D2L Inc. (TSX: DTOL) (“D2L” or the “Company”), a
global learning technology company, today announced financial
results for its fiscal 2023 first quarter ended April 30, 2022. All
amounts are in U.S. dollars and all figures are prepared in
accordance with International Financial Reporting Standards (IFRS)
unless otherwise indicated.
“We continue to see a healthy demand environment
as more schools, universities and businesses invest in online
learning and digitizing the classroom,” said John Baker, President
and CEO of D2L. “Against this backdrop, it was a solid start to
fiscal 2023, highlighted by 21% revenue growth and a 26% gross
profit increase, with gross margin improvements materializing at a
faster pace. Each month, we are adding important new customers
while continuing to strengthen the value proposition for users
through our investments in platform enhancements.”
“Our conversations with academic and business
leaders reinforce the pressing need for investments in better
learning technology. During past economic cycles, our business has
benefited from the resilience of our end markets, and our
expectation is that investments in improving learning outcomes will
be largely unaffected by the macroeconomic conditions. In the
corporate setting, labour market tightness is emphasizing the
importance of onboarding and upskilling,” added Mr. Baker.
Mr. Baker continued: “As we work to capture this
demand, it has taken us more time than expected to build our own
sales and marketing capacity globally – primarily as a result of
the war for talent that most of the technology industry is
currently experiencing. While we continue scaling, this shift in
timing has affected our revenue growth outlook for fiscal 2023.
With the addition of our new COO, I am happy to report that we have
made good progress improving our operational efficiencies. The net
effect is we now forecast a delay in revenue growth for fiscal 2023
and a reduced EBITDA loss for the year. The fundamentals of the
business are strong and we are on a faster path to
profitability.”
First Quarter Fiscal 2023 Financial
Highlights
- Total revenue of $41.9 million, up
21% from the comparative period in the prior year.
- Annual Recurring Revenue2 increased
by $23.3 million or 17% year-over-year to $159.3 million as at
April 30, 2022, compared with $136.0 million as at April 30,
2021.
- Subscription and support revenue of
$35.8 million, an increase of 17% over the prior year, primarily
attributable to the growth in new customers.
- Professional services and other
revenue of $6.1 million, up 54% from the same period of the prior
year. The increase was driven by several significant new customer
implementations and content development work for new and existing
customers.
- Gross Profit of $26.4 million
(62.9% of revenue), an increase of 26% from Gross Profit of $20.9
million (60.5% of revenue) in the prior year.
- Adjusted EBITDA1 loss of $1.5
million, compared to Adjusted EBITDA loss of $0.1 million for the
comparative period in the prior year.
- Loss for the period decreased to
$4.8 million, compared with a loss for the period of $34.4 million
in the same quarter of the prior year. The year-over-year
improvement was largely the result of the $32.3 million fair value
loss on the redeemable convertible preferred shares that was
recognized in the prior period, with no corresponding impact in the
current period.
- Cash flow used in operating
activities improved 23% year over year to $15.3 million, versus
$19.8 million in the prior year, and Free Cash Flow1 for Q1
improved to negative $16.2 million, compared with negative $19.9
million in the prior year. Cash flows from operations generally
have a seasonal low in the first quarter each year and a seasonal
high in the second quarter each year, due to the contractual timing
of annual invoicing with the Company’s Higher Education customers
located in the United States.
- Strong balance sheet at quarter
end, with cash of $98.1 million and no debt.
1 A non-IFRS financial measure or non-IFRS ratio. Please refer
to “Non-IFRS Financial Measures and Reconciliation of Non-IFRS
Financial Measures” section of this press release.2 Please refer to
“Key Performance Indicators” section of this press release.
First Quarter Business & Operating
Highlights
- Signed a new customer agreement
with Brock University, one of Canada’s top post-secondary
institutions, to deliver D2L Brightspace to more than 19,000
students.
- Signed new customer agreements with
two prestigious universities on the U.S. east coast to deliver D2L
Brightspace to students and faculty.
- Signed a new customer agreement
with the University of Limerick to build a flexible,
technology-enhanced learning platform that responds to digitization
and anticipates the future world of work.
- Signed a new customer agreement
with Breda University of Applied Sciences to help provide students
with a flexible, collaborative and personalized learning experience
underpinned by powerful learning analytics.
- Signed a new agreement with the
National Payroll Institute, which sets the professional standard of
excellence and sharing of critical expertise. The Institute will
soon provide their digital designation programs through D2L
Brightspace.
