- Fiscal 2023 revenue of
$52.4 million , an increase of 11% over Fiscal 2022 - Adjusted EBITDA1 for Fiscal 2023 of
$13.0 million , representing an Adjusted EBITDA Margin1 of 25% - Total Number of Clients2 of 956 as at
December 31, 2023
"Fiscal 2023 marks the third consecutive year of revenue growth for
Consolidated Business Highlights for the Three and 12 Months Ended
(All capitalized terms not defined herein shall have the meaning ascribed to them in the Management's Discussion and Analysis for the three and 12 months ended
- Fourth quarter 2023 revenue reached
$12.9 million , a decrease of 6% compared to the same period in 2022, largely due to one-time revenue recognized in the fourth quarter of 2022. Fourth quarter 2023 revenue was moderately higher than third quarter 2023 revenue. - ARR3 of
$51.0 million as atDecember 31, 2023 , representing a decrease of 3% over the same period in 2022. Of the$51.0 million of ARR3, approximately$43.4 million , or 85%, originated from enterprise clients, a 2% increase compared to the same period in 2022. Of the$51.0 million of ARR3, approximately 66% originated from clients outside ofCanada . - As at
December 31, 2023 , no single client accounted for more than 5% of ARR3. - ARR3 is reported on a constant currency basis using a 1.30 USD:CAD exchange rate. When adjusting for the exchange rate at the end of the fourth quarter 2023 of 1.3226 USD:CAD, ARR3 would be approximately
$51.6 million . - Fourth quarter 2023 Adjusted EBITDA1 of
$2.7 million , a decrease of$2.1 million compared to the same period in 2022. The decrease is largely due to one-time revenue and cost adjustments recognized in the fourth quarter of 2022. - Fourth quarter 2023 Adjusted EBITDA1 Margin of 21%, a decrease when compared to an Adjusted EBITDA Margin1 of 35% in the comparable quarter of 2022, which is largely attributable to one-time revenue and cost adjustments recognized in the fourth quarter of 2022.
- Adjusted EBITDA1 of
$13.0 million for Fiscal 2023, an increase of$2.3 million when compared to Fiscal 2022. - Fourth quarter 2023 net loss of
$17.7 million , a decrease from a net loss of$24.5 million in the fourth quarter of 2022. The decrease in net loss for the three months endedDecember 31, 2023 , is primarily due to lower goodwill impairment. - Notable client additions for the fourth quarter of 2023 included Canada Goose, Virtusa Corporation and
TravelBrands . Subsequent to quarter end, the Company added Accenture, Knitwell andAscena Retail as new clients. - Uptake in the expansion of multi-product clients continued with the close of new multi-product launches, including with Grant Thornton LLP in fourth quarter of 2023, and the successful closing of a cross-sale expansion with Amazon Canada subsequent to quarter end, among others.
- The Company anticipates continued uptake in cross-sell as we further execute on opportunities within the current portfolio, as well as an increase in multi-product sales with net new clients.
- Subsequent to quarter end, on
March 14, 2024 , the Company closed a private placement for gross proceeds of approximately$5.0 million . Proceeds of the private placement were used to repay outstanding senior indebtedness, resulting in total senior indebtedness of$66.4 million following repayment. The Company anticipates that amortization of the senior indebtedness will be approximately$1.8 million per quarter for 2024.
