Copperleaf Announces Second Quarter 2022 Results

• Annual Recurring Revenue grows 26% YoY to $40.6 million
• Q2 revenue increases 23% YoY to $20.6 million
• Q2 Subscription revenue increases 21% YoY to $9.5 million

VANCOUVER, BC, Aug. 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 six months ended June 30, 2022. All amounts are expressed in Canadian dollars unless otherwise stated.

"Strong tailwinds continued to drive growth in the decision analytics market in the second quarter of 2022. During the quarter, we successfully added new marquee clients and our existing clients expanded the use of our platform. Against this backdrop, Annual Recurring Revenue increased 26% Year over Year (YoY) and subscription revenue grew 21% YoY to $9.5 million, demonstrating the strength of Copperleaf's portfolio. Copperleaf continues to deliver innovation to our clients, with a new product update adding over a dozen new features, including: native multi-currency support, new workflow visualization tools, and process automation for reviews and approvals," said Judi Hess, CEO of Copperleaf.  

"The demand for our solutions remains robust, as critical infrastructure owners continue to make near-term and multi-decade investment decisions, but we are cognizant of the heightened uncertainty decision-makers must deal with at times like these," Ms. Hess continued, "Against a backdrop of broader macro-economic uncertainty, Copperleaf's solutions can help organizations navigate the future with agility. While we have seen delays in some of our deals due to a lack of IT resources at our client organizations as part of the tight labor market and the lingering effects of the pandemic, we welcome the recent return to in-person meetings and conferences which is helping accelerate our sales and business development activities. Both current and prospective clients continue to adopt and expand their use of Copperleaf's industry-leading solutions, which deliver a high return on investment, optimize execution, and enhance risk management. We continue to selectively hire to drive our growth but will be prudently allocating capital considering the current economic environment. The progress we have made hiring sales and enablement professionals over the past two quarters, and our increasing partner traction, will help us achieve our long-term growth objectives. With a deep pipeline, a strong balance sheet and marquee reference clients, we continue to expand our leadership position in the emerging decision analytics market."

Second 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 and six months ended June 30, 2022; Comparison periods in each case are the three months ended June 30, 2021, unless otherwise stated)}

• Revenue of $20.6 million, an increase of 23% over Q2 2021, driven by the increase in new clients and expansion of existing clients.
• Annual Recurring Revenue¹ as at June 30, 2022, of $40.6 million, a 26% increase from $32.3 million as of June 30, 2021.
• Subscription revenue of $9.5 million (46% of total revenue), an increase of 21% from the prior year.
• Gross profit of $15.7 million, compared to $13.7 million in Q2 2021, representing a Gross Margin of 76%.
• Adjusted EBITDA¹ loss of $5.8 million, compared to $1.3 million in Q2 2021.
• Net loss of $7.4 million, or $0.11 per share, compared to a net loss of $1.6 million, or $0.10 per share, in Q2 2021.
• As of June 30, 2022, our Net Revenue Retention Rate¹ was 107%.
• As of June 30, 2022, Revenue Backlog¹ grew 9% to $93.0 million, compared to $85.5 million as of June 30, 2021. 
• Cash and cash equivalents of $153.2 million as at June 30, 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 Q2 2022, with a significant new win at a water utility.
• In Q2 Copperleaf added a global energy and utility conglomerate headquartered in the United States into our Copperleaf Community as a direct result of our partner strategy with Accenture. This win adds multiple companies to the Copperleaf Community in the first phase of implementation.
• A large American utility gained Indiana Public Utility Commission approval for a $2 billion grid modernization investment plan, using Copperleaf in partnership with Black & Veatch.
• Strong engagement with Copperleaf Labs program in Q2 where we collaborated on 36 separate client engagements to continue to support our strategy of innovating together with the Copperleaf Community.
• We released version 22.2 of our product suite, which included more than a dozen new features, including: native multi-currency support, new workflow visualization and process automation for reviews and approvals.
• Copperleaf was granted two patents in Q2 for our scenario functionality and our asset intervention bundling.

Q2 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, August 10, 2022, at 5:00 PM ET.

