Share Name Share Symbol Market Type
NexJ Systems Inc TSX:NXJ Toronto Common Stock
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NexJ Systems Reports Third Quarter 2019 Results

25/10/2019 1:00pm

PR Newswire (Canada)


NexJ Systems (TSX:NXJ)
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TORONTO, Oct. 25, 2019 /CNW/ - NexJ Systems Inc. (TSX: NXJ), delivering intelligent customer management software to the financial services industry, today announced financial results for its third quarter ended September 30, 2019.

Third Quarter Summary

  • $4.0M of revenue for the third quarter as compared to $5.3M in the third quarter of the previous year
  • $1.3M in Adjusted EBITDA loss for the third quarter as compared to $686K in Adjusted EBITDA loss in the third quarter of the previous year
  • $1.8M of net loss for the third quarter as compared to $995K of net loss in the third quarter of the previous year
  • Initiated review of strategic and financial alternatives to explore options to accelerate growth and enhance shareholder value

"During the quarter we achieved significant product delivery milestones announcing availability of our new NexJ Nudge-AI product for intelligent investment recommendations and automated compliance as well as our next generation CRM for wealth management", said Paul O'Donnell, CEO, NexJ Systems Inc. "With early adoption by UBS and ENBD, and other large customers committed for 2020, our core recurring revenue will remain solid.  In addition, we are excited by the positive feedback we have received from new prospects and are confident we will see pipeline traction in the coming quarter."

NexJ Systems Inc.

Third Quarter Financial Results

(Expressed in thousands of Canadian dollars)

(Unaudited)





 Quarter ended September 30, 


 Nine months ended September 30, 


2019


2018


2019


2018









Revenue

$


$


$


$

License fees

391


615


950


1,717

Subscription fees

41


-


103


-

Professional services

1,279


2,425


4,640


7,904

Maintenance and support

2,313


2,280


6,972


6,641


4,024


5,320


12,665


16,262

Cost of revenue

1,290


1,704


5,014


6,065

Gross profit

2,734


3,616


7,651


10,197









Operating Expenses








Research and development, net

2,092


2,321


7,293


6,840

Sales and marketing

880


788


2,354


2,661

General and administrative, net

1,023


1,193


3,008


3,840


3,995


4,302


12,655


13,341









Adjusted EBITDA

(1,261)


(686)


(5,004)


(3,144)









Share-based payment expense

92


76


333


165

Depreciation and amortization

235


92


718


284

Lease-exit charges, net

-


-


-


103

Deferred share unit expense

225


-


225


225

Restructuring costs

-


-


614


331

Loss from operations

(1,813)


(854)


(6,894)


(4,252)









Foreign exchange loss (gain)

(40)


171


147


(239)

Finance income

(21)


(30)


(97)


(107)

Finance expense

36


-


112


-

Net loss

(1,788)


(995)


(7,056)


(3,906)

 

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) global financial market 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, 2018 dated February 14, 2019, 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, 2019


December 31, 2018





Assets





$


$

Current assets:




Cash and cash equivalents

6,678


10,951

Accounts receivable

2,286


4,876

Prepaid expenses and other assets 

2,362


1,688

Total current assets

11,326


17,515





Non-current assets:




Property and equipment

1,044


1,181

Right-of-use assets

2,075


-

Goodwill 

1,753


1,753

Investments

265


-

Contract costs

152


227

Other assets 

563


260

Total non-current assets

5,852


3,421





Total assets

17,178


20,936





Liabilities and Shareholders' Equity








Current liabilities:




Accounts payable and accrued liabilities 

2,326


2,689

Deferred revenue

4,921


4,786

Provisions

-


51

Lease liabilities

692


12

Total current liabilities

7,939


7,538





Non-current liabilities:




Accrued liabilities

140


-

Provisions

-


13

Lease liability

2,335


-

Total non-current liabilities

2,475


13





Total liabilities

10,414


7,551





Shareholders' equity:




Share capital 

82,915


82,905

Share purchase loans 

(3,598)


(3,598)

Contributed surplus 

8,795


8,366

Accumulated other comprehensive income (loss)

(4)


-

Deficit

(81,344)


(74,288)

Total shareholders' equity

6,764


13,385





Total liabilities and shareholders' equity

17,178


20,936

 

NexJ Systems Inc.