_____________________________ | |
1 | See "Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators" for a definition of "Adjusted EBITDA" and "Adjusted EBITDA Margin" |
2 | See "Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators" for a definition of "Number of Clients" |
3 | See "Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators" for a definition of "ARR" |
ARR, Number of Clients, Consolidated Net Dollar Retention Rate and Logo Retention Rate
ARR3 was approximately
ARR3 was broken down as follows over the last five quarters: |
(In thousands of Canadian dollars) | Q4- | Q1- | Q2- | Q3- | Q4- | Q4-2023 YoY Growth |
Enterprise Client ARR | 43,860 | 44,824 | 44,035 | 43,619 | 43,447 | (1 %) |
Embedded Solutions Clients & Other ARR | 8,978 | 8,488 | 8,155 | 7,913 | 7,585 | (16 %) |
Total ARR | 52,838 | 53,312 | 52,190 | 51,532 | 51,032 | (3 %) |
Total Number of Clients2 was 956 as at
Number of Clients2 was broken down as follows over the last five quarters: |
Q4- 2022 | Q1- 2023 | Q2- 2023 | Q3- | Q4- | Q4-2023 YoY Growth | |
Total Enterprise Clients | 983 | 972 | 979 | 973 | 942 | (4 %) |
Total Embedded Solutions Clients | 19 | 18 | 17 | 15 | 14 | (26 %) |
Total Number of Clients | 1,002 | 990 | 996 | 988 | 956 | (5 %) |
Consolidated Net Dollar Retention Rate4 for the quarter was 87%, a 11% increase from the same period in 2022. Net Dollar Retention4 for Enterprise Clients was approximately 87% as at
Logo Retention Rate5 was 79% as at
4 See "Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators" for a definition, "Net Dollar Retention Rate". |
5 See "Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators" for a definition, "Logo Retention Rate". |
Financial Results for the Three and 12 Months Ended
Selected Consolidated Financial Information | Three Months Ended | Fiscal Years Ended | |||
2023 | 2022 | 2023 | 2022 | ||
Revenue | 12,949 | 13,755 | 52,407 | 47,370 | |
Content development costs | 1,285 | 1,158 | 5,086 | 4,771 | |
11,664 | 12,597 | 47,321 | 42,599 | ||
Operating expenses: | |||||
Sales and marketing | 2,747 | 3,641 | 10,870 | 13,327 | |
General and administrative | 6,655 | 6,131 | 26,031 | 26,439 | |
Share-based compensation | 532 | 1,413 | 4,138 | 8,844 | |
Foreign exchange loss (gain) | 1,657 | (1,739) | 1,924 | (5,330) | |
Amortization and depreciation | 3,976 | 3,715 | 16,033 | 14,992 | |
15,567 | 13,161 | 58,996 | 58,272 | ||
Loss from operations | (3,903) | (564) | (11,675) | (15,673) | |
Acquisition and other costs (1) | - | - | - | 7,589 | |
Changes in fair value of on contingent consideration | - | (3,229) | (3,533) | (7,179) | |
Finance expense, net | 3,188 | 2,089 | 10,398 | 8,764 | |
Impairment | 12,673 | 26,503 | 12,673 | 26,503 | |
Loss before income taxes | (19,764) | (25,927) | (31,213) | (51,350) | |
Income taxes recovery | (2,089) | (1,383) | (4,952) | (3,434) | |
Net Loss | (17,675) | (24,544) | (26,261) | (47,916) | |
Loss per share - basic | (0.35) | (0.48) | (0.52) | (0.95) | |
Loss per share- diluted | (0.35) | (0.48) | (0.52) | (0.95) | |
Non-IFRS Measures and Non-IFRS Ratios | |||||
EBITDA (2) | (12,599) | (20,122) | (4,782) | (27,592) | |
Adjusted EBITDA (3) | 2,717 | 4,816 | 12,985 | 10,690 | |
Adjusted Net Income (Loss) (4) | (2,358) | 395 | (8,493) | (9,634) | |
Adjusted earnings (loss) per share – basic (5) | (0.05) | 0.01 | (0.17) | (0.19) | |
Adjusted earnings (loss) per share – diluted (6) | (0.05) | 0.01 | (0.17) | (0.19) | |
Notes: | |
(1) | Acquisition and other costs are comprised costs and expenses in connection with the Company's acquisitions and business integration costs. |
(2) | "EBITDA" has the meaning ascribed herein under "Cautionary Note Regarding Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators". |
(3) | "Adjusted EBITDA" has the meaning ascribed herein under "Cautionary Note Regarding Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators". |
(4) | "Adjusted Net Income (Loss)" has the meaning ascribed herein under "Cautionary Note Regarding Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators". |
(5) | "Adjusted earnings (loss) per share – basic" has the meaning ascribed herein under "Cautionary Note Regarding Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators". |
(6) | "Adjusted earnings (loss) per share – diluted" has the meaning ascribed herein under "Cautionary Note Regarding Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators". |
Conference Call Notification
The Company will subsequently hold a conference call to provide a business update on
Nolan Bederman , Executive ChairmanMichael Held , CEOMichael McKenna , CFO
A question-and-answer session will follow the business update.
