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Press release from CNW Group

NexJ Systems Reports Third Quarter Fiscal 2012 Financial Results

Tuesday, November 06, 2012

NexJ Systems Reports Third Quarter Fiscal 2012 Financial Results16:01 EST Tuesday, November 06, 2012TORONTO, Nov. 6, 2012 /CNW/ - NexJ Systems Inc., (TSX: NXJ), a provider of cloud-based software, delivering enterprise solutions for the financial services, insurance, and healthcare industries, today announced financial results for its third quarter ended September 30, 2012.Recent HighlightsThe NexJ Connected Wellness Platform became the technology foundation for a $39 million Connected Health & Wellness Project created to spur health care innovation throughout Southern Ontario and beyondAcquired Broadstreet Data Solutions Inc. to add next generation data management solutions and mobile expertise to complement NexJ's finance, insurance and healthcare offeringsAppointed Tim Stanley, former President of Broadstreet Data Solutions Inc., as Senior Vice President of Global SalesWon gold for Best Cloud Computing Solution and gold for Best Mobile Solution at the CDN Channel Elite AwardsQ3 2012 Financial ResultsThird quarter revenue was $6.1 million, down 19% Y/YAdjusted EBITDA (as defined below) was a loss of $3.8 million or $0.19 per share (basic and diluted) for the quarter ended September 30, 2012 as compared to an adjusted EBITDA loss of $1.9 million or $0.10 per share (basic and diluted) for the comparative period in 2011Net loss was $4.6 million or $0.23 per share (basic and diluted) for the quarter ended September 30, 2012, as compared to a net loss of $0.7 million or $0.04 per share (basic and diluted) for the comparative period in 2011"This was a challenging quarter for us in financial services, but I am pleased with our continued progress in healthcare," said William M. Tatham, Chief Executive Officer of NexJ.  "We are excited about the appointment of Tim Stanley as Senior Vice President of Global Sales at NexJ and have great expectations for contribution by him and his team."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 November 13, 2012 and can be accessed by dialing 416-849-0833 (Toronto local) or toll free at 1-855-859-2056 and using password 47920008.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 loss: Three months ended September 30, Nine months ended September 30,2012 2011 2012 2011 (in thousands of dollars, exceptpercentages) (in thousands of dollars, exceptpercentages)        Total revenue............................$6,082 $7,510 $19,337 $22,953        Net loss......................................(4,614) (687) (12,249) (4,566)Adjust for:       Share-based payment expense... 107 358 832 1,652Depreciation.................................278 199 850 566Foreign exchange loss (gain)...... 547 (1,600) 415 (975)Finance income...........................(154) (130) (452) (240)Finance costs.............................. - 1 2 6        Adjusted EBITDA....................... (3,836) (1,859) (10,602) (3,557)Adjusted EBITDA margin.......... (63%) (25%) (55%) (15%)About NexJ Systems Inc.NexJ is a provider of cloud-based software, delivering enterprise customer relationship management (CRM) solutions for the financial services, insurance, and healthcare industries.  Our next-generation, people-centered software combines industry-specific functionality with information from multiple applications and data stores to provide comprehensive knowledge of the individual.  Organizations use this knowledge to provide superior sales and service by enabling proactive interactions that influence behavior.