NexJ Systems Reports Fourth Quarter 2021 Results

TORONTO, March 8, 2022 /CNW/ - NexJ Systems Inc. (TSX: NXJ), delivering intelligent customer management software to the financial services industry, today announced financial results for its fourth quarter ended December 31, 2021.

Fourth Quarter Summary

• The Company continued its planned transition from a perpetual license model to a more predictable subscription license model generating $551K in license and subscription revenue for the fourth quarter, an increase of $505K as compared to $46K in the fourth quarter of the previous year
• Unbilled contracted subscription license revenue of $964K will be recognized as revenue in future quarters as compared to zero in the previous year
• $3.6M of revenue for the fourth quarter as compared to $4.2M in the fourth quarter of the previous year
• $225K in Adjusted EBITDA for the fourth quarter as compared to $836K in the fourth quarter of the previous year
• $186K of net loss for the fourth quarter as compared to $417K of net income in the fourth quarter of the previous year
• $1.5M in license and subscription revenue for the year, an increase of $1.3M as compared to $156K in the previous year
• $15.3M in revenue for the year as compared to $16.9M in the previous year
• $821K in Adjusted EBITDA for the year as compared to $985K in the previous year
• $468K in net loss for the year is a $1.0M improvement over $1.5M of net loss in the previous year
• Continued to increase the recurring subscription license revenue by delivering two new subscription license products to a leading bank based in Australia and New Zealand that support multiple cloud deployment options and real-time data streaming for enhanced analytics and reporting

"In 2021 our subscription-based license model continued to grow with subscription software licenses making up approximately 15% of total revenue in Q4 and 10% for 2021," said Paul O'Donnell, CEO. "The new software pricing model introduced in January 2021 resulted in the deferral of revenue recognition on new software contracts which would otherwise have been recognized as revenue under the previous perpetual license model.  Our strategic partnerships in globally recognizable financial services firms, growing subscription license opportunities and prudent management of expenses has established a strong foundation for 2022."

NexJ Systems Inc.
Fourth Quarter Financial Results
(Expressed in thousands of Canadian dollars)
(Unaudited)
	Quarter ended December 31,				Year ended December 31,
	2021		2020		2021		2020
Revenue	$		$		$		$
License and subscription fees	551		46		1,528		156
Professional services	1,123		2,058		5,683		7,779
Maintenance and support	1,919		2,143		8,122		8,915
	3,593		4,247		15,333		16,850
Cost of revenue	711		921		3,588		4,082
Gross profit	2,882		3,326		11,745		12,768
Operating Expenses
Research and development	1,132		1,082		5,342		5,514
Sales and marketing	491		610		2,145		2,543
General and administrative	1,034		798		3,437		3,726
	2,657		2,490		10,924		11,783
Adjusted EBITDA	225		836		821		985
Share-based payment expense	12		(20)		76		164
Depreciation and amortization	249		212		920		862
Deferred share unit expense	-		-		-		275
Restructuring costs	-		(36)		-		924
Income (loss) from operations	(36)		680		(175)		(1,240)
Foreign exchange loss	136		222		220		148
Finance income	(5)		(2)		(20)		(47)
Finance expense	19		43		93		144
Net income (loss)	(186)		417		(468)		(1,485)

Non-IFRS Measures

This news release includes certain measures that have not been prepared in accordance with International Financial Reporting Standards ("IFRS") such as Adjusted EBITDA and Adjusted EBITDA margin which are used to evaluate the Company's operating performance as a complement to results provided in accordance with IFRS. The Company believes that Adjusted EBITDA and Adjusted EBITDA margin are useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation and the other items listed below.

The term "Adjusted EBITDA" refers to net income (loss) before adjusting for share-based payment expense, depreciation and amortization, deferred share unit expense, restructuring costs, foreign exchange gain (loss), finance income, finance costs, and income taxes. "Adjusted EBITDA margin" refers to the percentage that Adjusted EBITDA for any period represents as a portion of total revenue for that period.

