- Annual Recurring Revenue increases 26% YoY to $51.2 million
- Subscription Revenue grows 23% YoY to $11.7 million
VANCOUVER, BC, Aug. 3, 2023
/CNW/ - Copperleaf Technologies Inc. (TSX: CPLF) ("Copperleaf" or
the "Company"), a provider of enterprise decision analytics
software solutions, today announced financial results for the three
and six months ended June 30, 2023.
All amounts are expressed in Canadian dollars unless otherwise
stated.
"Copperleaf delivered a 26% YoY increase in Annual Recurring
Revenue, and a 23% YoY increase in subscription revenue in the
second quarter. This represents material year-over-year growth
despite uncertain market conditions persisting in most of our
geographies. Our ability to unlock value, through improved capital
efficiency and increased alignment of resource allocation with our
client's strategy is a huge benefit under constrained conditions.
These results are a great indication that we are gaining traction
in articulating that value to clients." said Paul Sakrzewski,
CEO of Copperleaf.
"In the second quarter, Copperleaf welcomed Società Gasdotti
Italia, Italy's second largest gas
transmission operator, as its first client in Italy. Additionally, Copperleaf secured its
first client in Ireland and its
first Oil and Gas client in Europe, validating our strategic investments
in these regions and our deliberate, programmatic approach to
introducing Copperleaf's solutions to new industries," added
Mr. Sakrzewski. "Momentum also continues to
build across our Alliance Ecosystem, and following our announcement
in Q1, we have now achieved Premium Certification and are live on
the SAP store, marking the onset of joint go-to-market activities
between Copperleaf and SAP."
"For the remainder of 2023, we will remain focused on executing
our go-to-market strategy and further strengthening our global
salesforce, while prudently managing our expenses. The maturation
of our global go-to-market approach, supported by increasing
partner traction, will drive ARR and pipeline growth in the second
half of the year. With continued innovation in our market leading
solutions, a strong balance sheet, and a growing client base, we
are poised to extend our leadership position and drive future
growth." Mr. Sakrzewski concluded.
Second Quarter 2023 Financial Highlights
(All Capitalized terms used but not defined in this press
release have the meanings ascribed to them in Management's
Discussion and Analysis for the three and six months ended
June 30, 2023; Comparison periods in
each case are the three months ended June
30, 2022, unless otherwise stated)
- Revenue of $18.5 million, a
decrease of 10% compared to Q2 2022, driven primarily by a 97%
decrease in perpetual and term-based software license revenue over
Q2 2022.
- Annual Recurring Revenue1 as at June 30, 2023 of $51.2
million, a 26% increase from $40.6
million as at June 30,
2022.
- Subscription revenue of $11.7
million, an increase of 23% over Q2 2022.
- Gross profit of $12.8 million
representing a Gross margin of 69%, a 19% decrease from
$15.7 million and a Gross margin of
76% in Q2 2022. Gross margin decreased temporarily primarily due to
a decrease in perpetual and term-based software license revenue, an
increase in subcontractor costs for the quarter, plus increased
headcount and product support related to our growing client
base.
- Adjusted EBITDA1 loss of $10.6 million, compared to Adjusted
EBITDA1 loss of $5.8
million in Q2 2022.
- Net loss of $12.6 million, or a
loss of $0.18 per basic and diluted
share, compared to a net loss of $7.4
million, or a loss of $0.11
per basic and diluted share, in Q2 2022.
- As of June 30, 2023, the
Company's Net Revenue Retention Rate1 was 111% compared
to 107% as of June 30, 2022
- As of June 30, 2023, Copperleaf's
Revenue Backlog1 grew 16% to $107.7 million compared to $93.0 million, as of June
30, 2022.
- Strong balance sheet with cash and cash equivalents of
$62 million, short-term investments
of $55 million, and long-term
investments of $20 million as at
June 30, 2023.
Key Developments
- In Q2, Copperleaf made further progress on geographic and
industry sector expansion, closing its first clients in
Ireland, Italy, and its first Oil and Gas client in
Europe.
- Further to the public announcement in Q1 of Copperleaf and SAP
entering into an Endorsed Apps agreement, the Company has now
achieved Premium Certification and is live on the SAP store. This
milestone means that Copperleaf has passed stringent security and
interoperability requirements enabling organizations to add
Copperleaf to their SAP ecosystem with confidence. Achievement of
Premium Certification and inclusion on the store is the trigger for
the commencement of joint go-to-market activities between
Copperleaf and SAP.