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 visit www.nexj.com, e-mail info@nexj.com, or call 416-222-5611NexJ 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 for the year ended December 31, 2011 dated March 8, 2012, 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) September 30,December 31, 20122011AssetsCurrent assets: Cash and cash equivalents$ 52,172$ 56,218 Short-term investments - 4,068 Accounts receivable  7,7824,128 Investment and other tax credits receivable 2352,801 Prepaid expenses and other assets 1,0321,323 Total current assets 61,22168,538Non-current assets: Property and equipment 4,072 4,596 Other assets  260260 Total non-current assets 4,3324,856 Total assets $ 65,553$ 73,394 Liabilities and Shareholders' EquityCurrent liabilities: Accounts payable and accrued liabilities$ 4,073 $ 4,805 Current portion of obligations under capital leases -41 Deferred revenue 5,1762,097 Total current liabilities 9,249 6,943 Non-current liabilities: Accrued liabilities 960 1,053 Deferred revenue 538 -Total non-current liabilities 1,498 1,053 Total liabilities 10,747 7,996 Shareholders' equity: Share capital 80,701 79,831 Share purchase loans (3,622) (3,803) Contributed surplus 4,640 4,034 Deficit (26,913) (14,664) Total shareholders' equity 54,806 65,398 Total liabilities and shareholders' equity $ 65,553$ 73,394  NEXJ SYSTEMS INC.Condensed Interim Statements of Comprehensive Loss(Expressed in thousands of Canadian dollars)(Unaudited) Three months ended Nine months ended September 30, September 30, 2012 2011 2012 2011 Revenue: License fees $ 1,051 $ 1,217 $ 3,225 $ 7,082 Professional services 3,712 5,40912,33613,596 Maintenance and support 1,319 884 3,776 2,275  6,082 7,51019,33722,953 Expenses*: Professional service costs 2,4012,771 7,638 7,292 Research and development, net 3,8653,42511,2239,885 Sales and marketing 1,9121,818 6,139 5,916 General and administrative 2,1251,9126,621 5,635  10,3039,92631,62128,728 Loss from operations (4,221) (2,416)(12,284)(5,775) Foreign exchange gain (loss) (547)1,600(415) 975Finance income 154130452 240Finance costs -(1)(2)(6) (393) 1,72935 1,209 Loss before income taxes (4,614) (687) (12,249)(4,566) Income taxes - - - - Loss for the period and comprehensive loss $ (4,614) $ (687) $ (12,249) $ (4,566) Loss per share: Basic and diluted $ (0.23) $ (0.04) $ (0.62) $ (0.27)  *Share-based payment expense has been included in expenses as follows: Professional service costs $ 54 $ 60 $ 181 $ 222 Research and development, net 85 101 307408 Sales and marketing (122)71 44512 General and administrative 90126300510  $ 107 $ 358 $ 832$ 1,652  NEXJ SYSTEMS INC.Condensed Interim Statements of Cash Flows(Expressed in thousands of Canadian dollars)(Unaudited) Nine months ended September 30, 2012 2011Cash flows from operating activities: Loss for the period$ (12,249)$ (4,566) Adjustments for:  Depreciation 850 566  Share-based payment expense 832 1,652  Finance income (452) (240)  Finance costs 2 6  Foreign exchange loss (gain) 198(695) Change in non-cash operating working capital:  Accounts receivable (3,654) (1,810)  Prepaid expenses and other assets 291 (770)  Investment and other tax credits receivable 2,566 752  Accounts payable and accrued liabilities (876) (869)  Deferred revenue 3,617(2,636) Net cash flows used in operating activities (8,875) (8,610) Cash flows from financing activities: Obligations under capital leases (41) (49) Exercise of employee stock options 4722 Exercise of agent stock options 635 - Repayment of share purchase loans 14316 Issuance of common shares -43,650 Financing costs -(3,905) Interest paid (2)(6) Net cash flows from financing activities 782 39,728 Cash flows from investing activities: Purchase of property and equipment (275)(1,760) Redemption of short-term investments 4,005 5,090 Interest received 452 240 Increase in other assets - (64) Net cash flows from investing activities 4,182 3,506 Effects of exchange rates on cash and cash equivalents (135) 674 Increase (decrease) in cash and cash equivalents (4,046) 35,298 Cash and cash equivalents, beginning of period 56,218 23,942 Cash and cash equivalents, end of period $ 52,172$ 59,240 Supplemental cash flow information: Acquisition of property and equipment not yet paid for $ 51 $ 1,375 SOURCE: NexJ Systems Inc.For further information: Media Contact: Matthew Bogart 416-222-5611 matt.bogart@nexj.com