- 21st consecutive quarter of annual growth
- Product revenue of $7.9 million, up 72% year-over-year
- Company positioned well for second half of Fiscal 2022 as
revenues continue to grow and costs stabilize
Blackline Safety Corp. (TSX:
BLN), a global leader in connected safety
technology, today reported record fiscal second quarter financial
results for the period ended April 30, 2022.
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the full release here:
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Blackline Safety YTD FY2022 Highlights
(Graphic: Business Wire)
Management Commentary
“We generated another quarter of robust top-line growth reaching
revenue of $16.7 million, not including $0.8 million of orders that
were at the end of the quarter and are expected to be realized in
Q3. We continued to deliver for our customers despite difficult
operating conditions, including the ongoing global supply chain
challenges, which has temporarily driven cost increases and
extended sales cycle times,” said Cody Slater, CEO and Chair of
Blackline Safety. “We saw a return to growth in Canada with revenue
up 65%, while the United States (“U.S.”) and Rest of World
maintained strong growth of 51% and 62%, respectively. However, we
saw disappointing sales in our European market with growth of only
9%.
“Service margins have remained extremely strong at nearly 70%.
Although product margins continue to be affected by elevated
component and freight costs, the majority of lifetime value for
most of our products is generated by attaching higher margin
recurring service revenue. For example, every $1 in G7 wearable
sales translates to approximately $4 in lifetime recurring service
revenue. Additionally, our service business is performing well with
net dollar retention(1) of 105% and total software services revenue
of $7.8 million which was up 26% year-over-year and 5%
sequentially. Delayed deployments of large orders received in the
previous two quarters reduced the growth rate of our service
revenue in Q2, but we see these deployments being completed in the
second half of the year, which should accelerate service
growth.
“In the past 18 months our ‘Invest to Grow’ strategy has allowed
Blackline to generate excellent growth as we have expanded our
capabilities to meet the needs of our Global market. This
investment has positioned the Company to maintain our strong
top-line growth while enabling a more conservative approach to our
expenses. Going forward, we see this resulting in Q4 operating
expenses at or below those of our Q2. Collectively, we expect our
operating expense management and margin improvement, along with
continued top-line growth to drive our overall financial
performance.”
“We continue to see healthy demand for our products and
services, and to maximize these opportunities, we appointed Sean
Stinson as Chief Growth Officer in May. Sean is a proven leader who
has been instrumental building the commercial engine that drives
our North America and Rest of World sales. We expect that bringing
Europe under this umbrella will allow us to better capture this
market opportunity.”
“The forthcoming launch of our G6 product continues to generate
positive early feedback and interest as we look to disrupt the $240
million annual zero-maintenance gas detection market. The
commercial rollout of G6 had been forecast to launch in July,
however we have pushed out the launch date to October as supply
chain challenges have put demands on our development teams to
service products currently in the market. The newly acquired Swift
Labs Inc. (“Swift Labs”) engineering team gives us the additional
capacity needed to mitigate risk to the G6 schedule while ensuring
deliverability of our current portfolio despite supply chain
challenges. We are eager to launch G6 at the NSC Safety Congress
& Expo, North America’s largest event for workplace safety, in
September.”
