Quisitive Technology Solutions Inc. Reports Fiscal 2020 First Quarter Results
171% revenue growth for the first quarter of 2020 versus the first quarter of 2019, and gross margin of 37%
Toronto - TheNewswire - May 28, 2020, - Quisitive Technology Solutions Inc. (Quisitive or the "Corporation ") (TSXV: QUIS), a premier Microsoft solutions provider, announced today that it is has achieved quarterly revenues of $10.9 million or 171% year over year growth while driving operational performance of adjusted EBITDA of $1.1 million or 10% of revenue for the quarter ended March 31, 2020.
"We had two significant accomplishments in Q1 that provided us a strong foundation for the fiscal year," said Quisitive CEO Mike Reinhart. "The first was the completion of the Menlo Technologies acquisition that fueled our strategic vision by providing enterprise customers with North American scale, focused depth across Microsoft's entire cloud platform and offshore capability. The second was the release of LedgerPay, a secure Microsoft cloud-based payment processing and data insights platform that provides brick-and-mortar retailers unprecedented customer insights with every payment transaction."
March 31, 2020 Financial Results:
The Corporation's unaudited financial statements for the quarter ended in March 31, 2020 and related management's discussion and analysis can be found on the Company's website and at www.sedar.ca. All figures are expressed in United States dollars unless otherwise stated.
- Revenue for the quarter ended March 31, 2020 was $10.9 million versus $4 million for the quarter ended March 31, 2019.
- Gross margin for the quarter ended March 31, 2020 was $4 million or 37% as compared to $1.6 million or 40% for the quarter ended March 31, 2019.
- Adjusted EBITDA for the three months ended March 31, 2020 was $1.1 million or 10% of revenues as compared to an Adjusted EBITDA of $0.2 million for the three months ended March 31, 2019
- Net loss for the quarter ended March 31, 2020 was $4.3 million which represents a $0.04 loss per share. Included in the loss was the following:
- The Corporation incurred a fair value of derivative liability loss of $3.1 million relating to the convertible debt issued in connection with the acquisition of Menlo
- Amortization expense for the three months ended March 31, 2020 was $1 million
- Stock-based compensation for the three months ended March 31, 2020 was $0.2 million
- Depreciation expense for the three months ended March 31, 2020 was $0.2 million
FY2020 Q1 Business Highlights:
- Quisitive began the quarter with the completion of the Menlo Technologies acquisition. The acquisition fuels the Corporation's strategic vision to provide enterprise customers with depth across Microsoft's entire cloud platform.
- Quisitive was awarded a significant managed cloud services agreement with a leading Healthcare company to manage its Microsoft O365 and Dynamics 365 environment.
- Quisitive announced it had grown managed services and SaaS subscription billing offerings to 22% of revenue over the last three quarters.
- Quisitive demonstrated best-in-class capability as it was selected as a finalist for top mergers and acquisitions in North Texas by the D CEO and the Association for Corporate Growth-DFW.
- Quisitive announced the release of LedgerPay, its Microsoft cloud-based payment processing and data insights platform that provides brick-and-mortar merchants with unprecedented customer insights. To help further educate the market on the LedgerPay platform, Quisitive released two videos demonstrating how the LedgerPay platform works and how the LedgerPay payment tokenization solution drives value.
- Following the public release of LedgerPay, Quisitive secured its first LedgerPay licensing agreement with Rev19, a merchant services and financial technology company. Under the terms of the agreement, Rev19 is licensing LedgerPay's payment processing and payment tokenization platform to provide insights to its merchant base.
- Quisitive announced the strategic Go-To-Market relationship between LedgerPay and global data science leader, dunnhumby. The LedgerPay-dunnhumby offering is a first of its kind service for brick and mortar merchants who want to encourage repeat and more valuable sales by capitalizing on past purchases at the point of sale. LedgerPay SVP, Scotty Perkins published a conversation with dunnhumby North American President, Jose Luis-Gomes to discuss how the strategy brings market value.
