- Annual Recurring Revenue grows 27% YoY to $42.3 million
- Q3 Subscription revenue increases 22% YoY to $10.0 million and total revenue increases 7.5%
YoY to $18.1 million
VANCOUVER, BC, Nov. 10,
2022 /CNW/ - Copperleaf® Technologies Inc.
(TSX: CPLF) ("Copperleaf" or the "Company"), a provider of
enterprise decision analytics software solutions, today announced
financial results for the three and nine months ended September 30, 2022. All amounts are expressed in
Canadian dollars unless otherwise stated.
"Continued growth in subscription revenue, combined with 100%
client retention, drove a 27% increase in Annual Recurring Revenue
in the third quarter of 2022, highlighting the sustained demand for
Copperleaf's solutions and continued strength in the decision
analytics market. Copperleaf H2O, our rapid start
solution for the UK water market, continues to gain traction, with
the addition of Portsmouth Water to our growing list of clients.
Building on the success of H2O, Copperleaf introduced a
new rapid start solution for electricity distribution companies, to
improve implementation times and reduce sales cycles for smaller
regional utilities," said Judi
Hess, CEO of Copperleaf.
"Q3 marked one of Copperleaf's busiest quarters for sales lead
generation to fuel pipeline growth. This elevated activity has been
driven by our investment in expanding our salesforce, more
in-person travel and events, as well as improved traction with our
partner ecosystem," commented Paul Sakrzewski, President of
Copperleaf.
"We're pleased to have made significant top-of-funnel progress
despite a weaker economic backdrop; however, lack of client
resources and a tight labour market have continued to delay some
client deployments and prospect sales cycles. These factors, in
combination with the on-going SaaS transition, are expected to
impact near-term perpetual revenue. Moving forward, we remain
focused on prudently managing our expenses, while accelerating our
path to profitability. With a deep sales pipeline, market leading
products, a strong balance sheet, and marquee reference clients, we
continue to be well-positioned to expand our leadership in the
emerging decision analytics market." added Mr.
Sakrzewski.
Third Quarter 2022 Financial Highlights
(All
Capitalized terms which are not defined in this press release have
the meanings ascribed to them in Management's Discussion and
Analysis for the three and nine months ended September 30, 2022; Comparison periods in each
case are the three months ended September
30, 2021, unless otherwise stated)
- Revenue of $18.1 million, an
increase of 7.5% over Q3 2021, driven by the increase in new
clients and expansion of existing clients.
- Annual Recurring Revenue1 as at September 30, 2022, of $42.3 million, a 27% increase from $33.2 million as at September 30, 2021.
- Subscription revenue of $10.0
million (55% of total revenue), an increase of 22% from the
prior year driven by our clients' continued transition from
perpetual licenses to SaaS. This transition, in combination with
deal timing, has resulted in a decrease in Perpetual and term-based
software license revenue over the comparative period.
- Gross profit of $13.3 million,
compared to $12.9 million in Q3 2021,
representing a Gross Margin of 73%.
- Adjusted EBITDA1 loss of $8.1
million, compared to $1.4
million in Q3 2021.
- Net loss of $7.5 million, or
$0.11 per share, compared to a net
loss of $3.3 million, or $0.20 per share, in Q3 2021.
- As at September 30, 2022, our Net
Revenue Retention Rate1 was 109%.
- As at September 30, 2022, Revenue
Backlog1 was $93.1
million, an 18% increase from $79.1
million as at September 30,
2021.
- Cash and cash equivalents of $147.1
million as at September 30,
2022, compared to $161.4
million as at December 31,
2021.
1 Please refer to "Non-IFRS Measures"
section of this press release
|
Key Developments
- Copperleaf's rapid start solution for the UK water market,
Copperleaf H2O, continued to deliver successfully in Q3,
with the addition of Portsmouth Water.
- In Q3, Copperleaf held two of three planned in-person regional
client community summits in London
and Vancouver. These were the
first in-person summits held by Copperleaf since May 2019, providing an opportunity to interact
with clients, partners and prospects and share the Company's new
products and roadmap. These summits provide invaluable business
development opportunities by enabling in-depth discussions with
clients and prospects to accelerate new sales opportunities and
deepen partner relationships.
- During Q3, Copperleaf commenced three new projects focused on
creating solutions to drive new environmental, social, and
governance (ESG) investments, to deliver greenhouse gas reduction
targets and other ESG related objectives. Copperleaf's ability to
help companies operationalize their ESG goals is resulting in
increased demand for solutions both in the Company's installed base
and in new industry segments.
