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NexJ Systems Reports Fourth Quarter 2020 Results

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TORONTO, Feb. 18, 2021 /CNW/ - NexJ Systems Inc. (TSX: NXJ), delivering intelligent customer management software to the financial services industry, today announced financial results for its fourth quarter ended December 31, 2020.

Fourth Quarter Summary

  • $4.2M of revenue for the fourth quarter as compared to $4.6M in the fourth quarter of the previous year

  • $836K in Adjusted EBITDA profit for the fourth quarter is a $1.0M improvement over $164K in Adjusted EBITDA loss in the fourth quarter of the previous year

  • $417K of net income for the fourth quarter is a $1.0M improvement over $632K of net loss in the fourth quarter of the previous year

  • $16.9M in revenue for the year as compared to $17.2M in the previous year

  • $985K in Adjusted EBITDA profit for the year is a $6.2M improvement over Adjusted EBITDA loss of $5.2M in the previous year

  • $1.5M in net loss for the year is a $6.2M improvement over $7.7M of net loss in the previous year

"Despite the many challenges faced by the business community throughout 2020 resulting from the global pandemic, we are pleased with our improving quarterly results and the continued support of our customers," said Paul O'Donnell, CEO. "Our continued investments in AI-driven advisor and relationship manager tools that deliver hyper-personalization at scale to improve client acquisition, engagement and retention are completely aligned with current market demands. In support of our go-to-market efforts to maximize this opportunity, we have established a partnership with a highly-specialized firm with deep domain knowledge and a strong network in financial services which we expect will have a positive contribution to subscription license revenue in 2021."

NexJ Systems Inc.









Fourth Quarter Financial Results









(Expressed in thousands of Canadian dollars)









(Unaudited)











Quarter ended December 31,


Year ended December 31,



2020


2019


2020


2019










Revenue


$


$


$


$

License and subscription fees


46


399


156


1,452

Professional services


2,058


1,860


7,779


6,500

Maintenance and support


2,143


2,304


8,915


9,276



4,247


4,563


16,850


17,228

Cost of revenue


921


1,185


4,082


6,199

Gross profit


3,326


3,378


12,768


11,029










Operating Expenses









Research and development


1,082


1,813


5,513


9,106

Sales and marketing


610


822


2,544


3,176

General and administrative


798


907


3,726


3,915



2,490


3,542


11,783


16,197










Adjusted EBITDA


836


(164)


985


(5,168)










Share-based payment expense


(20)


79


164


412

Depreciation and amortization


212


230


862


948

Deferred share unit expense


-


-


275


225

Restructuring costs


(36)


-


924


614

Income (loss) from operations


680


(473)


(1,240)


(7,367)










Foreign exchange loss


222


149


148


296

Finance income


(2)


(23)


(47)


(120)

Finance expense


43


33


144


145

Net income (loss)


417


(632)


(1,485)


(7,688)

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 provides Intelligent Customer Management to the financial services industry. Our award-winning CRM is designed to help Wealth Management, Private Banking, Corporate and Commercial Banking, and Insurance firms revolutionize their business. Powered by artificial intelligence, our products help drive productivity, boost client engagement, and increase revenue. With users in over 60 countries, our customers benefit from our deep expertise across financial services verticals, strategic investment in innovation, and commitment to their success.

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) general economic 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, 2020 dated February 18, 2021, 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.




Statements of Financial Position




(Expressed in thousands of Canadian dollars)




(Unaudited)









December 31, 2020


December 31, 2019





Assets





$


$

Current assets:




Cash and cash equivalents

5,426


5,123

Accounts receivable

3,546


5,475

Prepaid expenses and other assets

1,320


1,757

Total current assets

10,292


12,355





Non-current assets:




Property and equipment

768


969

Right-of-use assets

1,280


1,747

Goodwill

1,753


1,753

Investments

255


260

Contract costs

51


136

Other assets

403


663

Total non-current assets

4,510


5,528





Total assets

14,802


17,883





Liabilities and Shareholders' Equity








Current liabilities:




