NexJ Systems Reports Second Quarter 2021 Results

TORONTO, July 29, 2021 /CNW/ - NexJ Systems Inc. (TSX: NXJ), delivering intelligent customer management software to the financial services industry, today announced financial results for its second quarter ended June 30, 2021.

First Quarter Summary

• $3.8M of revenue for the second quarter as compared to $4.3M in the second quarter of the previous year
• $130K in Adjusted EBITDA profit for the second quarter as compared to $582K in the second quarter of the previous year
• $179K of net loss for the second quarter as compared to $1.2M of net loss in the second quarter of the previous year
• Generated new subscription license revenue from our relationship with a leading US brokerage firm by delivering new technology that seamlessly supports multiple deployment options including public, private and hybrid clouds
• Delivered our new reporting and dashboarding platform to a multi-national European headquartered wealth management firm
• Entered the rapidly expanding RIA market through our eco-system partnership, driving more new customers onto our cloud service adding to our subscription license revenue in the past three months
• Building on our partnership with IBM, our products were released on IBM Cloud for Financial Services, designed to help address financial services institutions regulatory compliance, security and resiliency requirements

"New client acquisition and the shifting revenue mix to new subscription-based product revenue within our client base and our partner ecosystem is contributing towards higher recurring revenue," said Paul O'Donnell, CEO of NexJ, "The journey we began in 2019 is beginning to have a positive impact and while our recognized revenue is lower than last year at this time our subscription license revenue and software contract backlog continues to grow."

NexJ Systems Inc.
Second Quarter Financial Results
(Expressed in thousands of Canadian dollars)
(Unaudited)
		Quarter ended June 30,				Six months ended June 30,
		2021		2020		2021		2020
Revenue		$		$		$		$
License and subscription fees		395		26		438		50
Professional services		1,258		1,972		3,058		3,643
Maintenance and support		2,113		2,289		4,206		4,575
		3,766		4,287		7,702		8,268
Cost of revenue		894		872		1,957		2,203
Gross profit		2,872		3,415		5,745		6,065
Operating Expenses
Research and development		1,486		1,341		2,881		3,343
Sales and marketing		517		566		1,082		1,353
General and administrative		739		926		1,556		2,120
		2,742		2,833		5,519		6,816
Adjusted EBITDA		130		582		226		(751)
Share-based payment expense		17		58		54		129
Depreciation and amortization		224		222		442		433
Deferred share unit expense		-		275		-		275
Restructuring costs		-		960		-		960
Loss from operations		(111)		(933)		(270)		(2,548)
Foreign exchange loss (gain)		50		239		150		(134)
Finance income		(6)		(19)		(9)		(43)
Finance expense		24		34		51		70
Net loss for the period		(179)		(1,187)		(462)		(2,441)

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 CRM is designed to help Wealth Management, Private Banking, Corporate and Commercial Banking, and Insurance firms revolutionize their business. Powered by artificial intelligence, our products help drive productivity, boost client engagement, and increase revenue. With users in over 60 countries, our customers benefit from our deep expertise across financial services 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 CRM 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 CRM 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) our dependence on a limited number of customers and large project size; (ii) fluctuation in our quarterly operating results; (iii) our dependence on key personnel and our compensation structure; (iv) risks associated with managing large and complex software implementation projects; (v) uncertainties and assumptions in our sales forecasts, including the extent to which sales proposals are converted into sales; (vi) risks associated with our ability to design, develop, test, market, license and support our software products on a timely basis; (vii) market acceptance of our products and services; (viii) commercial success of products resulting from our investment in research and development; (ix) our success in expanding sales into new international markets; * competition in our industry; (xi) failure to protect our intellectual property or infringement of intellectual property rights of third parties; (xii) reliance upon a limited number of third-party software products to develop our products; (xiii) defects or disruptions in our products and services; (xiv) currency exchange rate fluctuations; (xv) lengthy sales cycles for our software; (xvi) general economic conditions; (xvii) failure to manage our growth successfully; (xviii) failure to successfully manage and integrate acquisitions; (xix) breach of our security measures and unauthorized access to data; (xx) employee retention and (xxi) litigation, including commercial, product liability, employment, class action and other litigation and claims.