- Copperleaf expanded to new geographies in Q3 with the signing
of three new pilot projects in France, Italy, and the Middle East, as a result of the Company's
recent go-to-market investments.
- Copperleaf's first rail client went into production in Q3 which
provides a beachhead in this new industry sector. Further new
sector expansion has been made this quarter with pilot projects in
both pharmaceuticals and mining.
- The Company released Copperleaf Suite version 22.3 which
includes, among many other features, new options for native
Geographic Information System support and strategic dashboards for
executive reporting. Copperleaf's advanced analytical software for
system level modelling went into production for the first time, and
we turbocharged our scenario analysis support delivering a
four-fold increase in performance. These new options will deliver
high value to clients and create incremental revenue streams.
- There was continued strong engagement with Copperleaf Labs
during Q3 where the Company collaborated on 63 separate client
engagements, supporting innovation within the Copperleaf
Community.
- In Q3 Copperleaf joined the UN Global Compact (UNCG) which
requires companies to communicate their progress annually.
Additionally, Copperleaf will be making climate-related financial
disclosures aligned with TCFD recommendations in the Company's 2022
annual report.
Q3 2022 Financial Results Conference Call Details
Judi Hess, Chief Executive
Officer, Chris Allen, Chief
Financial Officer, and Paul Sakrzewski, President, will host a
conference call followed by a question-and-answer session today,
November 10, 2022, at 5:00 PM ET.
Date:
November 10, 2022
Time:
5:00 PM ET
Dial-In
Number:
416-764-8659 or 1-888-664-6392
Webcast:
https://app.webinar.net/nYyw205Mxr3
Replay:
416-764-8677 or 1-888-390-0541 (Available until November 17, 2022
Replay Entry Code: 472685#
Key Performance Indicators
The Company monitors a number of key performance indicators
(KPIs) to evaluate performance. Some of the KPIs used by management
are recognized under IFRS, whereas others are non-IFRS measures and
are not recognized under IFRS. These non-IFRS measures are included
as additional information to complement the IFRS measures,
providing further understanding of our results of operations from
management's perspective. We believe that non-IFRS financial
measures are useful to investors and others in assessing our
performance; however, these measures should not be considered as a
substitute for reported IFRS measures nor should they be considered
in isolation. As these measures are not recognized measures under
IFRS, they do not have a standardized meaning prescribed by IFRS
and therefore may not be comparable to similar measures presented
by other companies. For a reconciliation of non-IFRS measures to
the most directly comparable measures calculated in accordance with
IFRS, see section "Non-IFRS Measures" below.
1Non-IFRS Measures
Annual Recurring Revenue ("ARR")
We define ARR as the annualized equivalent value of the
subscription and term-based software license revenue of all
existing contracts as at the date being measured, excluding
non-recurring SaaS and hosting fees. Our clients generally enter
into three-to-five-year contracts that are non-cancelable or
cancelable with penalty. Our calculation of Annual Recurring
Revenue assumes that clients will renew the contractual commitments
on a periodic basis as those commitments come up for renewal.
Subscription and term-based software license agreements are subject
to price increases upon renewal reflecting both inflationary
increases and the additional value provided by our solutions. In
addition to the expected increase in subscription and term-based
software license revenue from price increases over time, existing
clients may subscribe for additional products or services during
the term. We believe that this measure provides a fair real-time
measure of performance in a subscription-based environment.
Net Revenue Retention Rate
We believe that our Net Revenue Retention Rate is a key measure
to provide insight into the long-term value of our clients and our
ability to retain and expand revenue from our client base over
time. Our Net Revenue Retention Rate is calculated over a trailing
twelve-month period by considering the group of clients on our
platform as of the beginning of the period and dividing our Annual
Recurring Revenue attributable to this same group of clients at the
end of the period by the Annual Recurring Revenue at the beginning
of the period. By implication, this ratio excludes any Annual
Recurring Revenue from new clients acquired during the period but
does include incremental sales added to the cohort base of clients
during the period being measured. This measure provides insight
into client expansions, downgrades, and churn, and illustrates the
growth potential of our client base alone. Our success in
delivering exceptional value and extraordinary experiences to our
clients is fully realized when we can achieve a high Net Revenue
Retention Rate. However, this percentage can vary from period to
period due to the timing of large expansion contracts with our
existing clients. In addition, only the recurring component
of expansions with our perpetual license clients, such as on-going
support & maintenance, is recognized in this calculation.