- Signed a new customer agreement
with Reading in Motion, a not-for-profit organization dedicated to
helping young learners read, deliver programming for students as
well as professional development for staff.
- Signed a new customer agreement
with the Ted Rogers School of Management’s Diversity Institute to
run a project through Brightspace that will reach people at
companies across Canada and ensure their workforces are embracing
diversity and inclusion.
- Named as a SIIA CODiE Award 2022
finalist in nine categories, including Best Learning Management
System and Best Personalized Learning Solution.
First Quarter Fiscal 2023 Financial Results
Selected Financial
Measures
|
Three months ended April 30 |
|
2022 |
2021 |
Change |
Change |
$ |
$ |
$ |
% |
Subscription & Support
Revenue |
35,766 |
30,562 |
5,204 |
17.0% |
Professional Services &
Other Revenue |
6,104 |
3,974 |
2,130 |
53.6% |
Total Revenue |
41,870 |
34,536 |
7,334 |
21.2% |
|
|
|
|
|
Gross Profit |
26,353 |
20,903 |
5,450 |
26.1% |
Adjusted Gross Profit 1 |
26,423 |
20,934 |
5,489 |
26.2% |
Adjusted Gross Margin1 |
63.1% |
60.6% |
|
|
Loss for the period |
(4,763) |
(34,446) |
29,683 |
86.2% |
Adjusted EBITDA (loss)1 |
(1,505) |
(95) |
(1,410) |
-1,484.2% |
Cash Flows from (used in)
Operating Activities |
(15,298) |
(19,781) |
4,483 |
22.7% |
Free Cash Flow1 |
(16,202) |
(19,925) |
3,723 |
18.7% |
1 A non-IFRS financial measure or non-IFRS ratio. Please refer
to the “Non-IFRS Financial Measures and Reconciliation of Non-IFRS
Financial Measures” section of this press release for more
details.
Financial Outlook
The Company updated its previous guidance for the 12 months
ended January 31, 2023 to reflect lower revenue growth and reduced
Adjusted EBITDA loss. Specifically, for fiscal 2023 the Company is
expecting:
- Total revenue in the range of $175 million to $178 million,
implying growth of 15% to 17% over the year ended January 31, 2022
(rather than our previous guidance of total revenue in the range of
$179 million to $182 million, implying growth of 18% to 20% over
the same period); and
- Adjusted EBITDA loss in the range of $9 million to $11 million
(rather than our previous guidance of Adjusted EBITDA loss in the
range of $12 million to $14 million).
D2L continues to see strong market demand for
learning platforms across its education (higher education and K-12)
and corporate markets, consistent with its view entering fiscal
2023. With so many organizations at the early stages of digital
adoption, D2L remains well positioned to help potential customers
replace legacy technology and experiences. The change in the
expected revenue growth for fiscal 2023 mainly reflects the time
required to ramp up the Company’s sales and marketing teams, as
well as the impact of changes in foreign exchange rates,
particularly the strengthening U.S. dollar. In addition, the
Company is now expecting a lower Adjusted EBITDA loss in fiscal
2023, reflecting disciplined cost optimization and a strategic
prioritization of our investments, thereby putting us on an
accelerated path to profitability.
Conference Call & WebcastD2L management
will host a conference call on Thursday, June 9, 2022 at 8:30 am ET
to discuss its first quarter fiscal 2023 financial results.
Date: |
|
Thursday June 9, 2022 |
Time: |
|
8:30 am (ET) |
Dial in
number: |
|
Canada: 1 (226) 828-7575 or 1
(833) 950-0062 United States: 1 (844) 200-6205Access code:
459486 |
Webcast: |
|
A live webcast will be available
at ir.d2l.com/events-and-presentations/events/ |
Replay: |
|
Canada: 1 (226) 828-7578 or US: 1
(866) 813-9403(replay code: 01936) Available until June 16,
2022 |
Forward-Looking InformationThis
press release includes statements containing “forward-looking
information” within the meaning of applicable securities laws. In
some cases, forward-looking information can be identified by the
use of forward-looking terminology such as “plans”, “expects”,
“budget”, “scheduled”, “estimates”, “outlook”, “target”,
“forecasts”, “projection”, “potential”, “prospects”, “strategy”,
“intends”, “anticipates”, “seek”, “believes”, “opportunity”,
“guidance”, “aim”, “goal” or variations of such words and phrases
or statements that certain future conditions, actions, events or
results “may”, “could”, “would”, “should”, “might”, “will”, “can”,
or negative versions thereof, “be taken”, “occur”, “continue” or
“be achieved”, and other similar expressions. Statements containing
forward-looking information are not historical facts, but instead
represent management’s expectations, estimates and projections
regarding future events or circumstances.
