Fourth quarter revenue hits $19.3 million, 67% growth over Q4
2020
Blackline Safety Corp. (TSX: BLN) (“Blackline Safety”,
“Blackline”, the “Company”, “we”, “us”, or “our”), a global leader
in connected safety technology with a hardware-enabled
software-as-a-service (HeSaaS) business model, today released
record annual and fiscal fourth quarter results.
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the full release here:
https://www.businesswire.com/news/home/20220120005438/en/
Year end BLN (Graphic: Business Wire)
19 consecutive quarters of year-over-year growth
For the fiscal quarter ending October 31, 2021 Blackline
achieved a record $19.3 million in total revenue, an increase of
67% compared to the same period last year. Product revenue grew
129% from the prior year’s quarter with service revenue up 22% to
$8.2 million from $6.7 million, driven by a 20% increase in
recurring software services revenue.
Annual 2021 revenue was a record $54.3 million, with product
revenue up 93% to $24.8 million and service revenue up 16% to $29.5
million from the prior year.
“Despite a business environment that continues to be
challenging, we are seeing a return to our pre-pandemic growth
trajectory driven by $11.1 million in product revenue as new device
deployments hit record levels and 100%+ customer retention,
fuelling our HeSaaS business model,” said Cody Slater, CEO and
Chair at Blackline Safety.
“These results show that our invest to grow strategy over the
past 18 months is now paying dividends. We look forward to seeing
the ongoing impact of our enhanced sales, marketing and product
capabilities that will continue to strengthen the business and
drive growth throughout fiscal 2022 and beyond.”
Service revenue momentum continues, up 22%
quarter-over-quarter
Product sales alongside strong retention and renewal activity
and the Company’s entry into the rental market resulted in service
revenue increases in the fourth quarter. Total service revenue for
the quarter was $8.2 million up 22% from $6.7 million over the
prior year quarter. Recurring software services revenue increased
20% over the same period.
Service gross margin percentage(1) improved to 69% in the fourth
quarter from 67% in the prior year quarter excluding the impact of
the Canadian Emergency Wage Subsidy (“CEWS”). Product gross margin
percentage(1), though impacted by ongoing global supply chain
challenges, remained strong at 30% with growing sales of the
Company’s G7 EXO area gas monitor contributing proportionately
higher product margin compared to our other connected safety
devices. Blackline closed the fourth quarter with cash and
short-term investments of $54.5 million and no debt. The Company’s
cash position enabled it to invest in manufacturing infrastructure
and support the working capital required to achieve record product
deliveries during the quarter, despite ongoing challenges in the
global supply chain.
The Company strengthened its financial position at the end of
the fiscal year, closing its bought deal short-form prospectus
offering on October 19, 2021, raising gross proceeds of $40
million. Blackline continues to maintain flexibility to support its
growth strategies and investments in sales and marketing with an
expanded sales network and new digital lead generation
capabilities. Our product commercialization will continue to
accelerate including the launch of the first of its kind G6
connected personal safety device for the compliance market in July
2022, as well as the next generation of Blackline Live for
cloud-based real-time reporting. We are also building toward a 2023
initial product launch of our offering in the light industry and
construction market through our Wearable Technologies Limited
(“WTL”) subsidiary, with a total of $1.5 million expended during
the fourth quarter.
“Our Company has continued to demonstrate resiliency through
wave after wave of the pandemic, as we find new ways to grow amid
tremendous uncertainty and adversity. During this period, we have
seen our overall quarterly revenue grow by 127% globally and 176%
in our growth markets outside of Canada,” added Mr. Slater.
“Thanks to the committed Blackline team worldwide, we are
well-positioned to reap the rewards of our strategy to invest in
product development, as well as sales and marketing globally—all
driven by our corporate purpose to keep workers safe and contribute
to digital transformation of the industrial workforce.”