Revenue Backlog
Revenue Backlog represents the total revenue expected to be
recognized in the future, related to performance obligations that
are unsatisfied or partially unsatisfied at period end. The
recurring nature of our revenue provides high visibility into
future performance, and upfront payments result in cash flow
generation in advance of revenue recognition. Subscription
contracts require annual upfront payments; however, some clients
pay multiple years upfront. Typically, approximately 50% of our
expected annual revenue is recognized from client contracts that
are in place at the beginning of the year; however, we expect this
percentage to increase going forward as our client base continues
to transition toward SaaS and our Q4 seasonality persists.
Agreements with new clients or agreements with existing clients
purchasing incremental product and services in a quarter may not
contribute significantly to revenue in the current quarter. For
example, for SaaS contracts and professional services, a new client
who enters into an agreement late in a quarter will typically have
limited contribution to the revenue recognized in that quarter.
Software licenses, by contrast, are often recognized as revenue
upon delivery of the software which typically occurs immediately
upon contracting, and thus rarely enters Revenue Backlog.
Adjusted EBITDA
Adjusted EBITDA is used by management as a supplemental measure
to review and assess operating performance and to provide a more
complete understanding of factors and trends affecting our
business. Management believes that Adjusted EBITDA is a useful
measure of operating performance and our ability to generate
cash-based earnings, as it provides a more relevant picture of
operating results by excluding the effects of financing and
investing activities, including removing the effects of interest
and other expenses such as non-cash items and non-recurring
expenses that are not reflective of our underlying business. In
addition to interest, the other non-cash or non-recurring items
adjusted for include depreciation and amortization, share-based
payments expense, gain on lease modification, foreign exchange loss
(gain), current income tax expense, and IPO transaction related
expenses. Our management also uses Adjusted EBITDA in order to
facilitate operating performance comparisons and decision making
from period to period and to prepare annual operating budgets and
forecasts. In addition, it is used to provide securities analysts,
investors, and other interested parties with supplemental measures
of our operating performance and thus highlight trends in our
business that may not otherwise be apparent when relying solely on
IFRS measures.
The following table reconciles Adjusted EBITDA to net loss for
the periods indicated:
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
|
2022
$
|
2021
$
|
Change
%
|
2022
$
|
2021
$
|
Change
%
|
Net
loss
|
(7,501,523)
|
(3,281,416)
|
(129 %)
|
(25,832,903)
|
(6,674,784)
|
(287 %)
|
Depreciation and
amortization
|
490,313
|
547,734
|
(10 %)
|
1,643,056
|
1,685,183
|
(2 %)
|
Share-based payments
expense
|
1,194,127
|
426,768
|
180 %
|
3,109,572
|
1,431,997
|
117 %
|
Finance
costs
|
238,666
|
186,874
|
28 %
|
774,132
|
600,042
|
29 %
|
Finance and other
income
|
(860,341)
|
(738)
|
NM
|
(1,562,560)
|
(8,748)
|
NM
|
Gain on lease
modification
|
-
|
-
|
0 %
|
-
|
(181,372)
|
100 %
|
Foreign exchange (gain)
loss
|
(1,434,152)
|
(349,639)
|
(310 %)
|
(959,858)
|
701,814
|
(237 %)
|
Current income tax
(recovery) expense
|
(194,947)
|
(92,762)
|
(110 %)
|
(60,639)
|
98,782
|
(161 %)
|
IPO transaction related
costs1
|
-
|
1,143,600
|
(100 %)
|
-
|
2,092,582
|
(100 %)
|
Adjusted
EBITDA
|
(8,067,857)
|
(1,419,579)
|
(468 %)
|
(22,889,200)
|
(254,504)
|
(8894 %)
|
NM – Not
meaningful
|
1 IPO
transaction-related costs include costs related to our IPO and
consist of external consulting and professional fees that are
non-recurring, would otherwise not have been incurred, and are not
reflective of our underlying business
|
Selected Financial Information