The term Adjusted EBITDA and Adjusted EBITDA margin are not measures recognized by IFRS and do not have standardized meanings prescribed by IFRS. Therefore, Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similar measures presented by other issuers. Investors are cautioned that Adjusted EBITDA and Adjusted

EBITDA margin should not be construed as an alternative to net income (loss) as determined in accordance with IFRS.

About NexJ Systems Inc.

NexJ Systems provides Intelligent Customer Management to the financial services industry. Our award-winning financial services productivity software is designed to help Wealth Management, Private Banking, Corporate and Commercial Banking firms revolutionize their business. Powered by artificial intelligence, our products help drive productivity, boost client engagement, and help drive increased revenues. With users in over 60 countries, our customers benefit from our deep expertise across financial services sub-verticals, strategic investment in innovation, and commitment to their success.

Based in Toronto, NexJ has clients throughout North America, Asia Pacific and in Europe. For more information about NexJ visit www.nexj.com, e-mail [email protected], or call 416-222-5611. Join us on LinkedIn, follow us on Twitter, subscribe to our YouTube channel, or like us on Facebook.

NexJ Forward-looking Statement
Certain statements in this press release, including statements about the financial conditions, and results of operations and earnings, may contain words such as "may", "will", "expect", "anticipate", "aim", "estimate", "intend", "plan", "seek", "believe", "potential", "continue", "is/are likely to", "could", "should", "target", "envision", and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on the Company's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which the Company operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. The Company's assumptions, although considered reasonable by the Company at the date of this press release, may provide to be inaccurate and consequently the Company's actual results could differ materially from the expectations set out herein.

Actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following: (i) the future performance, financial and otherwise, of NexJ; (ii) the ability of NexJ to protect, maintain and enforce its intellectual property rights; (iii) the acceptance by the Company's customers and the marketplace of new technologies and solutions; (iv) the Company's growth and profitability prospects; (v) the estimated size and growth prospects of the CRM market; (vi) the Company's competitive position in the market and its ability to take advantage of future opportunities in this market; (vii) the Company's ability to attract new customers and develop and maintain existing customers; and (viii) the demand for the Company's product and the extent of deployment of the company's products in the marketplace. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances.

The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) out ability to successful integrate and manage acquired businesses, offerings and people; (ii) our dependence on a limited number of customers and large project size; (iii) fluctuation in our quarterly operating results; (iv) our dependence on key personnel, and ability to attract and retain talent; (v) our compensation structure; (vi) risks associated with managing large and complex software implementation projects; (vii) uncertainties and assumptions in our sales forecasts, including the extent to which sales proposals are converted into sales; (viii) risks associated with our ability to design, develop, test, market, license and support our software products on a timely basis; (ix) market acceptance of our products and services; * commercial success of products resulting from our investments in research and development; (xi) our success in expanding sales into new international markets; (xi) competition in our industry; (xii) failure to protect our intellectual property or infringement of intellectual property rights of third parties; (xiii) reliance upon a limited number of third-party software products to develop our products; (xiv) defects or disruptions in our products and services; (xv) currency exchange rate fluctuations; (xvi) lengthy sales cycles for our software; (xvii) general economic conditions; and (xviii) failure to manage our growth successfully.

For additional information with respect to risks and other factors which could occur, see the Company's most recently filed Annual Information Form for the year ended December 31, 2021 dated March 8, 2022, and other securities filings with the Canadian securities regulators available on www.sedar.com.  Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

