue is primarily driven by the Morgan Stanley and UBS license agreements in the U.S. entered into in November 2016 and May 2017, respectively.

  • Transaction activity – In addition to the recurring license revenue that Solium collects for the use of its Shareworks platform, the Company also collects re-occurring transaction based revenue. Transaction based revenue remained the same during the second quarter and increased by $2.3 million or 20% for the six months ended June 30, 2017, as compared to the same periods in 2016. The per participant trading activity was 10% lower in the second quarter of 2017 compared to the same period in 2016 and 6% higher than the historical five-year Q2 average.

  • Operating costs – Operating expenses (excluding a change in estimate to Scientific Research and Experimental Development (SRED) tax credit claims in 2016) increased by $2.2 million or 13% during the second quarter of 2017 and $3.9 million or 11% for the six months ended June 30, 2017, when compared to the same periods in 2016. The increase is primarily as a result of planned hiring to support the Morgan Stanley and UBS partnerships. The Company had 594 full-time equivalent employees (FTEs) at the end of the second quarter of 2017 compared to 474 FTEs at the end of the second quarter of 2016.

Selected financial information for the three and six month periods ended June 30, 2017:
(Expressed in thousands of USD except per share amounts and percentages)


Three Months Ended June 30,

Six Months Ended June 30,


2017

$

2016

$

%

Change

2017

$

2016

$

%

Change

Revenue

21,581

19,860

9%

42,847

38,415

12%

Operating expenses

19,478

18,731

4%

37,371

35,021

7%

Adjusted EBITDA1

3,127

3,683

(15%)

7,471

6,958

7%

Earnings from operations

2,103

1,129

86%

5,476

3,394

61%

Net earnings (loss)

1,671

(49)

NM(a)

4,215

1,312

221%








Net earnings (loss) per share2








Basic                                

0.033

(0.001)

NM(a)

0.084

0.027

211%


Diluted                             

0.033

(0.001)

NM(a)

0.082

0.026

215%








Issued and outstanding








Common shares              




50,711

49,733

2%


Diluted3




53,665

52,928

1%

(a) NM denotes as non-measurable.

Regional breakdown of results:
(Expressed in thousands of USD except percentages)

Currently included in the International reportable segment are the results relating to the U.K., Europe, Australia, and Hong Kong operations.




Three Months Ended June 30,


Canada

U.S.

International

Consolidated


2017

2016

2017

2016

2017

2016

2017

2016

Revenues

6,861

7,262

10,730

9,015

3,990

3,583

21,581

19,860

Adjusted EBITDA1

2,416

2,702

734

1,301

(23)

(320)

3,127

3,683

Adjusted EBITDA %1

35%

37%

7%

14%

(1%)

(9%)

14%

19%

Earnings (loss) from operations

2,114

945

98

613

(109)

(429)

2,103

1,129

 




Six Months Ended June 30,


Canada

U.S.

International

Consolidated


2017

2016

2017

2016

2017

2016

2017

2016

Revenues

14,839

13,792

20,322

18,018

7,686

6,605

42,847

38,415

Adjusted EBITDA1

4,507

4,433

2,848

3,241

116

(716)

7,471

6,958

Adjusted EBITDA %1

30%

32%

14%

18%

2%

(11%)

17%

18%

Earnings (loss) from operations

3,950

2,457

1,603

1,867

(77)

(930)

5,476

3,394

 

Basic net earnings per share was $0.033 in the second quarter of 2017 (2016: $0.001 loss per share) and $0.084 for the six month period ended June 30, 2017 (2016: $0.027). 

During the six month period ended June 30, 2017, the Company had an overall net increase in cash and cash equivalents of $3.3 million (2016: $5.3 million). Changes in working capital and cash tax payments brought total cash inflow from operations to $3.3 million during the six month period ended June 30, 2017 (2016: $1.7 million).

Working capital as at June 30, 2017 was $68.3 million (December 31, 2016: $63.2 million). Included in working capital was trade and other receivables of $19.0 million (December 31, 2016: $16.4 million).