Accounts payable and accrued liabilities

1,874


1,969

Deferred revenue

5,374


6,550

Lease liability

967


715

Total current liabilities

8,215


9,234





Non-current liabilities:




Accrued liabilities

101


117

Deferred revenue

346


281

Lease liability

1,078


2,045

Total non-current liabilities

1,525


2,443





Total liabilities

9,740


11,677





Shareholders' equity:




Share capital

83,471


82,915

Share purchase loans

(3,598)


(3,598)

Contributed surplus

8,664


8,874

Accumulated other comprehensive loss

(14)


(9)

Deficit

(83,461)


(81,976)

Total shareholders' equity

5,062


6,206





Total liabilities and shareholders' equity

14,802


17,883

NexJ Systems Inc.








Statements of Comprehensive Income (Loss)








(Expressed in thousands of Canadian dollars, except per share amounts)








(Unaudited)

















Quarter ended December 31,


Year ended December 31,


2020


2019


2020


2019









Revenue

$


$


$


$

License and subscription fees

46


399


156


1,452

Professional services

2,058


1,860


7,779


6,500

Maintenance and support

2,143


2,304


8,915


9,276


4,247


4,563


16,850


17,228

Cost of revenue

926


1,201


4,116


6,281

Gross profit

3,321


3,362


12,734


10,947









Expenses:








Research and development

1,091


1,828


5,556


9,171

Sales and marketing

610


824


2,551


3,188

General and administrative

976


1,183


4,943


5,341

Restructuring costs

(36)


-


924


614


2,641


3,835


13,974


18,314









Income (loss) from operations

680


(473)


(1,240)


(7,367)









Foreign exchange loss

(222)


(149)


(148)


(296)

Finance income

2


23


47


120

Finance expense

(43)


(33)


(144)


(145)


(263)


(159)


(245)


(321)

















Income (loss) for the year

417


(632)


(1,485)


(7,688)









Other comprehensive loss:








Items that will not be reclassified to profit or loss:








Unrealized loss on equity securities

(11)


(5)


(5)


(9)

Income (loss) for the year








and comprehensive income (loss)

406


(637)


(1,490)


(7,697)









Earnings (loss) per share








Basic and diluted

0.02


(0.03)


(0.07)


(0.37)









Weighted average number of common shares








outstanding, in thousands








Basic and diluted

21,100


20,677


20,888


20,575

NexJ Systems Inc.




Statements of Cash Flows




(Expressed in thousands of Canadian dollars)




(Unaudited)









Year ended


Year ended


December 31, 2020


December 31, 2019









Cash flows from (used in) operating activities:

$


$

Loss for the year

(1,485)


(7,688)

Adjustments for:




Depreciation and amortization of property and equipment

284


334

Depreciation of right-of-use assets

578


614

Changes in contract costs

85


211

Share-based payment expense

164


412

Deferred share unit expense

218


118

Finance income

(47)


(120)

Finance expense

144


145

Foreign exchange loss (gain)

214


(100)

Change in non-cash operating working capital:




Accounts receivable

1,929


(599)

Prepaid expenses and other assets

598


149

Accounts payable and accrued liabilities and provisions

(111)


(349)

Deferred revenue

(1,132)


2,045

Net cash flows from (used in) operating activities

1,439


(4,828)





Cash flows used in financing activities:




Repurchase of common shares

-


(10)

Costs of exercise of stock options

-


(2)

Costs of exercise of deferred share units

(36)


-

Payment of lease liability (completed contract)

-


(12)

Payment of lease liability (ongoing contract)

(850)


(805)

Net cash flows used in financing activities

(886)


(829)





Cash flows from (used in) investing activities:




Purchase of property and equipment

(83)


(122)

Purchase of equity investments

-


(269)

Interest received

47


120

Net cash flows used in investing activities

(36)


(271)





Effects of exchange rates on cash and cash equivalents

(214)


100





Increase (decrease) in cash and cash equivalents

303


(5,828)





Cash and cash equivalents, beginning of year

5,123


10,951





Cash and cash equivalents, end of year

5,426


5,123

SOURCE NexJ Systems Inc.

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View original content: http://www.newswire.ca/en/releases/archive/February2021/18/c7070.html