Fiscal Second Quarter 2022 and Recent Financial and
Operational Highlights
- Total revenue of $16.7 million, a 43% increase over the prior
year’s Q2
- Service revenue of $8.8 million, a 24% increase over the prior
year’s Q2
- Product revenue of $7.9 million, a 72% increase over the prior
year’s Q2
- Continued strong growth of 51% in the U.S. market compared to
the prior year’s Q2
- 62% revenue growth in Rest of World market compared to the
prior year’s Q2
- Canadian market returned to growth after two years with an
increase of $2.0 million
- Annual recurring revenue(1) growth of 24% year-over-year to
$30.8 million
- Closed acquisition of Swift Labs, an Internet of Things design
and engineering consulting firm, for consideration of $4.5 million
in cash and shares
- Appointed Sean Stinson as Chief Growth Officer to oversee
global revenue growth, channel management and customer support
functions
- Named by Financial Times as one of the fastest growing
companies in The Americas for 2022
- Awarded four 2022 top Industrial Hygiene Awards by Occupational
Health & Safety
Financial highlights
Three-months ended April
30
Six-months ended April
30
CAD millions, except for percentage and
per share data
2022
2021
Change
2022
2021
Change
$
$
%
$
$
%
Revenue
16.7
11.7
43
32.3
22.4
45
Gross Margin
7.1
6.0
18
13.4
11.5
17
Gross Margin Percentage
42%
51%
(9)
42%
52%
(10)
Net Loss
(14.5)
(8.6)
70
(27.4)
(13.4)
104
Loss per common share
(0.24)
(0.16)
50
(0.45)
(0.26)
73
EBITDA(1)
(12.9)
(7.2)
(78)
(24.3)
(11.1)
(119)
EBITDA per common share(1)
(0.21)
(0.13)
(62)
(0.40)
(0.21)
(90)
Adjusted EBITDA(1)
(6.4)
(1.5)
(337)
(12.7)
(1.8)
(601)
Adjusted EBITDA per common share(1)
(0.11)
(0.03)
(267)
(0.21)
(0.03)
(600)
(1) This news 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
Fiscal second quarter revenue was $16.7 million, an increase of
43% from $11.7 million in the prior year quarter, with Canada up
65%, Rest of World up 62% and U.S. revenues up 51% being the
largest geographic growth regions quarter-over-quarter.
Service revenue during the fiscal second quarter was $8.8
million, an increase of 24% compared to $7.1 million in the prior
year quarter. Software services revenue increased 26% to $7.8
million, operating lease revenue decreased 30% to $0.6 million and
rental revenue increased 384% to $0.5 million. Retention rates of
our existing customers across geographic regions and industry
sectors remained robust. Service revenue increases within our
existing customer base contributed $0.6 million during the quarter.
There were also adverse effects of $0.6 million 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
negligible reductions. Rental revenue growth continues to be
strong, establishing the business line as a more material
contributor to Blackline due to the application of the Company’s
complete suite of connected worker and area monitoring solutions in
the industrial turnaround and maintenance market.
Product revenue during the fiscal second quarter was $7.9
million, an increase of 72% compared to $4.6 million in the prior
year quarter, which reflects the Company’s investment in its
expanded sales network across North America, the European Union and
other geographies over the last twelve months.
Overall gross margin percentage for the fiscal second quarter
was 42%, a 9% decrease compared to the prior year quarter driven by
a heavier product versus service mix and lower product margins.
Service gross margin percentage was 69% in the fiscal second
quarter compared to 68% in the prior year quarter due to higher
overall service volumes, partially offset by higher carrier costs
for the connectivity of the Company’s devices as well as increases
in personnel costs for Safety Operations Centre team members and
the product development support team. Product gross margin
percentage decreased to 13% from 25% in the prior year quarter but
improved from 10% in the fiscal first quarter of 2022. The decrease
from the prior year period is due to higher material, supply and
freight costs resulting from global supply chain challenges.
Net loss and EBITDA were $14.5 million and ($12.9) million,
respectively, in the fiscal second quarter, compared to net loss
and EBITDA of $8.6 million and ($7.2) million in the prior year
quarter. The increase in losses is attributable to the Company’s
‘Invest to Grow’ strategy and was specifically related to an
increase in general and administrative, sales and marketing
expenses, and product research and development costs, primarily as
a result of higher salaries expense from additional new hires.
Adjusted EBITDA was ($6.4) million for the fiscal second quarter
compared to ($1.5) million in the prior year quarter. The decline
in Adjusted EBITDA in the quarter was primarily attributable to the
investments made to grow the business which resulted in an increase
in general and administrative and selling and marketing expenses
including higher salaries from additional team members.
At quarter end, Blackline had cash and short-term investments of
$30.0 million and no debt. The Company’s cash position enabled it
to invest in its manufacturing infrastructure and support the
working capital required to maintain flexibility in the face of
ongoing challenges in the global supply chain. During the quarter,
the Company closed on the acquisition of Swift Labs, the
consideration for which included $3.2 million in cash. Blackline
also invested an additional $1.3 million during the quarter to
expand the rental fleet to 1,500 units at the end of the quarter as
the Company secures a greater volume of short-term projects.
Blackline’s interim condensed consolidated financial statements
and management’s discussion and analysis on financial condition and
results of operations for the three and six-months ended April 30,
2022 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 Tuesday, June 14, 2022. Participants should dial
1-800-319-4610 or +1-416-915-3239 at least 10 minutes prior to the
conference time. A live webcast will also be available at
https://www.gowebcasting.com/11755. 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 either of the phone numbers above and entering replaying access
code 8995.
