Copperleaf Announces First Quarter 2022 Results

• Annual Recurring Revenue grows 26% YoY to $37.8 million
• Q1 revenue increases 11% YoY to $15.6 million

Vancouver, BC, May 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 months ended March 31, 2022. All amounts are expressed in Canadian dollars unless otherwise stated.

"Our first quarter results demonstrated continued growth with an 11% increase in revenue over Q1 2021 and reflects the period-to-period variability in our perpetual license revenue that is common to our business. Our subscription revenue delivered 34% YoY growth while we saw a decrease in perpetual licenses YoY due to the deals that were accelerated into Q4 2021 and the general transition towards SaaS.  We delivered 26% YoY growth in Annual Recurring Revenue, 14% YoY growth in our Revenue Backlog, and a 108% Net Revenue Retention Rate," said Judi Hess, CEO of Copperleaf. "We are encouraged to see momentum building with our partners and expect growth to accelerate in the second half of the year."

Ms. Hess continued, "Beginning in the fourth quarter of 2021 and continuing into the first quarter of 2022, Copperleaf has invested in attracting top sales talent and conducting sales enablement activities to address the growing demand for our solutions. This will allow us to drive new client acquisitions while servicing existing clients, and fully capitalize on the sustained growth tailwinds and the large, untapped opportunity we see in the investment planning and decision analytics market."

First Quarter 2022 Financial Highlights
(All Capitalized terms which are not defined in this press release have the meaning ascribed to them in Management's Discussion and Analysis for the three months ended March 31, 2022; Comparison periods in each case are the three months ended March 31, 2021, unless otherwise stated)

• Revenue of $15.6 million, an increase of 11% over Q1 2021, driven by the increase in new clients and expansion of existing clients.
• Annual Recurring Revenue¹ as at March 31, 2022, of $38.0 million, a 26% increase from $30.1 million as of March 31, 2021.
• Subscription revenue of $9.1 million (58% of total revenue), an increase of 34% from the prior year.
• Gross profit of $11.2 million, compared to $11.0 million in Q1 2021, representing a Gross Margin of 72%.
• Adjusted EBITDA¹ loss of $9.0 million, compared to a loss of $0.1 million in Q1 2021.
• Net loss of $10.9 million, or $0.16 per share, compared to a net loss of $1.8 million, or $0.11 per share, in Q1 2021.
• As of March 31, 2022, our Net Revenue Retention Rate¹ was 108%.
• As of March 31, 2022, Revenue Backlog¹ grew 14% to $96.0 million, compared to $84.5 million as of March 31, 2021.
• Cash and cash equivalents of $162.9 million as at March 31, 2022, compared to $161.4 million at December 31, 2021.

¹ Please refer to "Non-IFRS Measures" section of this press release

 Key Developments

• Our industry-specific solution for the UK water market, Copperleaf H2O, continued to deliver successfully in Q1 2022 with a win at South Staffs Water. Last year water became a core sector at Copperleaf.
• We continue to successfully expand into new verticals with an Oil & Gas win in Q1 in Japan made by our direct sales team.
• Our Alliance Ecosystem continues to gain traction as partners are building their Copperleaf practice areas and engaging in active partner pursuits.
• Copperleaf was recognized alongside our client, Anglian Water, for an Innovation Excellence Award in the category of Enterprise Carbon Management. Anglian Water is the first UK water company to set targets for reducing capital carbon to achieve net zero by 2030. To support these ambitious targets, Anglian Water uses Copperleaf's Decision Analytics Solution to model capital and operational carbon associated with an asset's full lifecycle. The Copperleaf solution provides visibility of capital baselines in proposed investments from which performance against targets is measured.
• Our overall website traffic increased 31% over same quarter last year.
• We had strong engagement with our Copperleaf Community through Copperleaf Labs where we collaborated with our clients on nine separate initiatives spanning machine learning applications, GIS, dashboards, and investment entry.
• During Q1 2022, we released version 22.1 of our product suite which included more than a dozen new features, including a new application for creating candidate projects from predictive analytics to inform strategy in Copperleaf Portfolio™; automation of investment capture and cost estimation; new security features; and the first edition of our dashboard library—creating more value for our clients throughout the entire planning process.

Q1 2022 Financial Results Conference Call Details

Judi Hess, Chief Executive Officer, and Chris Allen, Chief Financial Officer, will host a conference call followed by a question-and-answer session today, May 10, 2022, at 5:00 PM ET.

