Financial figures expressed in U.S. dollars ("USD")
- Quarterly revenue increased by 38% to $28.3 million
- Cash position strong at $96.1
million
- Quarterly adjusted EBITDA increased from $2.1 million to $5.4
million
- Major projects on track
CALGARY, Nov. 6, 2018 /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, 2018.
Financial and operating highlights for the three and nine
month periods ended September 30,
2018, compared to the same periods in 2017:
- Revenue increased by 38% to $28.3
million in the third quarter of 2018 and by 29% to
$81.3 million for the nine month
period ended September 30, 2018;
- Earnings from operations increased from $1.0 million to $2.6
million in the third quarter of 2018 and decreased from
$6.3 million to $2.7 million for the nine month period ended
September 30, 2018;
- Net earnings increased by $2.6
million to $2.3 million in the
third quarter of 2018 and decreased by $0.8
million to $3.0 million for
the nine month period ended September 30,
2018;
- Adjusted EBITDA1 increased to $5.4 million in the third quarter of 2018 and to
$11.1 million for the nine month
period ended September 30, 2018;
- Cash on hand as at September 30,
2018 totaled $96.1
million.
Key factors affecting the results in the three and nine month
periods ended September 30,
2018:
- License revenue – License and subscription fees
increased by $5.4 million or 38%
during the third quarter of 2018 and by $11.6 million or 28% for the nine months ended
September 30, 2018, as compared to
the same periods in 2017. Based on local currencies, the growth was
38% during the third quarter and 26% for the nine months ended
September 30, 2018. Growth in license
revenue is largely driven by organic growth from new sales in all
regions, the U.S. white label agreements and revenue from the
acquired Capshare and Advanced-HR businesses.
- Transaction activity – In addition to the
recurring license revenue that Solium collects for the use of its
technology platforms, the Company also collects re-occurring
transaction based revenue. Transaction based revenue increased by
$1.6 million or 27% during the third
quarter of 2018 and by $4.8 million
or 24% for the nine months ended September
30, 2018, as compared to the same periods in 2017. The
per-participant trading activity was 18% higher in the third
quarter of 2018 compared to the same period in 2017 and 18% higher
than the historical five-year Q3 average.
- Operating costs – Operating expenses (excluding 2017
sales tax adjustment) increased by $5.2
million or 25% during the third quarter of 2018 and by
$20.8 million or 36% for the nine
months ended September 30, 2018, when
compared to the same periods in 2017. The increases are primarily
driven by planned hiring to support the U.S. white label
agreements; costs from the new businesses of Capshare, Solium
Analytics and Advanced-HR; and the resulting incremental systems
and infrastructure costs. The Company also incurred costs in the
first half of 2018 associated with an investment opportunity that
did not materialize, further contributing to the nine month period
increase over 2017. The Company had 769 full-time equivalent
employees (FTEs) at the end of the third quarter of 2018 compared
to 611 FTEs at the end of the third quarter of 2017.
Changes in significant accounting policies:
The Company has adopted IFRS 15 Revenue from Contracts with
Customers and IFRS 16 Leases effective January 1, 2018. IFRS 9 Financial
Instruments is also effective from January 1, 2018 but does not have an impact on
the Company's financial information. For more information, refer to
note 3 of the Company's Condensed Consolidated Interim Financial
Statements for the three and nine month periods ended September 30, 2018.
Selected financial information for the three and nine
month periods ended September 30,
2018:
(Expressed in thousands of USD except
share, per share amounts and percentages)
|
Three Months
Ended
September
30,
|
Nine Months
Ended
September
30,
|
2018
$
|
2017
$
|
%
Change
|
2018
$
|
2017
$
|
%
Change
|
Revenue
|
28,257
|
20,542
|
38%
|
81,258
|
63,210
|
29%
|
Operating
expenses
|
25,660
|
19,566
|
31%
|
78,567
|
56,868
|
38%
|
Adjusted
EBITDA1
|
5,419
|
2,055
|
164%
|
11,118
|
10,721
|
4%
|
Earnings (loss) from
operations
|
2,597
|
976
|
166%
|
2,691
|
6,342
|
(58%)
|
Net earnings
(loss)
|
2,310
|
(306)
|
NM(3)
|
3,052
|
3,816
|
(20%)
|
|
|
|
|
|
|
|
Net earnings (loss)
per share2
|
|
|
|
|
|
|
Basic
|
0.041
|
(0.006)
|
NM(3)
|
0.054
|
0.076
|
(29%)
|
Diluted
|
0.040
|
(0.006)
|
NM(3)
|
0.053
|
0.075
|
(29%)
|
|
|
|
|
|
|
|
Issued and
outstanding (thousands)
|
|
|
|
|
|
|
Common
shares
|
|
|
|
56,577
|
50,984
|
11%
|
Diluted2
|
|
|
|
60,635
|
54,781
|
11%
|
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
|
|
2018
|
2017
|
2018
|
2017
|
2018
|
2017
|
2018
|
2017
|
Revenues
|
8,113
|
7,122
|
15,783
|
10,166
|
4,361
|
3,254
|
28,257
|
20,542
|
Adjusted
EBITDA1
|
2,894
|
1,932
|
2,226
|
1,059
|
299
|
(936)
|
5,419
|
2,055
|
Adjusted EBITDA
%1
|
36%
|
27%
|
14%
|
10%
|
7%
|
(29%)
|
19%
|
10%
|
Earnings (loss) from
operations
|
1,857
|
959
|
874
|
1,152
|
(134)
|
(1,135)
|
2,597
|
976
|
|
Nine Months Ended
September 30,
|
|
Canada
|
U.S
|
International
|
Consolidated
|
|
2018
|
2017
|
2018
|
2017
|
2018
|
2017
|
2018
|
2017
|
Revenues
|
25,543
|
21,944
|
42,366
|
30,424
|
13,349
|
10,842
|
81,258
|
63,210
|
Adjusted
EBITDA1
|
7,054
|
7,020
|
2,826
|
4,374
|
1,238
|
(673)
|
11,118
|
10,721
|
Adjusted EBITDA
%1
|
28%
|
32%
|
7%
|
14%
|
9%
|
(6%)
|
14%
|
17%
|
Earnings (loss) from
operations
|
3,905
|
4,874
|
(1,108)
|
2,730
|
(106)
|
(1,262)
|
2,691
|
6,342
|
|
(1) Adjusted EBITDA
is a non-IFRS financial measure. See definition and reconciliation
to net earnings (loss) in Note 1 on page 4.
