Solium Releases 2017 Fourth Quarter and Year-end Financial Results

• Annual revenue increased by 12% to $86.5 million
• Annual adjusted EBITDA decreased from $15.6 million to $12.2 million
• Cash position strong at $100.2 million
• Major projects on track

CALGARY, March 21, 2018 /CNW/ - Solium Capital Inc. (TSX: SUM) ("Solium" or the "Company") today announced its financial results for the fourth quarter and year ended December 31, 2017.

Financial and operating highlights for the fourth quarter and year ended December 31, 2017, compared to the same periods in 2016:

• Revenue increased by 21% to $22.9 million for the fourth quarter of 2017 and by 12% to $86.5 million for the year ended December 31, 2017;
  
  
• Adjusted EBITDA¹ decreased by 48% to $1.6 million in the fourth quarter of 2017 and by 21% to $12.2 million in the year ended December 31, 2017;
  
  
• Earnings from operations decreased by $0.7 million to a loss of $0.2 million for the fourth quarter of 2017 and by 7% to $6.5 million for the year ended December 31, 2017;
  
  
• Net earnings decreased from $0.8 million to a net loss of $0.5 million in the fourth quarter of 2017 and decreased by 9% to $3.6 million in the year ended December 31, 2017; and
  
  
• For the year ended December 31, 2017, Solium incurred capital expenditures of $6.7 million, primarily relating to the build out of the Company's new Calgary headquarters, as well as expansion of its data centre.

Acquisitions and bought deal financing:

• In October 2017, the Company acquired Capshare Inc., a U.S. company that provides a cloud-based platform for capitalization table management, electronic share tracking, modeling and waterfall analysis and compliance for private companies, for total purchase consideration of $16.2 million, including potential earn-outs.
  
  
• On November 1, 2017, the Company closed a bought deal financing for gross proceeds of $35.8 million (CAD $46.0 million). These funds provide Solium with the flexibility to move quickly on acquisition opportunities should they arise.
  
  
• Subsequent to the year end, in February 2018, the Company announced the acquisition of Advanced-HR, a U.S. company that provides compensation data and compensation planning software for private and venture backed companies. Advanced-HR provides compensation data through its products OptionDriver and OptionImpact to over 2,500 private companies and 120 venture capital firms.

Key factors affecting financial results for the year ended December 31, 2017:

• License revenue – License and subscription fees increased by $6.1 million or 12% for the year ended December 31, 2017 as compared to 2016. Based on local currencies, the growth was 11% as compared to 2016. Growth in license revenue is largely driven by the Morgan Stanley and UBS license agreements in the U.S., organic growth from new sales, revenue from the acquired Capshare business and migration of customers from NASDAQ Private Market, LLC to Solium.
  
  
• Transaction activity – In addition to the recurring license revenue that Solium collects for the use of its Shareworks platform, the Company also collects re-occurring transaction based revenue. Transaction based revenue increased by $3.6 million or 16% compared to 2016. The per-participant trading activity was 2% lower in 2017 compared to 2016, and 4% higher than the historical five-year rolling average. Despite the decrease in per-participant trading activity in 2017 compared to 2016, organic growth in client and participant levels throughout 2017 translated to increased transactional based revenue in the year.
  
  
• Operating costs – Operating expenses (excluding a change in estimate to Scientific Research and Experimental Development (SRED) tax credit claims in 2016 and sales tax adjustment) increased by $13.6 million or 20% compared to 2016. The Company had 677 full-time equivalent employees (FTEs) at the end of 2017 compared to 520 FTEs at the end of 2016. Of the 157 new FTEs added in 2017, approximately 80% related to product development (including support for the Morgan Stanley and UBS partnerships), the acquisition of Capshare and the launch of Solium Analytics. The investments made in Capshare and Solium Analytics contributed to the loss from operations in the fourth quarter.

Selected financial information for the fourth quarter and year ended December 31, 2017:
(Expressed in thousands of USD except per share amounts and percentages)

		Fourth Quarter			Year Ended December 31,
		2017 $	2016 $	% Change	2017 $	2016 $	% Change
Revenue		22,859	18,876	21%	86,502	77,219	12%
Operating expenses		23,078	17,366	33%	80,012	70,234	14%
Adjusted EBITDA^1		1,564	3,110	(48%)	12,217	15,558	(21%)
(Loss) earnings from operations		(219)	1,510	NM^(a)	6,490	6,985	(7%)
Net (loss) earnings		(492)	805	NM^(a)	3,611	3,974	(9%)
Net (loss) earnings per share^2
	Basic	(0.009)	0.016	NM^(a)	0.070	0.080	(13%)
	Diluted	(0.009)	0.016	NM^(a)	0.069	0.078	(12%)
Issued and outstanding
	Common shares				55,866	50,245	11%
	Diluted^3				59,510	53,626	11%

(a)	NM denotes non-measurable.