Date:	May 10, 2022
Time:	5:00 PM ET
Dial-In Number:	416-764-8659 or 1-888-664-6392
Webcast:	https://bit.ly/3y9JUvi
Replay:	416-764-8677 or 1-888-390-0541 (Available until May 17, 2022)
Replay Entry Code:	370582#

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 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 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 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. Perpetual 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:

	For three months ended March 31,
	2022	2021	$ Change	% Change
Net loss	$(10,905,702)	$(1,775,309)	$(9,130,393)	(514%)
Depreciation and amortization	$435,503	$567,981	$(132,478)	(23%)
Share-based payments expense	$739,434	$534,661	$204,773	38%
Finance costs	$273,729	$213,459	$60,270	28%
Finance income	$(270,312)	$(2,786)	$(267,526)	(9,603%)
Gain on lease modification	-	$(181,372)	$181,372	100%
Foreign exchange loss (gain)	$737,197	$423,273	$313,924	74%
Current income tax expense	$10,965	$79,062	$(68,097)	(86%)
Adjusted EBITDA	$(8,979,186)	$(141,031)	$(8,838,155)	(6,267%)

Selected Financial Information
Consolidated Statements of Loss and Comprehensive Loss (expressed in Canadian Dollars) (unaudited)
		For the three months ended March 31,
		2022		2021
		$		$
Revenue		15,569,383		13,981,695
Cost of revenue		4,391,707		2,941,024
Gross profit		11,177,676		11,040,671
Operating expenses
Sales and marketing		8,565,687		4,594,300
Research and development		6,649,075		4,438,160
General and administrative		6,117,037		3,251,884
		21,331,799		12,284,344
Loss from operations		(10,154,123)		(1,243,673)
Other expenses (income)
Finance costs		273,729		213,459
Finance income		(270,312)		(2,786)
Gain on lease modification		-		(181,372)
Foreign exchange loss		737,197		423,273
		740,614		452,574
Loss before income taxes		(10,894,737)		(1,696,247)
Income taxes
Current income tax expense		10,965		79,062
Deferred income tax expense		-		-
		10,965		79,062
Net loss and comprehensive loss for the period		(10,905,702)		(1,775,309)
Net loss per share
Basic		(0.16)		(0.11)
Diluted		(0.16)		(0.11)
Weighted average number of common shares outstanding,      basic		68,425,389		16,014,520
Weighted average number of common shares outstanding,      diluted		68,425,389		16,014,520

Consolidated Statements of Financial Position (expressed in Canadian Dollars) (unaudited)
		March 31, 2022 $	December 31, 2021 $
Assets
Current assets
Cash and cash equivalents		162,897,783	161,432,039
Accounts receivable		13,064,349	32,251,577
Investment tax credits receivable		1,407,539	1,407,539
Contract costs		748,621	719,263
Contract assets		4,618,154	2,199,394
Prepaid expenses		3,080,274	2,250,216
		185,816,720	200,260,028
Non-current assets
Deposit		65,307	81,455
Prepaid expenses		201,777	-
Contract costs		1,312,329	1,261,877
Property and equipment		2,018,464	2,009,533
Intangible assets		1,739,245	1,105,736
Right-of-use assets		1,175,232	1,323,751
		6,512,354	5,782,352
Total assets		192,329,074	206,042,380
Liabilities and shareholders' equity
Current liabilities
Accounts payable and accrued liabilities		12,464,774	13,182,045
Contract liabilities		18,927,256	20,849,117
Lease liabilities		1,055,690	1,031,531
		32,447,720	35,062,693
Non-current liabilities
Contract liabilities		14,002,263	14,727,655
Lease liabilities		988,765	1,234,024
		14,991,028	15,961,679
Total liabilities		47,438,748	51,024,372
Equity
Share capital		181,335,093	181,279,367
Share-based payments reserve		5,634,812	4,912,518
Deficit		(42,079,579)	(31,173,877)
Total equity		144,890,326	155,018,008
Total liabilities and equity		192,329,074	206,042,380

Disaggregation of revenue
		Three months ended March 31,			Change
		2022	2021		$	%
Subscription		$9,082,110	$6,770,431		$  2,311,679	34%
Professional services and other		$5,998,066	$5,463,788		$  534,278	10%
Perpetual software licenses		$489,207	$1,747,476		$  (1,258,269)	(72%)
		$15,569,383	$13,981,695		$  1,587,688	11%

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 customers 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. CPLF-IR

James Bowen, CFA, 416-519-9442, [email protected]