About Blackline Safety
Blackline Safety is a technology leader driving innovation in
the industrial workforce through IoT (Internet of Things). With
connected safety devices and predictive analytics, Blackline
enables companies to drive towards zero safety incidents and
improved operational performance. Blackline provides wearable
devices, personal and area gas monitoring, cloud-connected software
and data analytics to meet demanding safety challenges and enhance
overall productivity for organizations with coverage in more than
100 countries. Armed with cellular and satellite connectivity,
Blackline provides a lifeline to tens of thousands of people,
having reported over 180 billion data-points and initiated over
five million emergency responses. 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, including key performance indicators used by
management typically used by our competitors in the
software-as-a-service industry, 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 and key performance indicators
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.
Key Performance Indicators
The Company recognizes service revenues ratably over the term of
the service period under the provisions of agreements with
customers. The terms of agreements, combined with high customer
retention rates, provides the Company with a significant degree of
visibility into near-term revenues. Management uses a number of
metrics, including the ones identified below, to measure the
Company’s performance and customer trends, which are used to
prepare financial plans and shape future strategy. Key performance
indicators may be calculated in a manner different than similar key
performance indicators used by other companies.
- “Net dollar retention” compares the aggregate service
revenue contractually committed for a full period under all
customer agreements of our total customer base as of the beginning
of each period to the total service revenue of the same group at
the end of the period. It includes the effect of our service
revenue that expand, renew, contract or attrit, but excludes the
total service revenue from new activations during the period.
- “Annual recurring revenue” is the total annualized value
of recurring service amounts (ultimately recognized as software
services revenue) of all service contracts at a point in time.
Annualized service amounts are determined solely by reference to
the underlying contracts, normalizing for the varying revenue
recognition treatments under IFRS 15 Revenue from Contracts with
Customers. It excludes one-time fees, such as for non-recurring
professional services, and assumes that customers will renew the
contractual commitments on a periodic basis as those commitments
come up for renewal, unless such renewal is known to be
unlikely.
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 are 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
research and development costs related to new and existing
products, which enables the primary readers of the news release to
evaluate the results of the Company such that it was operating
without any expenditures in product research and 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 April
30
Six-months ended April
30
CAD millions
2022
2021
Change
2022
2021
Change
$
$
%
$
$
%
Net Loss
(14.5)
(8.6)
70
(27.4)
(13.5)
104
Depreciation and amortization
1.6
1.3
27
3.1
2.4
33
Finance income, net
(0.1)
-
63
(0.1)
(0.1)
16
Income taxes
0.1
0.1
29
0.1
0.1
24
EBITDA
(12.9)
(7.2)
(78)
(24.3)
(11.1)
(119)
Product research and development costs,
net of depreciation, amortization and stock-based compensation
expense(1)
6.0
3.6
64
11.0
6.8
61
Stock-based compensation expense(2)
0.3
1.4
(79)
0.4
1.8
(79)
Other non-recurring impact
transactions
0.2
0.7
(71)
0.2
0.7
(71)
Adjusted EBITDA
(6.4)
(1.5)
(337)
(12.7)
(1.8)
(601)
(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 news 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 of
deployments being completed in the second half of the year, that
the appointment of our Chief Growth Officer will help drive
improved operating performance across our regions, including
Europe; the evaluation of additional focused measures to optimize
operating performance and accelerate timeline to profitability; the
forthcoming G6 launch to disrupt the zero maintenance gas detection
industrial market, the timeline of launch, and confidence in the
potential for the product and service to take share in their
respective market. 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 news release presents certain non-GAAP and supplementary
financial measures, including key performance indicators used by
management and typically used by companies in the
software-as-a-service industry, 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 “Key
Performance Indicators,” and “Non-GAAP and Supplementary Financial
Measures” sections of this news release.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220614005429/en/
INVESTOR AND ANALYST CONTACTS:
Matt Glover or Jeff Grampp, CFA Gateway Group, Inc.
BLN@GatewayIR.com Telephone: +1 949 574 3860
MEDIA CONTACT Christine Gillies, CMO
cgillies@blacklinesafety.com Telephone: +1 403 629 9434
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