This forward-looking information relates to the
Company’s future financial outlook and anticipated events or
results and includes, but is not limited to, statements under the
heading “Financial Outlook” and information regarding: the
Company’s financial position, financial results, business strategy,
performance, achievements, prospects, objectives, opportunities,
business plans and growth strategies; addressable markets for the
Company’s products and solutions; the Company’s budgets, operations
and taxes; the markets in which the Company operates; industry
trends and the Company’s competitive position; expansion of the
Company’s product offerings; the timing and pace for achieving
profitability; and expectations regarding the growth of the
Company’s customer base, revenue and revenue generation
potential.
Forward-looking information is based on certain
assumptions, expectations and projections, and analyses made by the
Company in light of management’s experience and perception of
historical trends, current conditions and expected future
developments and other factors it believes are appropriate,
including the following: the Company’s ability to win business from
new customers and expand business from existing customers; the
timing of new customer wins and expansion decisions by existing
customers; the Company’s ability to generate revenue and expand its
business while controlling costs and expenses; the Company’s
ability to manage growth effectively; the Company’s ability to hire
and retain personnel returning to levels consistent with historical
experiences; the effects of foreign currency exchange rate
fluctuations on our operations; the ability to seek out, enter into
and successfully integrate acquisitions, including the acquisition
of Bayfield Design Inc. (“Bayfield”); business and industry trends,
including the success of current and future product development
initiatives; positive social development and attitudes toward the
pursuit of higher education; the Company’s ability to maintain
positive relationships with its customer base and strategic
partners; the Company’s ability to adapt and develop solutions that
keep pace with continuing changes in technology, education and
customer needs; the ability to patent new technologies and protect
intellectual property rights; the Company’s ability to comply with
security, cybersecurity and accessibility laws, regulations and
standards; the Company’s ability to retain key personnel; and that
the list of factors referenced in the following paragraph,
collectively, do not have a material impact on the Company.
Although the Company believes that the
assumptions underlying such forward-looking information were
reasonable when made, they are inherently uncertain and are subject
to significant risks and uncertainties and may prove to be
incorrect. The Company cautions investors that forward-looking
information is not a guarantee of the future and that actual
results may differ materially from those made in or suggested by
the forward-looking information contained in this press release.
Whether actual results, performance or achievements will conform to
the Company’s expectations and predictions is subject to a number
of known and unknown risks, uncertainties, assumptions and other
factors, including but not limited to: the Company’s ability to
hire and retain personnel returning to levels consistent with
historical experiences; the effects of foreign currency exchange
rate fluctuations on our operating results; and the risks
identified in the Company’s annual and most recently filed interim
management’s discussion and analysis or the Company’s Annual
Information Form for the year ended January 31, 2022. If any of
these risks or uncertainties materialize, or if assumptions
underlying the forward-looking information prove incorrect, actual
results might vary materially from those anticipated in the
forward-looking information.
Given these risks and uncertainties, investors
are cautioned not to place undue reliance on forward-looking
information, including any financial outlook. Any forward-looking
information that is contained in this press release speaks only as
of the date of such statement, and the Company undertakes no
obligation to update any forward-looking information or to publicly
announce the results of any revisions to any of those statements to
reflect future events or developments, except as required by
applicable securities laws. Comparisons of results for current and
any prior periods are not intended to express any future trends or
indications of future performance, unless specifically expressed as
such, and should only be viewed as historical data.
About D2L Inc. (TSX: DTOL)D2L
is transforming the way the world learns—helping learners of all
ages achieve more than they dreamed possible. Working closely with
clients all over the world, D2L is supporting millions of people
learning online and in person. Our growing global workforce is
dedicated to making the best learning products to leave the world
better than they found it. Learn more about D2L for K-12, higher
education and businesses at www.D2L.com.