Condensed Interim Statements of Comprehensive loss

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

(Unaudited)






Quarter ended September 30,


Nine months ended September 30,


2019


2018


2019


2018









Revenue

$


$


$


$

License fees

391


615


950


1,717

Subscription fees

41


-


103


-

Professional services

1,279


2,425


4,640


7,904

Maintenance and support

2,313


2,280


6,972


6,641


4,024


5,320


12,665


16,262

Cost of revenue

1,310


1,716


5,080


6,080

Gross profit

2,714


3,604


7,585


10,182









Expenses:








Research and development, net

2,100


2,332


7,343


6,861

Sales and marketing

884


790


2,364


2,665

General and administrative, net

1,543


1,336


4,158


4,577

Restructuring costs

-


-


614


331


4,527


4,458


14,479


14,434









Loss from operations

(1,813)


(854)


(6,894)


(4,252)









Foreign exchange gain (loss)

40


(171)


(147)


239

Finance income 

21


30


97


107

Finance expense 

(36)


-


(112)


-


25


(141)


(162)


346

















Net loss for the period

(1,788)


(995)


(7,056)


(3,906)









Other comprehensive income:








Items that will not be reclassified to profit or loss:








     Unrealized gain (loss) on equity securities

3


-


(4)


-

Comprehensive loss for the period

(1,785)


(995)


(7,060)


(3,906)









Loss per share








Basic and diluted

(0.09)


(0.05)


(0.34)


(0.19)









Weighted average number of common shares 








outstanding, in thousands








Basic and diluted

20,557


20,586


20,540


20,551

 

NexJ Systems Inc.




Condensed Interim Statements of Cash Flows




(Expressed in thousands of Canadian dollars)




(Unaudited)









Nine months ended


Nine months ended


September 30, 2019


September 30, 2018









Cash flows from (used in) operating activities:

$


$

Net loss for the period

(7,056)


(3,906)

Adjustments for:




Depreciation and amortization of property, equipment




and right-of-use assets

718


284

Amortization of contract costs

162


31

Share-based payment expense

333


165

Equity-settled deferred share unit expense

118


225

Finance income

(97)


(107)

Finance expense

112


-

Foreign exchange gain (loss)

42


(20)

Change in non-cash operating working capital:




Accounts receivable

2,590


374

Prepaid expenses and other assets

(505)


321

Accounts payable and accrued liabilities and provisions

(117)


(329)

Deferred revenue

135


378

Net cash flows used in operating activities

(3,565)


(2,584)





Cash flows from (used in) financing activities:




Proceeds from repayment of share purchase loans

-


24

Repurchase of common shares

(10)


(117)

Costs of exercise of stock options

(2)


(26)

Costs of exercise of deferred share units

-


(205)

Payment of finance lease liability (completed contract)

(12)


(111)

Payment of finance lease liability (ongoing contract)

(367)


-

Net cash flows used in financing activities

(391)


(435)





Cash flows from (used in) investing activities:




Purchase of property and equipment

(103)


(75)

Purchase of equity investments

(269)


-

Interest received

97


106

Net cash flows from (used in) investing activities

(275)


31





Effects of exchange rates on cash and cash equivalents

(42)


20





Decrease in cash and cash equivalents

(4,273)


(2,968)





Cash and cash equivalents, beginning of period

10,951


14,784





Cash and cash equivalents, end of period

6,678


11,816





Supplemental cash flow information:




Acquisition of property and equipment not yet paid

18


76

 

SOURCE NexJ Systems Inc.

Copyright 2019 Canada NewsWire

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