Fourth quarter highlights
- Nineteenth consecutive quarter of year-over-year quarterly
revenue growth
- Total revenue of $19.3 million, a 67% increase over the prior
year’s Q4, and 80% in our targeted growth markets outside
Canada
- Service revenue of $8.2 million, a 22% increase over the prior
year’s Q4, comprised of:
- Software services revenue of $6.8 million, a 20% increase from
the prior year’s Q4
- Operating lease revenue of $0.8 million, a 20% decrease from
the prior year’s Q4
- Rental revenue of $0.6 million, a 539% increase from the prior
year’s Q4
- Product revenue of $11.1 million, a 129% increase from the
prior year’s Q4
- Total revenue grew by 81% in the United States (“US”), 80% in
Europe and 66% in Australia, New Zealand and Rest of World compared
to the prior year’s Q4
- Closed five multi-year agreements with global customers in the
turnaround, water and wastewater, utility and defense industries
for a combined total contract value of $12.7 million
- Total cash and short-term investments of $54.5 million at
October 31, 2021, which was bolstered by the bought deal short-form
prospectus offering completed in October 2021 for gross proceeds of
$40 million
- Expanded globally by opening offices in Houston, Texas and
Dubai to service the Company’s growing customer segments in the US
and the United Arab Emirates (“UAE”)
- Expanded our manufacturing capacity in preparation for the
launch of the Company’s high volume G6 product line
Annual highlights
- Achieved total revenue of $54.3 million, a 42% increase over
the prior year, and 59% in our targeted growth markets outside
Canada
- Attained service revenue of $29.5 million, up 16% from the
prior year, comprised of:
- Software services revenue of $25.5 million, a 23% increase from
the prior year
- Operating lease revenue of $3.1 million, a 26% decrease from
the prior year
- Rental revenue of $0.9 million, an 87% increase from the prior
year
- Realized product revenue of $24.8 million, up 93% from the
prior year
- Grew total revenue by 42% in the United States, 88% in Europe
and 90% in Australia, New Zealand and Rest of World over the prior
year
- Grew future cash flows from customer finance leases by 163% to
$18.9 million from $7.2 million year over year
- Graduated to the Toronto Stock Exchange and opened the market
on June 11, 2021
- Secured access to a $15 million financing facility from
National Bank of Canada supported by Blackline’s HeSaaS business
model
- Completed first corporate acquisition of WTL, with a focus to
expand into the construction and light industrial safety
market
- Established new European Union (“EU”) based subsidiary and
opened a distribution facility in France to provide efficient
access to the EU enabling us to better service our European
customers
- Published first Environmental, Social and Governance report,
underlining our commitment to sustainability in our business and
our communities
- Grew and realigned our leadership team to support the Company’s
strategic objectives with the new appointments of our Chief
Technology Officer and Chief Marketing Officer and the addition of
two board members
Post-quarter highlights
- Secured a contract with a new major US energy customer for a
total contract value of $4.3 million
- Presented connected worker innovations as a featured exhibitor
at ADIPEC Exhibition in Abu Dhabi
- Recognized on Deloitte’s Enterprise Fast 15 as the 9th fastest
growing enterprise company in Canada with 230% revenue growth over
the last three years
- Named as a preferred vendor for Royal Dutch Shell in a
three-year global framework agreement to supply connected worker
solutions enterprise-wide
- Closed our previously announced agreement to secure a facility
in Dubai, UAE
Financial highlights
The subsequent values in this news release are in thousands,
except for percentages and per share data.
Three-months ended October 31
Year ended October 31
2021
2020
Change
2021
2020
Change
$
$
%
$
$
%
Revenue
19,266
11,550
67
54,312
38,377
42
Gross margin
9,019
6,510
39
26,394
20,188
31
Gross margin percentage(1)
47%
56%
(9)
49%
53%
(4)
Net loss
(9,606)
(1,804)
432
(33,305)
(8,021)
315
Loss per common share
(0.18)
(0.03)
500
(0.67)
(0.16)
319
EBITDA(1)
(8,157)
(701)
(1,064)
(28,235)
(4,084)
(591)
EBITDA per common share(1)
(0.15)
(0.01)
1,400
(0.57)
(0.09)
533
Adjusted EBITDA(1)
(3,479)
2,234
(256)
(9,921)
5,591
(277)
Adjusted EBITDA per common share(1)
(0.06)
0.04
(250)
(0.20)
0.12
(267)
(1) This press release presents certain non-GAAP and supplementary
financial measures, as well as non-GAAP ratios to assist readers in
understanding the Company’s performance. Further details on these
measures and ratios are included in the “Non-GAAP and Supplementary
Financial Measures” section of this press release.
Key Financial Information
Fourth quarter revenue was $19,266 an increase of 67% from
$11,550 in the comparable quarter of the prior fiscal year, with
the US up 81%, being the largest geographic growth region
quarter-over-quarter.
Service revenue during the fourth quarter was $8,172, an
increase of 22% compared to $6,712 in the same quarter last year.
Retention rates of our existing customers across geographic regions
and industry sectors remained robust. Service revenue increases
within our existing customer base contributed $382 during the
quarter. There were also adverse effects of $193 from customers who
renewed fewer active devices after experiencing workforce
reductions during the last twelve months. In addition, certain
customers declined to renew their service plans resulting in a
further $25 reduction.
