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NexJ Systems Reports Second Quarter 2018 Results

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NexJ Systems Reports Second Quarter 2018 Results

Canada NewsWire

TORONTO, July 26, 2018 /CNW/ - NexJ Systems Inc. (TSX:NXJ), a provider of intelligent customer management solutions to the financial services industry, today announced financial results for its second quarter ended June 30, 2018.

Financial Summary

  • $10.9M of revenue for the six month period is down from $15.6M in the same period in the prior year

  • $2.5M in Adjusted EBITDA loss for the six month period is down from $910K of Adjusted EBITDA reported in the same period in the prior year

  • $2.9M of net loss for the six month period is up from $88K of net loss reported in the same period in the prior year

  • $5.0M of revenue for the second quarter is down from $6.7M in the second quarter last year

  • $1.4M in Adjusted EBITDA loss for the second quarter is down from $177K of Adjusted EBITDA reported in the second quarter last year

  • $1.9M of net loss for the second quarter is down from $415K of net loss reported in the second quarter last year

  • $13.7M of cash and cash equivalents at quarter end

As a specialized vendor solving complex problems for the world's largest financial services firms, the company continues to be susceptible to extended sales cycles and revenue volatility. However, in addition to focusing on expanding the addressable market, winning high profile accounts remains a key part of the strategy as it delivers strong growth opportunities and long-term customer retention. 

"Although, the second quarter was challenging, I am encouraged by our current sales activity and continue to see improvements in our lead generation and pipeline development", said Paul O'Donnell, CEO, NexJ Systems Inc. "We are accelerating our efforts to drive additional business functionality into our product offerings through the application of augmented intelligence and I am encouraged by the response from our customers and prospects on this front."

Conference Call Information
NexJ will be hosting an earnings report conference call on July 26, 2018 at 5:00 p.m. ET. The call can be accessed via webcast or by phone by dialing 1-888-390-0605 (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 on July 26, 2018 at 8:00 p.m. ET through 11:59 p.m. on August 2, 2018 and can be accessed by dialing toll-free at 1-888-390-0541 and using password 996953.

NexJ Systems Inc.









Second Quarter Financial Results









(Expressed in thousands of Canadian dollars)








(Unaudited)









 Quarter ended June 30, 


 Six months ended June 30, 


2018


2017


2018


2017









Revenue:

$


$


$


$


License fees

422


1,387


1,102


4,570


Professional services

2,453


3,385


5,479


7,071


Maintenance and support

2,167


1,964


4,361


3,911


5,042


6,736


10,942


15,552

Expenses:









Professional services

1,977


2,700


4,361


5,618


Research and development, net

2,446


1,855


4,519


3,703


Sales and marketing

951


1,059


1,873


2,398


General and administrative, net

1,048


945


2,647


2,923


6,422


6,559


13,400


14,642









Adjusted EBITDA

(1,380)


177


(2,458)


910










Share-based payment expense

46


53


89


148


Depreciation and amortization

94


234


192


466


Lease-exit charges, net

-


-


103


-


Deferred share unit expense

225


200


225


200


Restructuring costs

331


-


331


-

Income (loss) from operations

(2,076)


(310)


(3,398)


96










Foreign exchange loss (gain)

(110)


121


(410)


219


Finance income

(38)


(16)


(77)


(35)

Net loss

(1,928)


(415)


(2,911)


(88)






 

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, deferred share unit expense, restructuring costs, 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 Systems is a provider of Intelligent Customer Management solutions for the financial services industry. Individually, NexJ's award winning products use artificial intelligence to improve customer service and increase advisor and banker productivity.  Together, the Intelligent Customer Management suite delivers a continuously-learning, cognitive application that recommends the right intelligence-augmented actions for users to deliver personalized customer service at scale and grow their business.