For further information, please contact: Craig
Armitage, Investor Relations IR@D2L.com (416) 347-8954
D2L INC.Condensed Consolidated Interim Balance
Sheets(In U.S. dollars)
As at April 30, 2022 and January 31, 2022 (Unaudited)
|
|
April 30,2022 |
|
January 31,2022 |
|
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
98,115,482 |
|
$ |
114,675,495 |
|
|
Trade and other receivables |
|
22,682,466 |
|
|
26,155,906 |
|
|
Uninvoiced revenue |
|
2,608,822 |
|
|
2,253,146 |
|
|
Prepaid expenses |
|
7,426,357 |
|
|
7,930,462 |
|
|
Deferred commissions |
|
3,723,299 |
|
|
3,711,334 |
|
|
|
|
134,556,426 |
|
|
154,726,343 |
|
|
|
|
|
Non-current
assets: |
|
|
|
Prepaid expenses |
|
164,987 |
|
|
178,585 |
|
|
Deferred income taxes |
|
164,436 |
|
|
139,101 |
|
|
Right-of-use assets |
|
13,266,437 |
|
|
1,323,017 |
|
|
Property and equipment |
|
2,660,153 |
|
|
2,323,708 |
|
|
Deferred commissions |
|
7,534,453 |
|
|
7,510,242 |
|
|
Intangible assets |
|
5,437,524 |
|
|
5,537,024 |
|
|
Goodwill |
|
7,414,615 |
|
|
7,474,647 |
|
|
|
|
Total assets |
$ |
171,199,031 |
|
$ |
179,212,667 |
|
|
|
|
|
Liabilities and Shareholders' Deficiency |
|
|
|
|
Current
liabilities: |
|
|
|
Accounts payable and accrued
liabilities |
$ |
19,406,405 |
|
$ |
24,340,115 |
|
|
Deferred revenue |
|
70,296,773 |
|
|
82,915,871 |
|
|
Lease liabilities |
|
1,160,155 |
|
|
1,199,013 |
|
|
Provisions |
|
3,265,449 |
|
|
3,265,449 |
|
|
|
|
94,128,782 |
|
|
111,720,448 |
|
|
|
|
|
Non-current
liabilities: |
|
|
|
Deferred income taxes |
|
372,085 |
|
|
418,403 |
|
|
Lease liabilities |
|
13,036,037 |
|
|
693,921 |
|
|
|
|
13,408,122 |
|
|
1,112,324 |
|
|
|
|
107,536,904 |
|
|
112,832,772 |
|
Shareholders'
equity: |
|
|
|
Share capital |
|
354,945,019 |
|
|
354,277,986 |
|
|
Additional paid-in
capital |
|
43,118,321 |
|
|
41,686,794 |
|
|
Accumulated other
comprehensive loss |
|
(3,384,373 |
) |
|
(3,330,708 |
) |
|
Deficit |
|
(331,016,840 |
) |
|
(326,254,177 |
) |
|
|
63,662,127 |
|
|
66,379,895 |
|
Commitments and
contingencies |
|
|
Related party
transactions |
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity |
$ |
171,199,031 |
|
$ |
179,212,667 |
|
D2L INC.Condensed Consolidated Interim
Statements of Comprehensive Loss(In U.S. dollars)
For the three months ended April 30, 2022 and 2021
(Unaudited)
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
Revenue: |
|
|
|
Subscription and support |
$ |
35,766,503 |
|
$ |
30,561,610 |
|
|
Professional services and other |
|
6,103,581 |
|
|
3,974,148 |
|
|
|
|
41,870,084 |
|
|
34,535,758 |
|
Cost of
revenue: |
|
|
|
Subscription and support |
|
11,438,628 |
|
|
11,058,046 |
|
|
Professional services and other |
|
4,078,365 |
|
|
2,575,144 |
|
|
|
|
15,516,993 |
|
|
13,633,190 |
|
|
|
|
|
Gross profit |
|
26,353,091 |
|
|
20,902,568 |
|
|
|
|
|
Expenses: |
|
|
|
Sales and marketing |
|
13,057,090 |
|
|
10,136,350 |
|
|
Research and development |
|
