TORONTO, July 25, 2019 /CNW/ - NexJ Systems Inc. (TSX: NXJ), delivering intelligent customer management software to the financial services industry, today announced financial results for its second quarter ended June 30, 2019.

Second Quarter Summary

  • $4.4M of revenue for the second quarter as compared to $5M in the second quarter of the previous year
  • $1.6M in Adjusted EBITDA loss for the second quarter as compared to $1.4M in Adjusted EBITDA loss in the second quarter of the previous year
  • $2.7M of net loss for the second quarter as compared to $1.9M of net loss in the second quarter of the previous year
  • Invested in and partnering with Boosted.ai to accelerate product delivery using AI and Machine Learning capabilities

"The selection process for large enterprise opportunities is naturally lengthy and continues to impact revenue.  We remain encouraged by the growth in our sales pipeline, specifically in Europe where data residency and security are of greater consideration", said Paul O'Donnell, CEO, NexJ Systems Inc. "Particularly, through our partnership with Boosted.ai, we are expanding our product portfolio and are excited about the prospects of introducing a sophisticated AI and machine learning investment portfolio optimization product, which we expect to release in Q4 this year".

NexJ Systems Inc.









Second Quarter Financial Results









(Expressed in thousands of Canadian dollars)









(Unaudited)











 Quarter ended June 30, 


 Six months ended June 30, 



2019


2018


2019


2018










Revenue


$


$


$


$

License fees


150


422


559


1,102

Subscription fees


62


-


62


-

Professional services


1,836


2,453


3,361


5,479

Maintenance and support


2,325


2,167


4,659


4,361



4,373


5,042


8,641


10,942

Cost of revenue


1,869


1,977


3,724


4,361

Gross profit


2,504


3,065


4,917


6,581










Operating Expenses









Research and development, net


2,470


2,446


5,201


4,519

Sales and marketing


708


951


1,474


1,873

General and administrative, net


948


1,048


1,985


2,647



4,126


4,445


8,660


9,039










Adjusted EBITDA


(1,622)


(1,380)


(3,743)


(2,458)










Share-based payment expense


119


46


241


89

Depreciation and amortization


242


94


483


192

Lease-exit charges, net


-


-


-


103

Deferred share unit expense


-


225


-


225

Restructuring costs


614


331


614


331

Loss from operations


(2,597)


(2,076)


(5,081)


(3,398)










Foreign exchange loss (gain)


92


(110)


187


(410)

Finance income


(37)


(38)


(76)


(77)

Finance expense


38


-


76


-

Net loss


(2,690)


(1,928)


(5,268)


(2,911)

 

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, 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 the pioneer of Intelligent Customer Management. Its award-winning CRM delivers financial services-specific capabilities powered by artificial intelligence to increase productivity, improve client engagement and increase revenue. 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, or like us on Facebook.

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 "may", "will", "expect", "anticipate", "aim", "estimate", "intend", "plan", "seek", "believe", "potential", "continue", "is/are likely to", "could", "should", "target", "envision", 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; (xviii) failure to successfully manage and integrate acquisitions; (xix) breach of our security measures and unauthorized access to data; (xx) employee retention and (xxi) litigation, including commercial, product liability, employment, class action and other litigation and claims.

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, 2018 dated February 14, 2019, 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, 2019


December 31, 2018





Assets





$


$

Current assets:




Cash and cash equivalents

8,445


10,951

Accounts receivable

2,085


4,876

Prepaid expenses and other assets 

2,298


1,688

Total current assets

12,828


17,515





Non-current assets:




Property and equipment

1,111


1,181

Right-of-use assets

2,229


-

Goodwill 

1,753


1,753

Investments

262


-

Contract costs

169


227

Other assets 

594


260

Total non-current assets

6,118


3,421





Total assets

18,946


20,936





Liabilities and Shareholders' Equity








Current liabilities:




Accounts payable and accrued liabilities 

2,540


2,689

Deferred revenue

4,814


4,786

Provisions

-


51

Lease liabilities

669


12

Total current liabilities

8,023


7,538





Non-current liabilities:




