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Copperleaf Announces First Quarter 2023 Results, Q1 Revenue Up 28% YoY to $20.0 Million
Friday, May 12, 2023Company Profile | Follow Company
Vancouver, BC, May 11, 2023--(T-Net)--Copperleaf Technologies Inc. (TSX: CPLF), a provider of enterprise decision analytics software solutions, today announced financial results for the three months ended March 31, 2023.
All amounts are expressed in Canadian dollars unless otherwise stated.
Paul Sakrzewski, President, Copperleaf
"Copperleaf's first quarter demonstrated continued momentum with material year-over-year growth spread across our geographies and sectors. During the quarter, we welcomed Scottish Water as our ninth UK-based water client and signed our first Australian water client, underscoring the global applicability of our solution," said Paul Sakrzewski, CEO of Copperleaf.
"Water utilities in particular are facing unprecedented challenges, making it increasingly challenging to meet service level targets and minimize disruptions. Copperleaf provides water companies with proven tools to address these complex challenges, providing a comprehensive understanding of asset risk."
"Copperleaf's strategic go-to-market investments continue to pay dividends, resulting in new industry sales, pipeline growth, and accelerated lead generation," continued Mr. Sakrzewski.
"During the first quarter we successfully expanded into the ports industry, as well as into upstream Oil & Gas. For the remainder of 2023, we will remain focused on executing our go-to-market strategy, maintaining a prudent approach to managing our expenses as we navigate through the current economic environment. We anticipate that our growth for the remainder of the year will be driven by the maturation of our newly expanded salesforce and increasing partner traction, which will drive bookings and ARR growth in the second half of 2023. With a deep sales pipeline, a strong balance sheet, a growing client base, and market leading solution, we are poised to extend our leadership position and drive future growth."
First Quarter 2023 Financial Highlights
(All Capitalized terms used but not defined in this press release have the meanings ascribed to them in Management's Discussion and Analysis for the three months ended March 31, 2023; Comparison period is the first quarter ended March 31, 2022, unless otherwise stated)
1 Please refer to "Non-IFRS Measures" section of this press release |
Key Developments
Selected Financial Information
Consolidated Statements of Loss and Comprehensive Loss
(expressed in thousands of Canadian dollars, except for share and per share amounts)
For the three months ended March 31, |
|||
2023 |
2022 |
||
$ |
$ |
||
Revenue |
19,966 |
15,569 |
|
Cost of revenue |
6,308 |
4,392 |
|
Gross profit |
13,658 |
11,177 |
|
Operating expenses |
|||
Sales and marketing |
10,399 |
8,565 |
|
Research and development |
9,663 |
6,649 |
|
General and administrative |
6,444 |
6,117 |
|
26,506 |
21,331 |
||
Loss from operations |
(12,848) |
(10,154) |
|
Other expenses (income) |
|||
Finance costs |
289 |
274 |
|
Finance and other income |
(1,357) |
(270) |
|
Foreign exchange (gain) loss |
(45) |
737 |
|
(1,113) |
741 |
||
Loss before income taxes |
(11,735) |
(10,895) |
|
Income taxes |
|||
Current income tax expense |
55 |
11 |
|
Net loss and comprehensive loss for the period |
(11,790) |
(10,906) |
|
Net loss per share |
|||
Basic and diluted |
(0.17) |
(0.16) |
|
Weighted average number of common shares outstanding, |
70,429,455 |
68,425,389 |
Consolidated Statements of Financial Position
(expressed in thousands of Canadian Dollars)
March 31, 2023 |
December 31, |
||
$ |
$ |
||
ASSETS |
|||
Current assets |
|||
Cash and cash equivalents |
145,884 |
149,458 |
|
Accounts receivable |
17,954 |
21,232 |
|
Contract costs |
919 |
852 |
|
Contract assets |
3,974 |
4,337 |
|
Prepaid expenses |
3,851 |
3,050 |
|
172,582 |
178,929 |
||
Non-current assets |
|||
Deposit and prepaid expenses |
594 |
702 |
|
Contract costs |
1,515 |
1,566 |
|
Contract assets |
692 |
458 |
|
Property and equipment |
1,684 |
1,901 |
|
Intangible assets |
1,309 |
1,407 |
|
Right-of-use assets |
581 |
730 |
|
6,375 |
6,764 |
||
TOTAL ASSETS |
178,957 |
185,693 |
|
LIABILITIES |
|||
Current liabilities |
|||
Accounts payable and accrued liabilities |
13,505 |
12,232 |
|
Contract liabilities |
30,362 |
28,098 |
|
Lease liabilities |
1,042 |
1,039 |
|
44,909 |
41,369 |
||
Non-current liabilities |
|||
Contract liabilities |
10,739 |
11,038 |
|
Lease liabilities |
- |
259 |
|
10,739 |
11,297 |
||
TOTAL LIABILITIES |
55,648 |
52,666 |
|
SHAREHOLDERS' EQUITY |
|||
Share capital |
184,787 |
183,778 |
|
Share-based payments reserve |
9,688 |
8,625 |
|
Deficit |
(71,166) |
(59,376) |
|
TOTAL SHAREHOLDERS' EQUITY |
123,309 |
133,027 |
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
178,957 |
185,693 |
Disaggregation of revenue
(expressed in thousands of Canadian Dollars, except percentages)
Three months ended March 31, |
|||
2023 |
2022 |
Change |
|
Subscription 1 |
11,276 |
9,082 |
24 % |
Professional services and custom software contracts 2 |
6,933 |
5,998 |
16 % |
Perpetual and term-based software licenses 3 |
1,757 |
489 |
259 % |
19,966 |
15,569 |
28 % |
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. |
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.
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, foreign exchange loss (gain), current income tax expense, and CEO transition 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 tables reconciles Adjusted EBITDA to net loss for the periods indicated:
Three months ended March 31, |
|||
2023 |
2022 |
Change |
|
Net loss |
(11,790) |
(10,906) |
(8 %) |
Depreciation and amortization |
475 |
435 |
9 % |
Share-based payments expense 1 |
1,633 |
739 |
121 % |
Finance costs |
289 |
274 |
5 % |
Finance and other income |
(1,357) |
(270) |
(403 %) |
Foreign exchange (gain) loss |
(45) |
737 |
(106 %) |
Current income tax (recovery) expense |
55 |
11 |
400 % |
CEO transition expenses 1 |
695 |
- |
- |
Adjusted EBITDA |
(10,045) |
(8,980) |
(12 %) |
1 Expenses incurred in the transition to our new CEO in 2023, which are non-recurring. CEO transition costs include share-based payments expense of $169 due to the modification of certain stock options. |
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. [ MORE ] |
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