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Press release from CNW Group

NexJ Systems Reports First Quarter Fiscal 2011 Results

Tuesday, June 14, 2011

NexJ Systems Reports First Quarter Fiscal 2011 Results16:49 EDT Tuesday, June 14, 2011Revenue up 200% from same period previous yearTORONTO, June 14, 2011 /CNW/ - NexJ Systems Inc., ("NexJ" or the "Company") (TSX: NXJ), a leading provider of enterprise private cloud software, delivering customer relationship management (CRM) solutions for the financial services, insurance and healthcare industries, today announced unaudited financial results for its first quarter ended March 31, 2011.Total revenue for the first quarter of fiscal 2011 was $7.8 million, up 200% compared to the $2.6 million for the same period of the prior fiscal year.  Adjusted EBITDA improved by $0.6 million to a loss of $0.8 million compared to a loss of $1.4 million in the same period in 2010.  Net loss of $2.4 million or $0.16 per share (basic and diluted), increased by $0.8 compared to a net loss of $1.6 million or $0.16 per share (basic and diluted), for the same period in 2010."We're pleased with the 200% increase in revenue in the first quarter.  This high level of growth demonstrates our ability to execute against our opportunities and reflects the large size of our customers.  As our target customers are very large with extended sales and implementation cycles, we measure our progress on an annual basis as quarterly revenue may fluctuate," said William M. Tatham, NexJ's Chief Executive Officer.  "NexJ is making the strategic investments today that are necessary to drive growth of the business and improve Adjusted EBITDA margins to achieve long term objectives."Recent Highlights:NexJ listed on the Toronto Stock Exchange under the symbol NXJ and raised approximately $43 million in gross proceeds in its initial public offeringNexJ was recognized by IDG's Computerworld Honors Program as a 2011 Laureate for its Mobile Health for Chronic Disease Project at the Black Creek Community Health CentreNexJ was honored at the first ever insurance industry interoperability testing event, ACORD LOMA, held in San Diego, for its adoption and certification of an implementation of the ACORD Web Services ProfileNexJ demonstrated its innovation leadership at the IHE Connectathon held in Chicago, proving the NexJ Universal Health Connector meets the standards for sharing information between healthcare enterprises and the National Health Information Network gatewayAite Group, an independent research and advisory firm focused on business, technology, and regulatory issues, evaluated NexJ against 7 of the most important CRM vendors and concluded it is the best CRM solution for large wealth management firmsForrester Research, Inc. an independent research company, evaluated NexJ Contact and concluded the solution has strong capabilities for key customer-facing CRM business processes for finance and insuranceNexJ released NexJ Contact for Finance 3.1 featuring significant new functionality and enhancements to the financial services CRM solutionInvestors Group completed its rollout of NexJ Contact for FinanceNexJ will be hosting an earnings report conference call today at 5:00 p.m. ET. The call can be accessed via webcast or by phone by dialing 647-427-7450 (Toronto local or international) or 1-888-231-8191 (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 today at 8:00 p.m. ET through 11:59 p.m. on June 21, 2011 and can be accessed by dialing 416-849-0833 and using password 72353900.Non-IFRS MeasuresThis 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 is 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 loss before deducting share-based payment expense, finance income, finance costs, foreign exchange loss, depreciation 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.The following table reconciles Adjusted EBITDA to net loss: Three months ended March 31,20112010 (in millions of dollars, except percentages)   Total revenue $ 7.8$ 2.6   Net loss (2.4)(1.6)Add back:  Share-based payment expense 0.90.1Depreciation 0.20.1Foreign exchange loss 0.5-Finance income, net --   Adjusted EBITDA (0.8)(1.4)Adjusted EBITDA margin (10.2%)(53.8%)About NexJ Systems Inc.NexJ is a leading provider of enterprise private cloud software, delivering customer relationship management (CRM) solutions for financial services, insurance, and healthcare.  NexJ's next-generation, people-centered software combines industry-specific functionality with information from multiple applications and data stores to provide comprehensive knowledge of the individual.NexJ was founded by an executive management team with extensive experience in the successful design and delivery of large-scale, integrated, enterprise software solutions.  