Copperleaf Announces First Quarter 2024 Results

• Annual Recurring Revenue increases 32% YoY to $64.6 million
• Q1 revenue increases 29% YoY to $25.8 million, subscription revenue reaches $14.9 million, a YoY 32% increase
• Record backlog of $145.5 million, an increase of 32% YoY

VANCOUVER, BC, May 9, 2024 /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, 2024. All amounts are expressed in Canadian dollars unless otherwise stated.

Paul Sakrzewski, CEO of Copperleaf commented, "During the first quarter, Copperleaf delivered material growth across all of our key financial metrics. This was highlighted by a 32% YoY increase in Annual Recurring Revenue, and a record backlog, demonstrating a strengthening market understanding of the outstanding value we bring to our clients. Overall, this increasing market understanding, the sustained fundamental tailwinds and improved execution from our focused go-to-market strategies are driving expansion within our core sectors, and momentum in new sectors."  

"Throughout the quarter, we added new clients in core sectors and built upon established beachheads in new sectors in line with our strategy. In addition to new client acquisitions, our Client Success Management team showed material success in getting existing clients excited about some material expansions, resulting in growth in our Net Revenue Retention to 113%," continued Mr. Sakrzewski.

"Our strong performance in Q1 underscores the effectiveness of our refreshed go-to-market model and increasing partner engagement. We anticipate continued robust growth in ARR and pipeline development throughout 2024 with our traditional Q4 weighting. These factors, combined with accelerating revenue growth and disciplined approach to managing costs, position us for significant progress back towards profitability," Mr. Sakrzewski concluded.

First Quarter 2024 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, 2024; Comparison period is to the three months ended March 31, 2023, unless otherwise stated)

• Record revenue of $25.8 million, an increase of 29% compared to Q1 2023, driven by an increase in new clients and the expansion of existing clients.
• Subscription revenue of $14.9 million, an increase of $3.6 million, or 32%, over Q1 2023, followed by a 27% increase in professional services revenue to $8.8 million, and a 20% increase in perpetual revenue year over year to $2.1 million.
• Annual Recurring Revenue¹ as at March 31, 2024 of $64.6 million, a 32% increase from $49.1 million as at March 31, 2023.
• As of March 31, 2024, the Company's Net Revenue Retention Rate¹ was 113% compared to 111% as of March 31, 2023.
• Gross profit of $18.9 million representing a gross margin of 73%, a 38% increase from $13.7 million and a gross margin of 68% in Q1 2023. Gross margin increased primarily due to an increase in subscription, professional services and perpetual license revenue partially offset by an increase in personnel costs, subcontractor costs, and product and support expenses related to our growing client base.
• Adjusted EBITDA¹ loss of $3.3 million, compared to Adjusted EBITDA¹ loss of $10.0 million in Q1 2023.
• Net loss of $2.6 million, or a loss of $0.04 per basic and diluted share, compared to a net loss of $11.8 million, or a loss of $0.17 per basic and diluted share, in Q1 2023. The decrease in net loss was primarily due to an increase in revenue and a decrease in headcount when compared to Q1 2023.
• As of March 31, 2024, Copperleaf's Revenue Backlog¹ grew 32% to $145.5 million compared to $110.5 million, as of March 31, 2023.
• Strong balance sheet with cash and cash equivalents of $33.5 million, short-term investments of $77.5 million, and long-term investments of $18.5 million as at March 31, 2024.

Key Developments

• During the first quarter, the Company continued to expand in its core sectors and made progress on its new-sector strategy, building upon the established beachheads in Transportation, Upstream Oil & Gas, and the globalization of Copperleaf's Water sector.
• In addition to new client acquisitions, Copperleaf's Client Success Management team continued to gather momentum with material expansions with existing clients.
• The Partner and Alliance Ecosystem continued to gain traction as the Company's partners played significant roles in wins across all regions.
• Q1 saw the continued roll out of our successful and popular "Copperleaf AIPM Forum" series in Italy, the Netherlands, and Japan with strong participation from both existing clients and prospects.
• During Q1, Copperleaf released version 24.1 of its product suite with numerous new features, including: Self-Serve Analysis functionality, which leverages cloud-native services to enable flexible enterprise reporting; generative AI Online Help functionality; and enhancements to the Company's geospatial (GIS) offering allowing map-based visualization of portfolio hierarchies.
• In Q1, Copperleaf was granted a Canadian patent for filtering, displaying and comparing different investment scenarios. This patent highlights Copperleaf's on-going dedication to R&D - pioneering solutions that facilitate better investment decision making.

__________

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

Q1 2024 Financial Results Conference Call Details

Paul Sakrzewski, Chief Executive Officer and Chris Allen, Chief Financial Officer and Chief Operating Officer will host the conference call, followed by a question-and-answer session today, May 9, 2024, at 5:00 PM ET.