- During the quarter, the Company released its inaugural
Environmental, Social and Governance (ESG) Report for the year
ended December 31, 2022. The ESG
Report includes responses to the recommendations outlined in the
Task Force on Climate Related Disclosures (TCFD) framework and
shares the Company's progress and plans to address important ESG
issues, in addition to showcasing Copperleaf's internal and
external ESG impact.
- The Company convened the first in-person Global Copperleaf
Summit since 2019 in Vancouver,
exceeding client attendance goals and record attendance from
partners.
- In Q2, Copperleaf saw growing engagement in Copperleaf
Community working groups, with the introduction of the H2O water
working group and held five working group meetings in the
quarter.
- During Q2, Copperleaf released version 23.2 of its product
suite which included numerous new features comprising:
-
- Interactive GIS Experience, a new chargeable option where users
can improve their decision making and storytelling on their asset
management plans by directly visualizing their Copperleaf Asset
results in ESRI's ArcGIS (Geographic Information System)
system.
- New enterprise-standard SCIM (System for Cross-domain Identity
Management) API which enables automatic management of users and
groups directly through user management systems such as Azure
Active Directory or OKTA.
_______________________________
|
1 Please
refer to "Non-IFRS Measures" section of this press
release
|
Q2 2023 Financial Results Conference Call Details
Paul Sakrzewski, Chief Executive Officer and Chris Allen, Chief Financial Officer, will host
a conference call followed by a question-and-answer session today,
August 3, 2023, at 5:00 PM ET.
Date: August 3, 2023
Time: 5:00pm ET
Dial-In Number: 416-764-8659 or 1-888-664-6392
Webcast: https://app.webinar.net/XnPBaNd830V
Replay: 416-764-8677 or 1-888-390-0541 (Available until
August 10, 2023)
Replay Entry Code: 264037#
Key Performance Indicators
The Company monitors a number of key performance indicators
(KPIs) to evaluate performance. Some of the KPIs used by management
are recognized under IFRS, whereas others are non-IFRS measures and
are not recognized under IFRS. These non-IFRS measures are included
as additional information to complement the IFRS measures,
providing further understanding of our results of operations from
management's perspective. We believe that non-IFRS financial
measures are useful to investors and others in assessing our
performance; however, these measures should not be considered as a
substitute for reported IFRS measures nor should they be considered
in isolation. As these measures are not recognized measures under
IFRS, they do not have a standardized meaning prescribed by IFRS
and therefore may not be comparable to similar measures presented
by other companies. For a reconciliation of non-IFRS measures to
the most directly comparable measures calculated in accordance with
IFRS, see section "Non-IFRS Measures" below.
1Non-IFRS Measures
Annual Recurring Revenue ("ARR")
We define ARR as the annualized equivalent value of the
subscription and term-based software license revenue of all
existing contracts as at the date being measured, excluding
non-recurring SaaS and hosting fees. Our clients generally enter
into three-to-five-year contracts that are non-cancelable or
cancelable with penalty. Our calculation of Annual Recurring
Revenue assumes that clients will renew the contractual commitments
on a periodic basis as those commitments come up for renewal.
Subscription and term-based software license agreements are subject
to price increases upon renewal reflecting both inflationary
increases and the additional value provided by our solutions. In
addition to the expected increase in subscription and term-based
software license revenue from price increases over time, existing
clients may subscribe for additional products or services during
the term. We believe that this measure provides a fair real-time
measure of performance in a subscription-based environment.
Net Revenue Retention Rate
We believe that our Net Revenue Retention Rate is a key measure
to provide insight into the long-term value of our clients and our
ability to retain and expand revenue from our client base over
time. Our Net Revenue Retention Rate is calculated over a trailing
twelve-month period by considering the group of clients on our
platform as of the beginning of the period and dividing our Annual
Recurring Revenue attributable to this same group of clients at the
end of the period by the Annual Recurring Revenue at the beginning
of the period. By implication, this ratio excludes any Annual
Recurring Revenue from new clients acquired during the period but
does include incremental sales added to the cohort base of clients
during the period being measured. This measure provides insight
into client expansions, downgrades, and churn, and illustrates the
growth potential of our client base alone. Our success in
delivering exceptional value and extraordinary experiences to our
clients is fully realized when we can achieve a high Net Revenue
Retention Rate. However, this percentage can vary from period to
period due to the timing of large expansion contracts with our
existing clients. In addition, only the recurring component
of expansions with our perpetual license clients, such as on-going
support & maintenance, is recognized in this calculation.
