VersaPay Announces Q3 2015 Financial Results

- Solutions Business Grows by 80% Year over Year -

TORONTO, Nov. 24, 2015 /CNW/ - VersaPay Corporation (TSXV: VPY) ("VersaPay" or the "Company"), a leading provider of cloud-based invoicing, accounts receiv­able management and payment solutions, today announced third quarter (Q3) financial results for the three and nine-month period ended September 30, 2015.

"Over the third quarter, we saw continued growth in our solutions business as exhibited by an 80% year over year increase in revenue," said Craig O'Neill, CEO of VersaPay. "Over the past year, we have focused on driving our ARC™ solution forward by investing in R&D and marketing, and by expanding our sales team to ramp up customer wins. This investment has resulted in 25 suppliers signed to date, with 13 live and using the platform every day. The live suppliers have also registered over 10,000 of their customers on ARC™ so far, resulting in over $8 million of invoices being processed through our platform to date."

"In addition to the success we have had with customer and revenue growth, during the quarter we introduced our newest version of ARC™ based on feedback we have been receiving through our constant engagement with our early adopters," continued Craig O'Neill. "At VersaPay, our strategy is to continuously drive innovation and offer the best solution for our supportive clients, and to continue being a driving force within the accounts receivable automation market."

Financial Highlights:

• VersaPay Solutions revenue for Q3 2015 increased by 79.3% to $0.23 million, compared to $0.13 million in Q3 2014. VersaPay Solutions revenue for the nine months ended September 30, 2015 increased by 66% to $0.59 million compared to $0.35 million for the nine months ended September 30, 2014.
• Total revenue for Q3 2015 increased by 2.0% to $1.39 million compared to $1.36 million in Q3 2014. Total revenue for the nine months ended September 30, 2015 increased by 1.28% to $4.04 million compared to $3.98 million for the nine months ended September 30, 2014. The total revenue for the quarter was negatively impacted due to a one time voluntary reimbursement of $127,621 that the Company made to Chase Paymentech ("Chase"), one of VersaPay's payment partners. The reimbursement was the result of Chase's rebates to certain point of sale (POS) clients due to an administrative problem, which resulted in Chase overcharging some of their client's accounts. This amount was accrued in accounts payable and treated as a reduction in POS revenues. Excluding the impact of the Chase rebate, total revenues would have increased by 11.4% to $1.51 million for the three month period ended September 30, 2015, and increased by 4.5% to $4.16 million for the nine months ended September 30, 2015.
• POS Merchant Services revenue for Q3 2015 decreased by 6.1% to $1.16 million compared to $1.23 million in Q3 2014. POS Merchant Services revenue for the nine months ended September 30, 2015 decreased by 5.0% to $3.45 million compared to $3.63 million for the nine months ended September 30, 2014. The decrease in POS Merchant Services revenues was mainly due to the Chase rebate as discussed above. Excluding the impact of the Chase rebate, POS Merchant Services revenue would have increased by 4.3% to $1.28 million for the three month period ended September 30, 2015, and decreased by 1.5% to $3.58 million for the nine months ended September 30, 2015, compared to the same periods in 2014. Gross margin percentages for the three-month period ended September 30, 2015 were 52.9%, compared to 61.8% in Q3 2014. Gross margin percentages for the nine-month period ended September 30, 2015 were 56.8%, compared to 62.3% for the nine-month period ended September 30, 2014.
• Cash operating expense (excluding non-cash operating items) increased 37% to $2.25 million in Q3 2015 from $1.64 million in Q3 2014. Cash operating expense (excluding non-cash operating items) for the nine-months ended September 30, 2015 increased 37% to $6.05 million compared to $4.40 million for the nine-months ended September 30, 2014. The increase reflects the Company's strategy of building the VersaPay Solutions business.
• Adjusted EBITDA⁽¹⁾ of ($1.16) million in Q3 2015, compared to ($0.78) million in Q3 2014 and Adjusted EBITDA of ($3.40) million for the nine-months ended September 30, 2015, compared to ($1.86) million for the same period in 2014, in keeping with the Company's plans to invest in the VersaPay Solutions business.
• Total comprehensive loss for Q3 2015 was $(1.63) million compared to a loss of $(1.08) million for Q3 2014, and total comprehensive loss for the nine-months ended September 30, 2015 of ($4.11) million compared to a loss of ($2.61) million for the same period in 2014, in keeping with the Company's plans to invest in the VersaPay Solutions business.
• As at September 30, 2015, the Company had cash on hand of $4.25 million compared to $5.16 million as at June 30, 2015

(1) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization, share-based payments, other income and expense, and other comprehensive income. Adjusted EBITDA 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. It should not be considered in isolation as a substitute for measures of performance prepared in accordance with IFRS. Please refer to the Company's management's discussion and analysis for the quarter ended September 30, 2015 for further information on the Company's use of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net earnings. 

Operational Highlights:

• During the quarter, the Company:
  • Signed a U.S. print media company as major new ARC™ customer;
  • Acquired its 20^th customer and reached the 8,000 user threshold on its ARC™ Solution;
  • Announced the closure of its U.S. office as part of the Company's change in US channel partner strategy.
    
    
• Subsequent to the quarter, the Company:
  • Presented at the 2^nd annual StableView Asset Management Tech15 Conference;
  • Introduced its newest version of ARC™ to the market;
  • Announced Sihl Incorporated as its 25^th ARC™ customer;
  • Was selected as 1 of the 20 most innovative public companies in Canada by the Canadian Innovation Exchange (CIX).

Conference Call Details:

Date: Wednesday, November 25, 2015
Time: 9:00 AM Eastern Time

Participant Dial-in Numbers:
Local – Toronto ([phone]
Toll Free – North America ([phone]
Conference ID: 24002468

Recording Playback Numbers:
Toronto ([phone]
Toll Free – North America ([phone]
Passcode: 002468 #
Expiry Date: Wednesday, December 2, 2015 9:00 AM

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 leading cloud-based invoice presentment and payment provider for businesses of all sizes. VersaPay's ARC™ software-as-a-service offering allows businesses to easily deliver customized electronic invoices to their customers, to accept credit card and EFT payments and automatically reconcile payments to their ERP and accounting software. VersaPay is headquartered in Toronto, Canada and has operations in Montreal.

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

David CW Chan, Chief Financial Officer, VersaPay Corporation, 647-258-9475, [email protected]; 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]