Consolidated Statements of Loss and Comprehensive Loss
(expressed in Canadian Dollars)
|
|
For the three months
ended
September 30,
|
For the nine months
ended
September 30,
|
|
|
2022
|
2021
|
2022
|
2021
|
|
|
$
|
$
|
$
|
$
|
Revenue
|
|
18,061,389
|
16,802,972
|
54,214,516
|
47,485,285
|
|
|
|
|
|
|
Cost of
revenue
|
|
4,786,536
|
3,934,755
|
14,024,717
|
9,861,210
|
|
|
|
|
|
|
Gross
profit
|
|
13,274,853
|
12,868,217
|
40,189,799
|
37,624,075
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
Sales and
marketing
|
|
9,640,173
|
6,384,224
|
27,666,396
|
16,125,910
|
Research and
development
|
|
6,797,429
|
5,268,994
|
20,822,027
|
14,534,271
|
General and
administrative
|
|
6,589,548
|
4,752,680
|
19,343,204
|
12,428,160
|
|
|
23,027,150
|
16,405,898
|
67,831,627
|
43,088,341
|
|
|
|
|
|
|
Loss from
operations
|
|
(9,752,297)
|
(3,537,681)
|
(27,641,828)
|
(5,464,266)
|
|
|
|
|
|
|
Other expense
(income)
|
|
|
|
|
|
Finance
costs
|
|
238,666
|
186,874
|
774,132
|
600,042
|
Finance and other
income
|
|
(860,341)
|
(738)
|
(1,562,560)
|
(8,748)
|
Gain on lease
modification
|
|
-
|
-
|
-
|
(181,372)
|
Foreign exchange (gain)
loss
|
|
(1,434,152)
|
(349,639)
|
(959,858)
|
701,814
|
|
|
(2,055,827)
|
(163,503)
|
(1,748,286)
|
1,111,736
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(7,696,470)
|
(3,374,178)
|
(25,893,542)
|
(6,576,002)
|
|
|
|
|
|
|
Income
taxes
|
|
|
|
|
|
Current income tax
(recovery) expense
|
|
(194,947)
|
(92,762)
|
(60,639)
|
98,782
|
|
|
|
|
|
|
Net loss and
comprehensive loss for the period
|
|
(7,501,523)
|
(3,281,416)
|
(25,832,903)
|
(6,674,784)
|
|
|
|
|
|
|
Net loss per
share
|
|
|
|
|
|
Basic and
diluted
|
|
(0.11)
|
(0.20)
|
(0.37)
|
(0.41)
|
|
|
|
|
|
|
Weighted average
number of
common shares outstanding,
basic and diluted
|
|
69,456,304
|
16,781,900
|
69,316,506
|
16,428,684
|
Consolidated Statements of Financial Position
(expressed in Canadian Dollars)
|
|
September 30,
2022
|
December 31,
2021
|
|
|
$
|
$
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
|
147,139,916
|
161,432,039
|
Accounts
receivable
|
|
15,515,721
|
32,251,577
|
Investment tax credits
receivable
|
|
-
|
1,407,539
|
Contract
costs
|
|
754,481
|
719,263
|
Contract
assets
|
|
5,890,645
|
2,199,394
|
Prepaid
expenses
|
|
2,527,781
|
2,250,216
|
|
|
171,828,544
|
200,260,028
|
Non-current
assets
|
|
|
|
Deposit
|
|
47,085
|
81,455
|
Prepaid
expenses
|
|
725,308
|
-
|
Contract
costs
|
|
1,339,651
|
1,261,877
|
Property and
equipment
|
|
2,133,862
|
2,009,533
|
Intangible
assets
|
|
1,408,811
|
1,105,736
|
Right-of-use
assets
|
|
885,182
|
1,323,751
|
|
|
6,539,899
|
5,782,352
|
TOTAL
ASSETS
|
|
178,368,443
|
206,042,380
|
|
|
|
|
LIABILITIES
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
|
14,952,087
|
13,182,045
|
Contract
liabilities
|
|
16,642,500
|
20,849,117
|
Lease
liabilities
|
|
1,064,870
|
1,031,531
|
|
|
32,659,457
|
35,062,693
|
|
|
|
|
Non-current
liabilities
|
|
|
|
Contract
liabilities
|
|
11,551,218
|
14,727,655
|
Lease
liabilities
|
|
492,118
|
1,234,024
|
|
|
12,043,336
|
15,961,679
|
TOTAL
LIABILITIES
|
|
44,702,793
|
51,024,372
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
Share
capital
|
|
183,190,109
|
181,279,367
|
Share-based payments
reserve
|
|
7,482,321
|
4,912,518
|
Deficit
|
|
(57,006,780)
|
(31,173,877)
|
TOTAL SHAREHOLDERS'
EQUITY
|
|
133,665,650
|
155,018,008
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
178,368,443
|
206,042,380
|
Disaggregation of
revenue
|
|
|
|
|
|
For the three months
ended
|
For the nine months
ended
|
|
September
30,
|
September
30,
|
|
2022
|
2021
|
2022
|
2021
|
|
$
|
$
|
$
|
$
|
Subscription
(1)
|
10,015,948
|
8,211,319
|
28,607,670
|
22,853,746
|
Professional services
and custom
software contracts (2)
|
7,639,545
|
7,924,758
|
20,758,193
|
18,727,731
|
Perpetual and
term-based software
licenses (3)
|
405,896
|
666,895
|
4,848,653
|
5,903,808
|
|
18,061,389
|
16,802,972
|
54,214,516
|
47,485,285
|
(1) Subscriptions
represent revenue from software as a service ("SaaS"), support and
maintenance services, and hosting.