Revenue Backlog
Revenue Backlog represents the total revenue expected to be
recognized in the future, related to performance obligations that
are unsatisfied or partially unsatisfied at period end. The
recurring nature of our revenue provides high visibility into
future performance, and upfront payments result in cash flow
generation in advance of revenue recognition. Subscription
contracts require annual upfront payments; however, some clients
pay multiple years upfront. Roughly 50% to 75% of our expected
annual revenue is recognized from client contracts that are in
place at the beginning of the year; however, this percentage will
vary year over year and we expect this percentage to generally
increase going forward as our client base continues to transition
toward SaaS and our Q4 seasonality persists. Agreements with new
clients or agreements with existing clients purchasing incremental
product and services in a quarter may not contribute significantly
to revenue in the current quarter. For example, for SaaS contracts
and professional services, a new client who enters into an
agreement late in a quarter will typically have limited
contribution to the revenue recognized in that quarter. Software
licenses, by contrast, are often recognized as revenue upon
delivery of the software which typically occurs immediately upon
contracting, and thus rarely enters Revenue Backlog.
Adjusted EBITDA
Adjusted EBITDA is used by management as a supplemental measure
to review and assess operating performance and to provide a more
complete understanding of factors and trends affecting our
business. Management believes that Adjusted EBITDA is a useful
measure of operating performance and our ability to generate
cash-based earnings, as it provides a more relevant picture of
operating results by excluding the effects of financing and
investing activities, including removing the effects of interest
and other expenses such as non-cash items and non-recurring
expenses that are not reflective of our underlying business. In
addition to interest, the other non-cash or non-recurring items
adjusted for include depreciation and amortization, share-based
payments expense, foreign exchange loss (gain), current income tax
expense, and CEO transition expenses. Our management also uses
Adjusted EBITDA in order to facilitate operating performance
comparisons and decision making from period to period and to
prepare annual operating budgets and forecasts. In addition, it is
used to provide securities analysts, investors, and other
interested parties with supplemental measures of our operating
performance and thus highlight trends in our business that may not
otherwise be apparent when relying solely on IFRS measures.
The following tables reconciles Adjusted EBITDA to net loss for
the periods indicated:
|
|
|
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|
(in thousands, except
percentages)
|
|
|
2023
$
|
2022
$
|
Change
%
|
2023
$
|
2022
$
|
Change
%
|
Net
loss
|
(12,606)
|
(7,426)
|
(70 %)
|
(24,396)
|
(18,331)
|
(33 %)
|
Depreciation and
amortization
|
475
|
717
|
(34 %)
|
950
|
1,153
|
(18 %)
|
Share-based payments
expense 1
|
1,326
|
1,176
|
13 %
|
2,959
|
1,915
|
55 %
|
Finance
costs
|
298
|
262
|
14 %
|
587
|
535
|
10 %
|
Finance and other
income
|
(1,515)
|
(432)
|
(251 %)
|
(2,872)
|
(702)
|
(309 %)
|
Foreign exchange (gain)
loss
|
1,428
|
(263)
|
(643 %)
|
1,383
|
474
|
192 %
|
Current income tax
expense
|
43
|
123
|
(65 %)
|
98
|
134
|
(27 %)
|
CEO transition expenses
1
|
-
|
-
|
-
|
695
|
-
|
100 %
|
Adjusted
EBITDA
|
(10,551)
|
(5,843)
|
(81 %)
|
(20,596)
|
(14,822)
|
(39 %)
|
1 Expenses
incurred in the transition to our new CEO in 2023, which are
non-recurring. CEO transition costs include share-based payments
expense of $169 due to the modification of certain stock
options.