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, 2017 dated February 21, 2018, 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 Statements of Financial Position



(Expressed in thousands of Canadian dollars)




(Unaudited)









June 30, 2018


December 31, 2017





Assets





$


$

Current assets:





Cash and cash equivalents

13,689


14,784


Accounts receivable

4,468


5,028


Prepaid expenses and other assets 

1,591


1,901

Total current assets

19,748


21,713





Non-current assets:





Property and equipment

1,257


1,374


Goodwill 

1,753


1,753


Contract costs

146


-


Other assets 

260


260

Total non-current assets

3,416


3,387





Total assets

23,164


25,100





Liabilities and Shareholders' Equity








Current liabilities:





Accounts payable and accrued liabilities 

3,327


3,356


Deferred revenue

5,228


4,601


Provisions

52


-


Current portion of finance lease liability

86


148

Total current liabilities

8,693


8,105





Non-current liabilities





Provisions

38


-


Finance lease liability

-


12


Deferred revenue

58


68

Total non-current liabilities

96


80





Total liabilities

8,789


8,185





Shareholders' equity:





Share capital 

82,365


82,445


Share purchase loans 

(3,598)


(3,622)


Contributed surplus 

8,916


8,663


Deficit

(73,308)


(70,571)

Total shareholders' equity

14,375


16,915









Total liabilities and shareholders' equity

23,164


25,100









 

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








Quarter ended June 30,


Six months ended June 30,



2018


2017


2018


2017



















Revenue:

$


$


$


$


License fees

422


1,387


1,102


4,570


Professional services

2,453


3,385


5,479


7,071


Maintenance and support

2,167


1,964


4,361


3,911



5,042


6,736


10,942


15,552










Expenses:









Professional services

1,977


2,717


4,364


5,653


Research and development, net       

2,450


1,879


4,529


3,760


Sales and marketing

952


1,062


1,875


2,407


General and administrative, net

1,408


1,388


3,241


3,636


Restructuring costs

331


-


331


-



7,118


7,046


14,340


15,456










Income (loss) from operations

(2,076)


(310)


(3,398)


96











Foreign exchange gain (loss)

110


(121)


410


(219)


Finance income 

38


16


77


35



148


(105)


487


(184)










Loss for the period and comprehensive loss

(1,928)


(415)


(2,911)


(88)










Loss per share:









Basic and Diluted

(0.09)


(0.02)


(0.14)


(0.00)










Weighted average number of common shares 








outstanding, in thousands:









Basic and Diluted

20,535


20,202


20,534


20,128

 

NexJ Systems Inc.



Condensed Interim Statements of Cash Flows



(Expressed in thousands of Canadian dollars)



(Unaudited)












Six months ended


Six months ended




June 30, 2018


June 30, 2017













Cash flows from (used in) operating activities:

$


$


Loss for the period

(2,911)


(88)


Adjustments for:






Depreciation and amortization

192


466



Amortization of contract costs

36


-



Share-based payment expense

89


148



Deferred share unit expense

225


200



Finance income

(77)


(35)



Foreign exchange gain

(135)


(48)


Change in non-cash operating working capital:






Accounts receivable

560


1,125



Prepaid expenses and other assets

310


(530)



Accounts payable and accrued liabilities and provisions

17


(1,214)



Deferred revenue

617


(1,588)

Net cash flows used in operating activities

(1,077)


(1,564)







Cash flows from (used in) financing activities:





Proceeds from repayment of share repurchase loans

24


-


Repurchase of common shares

(117)


(279)


Proceeds (costs) from exercise of stock options

(24)


112


Payment of finance lease liability

(74)


(73)

Net cash flows used in financing activities

(191)


(240)







Cash flows from (used in) investing activities:





Purchase of property and equipment

(39)


(164)


Interest received

77


35

Net cash flows from (used in) investing activities

38


(129)







Effects of exchange rates on cash and cash equivalents

135


48







Decrease in cash and cash equivalents

(1,095)


(1,885)







Cash and cash equivalents, beginning of year

14,784


14,678







Cash and cash equivalents, end of year

13,689


12,793







Supplemental cash flow information:





Acquisition of property and equipment not yet paid

36


101







 

SOURCE NexJ Systems Inc.

View original content: http://www.newswire.ca/en/releases/archive/July2018/26/c5655.html

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