Service revenue for the quarter was positively impacted by the
strong industrial turnaround and maintenance season this fall in
the US. Several large deployments resulted in rental revenue growth
of 539% to $620 from $97 in the prior year quarter as the Company
began its entry to that market with its complete suite of connected
worker and area monitoring solutions.
Product revenue during the fourth quarter was $11,094, an
increase of 129% compared to $4,838 in the prior year quarter, as
we saw the beginning of a return to more normal procurement
processes, particularly in the US and Europe and continued sales of
our new G7 EXO area gas monitors during the quarter. The increase
also reflects the Company’s investment in its expanded sales
network across North America, Europe and other geographies over the
last twelve months. Product revenue in the fourth quarter was
Blackline’s highest ever, with several large contracts realized for
two UK water authorities, a Texas-based turnaround service
provider, a UK defence contractor, and a US-based natural gas and
electric utility company.
Revenue for fiscal 2021 was $54,312 compared to $38,377 in the
prior year, with increases of 88% in Europe and 42% in the United
States.
Service revenue for the fiscal year was $29,536, an increase of
16% from $25,517 in the prior year. This growth was driven by the
software services revenue segment, which increased by 23% to
$25,518 from $20,805 in the prior year as a result of new
activations of the devices sold to end-users over the past twelve
months for customers utilizing the Company’s monitoring, HeSaaS and
data services.
Rental revenue also increased 87% for the year to $899 from $481
as Blackline’s complete suite of connected solutions began to be
adopted by several customers for short-term projects especially in
the fall turnaround market in the US.
Sales of Blackline’s connected safety hardware were $24,776 in
the year compared to $12,860 in the prior fiscal year, resulting in
a 93% increase which reflects the contribution of the expanded
sales team and a reduction of COVID-19 restrictions, allowing more
access to customers sites.
Overall gross margin percentage for the fourth quarter was 47%,
a 9% decrease to that achieved in the comparable quarter of the
prior year driven by a heavier product versus service mix. Service
gross margin percentage was 69% in the fourth quarter due to higher
overall service volumes, partially offset by higher carrier costs
for the connectivity of the Company’s devices. Product gross margin
percentage decreased to 30% from 40% in the prior year quarter due
to increased warranty and scrappage costs, and higher material,
supply and freight costs resulting from global supply chain
challenges. Excluding the impact of the CEWS, product gross margin
percentage was 30% compared to 37% and service gross margin
percentage was 69% compared to 67% in the fourth quarter compared
to the prior year quarter.
Overall gross margin percentage during the year was 49%, a 4%
decrease from the prior year due to the shift in product/service
sales mix. This was partially offset by a 4% increase in product
gross margin percentage. Product margin in fiscal 2021 improved due
to the higher revenues absorbing a greater proportion of fixed
material and labor costs as well as a full year of Blackline’s new
G7 EXO area gas monitor and its associated sales and cost mix
compared to Blackline’s other connected safety products. Service
gross margin percentage remained consistent year-over-year.
Excluding the impact of CEWS, product gross margin percentage was
23% compared to 17% and service gross margin percentage was 69%
compared to 68% in the current fiscal year compared to the prior
year.
Net loss and EBITDA were $9,606 and ($8,157), respectively in
the fourth quarter, driven by a 124% increase in total expenses.
The increase in the net loss for the quarter was predominately
attributable to an increase in general and administrative, sales
and marketing, and product research and development costs,
primarily as a result of higher salaries expense from additional
new hires with reduced CEWS funding of $750.
Net loss and EBITDA were $33,305 and ($28,235), respectively for
the year, driven by a 110% increase in total expenses as we
invested heavily in our product research and development, sales and
marketing, and general corporate efforts during the year.
Adjusted EBITDA was ($3,479) for the fourth quarter compared to
$2,234 in the prior year quarter. The decline in adjusted EBITDA in
the quarter was primarily attributable to the investments made to
grow the business, resulting in an increase in general and
administrative and selling and marketing expenses including higher
salaries from additional new hires and reduced CEWS funding of
$437.
Adjusted EBITDA for the year was ($9,921) compared to $5,591 in
the prior year, a decline of 277%. This decline is primarily due to
Blackline’s focus on expanding its global sales networks with a
corresponding increase to its general operations teams to support
the continued scaling of the Company during the year.
Blackline’s annual audited consolidated financial statements and
management’s discussion and analysis on financial condition and
results of operations for the year ended October 31, 2021 are
available on SEDAR under the Company’s profile at www.sedar.com.
All results are reported in Canadian dollars.