|
Selected Financial Information
Consolidated Statements of Loss and Comprehensive
Loss
(expressed in thousands of Canadian dollars, except for
share and per share amounts)
|
|
Three months
ended
June
30,
|
Six months
ended
June
30,
|
|
|
2023
|
2022
|
2023
|
2022
|
|
|
$
|
$
|
$
|
$
|
Revenue
|
|
18,504
|
20,584
|
38,470
|
36,153
|
|
|
|
|
|
|
Cost of
revenue
|
|
5,733
|
4,846
|
12,041
|
9,238
|
|
|
|
|
|
|
Gross
profit
|
|
12,771
|
15,738
|
26,429
|
26,915
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
Sales and
marketing
|
|
9,921
|
9,461
|
20,320
|
18,026
|
Research and
development
|
|
9,076
|
7,376
|
18,739
|
14,025
|
General and
administrative
|
|
6,126
|
6,637
|
12,570
|
12,754
|
|
|
25,123
|
23,474
|
51,629
|
44,805
|
|
|
|
|
|
|
Loss from
operations
|
|
(12,352)
|
(7,736)
|
(25,200)
|
(17,890)
|
|
|
|
|
|
|
Other expense
(income)
|
|
|
|
|
|
Finance
costs
|
|
298
|
262
|
587
|
535
|
Finance and other
income
|
|
(1,515)
|
(432)
|
(2,872)
|
(702)
|
Foreign exchange loss
(gain)
|
|
1,428
|
(263)
|
1,383
|
474
|
|
|
211
|
(433)
|
(902)
|
307
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(12,563)
|
(7,303)
|
(24,298)
|
(18,197)
|
|
|
|
|
|
|
Income
taxes
|
|
|
|
|
|
Current income tax
expense
|
|
43
|
123
|
98
|
134
|
|
|
|
|
|
|
Net loss and
comprehensive loss for the period
|
|
(12,606)
|
(7,426)
|
(24,396)
|
(18,331)
|
|
|
|
|
|
|
Net loss per share
basic and diluted
|
|
(0.18)
|
(0.11)
|
(0.34)
|
(0.27)
|
Weighted average
number of common shares
outstanding,
Basic and diluted
|
|
71,998,377
|
69,368,649
|
71,453,274
|
68,909,651
|
Consolidated Statements of Financial
Position
(expressed in thousands of Canadian Dollars)
|
|
|
|
|
|
June 30,
2023
|
December 31,
2022
|
|
|
$
|
$
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
|
61,983
|
149,458
|
Short-term
investments
|
|
54,942
|
-
|
Accounts
receivable
|
|
12,558
|
21,232
|
Contract
costs
|
|
983
|
852
|
Contract
assets
|
|
2,449
|
4,337
|
Prepaid
expenses
|
|
3,484
|
3,050
|
|
|
136,399
|
178,929
|
Non-current
assets
|
|
|
|
Long-term
investments
|
|
20,000
|
-
|
Deposit and prepaid
expenses
|
|
463
|
702
|
Contract
costs
|
|
1,464
|
1,566
|
Contract
assets
|
|
-
|
458
|
Property and
equipment
|
|
1,466
|
1,901
|
Intangible
assets
|
|
1,271
|
1,407
|
Right-of-use
assets
|
|
2,258
|
730
|
|
|
26,922
|
6,764
|
TOTAL
ASSETS
|
|
163,321
|
185,693
|
|
|
|
|
LIABILITIES
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
|
12,392
|
12,232
|
Contract
liabilities
|
|
25,812
|
28,098
|
Lease
liabilities
|
|
661
|
1,039
|
|
|
38,865
|
41,369
|
Non-current
liabilities
|
|
|
|
Contract
liabilities
|
|
9,488
|
11,038
|
Lease
liabilities
|
|
1,997
|
259
|
|
|
11,485
|
11,297
|
TOTAL
LIABILITIES
|
|
50,350
|
52,666
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
Share
capital
|
|
186,738
|
183,778
|
Share-based payments
reserve
|
|
10,005
|
8,625
|
Deficit
|
|
(83,772)
|
(59,376)
|
TOTAL SHAREHOLDERS'
EQUITY
|
|
112,971
|
133,027
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
163,321
|
185,693
|
Disaggregation of revenue
(expressed in thousands of
Canadian Dollars, except percentages)
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|
2023
$
|
2022
$
|
Change
%
|
2023
$
|
2022
$
|
Change
%
|
|
(in thousands, except
percentages)
|
Subscription
1
|
11,688
|
9,510
|
23 %
|
22,964
|
18,592
|
24 %
|
Professional
services and custom
software contracts 2
|
6,717
|
7,121
|
(6 %)
|
13,650
|
13,119
|
4 %
|
Perpetual
and term-based
software licenses 3
|
99
|
3,953
|
(97 %)
|
1,856
|
4,442
|
(58 %)
|
|
18,504
|
20,584
|
(10 %)
|
38,470
|
36,153
|
6 %
|
|
1
Subscriptions represent revenue from software as a service
("SaaS"), support and maintenance services, and
hosting.
|
2
Professional services and custom software contracts represent
revenue earned substantially from professional services.
|
3 Perpetual and term-based software
licenses represent software licenses that are client hosted or with
the option for the client to host.
|
Forward-Looking Statements
This news release contains "forward-looking information" and
"forward-looking statements" (collectively, "forward-looking
information") within the meaning of applicable securities laws in
Canada.