Provisions

-


13

Lease liability

2,566


-

Deferred revenue

18


-

Total non-current liabilities

2,584


13





Total liabilities

10,607


7,551





Shareholders' equity:




Share capital 

82,915


82,905

Share purchase loans 

(3,598)


(3,598)

Contributed surplus 

8,585


8,366

Accumulated other comprehensive income (loss)

(7)


-

Deficit

(79,556)


(74,288)

Total shareholders' equity

8,339


13,385





Total liabilities and shareholders' equity

18,946


20,936

 

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,


2019


2018


2019


2018









Revenue

$


$


$


$

License fees

150


422


559


1,102

Subscription fees

62


-


62


-

Professional services

1,836


2,453


3,361


5,479

Maintenance and support

2,325


2,167


4,659


4,361


4,373


5,042


8,641


10,942

Cost of revenue

1,894


1,977


3,770


4,364

Gross profit

2,479


3,065


4,871


6,578









Expenses:








Research and development, net

2,489


2,450


5,243


4,529

Sales and marketing

711


952


1,480


1,875

General and administrative, net

1,262


1,408


2,615


3,241

Restructuring costs

614


331


614


331


5,076


5,141


9,952


9,976









Loss from operations

(2,597)


(2,076)


(5,081)


(3,398)









Foreign exchange gain (loss)

(92)


110


(187)


410

Finance income 

37


38


76


77

Finance expense 

(38)


-


(76)


-


(93)


148


(187)


487

















Net loss for the period

(2,690)


(1,928)


(5,268)


(2,911)









Other comprehensive income:








Items that will not be reclassified to profit or loss:








Unrealized loss on equity securities

(7)


-


(7)


-

Comprehensive loss for the period

(2,697)


(1,928)


(5,275)


(2,911)









Loss per share








Basic and diluted

(0.13)


(0.09)


(0.26)


(0.14)









Weighted average number of common shares 








outstanding, in thousands








Basic and diluted

20,531


20,535


20,531


20,534

  

NexJ Systems Inc.




Condensed Interim Statements of Cash Flows




(Expressed in thousands of Canadian dollars)




(Unaudited)









Six months ended


Six months ended


June 30, 2019


June 30, 2018









Cash flows from (used in) operating activities:

$


$

Net loss for the period

(5,268)


(2,911)

Adjustments for:




Depreciation and amortization of property, equipment




and right-of-use assets

483


192

Amortization of contract costs

109


36

Share-based payment expense

241


89

Deferred share unit expense

-


225

Finance income

(76)


(77)

Finance expense

76


-

Foreign exchange loss (gain)

76


(135)

Change in non-cash operating working capital:




Accounts receivable

2,791


560

Prepaid expenses and other assets

(442)


310

Accounts payable and accrued liabilities and provisions

-


17

Deferred revenue

46


617

Net cash flows used in operating activities

(1,964)


(1,077)





Cash flows from (used in) financing activities:




Proceeds from repayment of share purchase loans

-


24

Repurchase of common shares

(10)


(117)

Costs of exercise of stock options

(2)


(24)

Payment of finance lease liability (completed contract)

(12)


(74)

Payment of finance lease liability (ongoing contract)

(160)


-

Net cash flows used in financing activities

(184)


(191)





Cash flows from (used in) investing activities:




Purchase of property and equipment

(89)


(39)

Purchase of equity investments

(269)


-

Interest received

76


77

Net cash flows from (used in) investing activities

(282)


38





Effects of exchange rates on cash and cash equivalents

(76)


135





Decrease in cash and cash equivalents

(2,506)


(1,095)





Cash and cash equivalents, beginning of period

10,951


14,784





Cash and cash equivalents, end of period

8,445


13,689





Supplemental cash flow information:




Acquisition of property and equipment not yet paid

17


36

 

SOURCE NexJ Systems Inc.

Copyright 2019 Canada NewsWire

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