NexJ Systems Reports Third Quarter 2021 Results

TORONTO, Oct. 28, 2021 /CNW/ - NexJ Systems Inc. (TSX: NXJ), delivering intelligent customer management software to the financial services industry, today announced financial results for its third quarter ended September 30, 2021.

Third Quarter Summary

• $4.0M of revenue for the third quarter as compared to $4.3M in the third quarter of the previous year
• $370K in Adjusted EBITDA profit for the third quarter as compared to $900K in the third quarter of the previous year
• $180K of net income for the third quarter as compared to $539K of net income in the third quarter of the previous year
• Continued to increase the recurring subscription license revenue by delivering two new subscription license products to a leading US wealth management firm that support multiple cloud deployment options and real-time data streaming for enhanced analytics and reporting
• Continued to leverage eco-system partnerships to service the rapidly expanding RIA market, driving new customers and incremental subscription license revenue
• Unbilled contracted subscription license revenue that will be recognized as revenue in future quarters stands at $1.4M as compared to zero in the previous year

"The increase in subscription license revenue and unbilled deferred revenue demonstrates our continued commitment to transition the business to a recurring license revenue model," said Paul O'Donnell, CEO of NexJ, "As we continue to focus our efforts on the remainder of the year we fully expect that we will add additional subscription license revenue, providing the strongest foundation for sustainable growth."

NexJ Systems Inc.
Third Quarter Financial Results
(Expressed in thousands of Canadian dollars)
(Unaudited)
		Quarter ended September 30,				Nine months ended September 30,
		2021		2020		2021		2020
Revenue		$		$		$		$
License and subscription fees		539		60		977		110
Professional services		1,502		2,078		4,560		5,721
Maintenance and support		1,997		2,197		6,203		6,772
		4,038		4,335		11,740		12,603
Cost of revenue		920		958		2,877		3,161
Gross profit		3,118		3,377		8,863		9,442
Operating Expenses
Research and development		1,329		1,088		4,210		4,431
Sales and marketing		572		581		1,654		1,934
General and administrative		847		808		2,403		2,928
		2,748		2,477		8,267		9,293
Adjusted EBITDA		370		900		596		149
Share-based payment expense		10		55		64		184
Depreciation and amortization		229		217		671		650
Deferred share unit expense		-		-		-		275
Restructuring costs		-		-		-		960
Income (loss) from operations		131		628		(139)		(1,920)
Foreign exchange loss (gain)		(66)		60		84		(74)
Finance income		(6)		(2)		(15)		(45)
Finance expense		23		31		74		101
Net income (loss) for the period		180		539		(282)		(1,902)

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)
	September 30, 2021		December 31, 2020
Assets
	$		$
Current assets:
Cash and cash equivalents	5,715		5,426
Accounts receivable	1,434		3,546
Prepaid expenses and other assets	1,120		1,320
Total current assets	8,269		10,292
Non-current assets:
Property and equipment	654		768
Right-of-use assets	1,154		1,280
Goodwill	1,753		1,753
Investments	254		255
Contract costs	97		51
Other assets	260		403
Total non-current assets	4,172		4,510
Total assets	12,441		14,802
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities	2,083		1,874
Deferred revenue	3,910		5,374
Lease liabilities	1,123		967
Total current liabilities	7,116		8,215
Non-current liabilities:
Accrued liabilities	72		101
Deferred revenue	24		346
Lease liabilities	377		1,078
Total non-current liabilities	473		1,525
Total liabilities	7,589		9,740
Shareholders' equity:
Share capital	83,485		83,471
Share purchase loans	(3,598)		(3,598)
Contributed surplus	8,723		8,664
Accumulated other comprehensive loss	(15)		(14)
Deficit	(83,743)		(83,461)
Total shareholders' equity	4,852		5,062
Total liabilities and shareholders' equity	12,441		14,802

NexJ Systems Inc.
Condensed Interim Statements of Comprehensive Income (Loss)
(Expressed in thousands of Canadian dollars, except per share amounts)
(Unaudited)
	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Revenue	$		$		$		$
License and subscription fees	539		60		977		110
Professional services	1,502		2,078		4,560		5,721
Maintenance and support	1,997		2,197		6,203		6,772
	4,038		4,335		11,740		12,603
Cost of revenue	919		966		2,874		3,190
Gross profit	3,119		3,369		8,866		9,413
Expenses:
Research and development	1,328		1,094		4,223		4,465
Sales and marketing	573		583		1,657		1,941
General and administrative	1,087		1,064		3,125		3,967
Restructuring costs	-		-		-		960
	2,988		2,741		9,005		11,333
Income (loss) from operations	131		628		(139)		(1,920)
Foreign exchange gain (loss)	66		(60)		(84)		74
Finance income	6		2		15		45
Finance expense	(23)		(31)		(74)		(101)
	49		(89)		(143)		18
Income (loss) for the period	180		539		(282)		(1,902)
Other comprehensive income (loss):
Items that will not be reclassified to profit or loss:
Unrealized gain (loss) on equity securities	6		(5)		(1)		7
Income (loss) for the period and     comprehensive income (loss)	186		534		(283)		(1,895)
Earnings (loss) per share
Basic and diluted	0.01		0.03		(0.01)		(0.09)
Weighted average number of common shares
outstanding, in thousands
Basic	21,067		21,108		21,059		21,817
Diluted	21,105		21,108		21,059		21,817

NexJ Systems Inc.
Condensed Interim Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
(Unaudited)
	Nine months ended		Nine months ended
	September 30, 2021		September 30, 2020
Cash flows from (used in) operating activities:	$		$
Loss for the period	(282)		(1,902)
Adjustments for:
Depreciation and amortization of property and equipment	156		219
Depreciation of right-of-use assets	515		431
Changes in contract costs	(46)		72
Share-based payment expense	64		184
Deferred share unit expense	-		218
Finance income	(15)		(45)
Finance expense	74		101
Foreign exchange loss	22		90
Change in non-cash operating working capital:
Accounts receivable	2,112		2,499
Prepaid expenses and other assets	184		415
Accounts payable and accrued liabilities	171		880
Deferred revenue	(1,793)		(1,864)
Net cash flows from operating activities	1,162		1,298
Cash flows from (used in) financing activities:
Payment of lease liabilities	(839)		(586)
Interest paid	(4)		-
Proceeds from exercise of stock options	9		-
Net cash flows used in financing activities	(834)		(586)
Cash flows from (used in) investing activities:
Purchase of property and equipment	(32)		(84)
Interest received	15		45
Net cash flows used in investing activities	(17)		(39)
Effects of exchange rates on cash and cash equivalents	(22)		(90)
Increase in cash and cash equivalents	289		583
Cash and cash equivalents, beginning of period	5,426		5,123
Cash and cash equivalents, end of period	5,715		5,706
Supplemental cash flow information:
Acquisition of property and equipment not yet paid	10		-

SOURCE NexJ Systems Inc.

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

Related Links

https://www.nexj.com/