CONFERENCE CALL DETAILS | |
DATE: | |
TIME: | |
DIAL-IN NUMBERS: | 1.833.950.0062 or 1.833.470.1428 |
REFERENCE NUMBER: | 058906 |
This live call is also being webcast and can be accessed by going to:
https://events.q4inc.com/attendee/475714595
An archived telephone replay of the call will be available for two weeks by dialing 1.226.828.7578 or 1.866.813.9403 and entering access code 178125.
Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators
Non-IFRS Measures, Non-IFRS Ratios and Reconciliation of Non-IFRS Measures
The Company uses non-IFRS measures, including "EBITDA", "Adjusted EBITDA", "Adjusted Net Income (Loss)", and the non-IFRS ratios, including "Adjusted earnings (loss) per share – basic", "Adjusted earnings (loss) per share – diluted" and "Adjusted EBITDA Margin". This press release also makes reference to "Annual Recurring Revenue" or "ARR", "Net Dollar Retention Rate", "Number of Clients" and "Logo Retention Rate", which are key performance indicators used in our industry.
EBITDA and Adjusted EBITDA
"EBITDA" is defined as net income (loss) before income tax recovery, finance expenses, net and amortization and depreciation.
"Adjusted EBITDA" is defined as EBITDA before acquisition and other costs, share based compensation, foreign exchange loss (gain), impairment, changes in fair value of contingent consideration, synergies realized and additional one time items. These non-cash and/or non-recurring costs are independent events and incurred over several financial periods.
"Adjusted EBITDA Margin" is calculated as Adjusted EBITDA divided by revenue for the relevant period.
(In thousands of Canadian dollars) | Three Months Ended | Fiscal Years Ended | ||
2023 | 2022 | 2023 | 2022 | |
Net loss | (17,674) | (24,543) | (26,261) | (47,914) |
Add: | ||||
Amortization and depreciation expense | 3,976 | 3,715 | 16,033 | 14,992 |
Finance expense | 3,188 | 2,089 | 10,398 | 8,764 |
Income tax recovery | (2,089) | (1,383) | (4,952) | (3,434) |
EBITDA(1) | (12,599) | (20,122) | (4,782) | (27,592) |
Add: | ||||
Acquisition and other costs (2) | - | - | - | 7,589 |
Share-based compensation | 532 | 1,413 | 4,138 | 8,844 |
Foreign exchange loss (gain) | 1,657 | (1,739) | 1,924 | (5,330) |
Changes in fair value of contingent consideration | - | (3,229) | (3,533) | (7,179) |
Impairment | 12,673 | 26,503 | 12,673 | 26,503 |
Synergies realized (3) | 33 | 501 | 631 | 2,912 |
Additional one-time costs (4) | 421 | 1,489 | 1,934 | 4,943 |
Adjusted EBITDA (5) | 2,717 | 4,816 | 12,985 | 10,690 |
Adjusted EBITDA Margin (6) | 21 % | 35 % | 25 % | 23 % |
Notes: | |
(1) | "EBITDA" has the meaning ascribed herein under "Cautionary Note Regarding Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators". |
(2) | Acquisition and other costs are comprised costs and expenses in connection with the Company's acquisitions and business integration costs. |
(3) | Synergies realized relates to the impact of the full period of cost synergies related to the reduction of employees and professional services in relation to acquisitions. |
(4) | One-time costs related to IPO specific adjustments, acquisitions specific adjustments and transition costs related to the Wellbeats acquisition. |
(5) | "Adjusted EBITDA" has the meaning ascribed herein under "Cautionary Note Regarding Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators". |
(6) | "Adjusted EBITDA Margin" has the meaning ascribed herein under "Cautionary Note Regarding Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators". |
Adjusted Net Income (Loss) / Adjusted Earnings (Loss)
"Adjusted Net Income (Loss)" is defined as net income (loss) before acquisition and other costs, share based compensation, foreign exchange loss (gain), impairment, changes in fair value of contingent consideration, synergies realized and additional one-time items. These non-cash and/or non-recurring costs are independent events and incurred over several financial periods.