Date: May 9, 2024
Time: 5:00pm ET
Dial-In Number: 416-764-8659 or 1-888-664-6392
Webcast: https://app.webinar.net/3MdDxYdAw1N
Replay: 416-764-8677 or 1-888-390-0541 (Available until May 16, 2024)
Replay Entry Code: 072916#
RapidConnect URL: https://emportal.ink/4b5Ldfi

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 ARR 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. ARR provides us with visibility for consistent and predictable growth to our cash flows. Our steady year over year revenue growth coupled with increasing ARR indicates the continued strength in the expansion of our business and will continue to be our target on a go-forward basis.

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 ARR attributable to this same group of clients at the end of the period by the ARR at the beginning of the period. By implication, this ratio excludes any ARR 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. Roughly 50% to 75% of our expected annual revenue is recognized from client contracts that are in place at the beginning of the year; however, this percentage will vary year over year and we expect this percentage to generally increase going forward as our new clients increasingly adopt 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 (recovery), 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 table reconciles Adjusted EBITDA to net loss for the periods indicated:

	Three months ended March 31,
	(in thousands, except percentages)
	2024 $	2023 $	Change %
Net loss	(2,628)	(11,790)	78 %
Depreciation and amortization	491	475	3 %
Share-based payments expense ^1	854	1,633	(48 %)
Finance costs	270	289	(7 %)
Finance and other income	(1,447)	(1,357)	(7 %)
Foreign exchange gain	(961)	(45)	NM
Current income tax expense	89	55	62 %
CEO transition expenses ^1	-	695	(100 %)
Adjusted EBITDA	(3,332)	(10,045)	67 %

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.

NM – Not meaningful

Selected Financial Information 

Consolidated Statements of Loss and Comprehensive Loss
(expressed in thousands of Canadian dollars, except for share and per share amounts)

	Three months ended March 31,
	2024	2023
	$	$
Revenue	25,830	19,966
Cost of revenue	6,940	6,308
Gross profit	18,890	13,658
Operating expenses
Sales and marketing	9,728	10,399
Research and development	7,574	9,663
General and administrative	6,265	6,444
	23,567	26,506
Loss from operations	(4,677)	(12,848)
Other expenses (income)
Finance costs	270	289
Finance and other income	(1,447)	(1,357)
Foreign exchange gain	(961)	(45)
	(2,138)	(1,113)
Loss before income taxes	(2,539)	(11,735)
Income taxes
Current income tax expense	89	55
Net loss and comprehensive loss for the period	(2,628)	(11,790)
		-
Net loss per share
Basic and diluted	(0.04)	(0.17)
Weighted average number of common shares outstanding,    Basic and diluted	73,963,081	70,429,455

Consolidated Statements of Financial Position
(expressed in thousands of Canadian Dollars)

	March 31, 2024	December 31, 2023
	$	$
ASSETS
Current assets
Cash and cash equivalents	33,539	34,113
Short-term investments	77,509	82,258
Accounts receivable	23,361	27,344
Contract costs	1,557	1,336
Contract assets	4,526	4,179
Prepaid expenses	4,189	3,650
	144,681	152,880
Non-current assets
Long-term investments	18,532	10,000
Deposit and prepaid expenses	334	434
Contract costs	2,182	1,844
Property and equipment	883	1,111
Intangible assets	2,514	1,158
Right-of-use assets	1,845	2,012
Other receivables	496	306
	26,786	16,865
TOTAL ASSETS	171,467	169,745
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	15,990	16,738
Contract liabilities	38,573	36,879
Lease liabilities	197	354
	54,760	53,971
Non-current liabilities
Contract liabilities	10,357	8,622
Lease liabilities	1,844	1,929
Other liabilities	460	-
	12,661	10,551
TOTAL LIABILITIES	67,421	64,522
SHAREHOLDERS' EQUITY
Share capital	190,302	189,474
Share-based payments reserve	10,899	10,276
Deficit	(97,155)	(94,527)
TOTAL SHAREHOLDERS' EQUITY	104,046	105,223
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	171,467	169,745

Disaggregation of Revenue
(expressed in thousands of Canadian Dollars)

	Three months ended March 31,
	2024 $	2023 $	Change %
	(in thousands, except percentages)
Subscription^1	14,926	11,276	32 %
Professional services	8,787	6,933	27 %
Perpetual and term-based software licenses ^2	2,117	1,757	20 %
	25,830	19,966	29 %

¹ Subscriptions represent revenue from SaaS, support and maintenance services, and hosting. 

² Perpetual and term-based software licenses represent software licenses that are client controlled.

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", "expect" or "does not expect", "is expected", "is poised to", "an opportunity exists", "budget", "scheduled", "estimates", "outlook", "future", "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" occur or be taken ,   or "will continue to" or "are poised to" 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 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 2023 Annual Information Form ("AIF") under "Risk Factors". A copy of the 2023 AIF can be accessed under our profile on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedarplus.ca. 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.

About Copperleaf:

Copperleaf (TSX:CPLF) 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 industry-leading products and our commitment to providing extraordinary experiences, shaped by people who care deeply and partnerships that stand the test of time. Copperleaf is actively involved in shaping and implementing global industry standards and sustainability principles through our participation in the United Nations Global Compact, the Institute of Asset Management, and other organizations. 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.

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