Regional breakdown of results:
(Expressed in thousands of USD except percentages)

Currently included in the International reportable segment are the results relating to the U.K., Europe, Australia, and Hong Kong operations.

	Three Months Ended December 31,
	Canada		U.S.		International		Consolidated
	2017	2016	2017	2016	2017	2016	2017	2016
Revenues	7,727	6,545	11,253	8,861	3,879	3,470	22,859	18,876
Adjusted EBITDA^1	1,277	476	377	1,695	(90)	939	1,564	3,110
Adjusted EBITDA %^1	17%	7%	3%	19%	(2%)	27%	7%	16%
Earnings (loss) from operations	414	(71)	(300)	866	(333)	715	(219)	1,510

	Year Ended December 31,
	Canada		U.S.		International		Consolidated
	2017	2016	2017	2016	2017	2016	2017	2016
Revenues	29,731	27,516	41,902	35,939	14,869	13,764	86,502	77,219
Adjusted EBITDA^1	8,268	7,876	4,678	7,319	(729)	363	12,217	15,558
Adjusted EBITDA %^1	28%	29%	11%	20%	(5%)	3%	14%	20%
Earnings (loss) from operations	5,383	3,478	2,632	3,940	(1,525)	(433)	6,490	6,985

Basic net loss per share was $0.009 in the fourth quarter of 2017 (2016: net earnings per share $0.016) and $0.070 in the year ended December 31, 2017 (2016: $0.080).

Total cash inflow from operations inclusive of working capital changes was $14.9 million for the year ended December 31, 2017 (2016: $9.8 million). Cash inflow from financing activities was $38.1 million in 2017 (2016: $1.7 million). Cash outflow from investing activities was $21.1 million in 2017 (2016: $1.5 million) mainly as a result of the Capshare acquisition and capital expenditures. During the year ended December 31, 2017, the Company had an overall net cash inflow of $36.5 million (2016: $11.0 million).

Working capital as at December 31, 2017 was $94.5 million (December 31, 2016: $63.2 million). Included in working capital was trade and other receivables of $15.0 million (December 31, 2016: $16.4 million) and trade payables and other accruals of $11.8 million (December 31, 2016: $8.8 million).

Outlook

In Q4 2016, Solium entered into a license agreement with Morgan Stanley, whereby Morgan Stanley's corporate customers and their respective employee participants will transition to a Morgan Stanley branded version of Shareworks. In order to execute on this agreement, Solium added headcount and committed additional resources in 2017 to ensure the success of this project. Solium migrated the first group of Morgan Stanley customers onto Shareworks in December 2017, and anticipates migrating all clients by the end of 2019.

In Q2 2017, Solium entered into a license agreement with UBS Financial Services Inc., where UBS's corporate customers will transition to a UBS branded version of the plan administration modules of Shareworks. During 2017, Solium started to add additional employees to support the UBS implementation, and this hiring is anticipated to continue throughout 2018. Solium migrated the first UBS customers onto Shareworks in December 2017, and anticipates migrating all clients by the end of 2019.

Solium has made three key investments recently to accelerate its position in the private company market. In October 2017, Solium announced the acquisition of Capshare Inc. The acquisition positions Solium to compete in the rapidly emerging early-stage angel and venture backed private company market. Shareworks is well positioned as the leading platform for late-stage private companies, including those seeking an Initial Public Offering. Capshare will allow Solium to provide a targeted, lower-cost solution that meets the unique requirements of earlier stage private companies. In Q3 2017, Solium also incorporated Solium Analytics LLC to provide 409A business valuation services to private companies. In February 2018, Solium announced the acquisition of Advanced-HR. Through the acquisition, Solium's private market clients will have the ability to access equity data and benchmarks to guide them in compensating their employees. Solium plans to commit additional resources to the Capshare, Analytics and Advanced-HR businesses.

Solium continues to be in an investment phase and remains committed to investing for future revenue growth over the course of 2018, resulting in further pressure on profitability in the near-term. The Company continues to invest in its capabilities and infrastructure – ensuring best-in-class technology and service – to drive long term investor returns.

