Solium Releases 2018 Second Quarter Financial Results

Transcription

1 FOR IMMEDIATE RELEASE Financial figures expressed in U.S. dollars ( USD ) Solium Releases 2018 Second Quarter Financial Results Quarterly revenue increased by 26% to 26.9 million Quarterly adjusted EBITDA decreased from 3.7 million to 2.2 million Cash position strong at 90.5 million Major projects on track CALGARY, August 8, 2018 Solium Capital Inc. (TSX: SUM) ( Solium or the Company ) today announced its financial results for the three and six month periods ended June 30, Financial and operating highlights for the three and six month periods ended June 30, 2018, compared to the same period in 2017: Revenue increased by 26% to 26.9 million in the second quarter of 2018 and by 24% to 53.0 million for the six month period ended June 30, 2018; Adjusted EBITDA 1 decreased by 40% to 2.2 million in the second quarter of 2018 and decreased by 34% to 5.7 million for the six month period ended June 30, 2018; Earnings from operations decreased from 2.0 million to a loss from operations of 0.7 million in the second quarter of 2018 and decreased from 5.4 million to 0.1 million for the six month period ended June 30, 2018; Net earnings decreased from 1.6 million to a net loss of 0.5 million in the second quarter of 2018 and decreased by 82% to 0.7 million for the six month period ended June 30, 2018; and Cash on hand as at June 30, 2018 totaled 90.5 million. Key factors affecting the results in the three and six month periods ended June 30, 2018: License revenue License and subscription fees increased by 2.8 million or 19% during the second quarter of 2018 and by 6.2 million or 23% for the six months ended June 30, 2018, as compared to the same periods in Based on local currencies, the growth was 17% during the second quarter and 19% for the six months ended June 30, Growth in license revenue is largely driven by organic growth from new sales in all regions, the U.S. white label agreements, revenue from the acquired Capshare, Inc. ( Capshare ) and Advanced-HR, Inc. ( Advanced-HR ) businesses and migration of customers from NASDAQ Private Market, LLC to Solium. 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 2.2 million or 35% during the second quarter and by 3.2 million or 23% for the six months ended June 30, 2018, as compared to the same periods in The per-participant trading activity was 26% higher in the second quarter of 2018 compared to the same period in 2017 and 21% higher than the historical five-year Q2 average. Operating costs Operating expenses increased by 8.1 million or 42% during the second quarter of 2018 and by 15.6 million or 42% for the six months ended June 30, 2018, when compared to the same periods in 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 costs associated with an investment opportunity that did not materialize. The Company had 719 full-time equivalent employees (FTEs) at the end of the second quarter of 2018 compared to 594 FTEs at the end of the second quarter of 2017.

2 Changes in significant accounting policies: The Company has adopted IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases effective January 1, 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 six months periods ended June 30, Selected financial information for the three and six month periods ended June 30, 2018: (Expressed in thousands of USD except share, per share amounts and percentages) Three Months Ended June 30, Six Months Ended June 30, % Change % Change Revenue 26,907 21,432 26% 53,001 42,668 24% Operating expenses 27,591 19,450 42% 52,907 37,302 42% Adjusted EBITDA 1 2,223 3,712 (40%) 5,699 8,666 (34%) (Loss) earnings from operations (684) 1,982 NM (a) 94 5,366 (98%) Net (loss) earnings (536) 1,583 NM (a) 742 4,122 (82%) Net (loss) earnings per share 2 Basic (0.010) NM (a) (84%) Diluted (0.010) NM (a) (85%) Issued and outstanding (thousands) Common shares 56,236 50,711 11% Diluted 3 59,541 53,665 11% (a) NM denotes as not meaningful. 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 June 30, Canada U.S. International Consolidated Revenues 8,854 6,835 13,451 10,632 4,602 3,965 26,907 21,432 Adjusted EBITDA 1 1,728 2,712 (16) ,223 3,712 Adjusted EBITDA % 1 20% 40% NM (a) 8% 11% 3% 8% 17% Earnings (loss) from operations 654 2,072 (1,394) (100) (684) 1,982 Six Months Ended June 30, Canada U.S. International Consolidated Revenues 17,430 14,822 26,583 20,258 8,988 7,588 53,001 42,668 Adjusted EBITDA 1 4,161 5, , ,699 8,666 Adjusted EBITDA % 1 24% 34% 2% 16% 10% 3% 11% 20% Earnings (loss) from operations 2,048 3,915 (1,982) 1, (127) 94 5,366 (a) NM denotes as not meaningful