11,285,167 |
|
|
8,324,831 |
|
|
General
and administrative |
|
6,407,040 |
|
|
4,349,399 |
|
|
|
|
30,749,297 |
|
|
22,810,580 |
|
|
|
|
|
Loss from
operations |
|
(4,396,206 |
) |
|
(1,908,012 |
) |
|
|
|
|
Interest and other
income (expense): |
|
|
|
Interest expense |
|
(237,600 |
) |
|
(115,358 |
) |
|
Interest income |
|
18,246 |
|
|
2,911 |
|
|
Loss on redeemable convertible
preferred shares |
|
- |
|
|
(32,315,296 |
) |
|
Foreign
exchange gain (loss) |
|
(28,218 |
) |
|
4,298 |
|
|
|
|
(247,572 |
) |
|
(32,423,445 |
) |
|
|
|
|
Loss before income
taxes |
|
(4,643,778 |
) |
|
(34,331,457 |
) |
|
|
|
|
Income taxes
(recovery): |
|
|
|
Current |
|
189,516 |
|
|
54,283 |
|
|
Deferred |
|
(70,631 |
) |
|
60,385 |
|
|
|
|
118,885 |
|
|
114,668 |
|
|
|
|
|
Loss for the
period |
|
(4,762,663 |
) |
|
(34,446,125 |
) |
|
|
|
|
Other
comprehensive income (loss): |
|
|
|
Foreign
currency translation income (loss) |
|
(53,665 |
) |
|
420,048 |
|
Comprehensive loss |
$ |
(4,816,328 |
) |
$ |
(34,026,077 |
) |
|
|
|
|
Loss per share –
basic |
$ |
(0.09 |
) |
$ |
(1.26 |
) |
Loss per share –
diluted |
|
(0.09 |
) |
|
(1.26 |
) |
|
|
|
Weighted average
number of common shares – basic |
|
52,987,915 |
|
|
27,404,171 |
|
Weighted average
number of common shares – diluted |
|
52,987,915 |
|
|
27,404,171 |
|
D2L INC.Condensed Consolidated Interim
Statements of Shareholders' Equity (Deficiency)(In U.S.
dollars)
For the three months ended April 30, 2022 and
2021(Unaudited)
|
Share Capital |
Additional paid-in |
|
|
Accumulated other |
|
Deficit |
|
Total |
|
|
Shares |
Amount |
|
capital |
|
|
comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January 31, 2022 |
52,912,502 |
$ |
354,277,986 |
|
$ |
41,686,794 |
|
|
$ |
(3,330,708 |
) |
$ |
(326,254,177 |
) |
$ |
66,379,895 |
|
Issuance of Subordinate Voting
Shares on exercise of options |
85,774 |
|
667,033 |
|
|
(218,526 |
) |
|
|
– |
|
|
– |
|
|
448,507 |
|
Stock-based compensation |
– |
|
– |
|
|
1,650,053 |
|
|
|
– |
|
|
– |
|
|
1,650,053 |
|
Other comprehensive loss |
– |
|
– |
|
|
– |
|
|
|
(53,665 |
) |
|
– |
|
|
(53,665 |
) |
Loss
for the period |
– |
|
– |
|
|
– |
|
|
|
– |
|
|
(4,762,663 |
) |
|
(4,762,663 |
) |
Balance, April 30, 2022 |
52,998,276 |
$ |
354,945,019 |
|
$ |
43,118,321 |
|
|
$ |
(3,384,373 |
) |
$ |
(331,016,840 |
) |
$ |
63,662,127 |
|
|
|
|
|
|
|
|
Balance, January 31, 2021 |
26,468,768 |
$ |
217,633 |
|
$ |
45,285,371 |
|
|
$ |
(4,190,459 |
) |
$ |
(228,601,100 |
) |
$ |
(187,288,555 |
) |
Issuance of Class O common
shares on exercise of options |
1,487,696 |
|
17,374,174 |
|
|
(6,307,665 |
) |
|
|
– |
|
|
– |
|
|
11,066,509 |
|
Stock-based compensation |
– |
|
– |
|
|
389,417 |
|
|
|
– |
|
|
– |
|
|
389,417 |
|
Other comprehensive
income |
– |
|
– |
|
|
– |
|
|
|
420,048 |
|
|
– |
|
|
420,048 |
|
Loss for the period |
– |
|
– |
|
|
– |
|
|
|
– |
|
|
(34,446,125 |
) |
|
(34,446,125 |
) |
|
|
|
|
|
|
|
