Loading...
Fifth consecutive quarter of positive Adjusted EBITDA with continued investment in frictionless products
Pivotree Announces Fourth Quarter and 2023 Results
For further information, please contact:
Mo Ashoor, Chief Financial Officer
investor@pivotree.com
1-877-767-5577
Sarah Kirk-Douglas, Vice President of Marketing
sarah.kirk-douglas@pivotree.com
905-251-6502
Pivotree Inc. (TSXV:PVT) (“Pivotree” or the “Company”), a leader in frictionless commerce solutions, today re ported financial results for the three and twelve month period ended December 31, 2023. 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 Bill Di Nardo, CEO of Pivotree. “ Our focus on frictionless products is bearing fruit, where we saw measurable progress with our IP based solutions through the year which we expect to continue into 2024.”
Pivotree also announced today that it has released a letter to shareholders from Bill Di Nardo, CEO. The letter can be accessed from the Company’s website at investor.pivotree.com and filed on SEDAR at www.sedar.com.
Fourth Quarter 2023 Financial Highlights
(All figures are in Canadian dollars and all comparisons are relative to the three-month period ended December 31, 2022 unless otherwise stated):
1 Please refer to “Key Performance Indicators” section of this press release.
2 Please refer to “Non-IFRS Measures and Reconciliation of Non-IFRS Measures” section of this press release.
Fourth Quarter 2023 Business Highlights
Fourth Quarter 2023 Results
Selected Financial Measures
|
Three months ended December 31, |
Twelve months ended December 31, |
||||||
|
|
|
|
|
|
|
||
|
2023 |
2022 |
$ Change |
% Change |
2023 |
2022 |
$ Change |
% Change |
|
$ |
$ |
$ |
% |
$ |
$ |
$ |
% |
Total LMS & MIPS |
10,710,317 |
11,143,928 |
(433,611) |
-3.9% |
43,575,647 |
41,187,567 |
2,388,080 |
5.8% |
Professional Services |
10,321,007 |
15,019,104 |
(4,698,097) |
-31.3% |
46,230,160 |
60,505,911 |
(14,275,751) |
-23.6% |
Total Revenue |
21,031,324 |
26,163,032 |
(5,131,708) |
-19.6% |
89,805,807 |
101,693,478 |
(11,887,671) |
-11.7% |
Results of Operations
The following table outlines our consolidated statements of loss and comprehensive loss for the three and twelve months ended December 31, 2023 and 2022.
|
Three months ended December 31, |
Twelve months ended December 31, |
||
|
2023 |
2022 |
2023 |
2022 |
|
$ |
$ |
$ |
$ |
Revenue |
21,031,324 |
26,163,032 |
89,805,807 |
101,693,478 |
Cost of revenue |
11,200,359 |
13,783,681 |
48,321,418 |
55,964,500 |
Gross profit |
9,830,965 |
12,379,351 |
41,484,389 |
45,728,978 |
Operating expenses |
|
|
|
|
General and administrative |
2,910,213 |
3,860,358 |
12,231,918 |
15,481,120 |
Sales and marketing |
2,235,968 |
2,590,421 |
9,877,260 |
9,997,599 |
Research and development |
518,949 |
735,123 |
2,394,136 |
4,202,619 |
IT and Operations |
3,447,126 |
3,882,543 |
14,581,825 |
15,643,150 |
Loss (gain) on foreign exchange |
103,143 |
203 |
284,604 |
(531,183) |
Amortization and Depreciation |
1,597,263 |
1,366,335 |
6,411,507 |
8,621,237 |
Stock based compensation |
181,350 |
127,046 |
860,413 |
925,878 |
Restructuring and Other |
74,086 |
73,320 |
1,414,179 |
1,402,956 |
Interest |
5,718 |
116,718 |
269,260 |
349,071 |
|
11,073,816 |
12,752,067 |
48,325,102 |
56,092,447 |
Income before other items |
(1,242,851) |
(372,716) |
(6,840,713) |
(10,363,469) |
Other items (expenses) |
- |
(2) |
- |
- |
Interest income |
69,762 |
- |
223,032 |
64,694 |
Operating loss |
(1,173,089) |
(372,718) |
(6,617,681) |
(10,298,775) |
Current taxes |
(168,661) |
1,073,962 |
(565,563) |
(525,437) |
Deferred taxes |
(46,814) |
761,214 |
(46,814) |
1,737,691 |
Net income (loss) |
(1,388,564) |
1,462,458 |
(7,230,058) |
(9,086,521) |
Other comprehensive income (loss) |
- |
- |
- |
- |
Foreign translation adjustment |
(572,644) |
1,971,814 |
(904,463) |
2,582,362 |
Comprehensive income (loss) |
(1,961,208) |
3,434,272 |
(8,134,521) |
(6,504,159) |
|
|
|
|
|
Income (Loss) per share - basic |
(0.05) |
0.05 |
(0.27) |
(0.35) |
Weighted average number of common shares outstanding - basic |