|
(2) Professional
services and custom software contracts represent revenue earned
substantially from professional services.
|
(3) Perpetual and
term-based software licenses represent software licenses that are
client hosted or with the option for the client to host.
|
Forward-Looking Statements
This news release contains "forward-looking information" and
"forward-looking statements" (collectively, "forward-looking
information") within the meaning of applicable securities laws in
Canada.
Forward-looking information may relate to our future business,
financial outlook, and anticipated events or results, and may
include information regarding our financial position, business
strategy, growth strategies, addressable markets, budgets,
operations, financial results, taxes, dividend policy, plans and
objectives. Particularly, information regarding our expectations of
future results, performance, achievements, prospects, or
opportunities, or the markets in which we operate, is
forward-looking information. In some cases, forward-looking
information can be identified by the use of forward-looking
terminology such as "plans", "targets", "expects" or "does not
expect", "is expected", "an opportunity exists", "budget",
"scheduled", "estimates", "outlook", "financial outlook",
"forecasts", "projection", "prospects", "strategy", "intends",
"anticipates", "does not anticipate", "believes", or variations of
such words and phrases, or statements that certain actions, events,
or results "may", "could", "would", "might", "will", "will be
taken", "occur" or "be achieved". In addition, any statements that
refer to expectations, intentions, projections, or other
characterizations of future events or circumstances contain
forward-looking information. Statements containing forward-looking
information are not historical facts but instead represent
management's expectations, estimates and projections regarding
possible future events or circumstances.
Forward-looking information may include, among other things: (i)
the Company's expectations regarding its financial performance,
including among others, revenue, gross profit, expenses, Adjusted
EBITDA; (ii) the Company's expectations regarding industry trends,
addressable market growth, overall market growth rates, and growth
rates and growth strategies; (iii) our business plans and
strategies; (iv) the continued success of our commercial model; (v)
our expectations regarding growth in our customer base, our ability
to retain clients and increase margin per customer; (vi)
acceleration in the growth and adoption of new technologies; (vii)
relationships with our technology partners; (viii) our ability to
continue to attract and retain talent; (ix) our competitive
position in our industry; and (xi) and the long-term impact of
COVID-19 on our business, financial position, results of operations
and/or cash flows.
Forward-looking information is necessarily based on a number of
opinions, estimates and assumptions that we considered appropriate
and reasonable as at the date such statements are made, and are
subject to known and unknown risks, uncertainties, assumptions and
other factors that may cause the actual results, level of activity,
performance or achievements to be materially different from those
expressed or implied by such forward-looking information, including
but not limited to the risk factors described in our 2021 Annual
Information Form ("AIF") under "Risk Factors". A copy of the 2021
AIF can be accessed under our profile on the System for Electronic
Document Analysis and Retrieval ("SEDAR") at www.sedar.com.
There can be no assurance that such forward-looking information
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such information.
Accordingly, readers should not place undue reliance on
forward-looking information, which speaks only as at the date
made.
In addition, forward-looking financial information with respect
to potential outlook and future financial results contained in this
press release are based on assumptions about future events
including economic conditions, the assumptions noted above and
proposed courses of action, based on management's reasonable
assessment of the relevant information available as at the date of
such forward-looking information. Readers are cautioned that any
such forward-looking financial information should not be used for
purposes other than for which it is disclosed.
About Copperleaf:
Copperleaf provides enterprise decision analytics software
solutions to companies managing critical infrastructure. We
leverage operational and financial data to empower our clients to
make investment decisions that deliver the highest business value.
What sets us apart is our commitment to providing extraordinary
experiences, shaped by people who care deeply, products that
deliver exceptional value, and partnerships that stand the test of
time. Copperleaf is a patron of The Institute of Asset Management
and actively participates in shaping the future of asset management
standards, including ISO 55000. Headquartered in Vancouver, Canada, our solutions are
distributed and supported by regional staff and partners worldwide.
Together, we are transforming how the world sees value.
For more details, visit https://www.copperleaf.com/
Source: Copperleaf Technologies
Inc. CPLF-IR
SOURCE CopperLeaf Technologies Inc.