Balance, April 30, 2021 |
27,956,464 |
$ |
17,591,807 |
|
$ |
39,367,123 |
|
|
$ |
(3,770,411 |
) |
$ |
(263,047,225 |
) |
$ |
(209,858,706 |
) |
|
|
|
|
|
|
|
D2L INC.Condensed Consolidated Interim
Statements of Cash Flows(In U.S. dollars)
For the three months ended April 30, 2022 and
2021(Unaudited)
|
|
|
|
2022 |
|
|
2021 |
|
Operating
activities: |
|
|
|
Loss for the
period |
$ |
(4,762,663 |
) |
$ |
(34,446,125 |
) |
|
Items not
involving cash: |
|
|
|
|
Depreciation of property and
equipment |
|
557,254 |
|
|
342,165 |
|
|
|
Depreciation of right-of-use
assets |
|
629,323 |
|
|
414,379 |
|
|
|
Amortization of intangible
assets |
|
55,645 |
|
|
4,706 |
|
|
|
Fair value loss on redeemable
convertible preferred shares |
|
– |
|
|
32,315,296 |
|
|
|
Stock-based compensation |
|
1,650,053 |
|
|
389,417 |
|
|
|
Net interest expense |
|
219,354 |
|
|
112,447 |
|
|
|
Income tax expense |
|
118,885 |
|
|
114,668 |
|
|
Changes in
operating assets and liabilities: |
|
|
|
|
Trade and other
receivables |
|
3,214,425 |
|
|
(10,467,540 |
) |
|
|
Uninvoiced revenue |
|
(372,689 |
) |
|
1,663,236 |
|
|
|
Prepaid expenses |
|
452,896 |
|
|
(1,757,859 |
) |
|
|
Deferred commissions |
|
(214,492 |
) |
|
88,734 |
|
|
|
Accounts payable and accrued
liabilities |
|
(4,965,676 |
) |
|
(3,936,673 |
) |
|
|
Deferred revenue |
|
(11,953,677 |
) |
|
(4,517,770 |
) |
|
|
Right-of-use assets and lease
liabilities |
|
129,413 |
|
|
(18,810 |
) |
|
Interest
received |
|
18,246 |
|
|
2,911 |
|
|
Interest paid |
|
(74,299 |
) |
|
(52,775 |
) |
|
Income
taxes paid |
|
– |
|
|
(31,900 |
) |
|
Cash flows
used in operating activities |
|
(15,298,002 |
) |
|
(19,781,493 |
) |
|
|
|
|
|
Financing
activities: |
|
|
|
Payment of lease
liabilities |
|
(547,484 |
) |
|
(559,367 |
) |
|
Proceeds from
exercise of stock options |
|
448,507 |
|
|
11,066,509 |
|
|
Borrowings on
credit facility |
|
– |
|
|
7,000,003 |
|
|
Cash flows
(used in) from financing activities |
|
(98,977 |
) |
|
17,507,145 |
|
|
|
|
|
|
Investing
activities: |
|
|
|
Purchase of
property and equipment |
|
(904,353 |
) |
|
(143,752 |
) |
|
Issuance of
shareholder loan |
|
– |
|
|
(16,648,465 |
) |
|
Cash flows
used in investing activities |
|
(904,353 |
) |
|
(16,792,217 |
) |
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents |
|
(258,681 |
) |
|
375,406 |
|
Decrease in cash
and cash equivalents |
|
(16,560,013 |
) |
|
(18,691,159 |
) |
Cash and cash
equivalents, beginning of period |
|
114,675,495 |
|
|
45,303,944 |
|
Cash and cash equivalents, end of period |
|
98,115,482 |
|
|
26,612,785 |
|
Non-IFRS Financial Measures and
Reconciliation of Non-IFRS Financial MeasuresThe
information presented within this press release refers to certain
non-IFRS financial measures (including non-IFRS ratios) including
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Gross Profit,
Adjusted Gross Margin, Free Cash Flow and Free Cash Flow Margin.