|
(2) Net earnings
(loss) per share and diluted shares outstanding are discussed in
further detail in Notes 2 and 3 on page 4, respectively.
|
(3) NM denotes as not
meaningful.
|
During the three month period ended September 30, 2018 the Company had an overall
increase in cash and cash equivalents of $5.6 million (2017: $3.3
million) and an overall decrease of cash and cash
equivalents during the nine month period ended September 30, 2018 of $4.1
million (2017: increase $6.6
million).
Total cash from operating activities was $4.7 million for the three month period ended
September 30, 2018 (2017:
$3.2 million) and $5.8 million for the nine month period ended
September 30, 2018 (2017:
$6.5 million). Cash from financing
activities was $0.7 million for the
three month period ended September 30,
2018 (2017: $0.6 million) and
$1.8 million for the nine month
period ended September 30, 2018
(2017: $1.7 million). Cash used in
investing activities was $1.2 million
for the three month period ended September
30, 2018 (2017: $3.0 million)
and $9.6 million for the nine month
period ended September 30, 2018
(2017: $5.6 million). The cash used
in investing activities in 2018 is primarily as a result of the
Advanced-HR acquisition.
Working capital including cash and cash equivalents as at
September 30, 2018 was $90.7 million (December
31, 2017: $93.8 million).
Included in working capital was trade and other receivables of
$20.9 million (December 31, 2017: $15.0
million) and trade payables and other accruals of
$12.7 million (December 31, 2017: $12.2
million).
Management change
Kelly Schmitt, the Company's
Chief Financial Officer who was on parental leave, resigned
effective October 18, 2018. As part
of its governance process the Company has begun the process to
recruit a new Chief Financial Officer and during this transition,
Sujeet Kini, who has been the
Company's Interim Chief Financial Officer since April 2, 2018, will continue in the role of
Interim Chief Financial Officer.
Outlook
In Q4 2016 and Q2 2017, Solium entered into white label license
agreements with U.S. partners Morgan Stanley and UBS Financial
Services Inc., respectively. Solium added significant headcount and
committed additional resources to ensure the success of these
projects, and some hiring is anticipated to continue throughout
2018. The first customers for both partners were migrated to
Shareworks in December 2017, and the
Company is now actively migrating clients on a monthly basis.
Solium remains on track to migrate all clients by the end of
2019.
Solium continues to invest for future revenue growth, and
expects this to continue through the course of 2018 and into 2019,
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, depreciation of right of
use assets, amortization of intangible assets, amortization of
contract costs, foreign exchange gain or loss (on translation of
working capital), share-based payments, adjustment of earn-out
payable, and sales tax adjustment. 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
(loss):
|
|
|
|
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
|
2018
|
2017
|
2018
|
2017
|
|
Adjusted
EBITDA
|
5,419
|
2,055
|
11,118
|
10,721
|
|
Foreign exchange
(loss) gain
|
(652)
|
(649)
|
175
|
(604)
|
|
Share-based
payments
|
(872)
|
(629)
|
(2,518)
|
(1,651)
|
|
Adjustment of
earn-out payable
|
926
|
-
|
926
|
-
|
|
Sales tax adjustment
included in operating expense
|
-
|
941
|
-
|
941
|
|
EBITDA
|
4,821
|
1,718
|
9,701
|
9,407
|
|
Finance
income
|
298
|
223
|
853
|
606
|
|
Depreciation of
property and equipment
|
(523)
|
(621)
|
(1,635)
|
(1,345)
|
|
Depreciation of right
of use assets
|
(474)
|
-
|
(1,420)
|
-
|
|
Amortization of
intangible assets
|
(772)
|
(618)
|
(2,289)
|
(1,889)
|
|
Amortization of
contract costs
|
(181)
|
(152)
|
(565)
|
(435)
|
|
Income
taxes
|
(859)
|
(856)
|
(1,593)
|
(2,528)
|
|
Net earnings
(loss)
|
2,310
|
(306)
|
3,052
|
3,816
|
|
|
2.
|
Diluted net earnings
(loss) 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, the
United Kingdom, 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
completing migrating the Morgan Stanley and UBS customers to
Shareworks, the Company's investment strategy, including plans to
continue to invest for future revenue growth, the Company's
acquisition strategy and the Company's ability to compete in the
private company market and planned hiring of a new Chief Financial
Officer. 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. and its investments
to accelerate its position in the private company market. 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, including the Company's annual
information form for the year ended December
31, 2017. 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, 2018
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.