"Adjusted earnings (loss) per share – basic" is defined as Adjusted Net Income (Loss) divided by the weighted average number of shares outstanding – basic for the relevant period.
"Adjusted earnings (loss) per share – diluted" is defined as Adjusted Net Income (Loss) divided by the weighted average number of shares outstanding – diluted for the relevant period.
(In thousands of Canadian dollars) | Three Months Ended | Fiscal Years Ended | ||
2023 | 2022 | 2023 | 2022 | |
Net loss | (17,674) | (24,543) | (26,261) | (47,914) |
Add: | ||||
Acquisition and other costs (1) | - | - | - | 7,589 |
Share-based compensation | 532 | 1,413 | 4,138 | 8,844 |
Foreign exchange loss (gain) | 1,657 | (1,739) | 1,924 | (5,330) |
Changes in fair value of contingent consideration | - | (3,229) | (3,533) | (7,179) |
Impairment | 12,673 | 26,503 | 12,673 | 26,503 |
Synergies realized (2) | 33 | 501 | 631 | 2,912 |
Additional one-time costs (3) | 421 | 1,489 | 1,934 | 4,943 |
Adjusted Net Income (Loss) (4) | (2,358) | 395 | (8,494) | (9,632) |
Adjusted earnings per share – basic (5) | (0.05) | 0.01 | (0.17) | (0.19) |
Adjusted earnings per share – diluted (6) | (0.05) | 0.01 | (0.17) | (0.19) |
Notes: | |
(1) | Acquisition and other costs are comprised costs and expenses in connection with the Company's acquisitions and business integration costs |
(2) | Synergies realized relates to the impact of the full period of cost synergies related to the reduction of employees and professional services in relation to acquisitions |
(3) | One-time costs related to IPO specific adjustments, acquisitions specific adjustments and transition costs related to the Wellbeats acquisition |
(4) | "Adjusted Net Income (Loss)" has the meaning ascribed herein under "Cautionary Note Regarding Non-IFRS Measures and Key Performance Indicators." |
(5) | "Adjusted earnings (loss) per share – basic" has the meaning ascribed herein under "Cautionary Note Regarding Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators" |
(6) | "Adjusted earnings (loss) per share – diluted" has the meaning ascribed herein under "Cautionary Note Regarding Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators" |
Key Performance Indicators
Annual Recurring Revenue
"Annual Recurring Revenue" or "ARR" is equal to the annualized value of contracted recurring revenue from all clients of our platform at the date being measured. Contracted recurring revenue is revenue generated from clients who are, as of the date being measured, party to contracts with
"Enterprise client ARR" is ARR at a particular date attributable to enterprise clients.
Net Dollar Retention Rate
"Net Dollar Retention Rate" for a period is defined by considering a cohort of clients at the beginning of the period, and dividing the ARR from enterprise and embedded solutions attributable to that cohort at the end of the period, by the ARR from enterprise and embedded solutions attributable to that cohort at the beginning of the period. Net Dollar Retention Rate provides a consolidated measure by which we can monitor the percentage of recurring ARR retained from existing clients.