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, 2020 dated February 18, 2021, 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.
Condensed Interim Statements of Financial Position
(Expressed in thousands of Canadian dollars)
(Unaudited)
	June 30, 2021		December 31, 2020
Assets
	$		$
Current assets:
Cash and cash equivalents	6,378		5,426
Accounts receivable	898		3,546
Prepaid expenses and other assets	1,034		1,320
Total current assets	8,310		10,292
Non-current assets:
Property and equipment	692		768
Right-of-use assets	1,170		1,280
Goodwill	1,753		1,753
Investments	248		255
Contract costs	70		51
Other assets	333		403
Total non-current assets	4,266		4,510
Total assets	12,576		14,802
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities	1,860		1,874
Deferred revenue	4,231		5,374
Lease liabilities	1,095		967
Total current liabilities	7,186		8,215
Non-current liabilities:
Accrued liabilities	77		101
Deferred revenue	-		346
Lease liabilities	666		1,078
Total non-current liabilities	743		1,525
Total liabilities	7,929		9,740
Shareholders' equity:
Share capital	83,471		83,471
Share purchase loans	(3,598)		(3,598)
Contributed surplus	8,718		8,664
Accumulated other comprehensive loss	(21)		(14)
Deficit	(83,923)		(83,461)
Total shareholders' equity	4,647		5,062
Total liabilities and shareholders' equity	12,576		14,802

NexJ Systems Inc.
Condensed Interim Statements of Comprehensive Loss
(Expressed in thousands of Canadian dollars, except per share amounts
(Unaudited)
	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Revenue	$		$		$		$
License and subscription fees	395		26		438		50
Professional services	1,258		1,972		3,058		3,643
Maintenance and support	2,113		2,289		4,206		4,575
	3,766		4,287		7,702		8,268
Cost of revenue	887		877		1,955		2,224
Gross profit	2,879		3,410		5,747		6,044
Expenses:
Research and development	1,492		1,353		2,895		3,371
Sales and marketing	518		568		1,084		1,358
General and administrative	980		1,462		2,038		2,903
Restructuring costs	-		960		-		960
	2,990		4,343		6,017		8,592
Loss from operations	(111)		(933)		(270)		(2,548)
Foreign exchange gain (loss)	(50)		(239)		(150)		134
Finance income	6		19		9		43
Finance expense	(24)		(34)		(51)		(70)
	(68)		(254)		(192)		107
Net loss for the period	(179)		(1,187)		(462)		(2,441)
Other comprehensive income (loss):
Items that will not be reclassified to profit or loss:
Unrealized gain (loss) on equity securities	(4)		(12)		(7)		12
Loss for the period and comprehensive loss	(183)		(1,199)		(469)		(2,429)
Loss per share
Basic and diluted	(0.01)		(0.06)		(0.02)		(0.12)
Weighted average number of common shares
outstanding, in thousands
Basic and diluted	21,055		20,664		21,055		20,670

NexJ Systems Inc.
Condensed Interim Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
(Unaudited)
	Six months ended		Six months ended
	June 30, 2021		June 30, 2020
Cash flows from (used in) operating activities:	$		$
Loss for the period	(462)		(2,441)
Adjustments for:
Depreciation and amortization of property and equipment	108		148
Depreciation of right-of-use assets	334		285
Changes in contract costs	(19)		61
Share-based payment expense	54		129
Deferred share unit expense	-		218
Finance income	(9)		(43)
Finance expense	51		70
Foreign exchange loss	81		31
Change in non-cash operating working capital:
Accounts receivable	2,648		4,448
Prepaid expenses and other assets	362		21
Accounts payable and accrued liabilities	(38)		1,107
Deferred revenue	(1,494)		(1,146)
Net cash flows from operating activities	1,616		2,888
Cash flows used in financing activities:
Payment of lease liabilities	(557)		(323)
Interest paid	(3)		-
Net cash flows used in financing activities	(560)		(323)
Cash flows from (used in) investing activities:
Purchase of property and equipment	(32)		(84)
Interest received	9		43
Net cash flows used in investing activities	(23)		(41)
Effects of exchange rates on cash and cash equivalents	(81)		(31)
Increase in cash and cash equivalents	952		2,493
Cash and cash equivalents, beginning of period	5,426		5,123
Cash and cash equivalents, end of period	6,378		7,616

SOURCE NexJ Systems Inc.

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

Related Links

https://www.nexj.com/