Forward-looking information may relate to our future business,
financial outlook, and anticipated events or results, and may
include information regarding our financial position, business
strategy, growth strategies, addressable markets, budgets,
operations, financial results, taxes, dividend policy, plans and
objectives. Particularly, information regarding our expectations of
future results, performance, achievements, prospects, or
opportunities, or the markets in which we operate, is
forward-looking information. In some cases, forward-looking
information can be identified by the use of forward-looking
terminology such as "plans", "targets", "expect" or "does not
expect", "is expected", "is poised to", "an opportunity exists",
"budget", "scheduled", "estimates", "outlook", "future", "financial
outlook", "forecasts", "projection", "prospects", "strategy",
"intends", "anticipates", "does not anticipate", "believes", or
variations of such words and phrases, or statements that certain
actions, events, or results "may", "could", "would", "might",
"will" occur or be taken , or "will continue to" or
"are poised to" be achieved. In addition, any statements that
refer to expectations, intentions, projections, or other
characterizations of future events or circumstances contain
forward-looking information. Statements containing forward-looking
information are not historical facts but instead represent
management's expectations, estimates and projections regarding
possible future events or circumstances.
Forward-looking information may include, among other things: (i)
the Company's expectations regarding its financial performance,
including among others, revenue, gross profit, expenses, Adjusted
EBITDA; (ii) the Company's expectations regarding industry trends,
addressable market growth, overall market growth rates, and growth
rates and growth strategies; (iii) our business plans and
strategies; (iv) the continued success of our commercial model; (v)
our expectations regarding growth in our customer base, our ability
to retain clients and increase margin per customer; (vi)
acceleration in the growth and adoption of new technologies; (vii)
relationships with our technology partners; (viii) our ability to
continue to attract and retain talent; (ix) our competitive
position in our industry; and (xi) and the long-term impact of
COVID-19 on our business, financial position, results of operations
and/or cash flows.
Forward-looking information is necessarily based on a number of
opinions, estimates and assumptions that we considered appropriate
and reasonable as at the date such statements are made, and are
subject to known and unknown risks, uncertainties, assumptions and
other factors that may cause the actual results, level of activity,
performance or achievements to be materially different from those
expressed or implied by such forward-looking information, including
but not limited to the risk factors described in our 2022 Annual
Information Form ("AIF") under "Risk Factors". A copy of the 2022
AIF can be accessed under our profile on the System for Electronic
Document Analysis and Retrieval ("SEDAR") at www.sedar.com.
There can be no assurance that such forward-looking information
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such information.
Accordingly, readers should not place undue reliance on
forward-looking information, which speaks only as at the date
made.
In addition, forward-looking financial information with respect
to potential outlook and future financial results contained in this
press release are based on assumptions about future events
including economic conditions, the assumptions noted above and
proposed courses of action, based on management's reasonable
assessment of the relevant information available as at the date of
such forward-looking information. Readers are cautioned that any
such forward-looking financial information should not be used for
purposes other than for which it is disclosed.
About Copperleaf:
Copperleaf (TSX:CPLF) provides enterprise decision analytics
software solutions to companies managing critical infrastructure.
We leverage operational and financial data to empower our clients
to make investment decisions that deliver the highest business
value. What sets us apart is our industry-leading products and our
commitment to providing extraordinary experiences, shaped by people
who care deeply and partnerships that stand the test of time.
Copperleaf is actively involved in shaping and implementing global
industry standards and sustainability principles through our
participation in the United Nations Global Compact, the Institute
of Asset Management, and other organizations. Headquartered in
Vancouver, Canada, our solutions
are distributed and supported by regional staff and partners
worldwide. Together, we are transforming how the world sees
value.
For more details, visit https://www.copperleaf.com/
For further information:
James
Bowen, CFA
416-519-9442
investors@copperleaf.com
Source: Copperleaf Technologies Inc. CPLF-IR
SOURCE CopperLeaf Technologies Inc.