Today's News

• 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, November 16, 2022--(T-Net)--Copperleaf Technologies Inc. (TSX: CPLF ), 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.

Judi Hess, CEO, Copperleaf

"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.

Paul Sakrzewski, President, 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.

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.

Selected Financial Information

Consolidated Statements of Loss and Comprehensive Loss
(expressed in Canadian Dollars)

Consolidated Statements of Financial Position
(expressed in Canadian Dollars)

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/

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.

1 Non-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: