152% Revenue Growth and 272% Adjusted EBITDA Growth for Q3 2020 versus Q3 2019
TORONTO, Nov. 24, 2020 /PRNewswire/ -- Quisitive Technology Solutions Inc. ("Quisitive" or the "Company") (TSXV: QUIS), a premier Microsoft Solutions Provider, today reported financial results for the third quarter ended September 30, 2020.
Management Commentary "Our performance for the third quarter was strong, especially given the headwinds and challenges from the global pandemic, demonstrating the resiliency of our business," said Quisitive CEO Mike Reinhart. "Operationally, our execution on our strategic initiatives during Q3 is reflected by our expanded relationship with Microsoft, increased number of partnerships with customers on the cloud solutions front, and the continued progress towards the general availability of LedgerPay, our cloud-based payment processing platform, in early 2021. Additionally, as we continue to navigate these unprecedented times, we remain focused on our M&A roadmap, looking for synergistic businesses with the right valuation metrics that further augment our cloud solutions offerings and technological capabilities. In conjunction with our operations, we also remain in a strong position financially, as we have ample cash on the balance sheet and enough flexibility to support our working capital and growth initiatives going forward. With the cloud solutions and fintech markets constantly growing, we are well positioned to capitalize on the opportunity through both organic and M&A growth."
Third Quarter 2020 Financial Results The Company's unaudited financial statements for the quarter ended September 30, 2020 and related management's discussion and analysis can be found on the Company's website and on the Company's issuer profile on SEDAR at www.sedar.com. All figures are expressed in United States dollars unless otherwise stated.
Revenue for the quarter ended September 30, 2020 was $12.7 million compared to $5.0 million for the quarter ended September 30, 2019. The increase in revenue was driven by the addition of Menlo revenues in 2020 as well as additional revenues from LedgerPay and strong organic growth within the Quisitive customer and recurring revenue base.
Gross profit increased to $5.1 million (40% of revenue) as compared to $2.3 million (45% of revenue) for the quarter ended September 30, 2019. The increase in gross profit dollars was primarily due to top line revenue growth.
Adjusted EBITDA for the three months ended September 30, 2020 increased to $2 million (or 16% of revenue) as compared to an Adjusted EBITDA of $0.6 million (or 11% of revenue) for the three months ended September 30, 2019. The increase in adjusted EBITDA was primarily driven by the increase in scale and revenues provided by the Menlo acquisition, organic growth, and high margin revenues from LedgerPay.
Net loss was $1.8 million or a loss of $(0.01) per share compared with net loss of $0.8 million or a loss of $(0.01) per share.
As of September 30, 2020, the Company had $12.3 million in cash.
Third Quarter 2020 and Recent Operational Highlights
Joined the Microsoft Cloud Native Accelerate Program, an initiative designed for select partners that provide cloud-native application development services to enhance or extend their existing practices on Azure.
Engaged Horizontal Digital as its exclusive Microsoft Cloud Solution Provider and strategic channel partner. Quisitive will manage Horizontal's licensing subscriptions and cloud services for its internal operational needs, and ultimately empower Horizontal to optimize their Microsoft spend, Microsoft productivity, and collaboration tools.
Selected as Grant Thornton's strategic application development partner to accelerate and automate a unique and industry-differentiated platform for System and Organization Controls reporting, by tapping into the power of the Microsoft cloud.
Partnered with Essilor, the world's leading ophthalmic lens manufacturer, to rollout a virtual appointment application system to help eye care offices safely reopen around the globe.
AppointedSue Darrow as Senior Vice President, Human Resources & Culture to spearhead Quisitive's initiative of engaging new talent and creating a profound workplace culture.
Conference Call Quisitive management will hold a conference call today (November 24, 2020) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.
Company CEO Mike Reinhart and CFO Michael Murphy will host the call, followed by a question and answer period.
Canada/U.S.: 1-800-319-4610 Toronto Toll: 1-416-915-3239
Please dial-in approximately 10 minutes beforehand and ask to join the Quisitive conference call. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 949-574-3860.
A replay of the conference call will be available following the call by dialing:
Canada/U.S.: 1-800-319-6413 International Toll: 1-604-638-9010 Replay Access Code: 5601
About Quisitive Quisitive is a premier Microsoft solutions provider that helps enterprise organizations move, operate, and innovate in the Microsoft cloud: Microsoft Azure, Microsoft Dynamics and Microsoft 365. Quisitive also provides proprietary Software as a Service ("SaaS") solutions such as CRG emPerform™ and Quisitive LedgerPay that complement the Microsoft platform. Quisitive serves clients globally with offices in Austin, TX; Dallas, TX; Denver, CO; Minneapolis, MN; Los Altos, CA; Washington, DC; Ottawa, ON; Toronto, ON and Hyderabad, India. For more information, visit www.Quisitive.com. TSXV: QUIS.
