VersaPay Announces Q3 2018 Financial Results

- ARC Annual Recurring Revenue Grows by 56% Year over Year -

TORONTO, Nov. 27, 2018 /PRNewswire/ - VersaPay Corporation (TSXV: VPY) ("VersaPay" or the "Company"), a leading provider of cloud-based invoicing, accounts receiv­able management and payment solutions, today announced third quarter ("Q3") financial results for the three- and nine-month periods ended September 30, 2018.

"While overall revenues were slightly short of expectations, revenues from ARC clients grew nicely, up year over year by 113% for the quarter and 148% for the nine months ended September 30," said Craig O'Neill, CEO of VersaPay. "Furthermore, in what is traditionally the slowest sales period of the year, we closed 13 new sales representing $0.6 million in committed ARC ARR, on top of the $1.0 million of committed ARC ARR in the backlog coming into the quarter."

Mr. O'Neill continued, "Although channel sales continued to be slower than expected, we again saw strong demand in the US, with much of our direct sales coming from south of the border.  We are making significant inroads, particularly in the commercial real estate and wholesale distribution sectors and expect continued growth in these industries in the coming quarters."

The Company also announced a number of organizational changes in response to its growing client list and increasing project workload.  "We've strengthened key leadership positions in Client Success/Support, Implementation Services and Engineering, attracting experienced leaders from top software and e-commerce companies to our team," said Craig O'Neill.  "In addition, Ross Pellizzari, CRO, is leaving the company as we further focus our sales and marketing efforts on direct sales and a select few channel initiatives.  I'd like to thank Ross for his contributions to our growth and long-term success."

Operational Highlights:

• Strong new sales ARC™: 13 new sales were closed in the quarter, excluding sales of ARC Lite. This again represents one of the Company's strongest sales quarter and was made up of 9 sales in the US, and 4 sales in Canada.  6 of these sales came from channel partners and 7 were from VersaPay's direct sales efforts.  US new client wins and pipeline growth exceeded Canadian sales for the second time in as many quarters.  These results are a direct outcome of the US expansion plan the Company embarked on in Q4 2017.  The plan included expanding the sales team in the US and increasing VersaPay's digital marketing investment, both are positively impacting sales results in the first three-quarters of 2018.
  
  
• Strong increases in ARC™ usage metrics: As at September 30, 2018, 129,231 end-customers were using ARC™ compared to 57,237 at the end of September 30, 2017, and approximately 616,000 invoices were delivered to end-customers during Q3 2018 compared to 290, 000 invoices in Q3 2017. Total payments in Q3 2018 were $179 million, compared to $52 million in Q3 2017 and $149 million in Q2 2018.
  
  
• Expanded VAR program: 6 Value-Added Resellers (VAR) were signed in Q3 2018, bringing the total number of VARs the Company has partnered with to 14. VARs are well-positioned to sell and implement ARC as a natural extension of the current business they do with their clients.  VersaPay is marketing to VARs that specialize in Sage Intacct and Oracle JDE – a community of approximately 5,000 companies.

Financial Highlights:

• Total Revenue for Q3 2018 increased by 46% to $1.14 million compared to $0.78 million in Q3 2017.
• Total ARC revenues in Q3 2018 were $0.71 million compared to $0.33 million in Q3 2017, an increase of 113%.
• Total ARC revenues for the 9-months ended September 30, 2018 were $1.88 million compared to $0.76 million for the same period in 2017, an increase of 148%.
• Total Annual Recurring Revenue ("ARR") as of Q3 2018 was $4.43 million, compared to $3.06 million as of Q3 2017, an increase of 45%.
• ARC ARR increased to $2.53 million compared to $1.62 million in Q3 2017 and $2.30 million in Q2 2018.  This represents an increase of 56% year over year and an increase of 10% quarter over quarter.
• Gross profit percentage for Q3 2018 was 73.4%, compared to 73.3% in Q3 2017.
• Total comprehensive loss for Q3 2018 was ($2.95) million, compared to ($2.19) million for Q3 2017.
• Adjusted EBITDA was ($2.83) million in Q3 2018, compared to ($1.94) million in Q3 2017.
• Total operating expense for Q3 2018 increased by 37% to $3.81 million, compared to $2.78 million for the three-months ended September 30, 2017.  Included in Q3 2018 operating expense are share-based payments representing $0.18 million (Q3 2017 - $0.06 million), $(0.10) million recovery related to fair value adjustment for restricted share units (Q3 2017 - $0.16 million). Excluding these items, expenses increased by 46% compared to Q3 2017.

The term Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") is a non-IFRS financial measure which does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. Adjusted EBITDA provides useful information to users as it reflects the net earnings before interest, taxes, depreciation and amortization and adjusted for the effect of non-operating expenses, share-based compensation (which includes share-based payments, restricted share units, performance share units, and deferred share units), and unusual items such as discontinued operations and sales tax accrual. Management uses Adjusted EBITDA in measuring the financial performance of the Company as this measure reflects results that are controllable by management in day-to-day operations. Management monitors Adjusted EBITDA against budget and past results on a regular basis.

The term Monthly Recurring Revenue ("MRR") is a non-IFRS measure and includes revenues earned in a given month relating to monthly fixed subscription fee, monthly transaction fees, ARC LiteÔ revenue, and PayPortÔ revenue. MRR is a common metric used in Software as a Service ("SaaS") companies and its definition is not guided by IFRS standards.  Accordingly, MRR is unlikely to be comparable to similar measures presented by other issuers.

The term Annualized Recurring Revenue ("ARR") is a non-IFRS measure and refers to multiplying the MRR value defined above by 12 to represent management's best estimate of forward looking 12 months of recurring revenues that the Company would earn based on the current Monthly Recurring Revenue

The term Operating Expense is the aggregation of general and administrative expenses, research and development expenses, and sales and marketing expenses.

Conference Call Details:

Date: Wednesday, November 28, 2018
Time: 9:00 AM Eastern Time

Participant Dial-in Numbers:
Local – Toronto (+1) 416 764 8609
Toll Free – North America (+1) 888 390 0605
Conference ID: 62830263

Recording Playback Numbers:
Toronto (+1) 416 764 8677
Toll Free – North America (+1) 888 390 0541
Passcode: 830263#
Expiry Date: Wednesday, September 5, 2018 11:59 pm

A live audio webcast and archive of the conference call will be available by visiting the Company's website at http://www.versapay.com/company/investor-relations/. Please connect at least 15 minutes prior to the conference call to ensure time for any software download that may be needed to hear the webcast.

About VersaPay

VersaPay is a leading cloud-based invoice presentment and payment provider for businesses of all sizes. VersaPay's ARC software-as-a-service offering allows businesses to easily deliver customized electronic invoices to their customers, to accept credit card and EFT payments and automatically reconcile payments to their ERP and accounting software. VersaPay is headquartered in Toronto, Canada and has operations in Montreal.

More information about VersaPay can be found on the Company's website at www.versapay.com or under the Company's profile on SEDAR at www.sedar.com.

Forward Looking and Other Cautionary Statements

This news release contains "forward-looking information" which may include, but is not limited to, statements with respect to the activities, events or developments that the Company expects or anticipates will or may occur in the future. Such forward-looking information is often, but not always, identified by the use of words and phrases such as "plans," "expects," "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved.

These forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business. Management believes that these assumptions are reasonable. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, risks related to the speculative nature of the Company's business, the Company's formative stage of development and the Company's financial position.

Forward-looking statements contained herein are made as of the date of this news release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information.

Neither the 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.

SOURCE VersaPay Corporation

Related Links

www.versapay.com