Number of Clients
"Number of Clients" is defined as the number of clients at the end of any particular period as the number of enterprise clients and clients of our embedded solutions for which the term of services has not ended, or with which the Company is negotiating contract renewal and which meet a minimum revenue threshold.
Logo Retention Rate
"Logo Retention Rate" for a period is defined by considering a cohort of clients at the beginning of the period, and dividing the Number of Clients from that cohort at the end of the period, by the Number of Clients from that cohort at the beginning of the period. Logo Retention Rate provides a consolidated measure by which the Company can monitor the percentage of contracted clients retained every year.
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Forward-Looking Information
This press release may contain "forward-looking information" within the meaning of applicable Canadian securities laws. Forward-looking information may relate to the Company's future business, financial outlook and anticipated events or results and may include information regarding the Company's financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, and the Company's plans and objectives. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "budget", "scheduled", "estimates", "outlook", "forecasts", "projection", "prospects", "strategy", "intends", "anticipates", "does not anticipate", "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", "will", "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Particularly, information regarding the Company's expectations of future results, revenue growth, ARR, EBITDA, adjusted EBITDA margin, adjusted EBITDA, adjusted Net Income (Loss), adjusted Earnings (Loss), Number of Clients, Net Dollar Retention Rate, Logo Retention Rate, performance, synergies, achievements, prospects, industry trends, advancement of its strategy and acceleration of its growth, amortization, contribution of new clients to ARR, the amortization schedule and loan repayments, the among of senior indebtedness remaining, or opportunities, including for cross-selling, or the markets in which the Company operates is forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding possible future events or circumstances.
This forward-looking information and other forward-looking information are based on opinions, estimates and assumptions in light of the Company's experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company currently believes are appropriate and reasonable in the circumstances. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. These opinions, estimates and assumptions include, but are not limited to, the following: the Company's ability to build its market share and enter new geographies; the total available market for its products; the Company's ability to retain key personnel; the Company's ability to maintain and expand geographic scope; the Company's ability to execute on its expansion plans; the Company's ability to continue investing in infrastructure to support its growth and brand recognition; the Company's ability to maintain its existing client base; the Company's ability to continue maintaining and enhancing its technological infrastructure and functionality of its platform; to the Company's ability to obtain financing on acceptable terms; the Company's ability to meet its amortization schedule in the future; decisions made by the Company's lenders; the Company's ability to effectively integrate its recent acquisitions; the Company's ability to generate sufficient cash to deleverage, the impact of competition; the changes and trends in the Company's industry or the global economy; and changes in laws, rules, regulations, and global standards.
The risks and uncertainties that may affect forward-looking statements include, among others: performance of the market sectors that the Company serves; general market performance including capital market conditions and availability and cost of credit; foreign currency and exchange risk; impact of factors such as increased pricing pressure and possible margin compression; the regulatory and tax environment; that expected cost and revenue synergies are not realized within the expected timeframe or at all; that revenue, ARR, EBITDA margin and cash flow expectations are not met for any number of reasons; political, labour or supplier disruptions; that our clients face recessionary pressures, and other risks detailed from time to time in the Company's filings with Canadian provincial securities regulators, including the risk factors which are described in greater detail under "Risk Factors" in the Company's annual information form for the fiscal year ended 2022 and the Company's annual information form which is to be filed on or before
Accordingly, prospective investors should not place undue reliance on forward-looking information. The forward-looking information contained in this press release represents the Company's expectations as of the date of this press release (or as the date it is otherwise stated to be made) and is subject to change after such date. However, the Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable Canadian securities laws.
All of the forward-looking information contained in this press release is expressly qualified by the foregoing cautionary statements. Prospective investors should read this entire press release and consult their own professional advisors to ascertain and assess the income tax, legal, risk factors and other aspects of an investment in the Company.
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