3 During the three month period ended June 30, 2018 the Company had an overall increase in cash and cash equivalents of 3.5 million (2017: increase 2.2 million) and an overall decrease of cash and cash equivalents during the six month period ended June 30, 2018 of 9.7 million (2017: increase 3.3 million). Total cash from operating activities was 4.7 million for the three month period ended June 30, 2018 (2017: 1.8 million) and 1.1 million for the six month period ended June 30, 2018 (2017: 3.3 million). Cash from financing activities was 1.1 million for the three month period ended June 30, 2018 (2017: 0.9 million) and 1.2 million for the six month period ended June 30, 2018 (2017: 1.1 million). Cash used in investing activities was 0.8 million for the three month period ended June 30, 2018 (2017: 1.4 million) and 8.4 million for the six month period ended June 30, 2018 (2017: 2.6 million) primarily as a result of the Advanced-HR acquisition. Working capital including cash and cash equivalents as at June 30, 2018 was 84.9 million (December 31, 2017: 93.8 million). Included in working capital was trade and other receivables of 18.8 million (December 31, 2017: 15.0 million) and trade payables and other accruals of 11.1 million (December 31, 2017: 12.2 million). Outlook In Q and Q2 2017, respectively, Solium entered into white label license agreements with U.S. partners Morgan Stanley and UBS Financial Services Inc. Solium added significant headcount and committed additional resources to ensure the success of these projects, and some hiring is anticipated to continue throughout 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 Solium has made three key investments recently to accelerate its position in the private company market. In October 2017, Solium announced the acquisition of Capshare Inc. The acquisition positions Solium to compete in the rapidly emerging early-stage angel and venture backed private company market. Shareworks is well positioned as the leading platform for late-stage private companies, including those seeking an Initial Public Offering. Capshare will allow Solium to provide a targeted solution that meets the unique requirements of earlier stage private companies. In Q3 2017, Solium also incorporated Solium Analytics LLC to provide 409A business valuation services to private companies. In February 2018, Solium announced the acquisition of Advanced-HR. Through the acquisition, Solium s private market clients will have the ability to access equity data and benchmarks to guide them in compensating their employees. Solium plans to commit additional resources to the Capshare, Analytics and Advanced-HR businesses. 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

4 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) and share-based payments. 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 (loss) earnings: Three months ended June 30, Six months ended June 30, Adjusted EBITDA 2,223 3,712 5,699 8,666 Foreign exchange (loss) gain (149) (352) Share-based payments (897) (562) (1,646) (1,022) EBITDA 1,177 2,798 4,880 7,689 Finance income Depreciation of property and equipment (538) (381) (1,112) (724) Depreciation of right of use assets (497) - (946) - Amortization of intangible assets (795) (643) (1,517) (1,271) Amortization of contract costs (180) (144) (384) (283) Income taxes 72 (242) (734) (1,672) Net (loss) earnings (536) 1, , Diluted (loss) net earnings 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 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 commit additional resources to the Solium Analytics LLC, Capshare Inc. and Advanced-HR businesses, the Company s acquisition strategy and the Company s ability to compete in the private company market. 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 - 4 -

5 documents of the Company, including the Company s annual information form for the year ended December 31, 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 June 30, 2018 referred to herein will be available on SEDAR at under Solium Capital Inc., or at For further information: Investor relations Heidi Christensen Brown NATIONAL Equicom hchristensenbrown@national.ca - 5 -