For more information about NexJ Systems call 416-222-5611, e-mail info@nexj.com, or visit www.nexj.com.NexJ Forward-looking StatementCertain 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; * risks associated with expansion into healthcare and other new industry verticals; (xi) competition in our industry; (xii) failure to protect our intellectual property or infringement of intellectual property rights of third parties; (xiii) reliance upon a limited number of third-party software products to develop our products; (xiv) defects or disruptions in our products and services; (xv) currency exchange rate fluctuations; (xvi) lengthy sales cycles for our software; (xvii) global financial market conditions; and (xviii) failure to manage our growth successfully.For additional information with respect to risks and other factors which could occur, see the Company's Management's Discussion and Analysis of Financial Condition and Results of Operations dated June 14, 2011 for the three months ended March 31, 2011 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)      March 31, December 31, January 1, 20112010 2010Assets    Current assets:    Cash and cash equivalents $ 24,723 $ 23,942 $ 34 Short-term investments - 5,070 3,597 Accounts receivable  4,725 6,491 1,000 Investment tax credits receivable 4,463 4,063 3,822 Prepaid expenses and other assets 1,238 433 459 Total current assets 35,149 39,999 8,912Non-current assets:    Property and equipment  2,058 1,858 631 Other assets  251 307 260 Total non-current assets 2,309 2,165 891Total assets $ 37,458 $ 42,164 $ 9,803Liabilities and Shareholders' Equity   Current liabilities:    Accounts payable and accrued liabilities $ 4,448 $ 4,286 $ 1,787 Current portion of obligations under capital leases  68 67 63 Deferred revenue 3,173 5,727 831 Total current liabilities 7,689 10,080 2,681Non-current liabilities:    Accrued liabilities 679 1,513 1,414 Obligations under capital leases  23 41 108 Total non-current liabilities 702 1,554 1,522Total liabilities 8,391 11,634 4,203Shareholders' equity:    Share capital 39,213 35,455 10,372 Share purchase loans (3,745) - - Contributed surplus 3,146 2,196 480 Deficit (9,547) (7,121) (5,252)Total equity 29,067 30,530 5,600Total liabilities and equity $ 37,458 $ 42,164 $ 9,803NEXJ SYSTEMS INC.Condensed Interim Statements of Comprehensive Loss(Expressed in thousands of Canadian dollars)(Unaudited)   Three months ended March 31, 2011 2010Revenue:   License fees $ 3,736 $ 32 Professional services 3,501 2,034 Maintenance and support 508 513 7,745 2,579Expenses*:   Professional service costs 2,181 924 Research and development, net 3,352 1,446 Sales and marketing 2,245 932 General and administrative 1,920 840 9,698 4,142Loss before the undernoted (1,953) (1,563)Foreign exchange loss (515) (72)Finance income 43 1Finance costs (1) (2) (473) (73)Loss before income taxes (2,426) (1,636)Income taxes - -Net loss and comprehensive loss for the period $ (2,426) $ (1,636)Loss per share:   Basic $ (0.16) $ (0.16) Diluted   (0.16) (0.16)*Share-based payment expense has been included in expenses as follows:   Professional service costs $ 116 $ 31 Research and development, net 221 31 Sales and marketing 360 19 General and administrative 257 21 $ 954 $ 102NEXJ SYSTEMS INC.Condensed Interim Statements of Cash Flows(Expressed in thousands of Canadian dollars)(Unaudited)  Three months endedMarch 31, 20112010Cash flows from operating activities:   Net loss and comprehensive loss for the period $ (2,426) $ (1,636) Adjustments for:    Depreciation 182 79  Share-based payment expense 954 102  Finance income (43) (1)  Finance costs 1 2  Foreign exchange loss 343 1 Change in non-cash operating working capital:    Accounts receivable 1,766 (5,784)  Prepaid expenses and other assets (252) 209  Investment tax credits receivable (400) (508)  Accounts payable and accrued liabilities (877) 414  Deferred revenue (2,554) 5,884 Net cash flows used in operating activities (3,306) (1,238)Cash flows from financing activities:  Obligations under capital leases (17) (15) Proceeds from exercise of stock options     9 10 Issuance of common shares - 744 Financing costs relating to the IPO (553) - Interest paid (1) (2) Net cash flows from (used in) financing activities (562) 737Cash flows from investing activities:   Purchase of property and equipment (177) (439) Redemption of short-term investments 4,823 3,597 Interest received 43 1 Decrease in other long-term assets 56 - Net cash flows from investing activities 4,745 3,159Effects of exchange rates on cash and cash equivalents (96) (1)Increase in cash and cash equivalents 781 2,657Cash and cash equivalents, beginning of period 23,942 34Cash and cash equivalents, end of period $ 24,723 $ 2,691Supplemental cash flow information:   Acquisition of property and equipment not yet paid for $ 205 $ 25      For further information: Media Contact: Matthew Bogart 416-222-5611 matt.bogart@nexj.com