VersaPay Announces Q1 2018 Financial Results

- ARC Annual Recurring Revenue Grows by 146% Year over Year -

TORONTO, May 29, 2018 /CNW/ - VersaPay Corporation (TSXV: VPY) ("VersaPay" or the "Company"), a leading provider of cloud-based invoice-to-cash solutions including electronic invoice presentment and payment, automated accounts receivable, cash application and collections management, today announced first quarter ("Q1") financial results for the three-month period ended March 31, 2018.

"We are very pleased with our start to the 2018 fiscal year as we are seeing a rapid increase in our ARC Annual Recurring Revenue (ARR)," said Craig O'Neill, CEO of VersaPay. "We continue to see more and more businesses across our target industries actively seeking to improve their accounts receivable and our pipeline and new signings are gaining momentum as a result."

Mr. O'Neill continued, "ARC ARR at the end of the quarter was two and a half times that of the first quarter of last year, and for the first time ever has exceeded the ARR of our payments solution PayPort.  This growth is thanks to our direct marketing and sales teams which were expanded in Q4 to increase our reach in the US. As our new team members get further up the learning curve and build their pipelines we expect this growth to accelerate.  Our progress in channel sales will further add to our growth in the second half of the year."

Operational Highlights:

• Strong new sales for ARC™. 11 new clients were signed in the quarter, excluding sales of ARC Small Business Edition. This represent the Company's strongest sales quarter ever and was made up of seven sales in the US, and four sales in Canada.  Two of these sales came from channel partners and the remainder were from VersaPay's direct sales efforts.  These results are a direct outcome of the US expansion plan the Company embarked on in Q4 of 2017.  The plan included expanding the sales team in the US and increasing VersaPay's digital marketing investment, both of which had an immediate impact in Q1."
  
  
• Strong increases in ARC™ usage metrics: At the end of Q1 2018, 106,749 end-customers were using ARC™ compared to 42,291 at the end of March 31, 2017, and approximately 392,000 invoices were delivered to end-customers during the quarter compared to 254, 000 invoices in Q1 2017. Total payments in Q1 2018 were $155.8 million, compared to $51 million in Q1 2017 and $101.0 million in Q4 2017. 
  
  
• Expanded Channel program: The first Value-Added Reseller (VAR) that specializes in the sale and implementation of the Sage Intacct ERP system was signed in Q1. This marks the first of many VARs the Company plans to sign as part of its channel strategy.  VARs are well-positioned to sell and implement ARC with as a natural extension of the current business they do with their clients.  VersaPay is marketing to VARs that specialize in Sage Intacct, Oracle JDE and Accumatica – a community of more than 5,000 companies.

Financial Highlights:

• Total Annual Recurring Revenue ("ARR") as of Q1 2018 was $3.72 million, compared to $1.93 million as of Q1 2017, an increase of 93%.
• Annual Recurring Revenue from ARC as of Q1 2018 was $1.92 million compared to $0.78 million in Q1 2017, an increase of 146%.
• Total Revenue for Q1 2018 increased by 108.1% to $1.01 million compared to $0.49 million in Q1 2017.
• Gross margin percentage for Q1 2017 was 66.7%, compared to 56.4% in Q1 2017.
• Adjusted EBITDA⁽¹⁾ was ($2.51) million in Q1 2018, compared to ($1.80) million in Q1 2017.
• Total comprehensive loss for Q1 2018 was ($2.68) million, compared to a gain of 7.01 million for Q1 2017, which included earnings from the now discontinued POS Merchant Services segment of the business.
• Total operating expense for the first quarter March 31, 2018 increased by 60.3% to $3.44 million, compared to $2.17 million for the three-months ended March 31, 2017.
• As at March 31, 2018, the Company had cash on hand of $13.40 million compared to $15.83 million as at December 31, 2017.

The term Adjusted EBITDA ("Adjusted EBITDA") is a non-IFRS measure and refers to earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") and is a non-IFRS financial measure which does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. Adjusted EBITDA provides useful information to users as it reflects the net earnings prior to the effect of non-operating expenses and unusual items such as discontinued operations. Management uses Adjusted EBITDA in measuring the financial performance of the Company as this measure reflects results that are controllable by management in day-to-day operations. Management monitors Adjusted EBITDA against budget and past results on a regular basis

The term Monthly Recurring Revenue ("MRR") is a non-IFRS measure and includes revenues earned in a given month relating to monthly fixed subscription fee, monthly transaction fees, ARC LiteÔ revenue, and PayPortÔ revenue. MRR is a common metric used in Software as a Service ("SaaS") companies and its definition is not guided by IFRS standards.  Accordingly, MRR is unlikely to be comparable to similar measures presented by other issuers.

The term ARR is a non-IFRS measure and refers to the sum of:

• multiplying the ARC MRR value defined above by 12 to represent management's best estimate of forward looking 12 months of recurring revenues that the Company would earn based on the current MRR, and
• Average monthly normalized Payport revenues over the past 12 months

Conference Call Details:

Date: Wednesday, May 30, 2018
Time: 9:00 AM Eastern Time

Participant Dial-in Numbers:
Local – Toronto ([phone]
Toll Free – North America ([phone]
Conference ID: 91346247

Recording Playback Numbers:
Toronto ([phone]
Toll Free – North America ([phone]
Passcode: 346247 #
Expiry Date: Wednesday, June 6, 2018, 11:59pm

A live audio webcast and archive of the conference call will be available by visiting the Company's website at http://www.versapay.com/company/investor-relations/. Please connect at least 15 minutes prior to the conference call to ensure time for any software download that may be needed to hear the webcast.

About VersaPay

VersaPay is a Fintech company and leading provider of cloud-based invoice-to-cash solutions, enabling businesses to provide a superior customer experience, get paid faster, streamline financial operations, and dramatically reduce DSO and costs. VersaPay ARC is the new standard in accounts receivable and collections management with a customer self-service environment to view invoices online, collaborate on inquiries and disputes, and facilitate secure online payments (EFT/ACH and credit card). Businesses gain access to a suite of powerful tools that enable efficient collections, cash application and real-time insight into accounts receivable. VersaPay ARC automatically reconciles payments and account information through integrations with a wide range of ERPs and accounting software providers.

More information about VersaPay can be found on the Company's website at www.versapay.com or under the Company's profile on SEDAR at www.sedar.com.

Forward Looking and Other Cautionary Statements

This news release contains "forward-looking information" which may include, but is not limited to, statements with respect to the activities, events or developments that the Company expects or anticipates will or may occur in the future. Such forward-looking information is often, but not always, identified by the use of words and phrases such as "plans," "expects," "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved.

These forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business. Management believes that these assumptions are reasonable. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, risks related to the speculative nature of the Company's business, the Company's formative stage of development and the Company's financial position.

Forward-looking statements contained herein are made as of the date of this news release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE VersaPay Corporation

please contact: John McLeod, Vice President, Marketing, VersaPay Corporation, 647-258-9406, [email protected]; Babak Pedram, Investor Relations, Virtus Advisory Group Inc., 416-644-5081, [email protected]

Related Links

www.versapay.com