NexJ Systems Inc.
Statements of Financial Position
(Expressed in thousands of Canadian dollars)
(Unaudited)
	December 31, 2021		December 31, 2020
Assets
	$		$
Current assets:
Cash and cash equivalents	5,489		5,426
Accounts receivable	5,457		3,546
Prepaid expenses and other assets	1,334		1,320
Total current assets	12,280		10,292
Non-current assets:
Property and equipment	612		768
Right-of-use assets	951		1,280
Goodwill	1,753		1,753
Investments	-		255
Contract costs	88		51
Other assets	-		403
Total non-current assets	3,404		4,510
Total assets	15,684		14,802
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities	2,023		1,874
Deferred revenue	6,592		5,374
Lease liabilities	1,152		967
Total current liabilities	9,767		8,215
Non-current liabilities:
Accrued liabilities	62		101
Deferred revenue	328		346
Lease liabilities	83		1,078
Total non-current liabilities	473		1,525
Total liabilities	10,240		9,740
Shareholders' equity:
Share capital	83,485		83,471
Share purchase loans	(3,598)		(3,598)
Contributed surplus	8,735		8,664
Accumulated other comprehensive income (loss)	751		(14)
Deficit	(83,929)		(83,461)
Total shareholders' equity	5,444		5,062
Total liabilities and shareholders' equity	15,684		14,802

NexJ Systems Inc.
Statements of Comprehensive Income (Loss)
(Expressed in thousands of Canadian dollars, except per share amounts)
(Unaudited)
	Quarter ended December 31,				Year ended December 31,
	2021		2020		2021		2020
Revenue	$		$		$		$
License and subscription fees	551		46		1,528		156
Professional services	1,123		2,058		5,683		7,779
Maintenance and support	1,919		2,143		8,122		8,915
	3,593		4,247		15,333		16,850
Cost of revenue	712		926		3,586		4,116
Gross profit	2,881		3,321		11,747		12,734
Expenses:
Research and development	1,134		1,091		5,357		5,556
Sales and marketing	491		610		2,148		2,551
General and administrative	1,292		976		4,417		4,943
Restructuring costs	-		(36)		-		924
	2,917		2,641		11,922		13,974
Income (loss) from operations	(36)		680		(175)		(1,240)
Foreign exchange loss	(136)		(222)		(220)		(148)
Finance income	5		2		20		47
Finance expense	(19)		(43)		(93)		(144)
	(150)		(263)		(293)		(245)
Income (loss) for the year	(186)		417		(468)		(1,485)
Other comprehensive income (loss):
Items that will not be reclassified to profit or loss:
Unrealized gain (loss) on equity securities	1		(11)		-		(5)
Realized gain on sale of equity securities	765		-		765		-
Net income (loss) for the year and     comprehensive income (loss)	580		406		297		(1,490)
Earnings (loss) per share
Basic and diluted	(0.01)		0.02		(0.02)		(0.07)
Weighted average number of common shares
outstanding, in thousands
Basic and diluted	21,076		21,100		21,064		20,888

NexJ Systems Inc.
Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
(Unaudited)
	Year ended		Year ended
	December 31, 2021		December 31, 2020
Cash flows from (used in) operating activities:	$		$
Loss for the year	(468)		(1,485)
Adjustments for:
Depreciation and amortization of property and equipment	202		284
Depreciation of right-of-use assets	718		578
Changes in contract costs	(37)		85
Share-based payment expense	76		164
Deferred share unit expense	-		218
Finance income	(20)		(47)
Finance expense	93		144
Foreign exchange loss	77		214
Change in non-cash operating working capital:
Accounts receivable	(1,911)		1,929
Prepaid expenses and other assets	231		598
Accounts payable and accrued liabilities and provisions	110		(111)
Deferred revenue	1,192		(1,132)
Net cash flows from operating activities	263		1,439
Cash flows from (used in) financing activities:
Payment of lease liabilities	(1,120)		(850)
Interest paid	(6)		-
Proceeds from exercise of stock options	9		-
Costs of exercise of deferred share units	-		(36)
Net cash flows used in financing activities	(1,117)		(886)
Cash flows from (used in) investing activities:
Purchase of property and equipment	(46)		(83)
Sales of equity investment	1,020		-
Interest received	20		47
Net cash flows from (used in) investing activities	994		(36)
Effects of exchange rates on cash and cash equivalents	(77)		(214)
Increase in cash and cash equivalents	63		303
Cash and cash equivalents, beginning of year	5,426		5,123
Cash and cash equivalents, end of year	5,489		5,426

SOURCE NexJ Systems Inc.

Media Contact: Matthew Bogart, 416-227-3708, [email protected]