Date:	August 10, 2022
Time:	5:00 PM ET
Dial-In Number:	416-764-8659 or 1-888-664-6392
Webcast:	https://app.webinar.net/LKYnpkzdqPJ
Replay:	416-764-8677 or 1-888-390-0541 (Available until August 17, 2022)
Replay Entry Code:	848083#

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 June 30,			Six months ended June 30,
	2022 $	2021 $	Change %	2022 $	2021 $	Change %
Net loss	(7,425,678)	(1,618,057)	(359 %)	(18,331,380)	(3,393,368)	(440 %)
Depreciation and amortization	717,240	569,472	26 %	1,152,743	1,137,451	1 %
Share-based payments expense	1,176,010	470,566	150 %	1,915,444	1,005,227	91 %
Finance costs	261,737	199,709	31 %	535,466	413,168	30 %
Finance income	(431,907)	(5,224)	(8168 %)	(702,219)	(8,010)	(8667 %)
Gain on lease modification	-	-	-	-	(181,372)	100 %
Foreign exchange loss (gain)	(262,903)	628,180	(142 %)	474,294	1,051,453	(55 %)
Current income tax expense	123,343	112,481	10 %	134,308	191,543	(30 %)
IPO transaction related costs^1	-	948,982	(100 %)	-	948,982	(100 %)
Adjusted EBITDA	(5,842,158)	1,306,109	(547 %)	(14,821,344)	1,165,074	(1372 %)

Selected Financial Information

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

		For the three months ended June 30,		For the six months ended June 30,
		2022	2021	2022	2021
		$	$	$	$
Revenue		20,583,744	16,700,617	36,153,127	30,682,312
Cost of revenue		4,846,474	2,985,432	9,238,181	5,926,455
Gross profit		15,737,270	13,715,185	26,914,946	24,755,857
Operating expenses
Sales and marketing		9,460,536	5,147,386	18,026,223	9,741,686
Research and development		7,375,523	4,827,114	14,024,598	9,265,277
General and administrative		6,636,619	4,423,596	12,753,656	7,675,480
		23,472,678	14,398,096	44,804,477	26,682,443
Loss from operations		(7,735,408)	(682,911)	(17,889,531)	(1,926,586)
Other expense (income)
Finance costs		261,737	199,709	535,466	413,168
Finance and other income		(431,907)	(5,224)	(702,219)	(8,010)
Gain on lease modification		-	-	-	(181,372)
Foreign exchange (gain) loss		(262,903)	628,180	474,294	1,051,453
		(433,073)	822,665	307,541	1,275,239
Loss before income taxes		(7,302,335)	(1,505,576)	(18,197,072)	(3,201,825)
Income taxes
Current income tax expense		123,343	112,481	134,308	191,543
Net loss and comprehensive loss     for the period		(7,425,678)	(1,618,057)	(18,331,380)	(3,393,368)
Net loss per share
Basic and diluted		(0.11)	(0.10)	(0.27)	(0.21)
Weighted average number of    common shares outstanding, basic and diluted		69,368,649	16,641,767	68,909,651	16,239,116

Consolidated Statements of Financial Position
(expressed in Canadian Dollars)

		June 30, 2022	December 31, 2021
		$	$
ASSETS
Current assets
Cash and cash equivalents		153,191,824	161,432,039
Accounts receivable		14,424,577	32,251,577
Investment tax credits receivable		-	1,407,539
Contract costs		720,878	719,263
Contract assets		5,831,036	2,199,394
Prepaid expenses		3,309,805	2,250,216
		177,478,120	200,260,028
Non-current assets
Deposit		47,035	81,455
Prepaid expenses		817,382	-
Contract costs		1,302,682	1,261,877
Property and equipment		1,972,010	2,009,533
Intangible assets		1,513,796	1,105,736
Right-of-use assets		1,029,702	1,323,751
		6,682,607	5,782,352
TOTAL ASSETS		184,160,727	206,042,380
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities		11,907,861	13,182,045
Contract liabilities		18,894,650	20,849,117
Lease liabilities		1,059,725	1,031,531
		31,862,236	35,062,693
Non-current liabilities
Contract liabilities		11,826,554	14,727,655
Lease liabilities		742,247	1,234,024
		12,568,801	15,961,679
TOTAL LIABILITIES		44,431,037	51,024,372
SHAREHOLDERS' EQUITY
Share capital		182,844,295	181,279,367
Share-based payments reserve		6,390,652	4,912,518
Deficit		(49,505,257)	(31,173,877)
TOTAL SHAREHOLDERS' EQUITY		139,729,690	155,018,008
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		184,160,727	206,042,380

Disaggregation of revenue
	For the three months ended		For the six months ended
	June 30,		June 30,
	2022	2021	2022	2021
	$	$	$	$
Subscription	9,509,612	7,871,996	18,591,722	14,642,427
Professional services and custom     software contracts	7,120,582	5,339,184	13,118,648	10,802,972
Perpetual and term-based software     licenses	3,953,550	3,489,437	4,442,757	5,236,913
	20,583,744	16,700,617	36,153,127	30,682,312

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.

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