- Quisitive added a new subscription-based service, On-Ramp to Azure, to the growing GTM portfolio. On-Ramp is focused on helping small, midsize and enterprise organizations rapidly and successfully move to the Microsoft Azure cloud. In response to the success the Corporation had with its Azure Assessment Program; On-Ramp was designed to move customers from evaluation to action. During the quarter ending March 31, 2020, Quisitive had 26 customers engage within the On-Ramp to Azure program.
- The Corporation applied its application development and artificial intelligence expertise to help a precision infectious disease diagnostics company build an Azure-based COVID-DX software to offer hospitals, government organizations, NGOs and research groups the ability to address the current requirements for rapid, accurate, RNA based COVID19-testing.
- The Corporation secured a strategic relationship with a large professional services firm to become its product development organization. The Corporation has designed and implemented a governance process to quickly vet the viability of Go-To-Market products with the firm's customers. The products developed by the Corporation will improve delivery velocity and profitability for the firm and create new revenue streams.
- The Corporation expanded its Azure services into the Caribbean, securing a Cloud Solution Provider opportunity with a firm in Trinidad and successfully completing an Azure Assessment and Migration project.
- The Corporation secured a second implementation phase for an Enterprise Data Warehouse migration for a large public utility on the West Coast.
- The Corporation completed an Office 365 migration for a manufacturer of transportation products.
- The Corporation completed the migration of key applications to Azure for a major furniture retailer.
- The Corporation delivered 7 Smart Start for Microsoft Teams engagements, helping organizations with the governance and adoption of Microsoft Teams.
- The world's leader of electronic components and services engaged the Corporation to begin planning their first data center move to Azure.
"We are very pleased with our progress in Q1, particularly in light of the challenging business environment many companies are facing because of Covid-19, and we are particularly excited to have launched LedgerPay and secured its first customer" continued Mike Reinhart. "The go-to-market relationship with dunnhumby provides access to a significant pool of potential customers who can benefit from LedgerPay's unique offering. We look forward continuing to build the LedgerPay business as an important part of Quisitive's growth in the coming quarters".
Members of Quisitive's executive management team will host a conference call to discuss the Corporation's financial results at 8:30am ET on Friday, May 29, 2020.
Conference Call Access
To access the conference call by phone, please dial the following numbers.
Canada/United States: 1-800-319-4610
Toronto Toll: 1-416-915-3239
Phone conference dial-in or is required approximately 10 minutes beforehand and ask to join the Quisitive Technology Solutions earnings call. Replays of the conference call will be available following the call at https://quisitive.com/investor-relations/.
Quisitive is a premier Microsoft solutions provider that helps enterprise organizations move, operate, and innovate in the Microsoft cloud: Microsoft Azure, Microsoft Dynamics and Microsoft 365. Quisitive also provides proprietary Software as a Service ("SaaS") solutions such as CRG emPerform(TM) and LedgerPay that complement the Microsoft platform. Quisitive serves clients globally with offices in Austin, TX; Dallas, TX; Denver, CO; Minneapolis, MN; Silicon Valley, CA; Washington, DC; Ottawa, ON; Toronto, ON and Hyderabad, India. For more information, visit http://www.Quisitive.com and follow @BeQuisitive. TSXV: QUIS.
For further information, please contact:
Mike Reinhart - Chief Executive Officer
Reconciliation of Non-GAAP Financial Measures - Adjusted EBITDA and Adjusted EBITDA as a percentage of revenue
Financial Measures and Adjusted EBITDA
There are measures included in this news release that do not have a standardized meaning under generally accepted accounting principles (GAAP) and therefore may not be comparable to similarly titled measures and metrics presented by other publicly traded companies. The company includes these measures because it believes certain investors use these measures and metrics as a means of assessing financial performance. EBITDA (earnings before interest, taxes, depreciation and amortization is calculated as net earnings before finance costs (net of finance income), income tax expense, and depreciation and amortization of intangibles) is a non-GAAP financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.
We prepare and release quarterly unaudited and annual audited financial statements prepared in accordance with IFRS. We also disclose and discuss certain non-GAAP financial information, used to evaluate our performance, in this and other earnings releases and investor conference calls as a complement to results provided in accordance with IFRS. We believe that current shareholders and potential investors in our Corporation use non-GAAP financial measures, such as Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues, in making investment decisions about our Corporation and measuring our operational results.
