PIVOTREE INC. All amounts are expressed in Canadian dollars unless otherwise stated.
'We achieved a number of the objectives we set out to accomplish in 2023 including four consecutive quarters of positive Adjusted EBITDA despite PS revenue softness. Coming off a record Q4 2022, the team adjusted well to an environment of reduced project spend and I am confident we will continue to make adjustments as necessary for profitable growth.' said
Fourth Quarter 2023 Financial Highlights
Total Revenue of
o Total Legacy Managed Services + Managed & IP Solutions (LMS + MIPS) of
Legacy Managed Services (LMS) Revenue declined 24.8% to
Managed & IP Solutions (MIPS) Revenue grew 59.2% to
Gross profit of
Net loss of
Adjusted EBITDA1 of
Fourth Quarter 2023 Business Highlights
Commerce saw success in winning new logos across industries including: a leading payments provider, a home improvement retailer, an oil and gas services company and a barcode vendor. Additionally, Commerce introduced several price increases across legacy services upon renewal.
Data Management continued to see extensions of SKU Build as well as a number of other extensions of Stibo,
Supply Chain saw its best quarter of bookings in Q4 driven largely by extensions of Fluent OMS projects for existing customers. Supply Chain secured important renewals across Fluent OMS and Sterling WMS as well as extensions of
Non-IFRS Measures and Reconciliation of Non-IFRS Measures
This press release makes reference to certain non-IFRS measures including key performance indicators used by management and typically used by our competitors in the technology industry. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore not necessarily comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. These non-IFRS measures and technology metrics are used to provide investors with supplemental measures of our operating performance and liquidity and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures, including technology industry metrics, in the evaluation of companies in the technology industry. Management also uses non-IFRS measures and technology industry metrics in order to facilitate operating performance comparisons from period to period, the preparation of annual operating budgets and forecasts and to determine components of executive compensation. The non-IFRS measures and technology industry metrics referred to in this press release include, 'Recurring and Non-Recurring Revenue', 'Adjusted EBITDA' and 'Free Cash Flow'.
Key Performance Indicators
Due to our operating model, we recognize revenue within Total LMS & MIPS and professional services. Total LMS & MIPS Solutions, while largely based on minimum monthly recurring fees, also includes transactional and overage charges that may be variable from month to month.
Management uses a number of metrics, including the ones identified below, to measure the Company's performance and customer trends, which are used to prepare financial plans and shape future strategy. Our key performance indicators may be calculated in a manner different than similar key performance indicators used by other companies.
Annual Recurring Revenue (ARR): (Note: This will be the final period in which this metric will be reported. Subsequent MD&As will focus on the revenue segments of professional services and Total LMS & MIPS). We define Annual Recurring Revenue as the annualized equivalent value of the most recent quarter's recurring revenue of all existing Total LMS & MIPS and professional services contracts that contain a minimum committed spend with total ARR being inclusive of related overage fees, transaction volumes and customer credits as at the date being measured, and excluding any non-recurring set up fees and short-term standalone projects. The revenues captured are related to customer contracts that generally span a one to three-year contract term with most of the managed services being non-cancelable. Almost all of our customer contracts, contributing to ARR, automatically renew unless canceled by our customers. Actual ARR versus new ARR Bookings would be expected to increase with the related overage charges and through the upsell of additional services across our categories. ARR provides us with visibility for consistent and predictable growth to our cash flows.
Annual Recurring Revenue (ARR) bookings: (NOTE: This will be the final period in which this metric will be reported. Subsequent MD&As will focus on Total Contract Value Booking. This metric is defined as the new contractual bookings with existing and new customers for services that include minimum committed levels that automatically renew and generally span a one to three-year contract term. This amount does not include any projects, set up fees or overage charges. The bookings on renewals of similar services are recorded using the net incremental amounts to provide readers with revenue growth expectations. The bookings conversion to revenue will depend on the time it takes to deploy a given purchased service, which is driven by the complexity of the solution. The actual impact on revenue could vary from actuals once overage and seasonal consumption charges are captured, as they are not estimated and recorded at time of booking. The revenue conversion may also be impacted as booking will capture amendments in existing services that convert on demand services to longer term agreements with minimum commitments. It is important to note that while this is an indicator of revenue and future potential revenue, it cannot be reconciled to actual revenue recognized or industry book to bill metrics.