These measures are not recognized measures under IFRS and do not
have a standardized meaning prescribed by IFRS. Non-IFRS financial
measures should not be considered in isolation nor as a substitute
for analysis of the Company’s financial information reported under
IFRS and are unlikely to be comparable to similar measures
presented by other issuers. Rather, these measures are provided as
additional information to complement those IFRS measures by
providing further understanding of the Company’s results of
operations, financial performance and liquidity from management’s
perspective and thus highlight trends in its core business that may
not otherwise be apparent when relying solely on IFRS measures. The
Company believes that securities analysts, investors and other
interested parties frequently use non-IFRS financial measures in
the evaluation of the Company. The Company’s management also uses
non-IFRS financial measures to facilitate operating performance
comparisons from period to period, to prepare annual operating
budgets and forecasts, and to assess our ability to meet our
capital expenditures and working capital requirements.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA is defined as net income (loss),
excluding interest, taxes, depreciation and amortization (or
EBITDA), as adjusted for changes in the fair value of redeemable
preferred shares, stock-based compensation, foreign exchange gains
and losses, transaction-related expenses and other income and
losses. Adjusted EBITDA Margin is calculated as Adjusted EBITDA
expressed as a percentage of total revenue. The following table
reconciles Adjusted EBITDA to net income (loss), and discloses
Adjusted EBITDA Margin, for the periods indicated:
(in thousands of
U.S. dollars, except for percentages) |
Three months ended April 30 |
2022 |
|
2021 |
|
Loss for the period |
(4,763 |
) |
(34,446 |
) |
Loss on redeemable convertible
preferred shares |
- |
|
32,315 |
|
Stock-based compensation |
1,650 |
|
389 |
|
Foreign exchange loss
(gain) |
28 |
|
(4 |
) |
Transaction-related
costs(1) |
- |
|
663 |
|
Interest expense net of
interest income |
219 |
|
112 |
|
Income tax expense |
119 |
|
115 |
|
Depreciation and
amortization |
1,242 |
|
761 |
|
Adjusted
EBITDA |
(1,505 |
) |
(95 |
) |
Adjusted EBITDA
Margin |
-3.6 |
% |
-0.3 |
% |
(1) These costs include professional, legal,
consulting and accounting fees incurred in connection with the
Company’s initial public offering, which closed on November 3,
2021, and related other activities, and are not considered
indicative of continuing operations. These costs did not meet the
criteria for capitalization and thus were expensed in the Company’s
consolidated statements of comprehensive loss. Share issuance costs
that met the criteria for capitalization are described in Note
13(b) of the Company’s annual audited consolidated financial
statements.
Adjusted Gross Profit and Adjusted Gross
Margin
Adjusted Gross Profit is defined as gross profit
excluding related stock-based compensation expenses. Adjusted Gross
Margin is calculated as Adjusted Gross Profit expressed as a
percentage of total revenue. The following table reconciles
Adjusted Gross Margin to gross profit expressed as a percentage of
revenue, for the periods indicated:
|
Three months ended April 30 |
(in thousands of U.S. dollars, except for
percentages) |
2022 |
|
2021 |
|
Gross profit for the
period |
26,353 |
|
20,903 |
|
Stock based compensation |
70 |
|
31 |
|
Adjusted Gross
Profit |
26,423 |
|
20,934 |
|
Adjusted Gross
Margin |
63.1 |
% |
60.6 |
% |
Free Cash Flow and Free Cash Flow
Margins
Free Cash Flow is defined as cash provided by
(used in) operating activities less net additions to property and
equipment. Free Cash Flow Margin is calculated as Free Cash Flow
expressed as a percentage of total revenue.
The following table reconciles cash flow from operating
activities to Free Cash Flow, and discloses Free Cash Flow Margin,
for the periods indicated:
|
Three months ended April 30 |
(in thousands of U.S. dollars, except for
percentages) |
2022 |
|
2021 |
|
Cash flow used in operating
activities |
(15,298 |
) |
(19,781 |
) |
Purchase of property and
equipment, net of proceeds on disposal |
(904 |
) |
(144 |
) |
Free Cash
Flow |
(16,202 |
) |
(19,925 |
) |
Free Cash Flow
Margin |
-38.7 |
% |
-57.7 |
% |
Management uses a number of metrics, including
the key performance indicators identified below, to help us
evaluate our business, measure our performance, identify trends
affecting our business, formulate business plans and make strategic
decisions. Our key performance indicators may be calculated in a
manner different than similar key performance indicators used by
other issuers. These metrics are estimated operating metrics and
not projections, nor actual financial results, and are not
indicative of current or future performance.
- Annual
Recurring Revenue: We define Annual Recurring Revenue as the
annualized equivalent value of subscription revenue from all
existing customer contracts as at the date being measured,
exclusive of the implementation period. Our calculation of Annual
Recurring Revenue assumes that customers will renew their
contractual commitments as those commitments come up for renewal.
We believe Annual Recurring Revenue provides a reasonable,
real-time measure of performance in a subscription-based
environment and provides us with visibility for potential growth to
our cash flows. We believe that an increasing Annual Recurring
Revenue indicates the continued strength in the expansion of our
business, and will continue to be our focus on a go-forward basis.
Annual recurring revenue as at April 30, 2022 was $159.3 million
($136.0 million as at April 30, 2021).
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