Notes:
1.	Earnings before interest, taxes, depreciation and amortization ("EBITDA") and Adjusted EBITDA are non-IFRS financial measures which do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. EBITDA and Adjusted EBITDA provide useful information to users as they reflect the net earnings prior to the effect of non-operating expenses such as finance costs, income taxes, amortization, foreign exchange gain or loss (on translation of working capital), share-based payments, gain on derecognition of liability, sales tax adjustment, and change in estimate of scientific research and experimental development ("SRED") investment tax credits. Management uses Adjusted EBITDA in measuring the financial performance of the Company. Management monitors Adjusted EBITDA against budget and past results on a regular basis.  The measure is a component in determining the annual bonus pool for staff and management.
The following is a reconciliation of Adjusted EBITDA to net earnings:

		Fourth Quarter				Fiscal Year
		2017		2016		2017		2016
Adjusted EBITDA		1,564		3,110		12,217		15,558
Foreign exchange gain (loss)		156		(370)		(448)		(1,223)
Share-based payments^4		(786)		(551)		(2,437)		(2,195)
Gain on derecognition of liability		-		-		-		445
Sales tax adjustment included in operating expenses		361		(80)		1,302		(330)
Change in estimate for SRED investment tax credits		-		-		-		(2,185)
EBITDA		1,295		2,109		10,634		10,070
Finance income		396		173		1,002		652
Depreciation of property and equipment		(535)		(311)		(1,880)		(1,225)
Amortization of intangible assets		(823)		(658)		(2,712)		(2,638)
Income taxes		(825)		(508)		(3,433)		(2,885)
Net (loss) earnings		(492)		805		3,611		3,974

2.	Diluted net earnings per share is calculated using the treasury stock method.
3.	Diluted shares as presented equals issued and outstanding common shares plus the effects of dilutive outstanding stock options and restricted share units.
4.	Share-based payments was included as an add back to Adjusted EBITDA based on peer company analysis performed by the Company to ensure certain measures presented by the Company to users are comparable to other issuers.

About Solium Capital Inc.

Solium Capital Inc. (TSX: SUM) provides cloud-enabled services for global equity administration, financial reporting and compliance.  From offices in the United States, Canada, the United Kingdom, Europe, Australia and Hong Kong, our innovative software-as-a-service (SaaS) technology powers share plan administration and equity transactions for more than 3,000 corporate clients with employee participants in more than 100 countries. Follow us @Solium and visit us at solium.com.

Certain statements included in this press release constitute forward-looking statements or forward-looking information under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar words suggesting future outcomes or statements regarding an outlook. Specific forward-looking statements in this press release include statements with respect to the projects with Morgan Stanley and UBS Financial Services Inc. including the financial impact of new hires and plans to hire additional employees, the anticipated timing of completing migrating the Morgan Stanley and UBS customers to Shareworks, the Company's investment strategy, including plans to commit additional resources to the Solium Analytics LLC and Capshare Inc. businesses, the Company's acquisition strategy and the Company's ability to compete in the private company market. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect, including assumptions with respect to the ability of the Company to identify, hire, train, motivate and retain qualified personnel, the Company's ability to maintain or accurately forecast revenue from its products and services, the competitive environment in which the Company operates, and the Company's ability to realize the anticipated benefits from its investment in the partnerships with Morgan Stanley and UBS Financial Services Inc. Although Solium believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements or information because Solium can give no assurance that such expectations will prove to be correct. The forward-looking statements and information are based on Solium's current expectations, estimates and projections, and are subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated, including general business and economic conditions, actions of competitors and partners, the regulatory environment and product capability and acceptance. The foregoing is not exhaustive and other risks are detailed from time to time in other continuous disclosure documents of the Company. Accordingly, readers are advised not to place undue reliance on forward-looking statements or information. The forward-looking statements and forward-looking information included in this press release are made as of the date of this press release. The Company does not intend to nor does it assume any obligation to update publicly or to revise any of the forward-looking statements or forward looking information, whether as a result of new information, subsequent events or otherwise, except as required by law.

The Management's Discussion and Analysis and the Consolidated Financial Statements for the year ended December 31, 2017 referred to herein will be available on SEDAR at www.sedar.com under Solium Capital Inc., or at www.solium.com.

SOURCE Solium Capital Inc.

Investor relations, Heidi Christensen Brown, NATIONAL | Equicom, 416.848.1389, [email protected]