Non-Recurring Bookings: (Note: This will be the final period in which this metric will be reported. Subsequent MD&As will focus on Total Contract Value Booking). This is defined as contractual bookings with existing and new customers primarily for professional services projects but would also include one-time managed service set up fees, and short-term managed services arrangements. The conversion to non-recurring revenue will depend on the start date and ramp up with revenue being recognized through the duration of the projects, as the defined scope is delivered. The bookings amount may differ from actual revenues where the fees are based on a time and material structure.
Total Bookings: (NOTE: This will be the final period in which this metric will be reported. Subsequent MD&As will focus on Total Contract Value Booking. This is defined as ARR booking plus the contract value of the Non- Recurring Bookings
Net Revenue Retention Rate in Constant Currency: (Note: This will be the final period in which this metric will be reported). We define Net Revenue Retention Rate in constant currency for a period by considering the group of customers on our platform as of twelve months prior and dividing our ARR attributable to such group of customers at the end of the period by the ARR at the beginning of such period. By implication, this ratio excludes any ARR from new customers acquired during the period, but it does include incremental sales added to the cohort base of customers during the period being measured. The benefits of cross selling and expanding our level of integrations and support is realized when we can achieve high Net Revenue Retention Rates. We reach constant currency for the reported period by applying the average foreign exchange of the comparable period from twelve months prior to translate the reported period results.
Total Contract Value (TCV) Booking: (Note: This is a new metric, which will be reported by the Company going forward and it replaces the booking metrics indicated above). This is defined as the total value of the contract executed with customers by the Company in the quarter. This is a new KPI to provide improved visibility to total bookings. It is important to note that while this is an indicator of revenue and future potential revenue, it cannot be reconciled to actual revenue recognized or industry book to bill metrics due to variances to time and material estimates, transactional or overage revenue that may not appear in bookings. The TCV Booking will be reported for the professional and Legacy Managed Services (LMS) & Managed and IP Solutions (MIPS) revenue segments. For this quarter we have provided the trailing twelve months which will serve as the comparative as we begin to report the Company's 2024 quarterly results.
Legacy Managed Services (LMS) Revenue: (Note: This is a new metric, which will be reported by the Company going forward.) This supplementary information will provide visibility into the revenues associated with supporting certain technology platforms in which the Company is not actively investing to grow. This metric should provide the readers with an overview of the underlying growth of the Company when these services are excluded from the results. This is a one-time segmentation for specific contracts of which the company intends to continue to report on until the revenues become less material to the overall Company's results. Starting 2024, the quarterly results will be compared to the table provided within this document.
Managed & IP Solutions (MIPS): (Note: This is a new metric, which will be reported by the Company going forward.) This supplementary information will provide visibility into the revenue growth of managed services and licenses when the legacy managed services business is excluded.
Total LMS & MIPS: This was referred to as managed services in prior reporting and will now be referenced using the new term. This segment combines both the LMS and MPS supplementary segmentations introduced within.
Credit Facility
Today,
Change in Leadership
Forward-looking Information
This press release contains 'forward-looking information' and 'forward-looking statements' (collectively, 'forward-looking information') within the meaning of applicable securities laws. Forward-looking information may relate to the Company's future financial outlook and anticipated events or results and may include information regarding the Company's financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding the Company's expectations of future results, performance, achievements, prospects or opportunities or the markets in which the Company operates is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as 'plans', 'targets', 'expects', 'budgets', 'scheduled', 'estimates', 'outlook', 'forecasts', 'projects', 'prospects', 'strategy', 'intends', 'anticipates', 'believes', or variations of such words and phrases or statements that certain actions, events or results 'may', 'could', 'would', 'might', or 'will' occur. 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 future events or circumstances. The forward-looking information contained herein includes, but is not limited to, proposed expansion of the Company's market position and potential acquisitions.
Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that, while considered by the Company to be appropriate and reasonable as of the date of this press release, 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, risks and uncertainties associated with market conditions and the satisfaction of all applicable regulatory requirements, as well as risks and uncertainties associated with the Company's business and finances in general.
If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in forward-looking information. The opinions, estimates or assumptions referred to above and the risk factors described in the 'Risk Factors' section of the prospectus of the Company dated
Although the Company has attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to the Company or that the Company presently believes is not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such 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 of the date made. Forward-looking information contained in this press release represents the Company's expectations as of the date of this press release (or as of the date they are otherwise stated to be made), and are subject to change after such date. The Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.
About
Contact:
Chief Financial Officer
Tel: 1-877-767-5577
Email: investor@pivotree.com
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