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Press release from CNW Group

NexJ Systems Reports Second Quarter Fiscal 2011 Results

Wednesday, August 03, 2011

NexJ Systems Reports Second Quarter Fiscal 2011 Results16:01 EDT Wednesday, August 03, 2011Revenue up 93% year-to-date, cash balance increases to $63 millionTORONTO, Aug. 3, 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 second quarter ended June 30, 2011.Total revenue for the second quarter of fiscal 2011 was $7.7 million, up 42% compared to $5.4 million for the same period of the prior fiscal year.  Adjusted EBITDA decreased to a loss of $0.9 million compared to income of $0.5 million in the same period in 2010.  Net loss of $1.5 million or $0.8 per share (basic and diluted), increased by $2.0 million compared to earnings of $0.5 million or $0.04 per share (basic and diluted), for the same period in 2010.Total revenue for six months ended June 30, 2011 was $15.4 million, up 93% compared to the $8.0 million for the same period of the prior fiscal year.  Adjusted EBITDA decreased to a loss of $1.7 million compared to a loss of $0.9 million in the same period in 2010.  Net loss of $3.9 million or $0.24 per share (basic and diluted), increased by $2.8 million compared to a loss of $1.1 million or $0.09 per share (basic and diluted), for the same period in 2010."In the first half of 2011 NexJ made significant advancements in the business that contributed to the 93% growth in revenue year-to-date and furthered our ability to deliver on our objectives for the coming years," said William M. Tatham, NexJ's Chief Executive Officer.  "We continue to see strong demand for our industry leading technology within the financial services and insurance markets.  Following on our recent initial entrance in the health market we are also now responding to opportunities in this area which we believe will positively impact our results in the medium and long term."NexJ 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 77819713.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 income/loss before deducting share-based payment expense, finance income, finance costs, foreign exchange gain/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 income (loss): Three months ended June 30,Six months ended June 30,2011201020112010 (in thousands of dollars, except percentages)(in thousands of dollars, except percentages)     Total revenue $7,698$5,436$15,443$8,015     Net income (loss) (1,453)530(3,879)(1,106)Add back:    Share-based payment expense 3402271,294329Depreciation 185107367186Foreign exchange loss (gain) 110(317)625(245)Finance income (67)(43)(110)(44)Finance costs 4254     Adjusted EBITDA (881)506(1,698)(876)Adjusted EBITDA margin (11%)9%(11%)(11%)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)     June 30, 2011 December 31, 2010 January 1,2010AssetsCurrent assets: Cash and cash equivalents $ 62,830 $ 23,942 $ 34 Short-term investments - 5,070 3,597 Accounts receivable  6,533 6,491 1,000 Investment tax credits receivable 3,171 4,063 3,822 Prepaid expenses and other assets 925 433 459 Total current assets 73,459 39,999 8,912Non-current assets: Property and equipment  3,007 1,858 631 Other assets  361 307 260 Total non-current assets 3,368 2,165 891Total assets   $ 76,827 $ 42,164 $ 9,803Liabilities and Shareholders' EquityCurrent liabilities: Accounts payable and accrued liabilities $ 5,000 $ 4,286 $ 1,787 Current portion of obligations under capital leases  70 67 63 Deferred revenue 3,385 5,727 831 Total current liabilities 8,455 10,080 2,681Non-current liabilities: Accrued liabilities 639 1,513 1,414 Obligations under capital leases  5 41 108 Total non-current liabilities 644 1,554 1,522Total liabilities  9,099 11,634 4,203Shareholders' equity: Share capital 79,071 35,455 10,372 Share purchase loans (3,826) - - Contributed surplus 3,483 2,196 480 Deficit (11,000) (7,121) (5,252)Total equity  67,728 30,530 5,600      Total liabilities and equity  $ 76,827 $ 42,164 $ 9,803NEXJ SYSTEMS INC.Condensed Interim Statements of Comprehensive Income(Expressed in thousands of Canadian dollars)(Unaudited)       Three month periods ended June 30,  Six month periods endedJune 30, 2011 2010 2011 2010Revenue: License fees $ 2,129 $ 2,213 $ 5,865 $ 2,245 Professional services 4,686 2,717 8,187 4,751 Maintenance and support 883 506 1,391 1,019 7,698 5,436 15,443 8,015Expenses*: Professional service costs 2,397 1,077 4,521 2,001 Research and development, net 3,154 1,877 6,460 3,323 Sales and marketing 1,669 1,319 4,098 2,251 General and administrative 1,884 991 3,723 1,831 9,104 5,264 18,802 9,406Income (loss) before the undernoted (1,406) 172 (3,359) (1,391)Foreign exchange (loss) gain (110) 317 (625) 245Finance income 67 43 110 44Finance costs (4) (2) (5) (4) (47) 358 (520) 285Income (loss) before income taxes (1,453) 530 (3,879) (1,106)Income taxes - - - -Net income (loss) and comprehensive income (loss) $ (1,453) $ 530 $ (3,879) $ (1,106)Net income (loss) per share: Basic $ (0.08) $ 0.04 $ (0.24) $ (0.09) Diluted (0.08) 0.04 (0.24) (0.09)*Share-based payment expense has been included in expenses as follows: Professional service costs $ 46 $ 70$ 162 $ 101 Research and development, net 86 68 307 99 Sales and marketing 81 43 441 62 General and administrative 127 46384 67  $ 340 $ 227 $ 1,294 $ 329NEXJ SYSTEMS INC.Condensed Interim Statements of Cash Flows(Expressed in thousands of Canadian dollars)(Unaudited)    Six month periods ended June 30, 2011 2010Cash flows from operating activities: Loss and comprehensive loss for the period $ (3,879) $ (1,106) Adjustments for:    Depreciation 367 186  Share-based payment expense 1,294 329  Finance income (110) (44)  Finance costs 5 4  Foreign exchange loss (gain) 425 (156) Change in non-cash operating working capital:  Accounts receivable (42) (2,321)  Prepaid expenses and other assets (492) 73  Investment tax credits receivable 892 773  Accounts payable and accrued liabilities (1,087) (40)  Deferred revenue (2,342) 4,058 Net cash flows from (used in) operating activities (4,969) 1,756    Cash flows from financing activities: Repayment of obligations under capital leases (33) (31) Proceeds from exercise of stock options 22 10 Proceeds from repayment of share purchase loans  16 - Issuance of common shares 43,650 23,249 Financing costs (3,905) (1,291) Interest paid (5) (4) Net cash flows from financing activities 39,745 21,933    Cash flows from investing activities:   Purchase of property and equipment (589) (1,065) Redemption of short-term investments 5,090 3,748 Interest received 110 44 Decrease (increase) in other assets (54) 108 Net cash flows from investing activities 4,557 2,835    Effects of exchange rates on cash and cash equivalents  (445) 5Increase in cash and cash equivalents   38,888 26,529Cash and cash equivalents, beginning of period  23,942 34Cash and cash equivalents, end of period   $ 62,830 $ 26,563Supplemental cash flow information:    Acquisition of property and equipment not yet paid for $ 927 $ 57  For further information: Media Contact: Matthew Bogart 416-222-5611 matt.bogart@nexj.com