Conference Call
A conference call and live webcast have been scheduled for 11:00
am ET on Thursday, January 20, 2022. Participants should dial
1-800-319-4610 or +1-604-638-5340 at least 10 minutes prior to the
conference time. A live webcast will also be available at
https://www.gowebcasting.com/11689. Participants should join the
webcast at least 10 minutes prior to the conference time to
register and install any necessary software. If you cannot make the
call live, a replay will be available within 24 hours by dialing in
to any of the phone numbers above and entering replaying access
code 8253.
About Blackline Safety
Blackline Safety is a global connected safety leader that helps
to ensure every worker gets their job done and returns home safely
each day. Blackline provides wearable safety technology, personal
and area gas monitoring, cloud-connected software and data
analytics to meet demanding safety challenges and increase
productivity of organizations with coverage in more than 100
countries. Blackline Safety wearables provide a lifeline to tens of
thousands of men and women, having reported over 167 billion
data-points and initiated over five million emergency responses.
Armed with cellular and satellite connectivity, we ensure that help
is never too far away. For more information, visit
BlacklineSafety.com and connect with us on Facebook, Twitter,
LinkedIn and Instagram.
Non-GAAP and Supplementary Financial Measures
This press release presents certain non-GAAP and supplementary
financial measures, as well as non-GAAP ratios to assist readers in
understanding the Company’s performance. These measures do not have
any standardized meaning and therefore are unlikely to be
comparable to similar measures presented by other issuers and
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP.
Management uses these non-GAAP and supplementary financial
measures, as well as non-GAAP ratios to analyze and evaluate
operating performance. Blackline also believes the non-GAAP and
supplementary financial measures defined below are commonly used by
the investment community for valuation purposes, and are useful
complementary measures of profitability, and provide metrics useful
in Blackline’s industry.
Throughout this news release, the following terms are used,
which do not have a standardized meaning under GAAP.
Non-GAAP Financial Measures
A non-GAAP financial measure: (a) depicts the historical or
expected future financial performance, financial position or cash
of the Company; (b) with respect to its composition, excludes an
amount that is included in, or includes an amount that is excluded
from, the composition of the most comparable financial measure
presented in the primary consolidated financial statements; (c) is
not presented in the primary financial statements of the Company;
and (d) is not a ratio.
Non-GAAP financial measures presented and discussed in this news
release is as follows:
“EBITDA” is useful to securities analysts, investors and
other interested parties in evaluating operating performance by
presenting the results of the Company on a basis which excludes the
impact of certain non-operational items. EBITDA refers to earnings
before interest expense, interest income, income taxes,
depreciation and amortization.
“Adjusted EBITDA” is useful to securities analysts,
investors and other interested parties in evaluating operating
performance by presenting the results of the Company on a basis
which excludes the impact of certain non-operational items, product
development costs related to new and existing products, which
enables the primary readers of the MD&A to evaluate the results
of the Company such that it was operating without any expenditures
in product development, and certain non-cash and non-recurring
items, such as stock compensation expense, that the Company
considers appropriate to adjust given the irregular nature and
relevance to comparable companies. Adjusted EBITDA is calculated as
earnings before interest expense, interest income, income taxes,
depreciation and amortization, stock-based compensation expense,
product development costs and non-recurring impact transactions, if
any. The Company considers an item to be non-recurring when a
similar revenue, expense, loss or gain is not reasonably likely to
occur within the next two years or has not occurred during the
prior two years.
Reconciliation of non-GAAP
financial measures
Three-months ended October
31,
Year ended October 31,
000s
2021
2020
Change
2021
2020
Change
$
$
%
$
$
%
Net loss
(9,606)
(1,804)
432
(33,305)
(8,021)
315
Depreciations and
amortization
1,428
1,094
31
5,055
4,159
22
Finance income, net
(31)
(77)
(60)
(173)
(327)
(47)
Income tax
52
86
(40)
188
105
79
EBITDA
(8,157)
(701)
(1,064)
(28,235)
(4,084)
(591)
Product research and development
costs, net of depreciation, amortization and stock-based
compensation expense(1)
4,274
2,746
56
15,111
8,588
76
Stock-based compensation
expense(2)
404
189
114
2,539
1,298
96
Other non-recurring impact
transactions
-
-
-
664
(211)
(415)
Adjusted EBITDA
(3,479)
2,234
(256)
(9,921)
5,591
(277)
(1) Product research and
development costs exclude depreciation and amortization, as well as
stock-based compensation relating to product research and
development is excluded and adjusted in the subsequent line as
defined below.