Outlook

In Q4 2016, Solium entered into a license agreement with Morgan Stanley, whereby Morgan Stanley's corporate customers and their respective employee participants will transition to a Morgan Stanley branded version of Shareworks. In order to execute on this agreement, Solium has added headcount and committed additional resources in the first half of 2017 to ensure the success of this project. In Q2 2017, Solium had substantially completed the hiring of the employees necessary to support the Morgan Stanley implementation. However, the full financial impact of these new hires will not be fully reflected in the Company's financial results until the second half of 2017.

In Q2 2017, Solium entered into a license agreement with UBS Financial Services Inc., where UBS's corporate customers will transition to a UBS branded version of the plan administration modules of Shareworks.  During the quarter, Solium started to add additional employees to support the UBS implementation, and this hiring is anticipated to continue throughout the second half of 2017.

Solium remains committed to investing for future revenue growth over the course of 2017, resulting in near-term pressure on profitability. The Company continues to invest in its capabilities and infrastructure – ensuring best-in-class technology and service – to drive long term investor returns.

Notes:


1.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA are non-IFRS financial measures which do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers.  EBITDA and Adjusted EBITDA provide useful information to users as they reflect the net earnings prior to the effect of non-operating expenses such as finance income, income taxes, depreciation of property and equipment, amortization of intangible assets, foreign exchange gain or loss (on translation of working capital), gain on derecognition of liability, sales tax adjustment, and change in estimate of scientific research and experimental development ("SRED") investment tax credits. Management uses Adjusted EBITDA in measuring the financial performance of the Company. Management monitors Adjusted EBITDA against budget and past results on a regular basis. The measure is a component in determining the annual bonus pool for staff and management.



The following is a reconciliation of Adjusted EBITDA to net earnings:


Three Months Ended June 30,

Six Months Ended June 30,


2017

2016

2017

2016

Adjusted EBITDA

3,127

3,683

7,471

6,958

Foreign exchange (loss) gain

(352)

(644)

45

(1,244)

Gain on derecognition of liability

-

-

-

445

Sales tax adjustment included in operating expenses

-

(85)

-

(165)

SRED investment tax credits included in operating expenses

-

(1,502)

-

(1,502)

EBITDA

2,775

1,452

7,516

4,492

 

Finance income

 

195

172

383

313

Depreciation of property and equipment

(381)

(307)

(724)

(577)

Amortization of intangible assets

(643)

(660)

(1,271)

(1,320)

Income taxes

(275)

(706)

(1,689)

(1,596)

Net earnings (loss)

1,671

(49)

4,215

1,312






 

2.

 Diluted net earnings per share is calculated using the treasury stock method.



3.

 Diluted shares as presented equals issued and outstanding common shares plus the effects of dilutive outstanding stock options and restricted share units.

 

About Solium Capital Inc.

Solium Capital Inc. (TSX: SUM) provides cloud-enabled services for global equity administration, financial reporting and compliance.  From offices in the United States, Canada, Europe, Australia and Hong Kong, our innovative software-as-a-service (SaaS) technology powers share plan administration and equity transactions for more than 3,000 corporate clients with employee participants in more than 100 countries.  Follow us @Solium and visit us at solium.com.

Certain statements included or incorporated by reference in this press release constitute forward-looking statements or forward-looking information under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook. Specific forward-looking statements in this press release include statements with respect to the projects with Morgan Stanley and UBS Financial Services Inc. including the financial impact of new hires and plans to hire additional employees, and the Company's investment strategy. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect, including assumptions with respect to the ability of the Company to identify, hire, train, motivate and retain qualified personnel, the Company's ability to maintain or accurately forecast revenue from its products and services, the competitive environment in which the Company operates, and the Company's ability to realize the anticipated benefits from its investment in the partnerships with Morgan Stanley and UBS Financial Services Inc. Although Solium believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements or information because Solium can give no assurance that such expectations will prove to be correct. The forward-looking statements and information are based on Solium's current expectations, estimates and projections, and are subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including general business and economic conditions, actions of competitors and partners, the regulatory environment and product capability and acceptance. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information.

The Management's Discussion and Analysis and the Condensed Consolidated Interim Financial Statements for the quarter and period ended June 30, 2017 referred to herein will be available on SEDAR at www.sedar.com under Solium Capital Inc., or at www.solium.com.

SOURCE Solium Capital Inc.

For further information: Investor relations, Heidi Christensen Brown, NATIONAL | Equicom, 416.848.1389, hchristensenbrown@national.ca


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