Solium Releases 2017 Third Quarter Financial Results

• Quarterly revenue increased by 4% to $20.8 million
• Quarterly adjusted EBITDA decreased from $3.8 million to $1.5 million
• Cash position strong at $70.3 million

CALGARY, Nov. 7, 2017 /CNW/ - Solium Capital Inc. (TSX: SUM) ("Solium" or the "Company") today announced its financial results for the three and nine month periods ended September 30, 2017.

Financial and operating highlights for the three and nine month period ended September 30, 2017, compared to the same periods in 2016:

• Revenue increased by 4% to $20.8 million in the third quarter of 2017 and by 9% to $63.6 million for the nine month period ended September 30, 2017;
  
  
• Adjusted EBITDA¹ decreased by 60% to $1.5 million in the third quarter of 2017 and by 17% to $9.0 million for the nine month period ended September 30, 2017;
  
  
• Earnings from operations decreased by 41% to $1.2 million in the third quarter of 2017 and increased by 23% to $6.7 million for the nine month period ended September 30, 2017;
  
  
• Net earnings decreased from $1.9 million to a net loss of $0.1 million in the third quarter of 2017 and increased by 29% to $4.1 million for the nine month period ended September 30, 2017;
  
  
• For the nine month period ended September 30, 2017, Solium incurred capital expenditures of $5.2 million, primarily relating to the build out of the Company's new Calgary headquarters, as well as expansion of its data centre.

Acquisition and bought deal financing

• Subsequent to the quarter end, in October 2017, the Company announced the acquisition of Capshare Inc., a U.S. company that provides a cloud-based platform for cap table management, electronic share tracking, modeling and waterfall analysis and compliance for private companies, for consideration of $13.5 million;
  
  
• On November 1, 2017, the Company closed a bought deal financing for gross proceeds of CAD $46 million.  These funds provide Solium with the flexibility to move quickly on acquisition opportunities as they arise.

Key factors affecting financial results in the three and nine month periods ended September 30, 2017:

• License revenue – License and subscription fees increased by $2.0 million or 16% during the third quarter of 2017 and $3.5 million or 9% for the nine months ended September 30, 2017, as compared to the same periods in 2016. Based on local currencies, the growth was 15% during the third quarter and 9% for the nine months ended September 30, 2017. Growth in license revenue is largely driven by the Morgan Stanley and UBS license agreements in the U.S. entered into in November 2016 and May 2017, respectively.
  
  
• 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 decreased by $0.3 million or 5% during the third quarter and increased by $2.0 million or 11% for the nine months ended September 30, 2017, as compared to the same periods in 2016. The per-participant trading activity was 14% lower in the third quarter of 2017 compared to the same period in 2016 and 6% higher than the historical five-year Q3 average.
  
  
• 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 $3.4 million or 20% during the third quarter of 2017 and $7.4 million or 15% for the nine months ended September 30, 2017, when compared to the same periods in 2016. The increase is primarily as a result of planned hiring to support the Morgan Stanley and UBS partnerships. The Company had 611 full-time equivalent employees (FTEs) at the end of the third quarter of 2017 compared to 502 FTEs at the end of the third quarter of 2016.

Selected financial information for the three and nine month periods ended September 30, 2017:
(Expressed in thousands of USD except per share amounts and percentages)

		Three Months Ended September 30,				Nine Months Ended September 30,
		2017 $	2016 $	% Change	2017 $		2016 $	% Change
Revenue		20,796	19,928	4%	63,643		58,343	9%
Operating expenses		19,563	17,847	10%	56,934		52,868	8%
Adjusted EBITDA^1		1,531	3,846	(60%)	9,002		10,804	(17%)
Earnings from operations		1,233	2,081	(41%)	6,709		5,475	23%
Net (loss) earnings		(112)	1,857	NM^(a)	4,103		3,169	29%
Net (loss) earnings per share^2
	Basic	(0.002)	0.037	NM^(a)	0.081		0.064	27%
	Diluted	(0.002)	0.037	NM^(a)	0.080		0.063	27%
Issued and outstanding
	Common shares				50,984		50,149	2%
	Diluted^3				54,781		53,637	2%

(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 September 30,
	Canada		U.S.		International		Consolidated
	2017	2016	2017	2016	2017	2016	2017	2016
Revenues	7,165	7,180	10,327	9,060	3,304	3,688	20,796	19,928
Adjusted EBITDA^1	1,561	2,037	1,000	1,899	(1,030)	(90)	1,531	3,846
Adjusted EBITDA %^1	22%	28%	10%	21%	(31%)	(2%)	7%	19%
Earnings (loss) from operations	1,019	1,089	1,329	1,208	(1,115)	(216)	1,233	2,081

	Nine Months Ended September 30,
	Canada		U.S.		International		Consolidated
	2017	2016	2017	2016	2017	2016	2017	2016
Revenues	22,006	20,971	30,648	27,078	10,989	10,294	63,643	58,343
Adjusted EBITDA^1	6,067	6,469	3,849	5,141	(914)	(806)	9,002	10,804
Adjusted EBITDA %^1	28%	31%	13%	19%	(8%)	(8%)	14%	19%
Earnings (loss) from operations	4,970	3,547	2,931	3,074	(1,192)	(1,146)	6,709	5,475

Basic net loss per share was $0.002 in the third quarter of 2017 (2016: net earnings per share of $0.037) and $0.081 for the nine month period ended September 30, 2017 (2016: $0.064). 

During the nine month period ended September 30, 2017, the Company had an overall net increase in cash and cash equivalents of $6.6 million from year end December 31, 2016 (2016: $8.1 million). Changes in working capital and cash tax payments brought total cash inflow from operations to $6.4 million during the nine month period ended September 30, 2017 (2016: $5.2 million).

Working capital as at September 30, 2017 was $71.2 million (December 31, 2016: $63.2 million). Included in working capital was trade and other receivables of $18.7 million (December 31, 2016: $16.4 million) and trade and other accruals of $11.2 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 anticipates migrating the first group of Morgan Stanley customers onto Shareworks before the end of 2017.

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 Q2 and Q3, Solium started to add additional employees to support the UBS implementation, and this hiring is anticipated to continue throughout the remainder of 2017 and into 2018. Solium anticipates migrating the first UBS customer to Shareworks before the end of 2017.

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. Solium plans to commit additional resources to both the Capshare and Analytics businesses.

Solium continues to be in an investment phase and remains committed to investing for future revenue growth over the course of 2017 and 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 income, income taxes, depreciation of property and equipment, amortization of intangible assets, foreign exchange gain or loss (on translation of working capital), 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:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016
Adjusted EBITDA	1,531	3,846	9,002	10,804
Foreign exchange (loss) gain	(649)	391	(604)	(853)
Gain on derecognition of liability	-	-	-	445
Sales tax adjustment included in operating expenses	941	(85)	941	(250)
Change in estimate for SRED investment tax credits	-	(683)	-	(2,185)
EBITDA	1,823	3,469	9,339	7,961
Finance income	223	166	606	479
Depreciation of property and equipment	(621)	(337)	(1,345)	(914)
Amortization of intangible assets	(618)	(660)	(1,889)	(1,980)
Income taxes	(919)	(781)	(2,608)	(2,377)
Net (loss) earnings	(112)	1,857	4,103	3,169

	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.

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, 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 migrating the first 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 Condensed Consolidated Interim Financial Statements for the quarter and period ended September 30, 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]