(2) Stock-based compensation expense relates to the Company’s
stock compensation plan and stock option expense extracted from
cost of sales, general and administrative expenses, sales and
marketing expenses and product research and development costs on
the consolidated statements of loss and comprehensive loss.
Non-GAAP Ratios
A non-GAAP ratio is a financial measure presented in the form of
a ratio, fraction, percentage or similar representation and that
has a non-GAAP financial measure as one or more of its
components.
Non-GAAP ratios presented and discussed in this news release is
follows:
“EBITDA per common share” is useful to securities
analysts, investors and other interested parties in evaluating
operating and financial performance. EBITDA per common share is
calculated on the same basis as net loss per common share,
utilizing the basic and diluted weighted average number of common
shares outstanding during the periods presented.
“Adjusted EBITDA per common share” is useful to
securities analysts, investors and other interested parties in
evaluating operating and financial performance. Adjusted EBITDA per
common share is calculated on the same basis as net income (loss)
per common share, utilizing the basic and diluted weighted average
number of common shares outstanding during the periods
presented.
Supplementary Financial Measures
A supplementary financial measure: (a) is, or is intended to be,
disclosed on a periodic basis to depict the historical or expected
future financial performance, financial position or cash flow of
the Company; (b) is not presented in the financial statements of
the Company; (c) is not a non-GAAP financial measure; and (d) is
not a non-GAAP ratio.
Supplementary financial measures presented and discussed in this
news release is as follows:
- “Gross margin percentage” represents gross margin as a
percentage of revenue
- “Product gross margin percentage” represents product
gross margin as a percentage of product revenue
- “Service gross margin percentage” represents service
gross margin as a percentage of service revenue
Note Regarding Forward-Looking Statements
This press release contains forward-looking statements and
forward-looking information (collectively "forward-looking
information") within the meaning of applicable securities laws
relating to, among other things, Blackline Safety's expectation to
realize potential from its intended investment in organic growth
opportunities in 2022, that Blackline intends to continue to
maintain flexibility to maintain its growth strategies and
investments in sales and marketing with an expanded sales network
and new digital lead generation capabilities, expectations with
respect to continuing to accelerate product commercialization,
including the launch of the first of its kind G6 connected personal
safety device for the compliance market in July 2022, as well as
the next generation of Blackline Live, for cloud-based real-time
reporting and Blackline's offering for the light industry and
construction market through our Wearable Technologies Limited
(“WTL”), subsidiary. Blackline provided such forward-looking
statements in reliance on certain expectations and assumptions that
it believes are reasonable at the time, including expectations and
assumptions concerning business prospects and opportunities,
customer demands, the availability and cost of financing, labor and
services, that Blackline will pursue growth strategies and
opportunities in the manner described herein, and that it will have
sufficient resources and opportunities for the same, or that other
strategies or opportunities may be pursued in the future, and the
impact of increasing competition. Although Blackline believes that
the expectations and assumptions on which such forward-looking
information is based are reasonable, undue reliance should not be
placed on the forward-looking information because Blackline can
give no assurance that they will prove to be correct.
Forward-looking information addresses future events and conditions,
which by their very nature involve inherent risks and
uncertainties, including the risks discussed in Blackline's
Management's Discussion and Analysis and annual information form
for the year ended October 31, 2021 and available on SEDAR at
www.sedar.com. Blackline's actual results, performance or
achievement could differ materially from those expressed in, or
implied by, the forward-looking information and, accordingly, no
assurance can be given that any of the events anticipated by the
forward-looking information will transpire or occur, or if any of
them do so, what benefits Blackline will derive therefrom.
Management has included the above summary of assumptions and risks
related to forward-looking information provided in this press
release in order to provide readers with a more complete
perspective on Blackline's future operations and such information
may not be appropriate for other purposes. Readers are cautioned
that the foregoing lists of factors are not exhaustive. These
forward-looking statements are made as of the date of this press
release and Blackline disclaims any intent or obligation to update
publicly any forward-looking information, whether as a result of
new information, future events or results or otherwise, other than
as required by applicable securities laws.
(1) This press release presents certain non-GAAP and
supplementary financial measures, as well as non-GAAP ratios to
assist readers in understanding the Company’s performance. Further
details on these measures and ratios are included in the “Non-GAAP
and Supplementary Financial Measures” section of this press
release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220120005438/en/
INVESTOR/ANALYST CONTACT Cody Slater, CEO
cslater@blacklinesafety.com Telephone: +1 403 451 0327
MEDIA CONTACT Christine Gillies, CMO
cgillies@blacklinesafety.com Telephone: +1 403 629 9434
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