The term "Adjusted EBITDA" refers to a financial measure that we define as earnings before certain charges that management considers to be non-operating expenses and which consist of interest, taxes, depreciation, amortization, stock-based compensation (for which we include related fees and taxes), changes in fair value of derivatives, acquisition-related expenses and listing expense. Adjusted EBITDA as a percentage of revenues divides Adjusted EBITDA for a period by the revenues for the corresponding period and expresses the quotient as a percentage.
Management considers these non-operating expenses to be outside the scope of Quisitive' ongoing operations and the related expenses are not used by management to measure operations. Accordingly, these expenses are excluded from Adjusted EBITDA, which we reference to both measure our operations and as a basis of comparison of our operations from period-to-period.
Management believes that investors and financial analysts measure our business on the same basis, and we are providing the Adjusted EBITDA financial metric to assist in this evaluation and to provide a higher level of transparency into how we measure our own business. However, Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues are non-GAAP financial measures and may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues should not be construed as a substitute for net income determined in accordance with IFRS or other non-GAAP measures that may be used by other companies, such as EBITDA. The use of Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues does have limitations. As these acquisition-related expenses charges may continue as we pursue our consolidation strategy, some investors may consider these charges and expenses as a recurring part of operations rather than expenses that are not part of operations.
Cautionary Note Regarding Forward Looking Information
Neither TSX Venture Exchange nor its Regulation Services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements: Some statements in this news release contain forward-looking information. These statements include, but are not limited to, statements with respect to proposed activities, consolidation strategy and future expenditures. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include, among others the limited history of operations, lack of profitability, availability of financing, the need for additional financing and the timing and amount of expenditures, information pertaining to strategy, plans, or future financial performance, such as statements with respect to future revenues, EBITDA, cash flows and other statements that express management's expectations or estimates of future performance, the anticipated timing of future cash flow and positive EBITDA, ability to successfully execute on consolidation strategies, the failure to find economically viable acquisition targets, funding for internally developed technology solutions, client retention and attrition, client demands, reliance on key personnel, economic spending in the IT industry and technological changes in the IT industry.
These forward-looking statements are based on reasonable assumptions and estimates of management of the Corporation at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include: changes in technology, customer markets and demand for the Corporation's services; the efficacy of the Corporation's software and product offering; sales and margin risk; acquisition and integration risks; dependence on economic and market conditions including, but not limited to, access to equity or debt capital on favourable terms if required; changes in market dynamics including business relationships and competition; information system risks; risks associated with the introduction of new products; product design risk; risks related to the Corporation being a holding company; environmental risks; customer and vendor risks; credit risks; tax and insurance related risks; risks of legislative changes; risks relating to remote operations; key executive risk; risk of litigation risks; risks related to contracts with third party service providers; risks related to the enforceability of contracts; risks related to general economic, market and business conditions, including, but not limited to, the ongoing impact of the COVID-19 pandemic; the limited operating history of the Corporation; reliance on the expertise and judgment of senior management of the Corporation; risks related to proprietary intellectual property and potential infringement by third parties; risks relating to financing activities including leverage; risks relating to the management of growth; increased costs associated with the Corporation becoming a publicly traded company; increasing competition in the industry; risks relating to energy costs; reliance on key inputs, suppliers and skilled labour; cyber-security risks; risks related to quantifying the Corporation's target market; risks related to industry growth and consolidation; fraudulent activity by employees, contractors and consultants; conflicts of interest; risks related to the cost structures of certain projects; risks relating to certain remedies being limited and the difficulty of enforcement of judgments and effect service outside of Canada; risks related to future dispositions; sales by existing shareholders; the limited market for securities of the Corporation; price volatility of the common shares of the Corporation; no guarantee regarding use of available funds; currency fluctuations; and those factors described under the heading "Risks Factors" in the company's annual information form dated May 15, 2020 available on SEDAR. Although the forward-looking statements contained in this news release are based upon what management of the company believes, or believed at the time, to be reasonable assumptions, the company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking statements and information. There can be no assurance that forward-looking information, or the material factors or assumptions used to develop such forward-looking information, will prove to be accurate. The Corporation does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law.
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