Reconciliation of Non-GAAP Financial Measures - Adjusted EBITDA and Adjusted EBITDA as a percentage of revenue
Financial Measures and Adjusted EBITDA There are measures included in this news release that do not have a standardized meaning under generally accepted accounting principles (GAAP) and therefore may not be comparable to similarly titled measures and metrics presented by other publicly traded companies. The Company includes these measures because it believes certain investors use these measures and metrics as a means of assessing financial performance. EBITDA (earnings before interest, taxes, depreciation and amortization is calculated as net earnings before finance costs (net of finance income), income tax expense, and depreciation and amortization of intangibles) is a non-GAAP financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.
We prepare and release quarterly unaudited and annual audited financial statements prepared in accordance with IFRS. We also disclose and discuss certain non-GAAP financial information, used to evaluate our performance, in this and other earnings releases and investor conference calls as a complement to results provided in accordance with IFRS. We believe that current shareholders and potential investors in the Company use non-GAAP financial measures, such as Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues, in making investment decisions about the Company and measuring our operational results.
The term "Adjusted EBITDA" refers to a financial measure that we define as earnings before certain charges that management considers to be non-operating expenses and which consist of interest, taxes, depreciation, amortization, stock-based compensation (for which we include related fees and taxes), changes in fair value of derivatives, transaction and acquisition-related expenses, and earn-out settlement losses. Adjusted EBITDA as a percentage of revenues divides Adjusted EBITDA for a period by the revenues for the corresponding period and expresses the quotient as a percentage.
Management considers these non-operating expenses to be outside the scope of Quisitive' ongoing operations and the related expenses are not used by management to measure operations. Accordingly, these expenses are excluded from Adjusted EBITDA, which we reference to both measure our operations and as a basis of comparison of our operations from period-to-period.
Management believes that investors and financial analysts measure our business on the same basis, and we are providing the Adjusted EBITDA financial metric to assist in this evaluation and to provide a higher level of transparency into how we measure our own business. However, Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues are non-GAAP financial measures and may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues should not be construed as a substitute for net income determined in accordance with IFRS or other non-GAAP measures that may be used by other companies, such as EBITDA. The use of Adjusted EBITDA and Adjusted EBITDA as a percentage of revenues does have limitations. As these acquisition-related expenses charges may continue as we pursue our consolidation strategy, some investors may consider these charges and expenses as a recurring part of operations rather than expenses that are not part of operations.
Cautionary Note Regarding Forward Looking Information Neither 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.
Forward-Looking Statements: Some statements in this news release contain forward-looking information. These statements include, but are not limited to, statements with respect to proposed activities, consolidation strategy and future expenditures. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include, among others the limited history of operations, lack of profitability, availability of financing, the need for additional financing and the timing and amount of expenditures, information pertaining to strategy, plans, or future financial performance, such as statements with respect to future revenues, EBITDA, cash flows and other statements that express management's expectations or estimates of future performance, the anticipated timing of future cash flow and positive EBITDA, ability to successfully execute on corporate strategies, the failure to find economically viable acquisition targets, funding for internally developed technology solutions, client retention and attrition, client demands, reliance on key personnel, economic spending in the IT industry and technological changes in the IT industry.
These forward-looking statements are based on reasonable assumptions and estimates of management of the Company at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include: changes in technology, customer markets and demand for the Company's services; the efficacy of the Company's software and product offering; sales and margin risk; acquisition and integration risks; dependence on economic and market conditions including, but not limited to, access to equity or debt capital on favourable terms if required; changes in market dynamics including business relationships and competition; information system risks; risks associated with the introduction of new products; product design risk; risks related to the Company being a holding company; environmental risks; customer and vendor risks; credit risks; tax and insurance related risks; risks of legislative changes; risks relating to remote operations; key executive risk; risk of litigation risks; risks related to contracts with third party service providers; risks related to the enforceability of contracts; risks related to general economic, market and business conditions, including, but not limited to, the ongoing impact of the COVID-19 pandemic; the limited operating history of the Company; reliance on the expertise and judgment of senior management of the Company; risks related to proprietary intellectual property and potential infringement by third parties; risks relating to financing activities including leverage; risks relating to the management of growth; increased costs associated with the Company becoming a publicly traded company; increasing competition in the industry; risks relating to energy costs; reliance on key inputs, suppliers and skilled labour; cyber-security risks; risks related to quantifying the Company's target market; risks related to industry growth and consolidation; fraudulent activity by employees, contractors and consultants; conflicts of interest; risks related to the cost structures of certain projects; risks relating to certain remedies being limited and the difficulty of enforcement of judgments and effect service outside of Canada; risks related to future dispositions; sales by existing shareholders; the limited market for securities of the Company; price volatility of the common shares of the Company; no guarantee regarding use of available funds; currency fluctuations; and those factors described under the heading "Risks Factors" in the company's annual information form dated May 15, 2020 available on SEDAR. Although the forward-looking statements contained in this news release are based upon what management of the company believes, or believed at the time, to be reasonable assumptions, the company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking statements and information. There can be no assurance that forward-looking information, or the material factors or assumptions used to develop such forward-looking information, will prove to be accurate. The Company does not undertake any obligations to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law.