26,576,306 |
26,600,896 |
26,605,913 |
26,180,606 |
Cash Flows
|
Three months ended December 31, |
Twelve months ended December 31, |
||
|
2023 |
2022 |
2023 |
2022 |
|
$ |
$ |
$ |
$ |
Cash and cash equivalents, beginning of period |
8,969,128 |
13,844,455 |
17,346,028 |
24,570,287 |
Net cash provided by (used in): |
|
|
|
|
Operating activities |
1,091,770 |
3,914,309 |
(2,576,863) |
(1,689,094) |
Investing activities |
(501,254) |
45,208 |
(3,632,679) |
(4,852,809) |
Financing activities |
(940,484) |
(457,944) |
(2,517,325) |
(682,356) |
Net increase (decrease) in cash and cash |
(349,967) |
3,501,573 |
(8,726,867) |
(7,224,259) |
Cash and cash equivalents, end of period |
8,619,161 |
17,346,028 |
8,619,161 |
17,346,028 |
Conference Call
Management will host a live Zoom Video Webinar on Wednesday, March 27, 2024 at 8:30 am ET to discuss these fourth quarter 2023 results. The webinar can be accessed through the following registration link: https://pivotree.zoom.us/webinar/register/WN_QyIg3_HJQmWwRdXxWSL_7g.
A replay will be available approximately two hours after the conclusion of the live event and posted on https://investor.pivotree.com/.
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, Bookings and Net Revenue Retention Rate for the three and twelve months ended December 31, 2023 are as follows:
The ARR, ARR Bookings, Non-Recurring Bookings and Net Revenue retention rate will be discontinued in all 2024 MD&A reports.
|
Three Months Ended
|
|
YoY Change |
|
Twelve Months Ended
|
|
YoY Change |
||||
|
2023 |
2022 |
|
Change |
% Change |
|
2023 |
2022 |
|
Change |
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
Total ARR (1) |
41,396,468 |
48,786,824 |
|
(7,390,356) |
-15.1% |
|
N/A |
N/A |
|
N/A |
N/A |
YTD ARR Bookings |
1,043,907 |
872,727 |
|
171,180 |
19.6% |
|
4,025,908 |
4,321,354 |
|
(295,446) |
-6.8% |
YTD Non-Recurring Bookings |
12,286,022 |
20,457,472 |
|
(8,171,450) |
-39.9% |
|
45,091,085 |
69,050,148 |
|
(23,959,063) |
-34.7% |
YTD Total Bookings |
13,329,929 |
21,330,199 |
|
(8,000,270) |
-37.5% |
|
49,116,993 |
73,371,502 |
|
(24,254,509) |
-33.1% |
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenue Retention Rate in Constant Currency (1) |
70.3% |
98.8% |
|
-28.5% |
N/A |
|
N/A |
N/A |
|
N/A |
N/A |
Adjusted EBITDA
Adjusted EBITDA is used by management as a supplemental measure to review and assess operating performance and provide a more complete understanding of factors and trends affecting our business. Management believes that Adjusted EBITDA is a useful measure of operating performance and our ability to generate cash-based earnings, as it provides a relevant picture of operating results by excluding the effects of financing and investing activities which removes the effects of interest, depreciation and amortization expenses as non-cash items that are not reflective of our underlying business performance, and other one-time or non-recurring expenses. The Company defines Adjusted EBITDA as net income (loss) excluding taxes, interest and finance costs, amortization and depreciation, restructuring and other, and share based compensation. Management believes that these adjustments are appropriate in making Adjusted EBITDA an approximation of cash-based earnings from operations before capital replacement, financing, and income tax charges. Adjusted EBITDA does not have a standardized meaning under IFRS and is not a measure of operating income, operating performance or liquidity presented in accordance with IFRS and is subject to important limitations. The Company's definition of Adjusted EBITDA may be different than similarly titled measures used by other companies.
The following table reconciles Adjusted EBITDA to net loss for the periods indicated:
|
Three months ended December 31, |
Twelve months ended December 31, |
||
|
2023 |
2022 |
2023 |
2022 |
|
|
|
|
|
Net Income (loss) |
(1,388,565) |
1,462,459 |
(7,230,058) |
(9,086,521) |
Depreciation & Amortization (1) |
1,597,263 |
1,366,335 |
6,411,507 |
8,621,237 |
Interest (2) |
(64,044) |
116,718 |
46,228 |
284,377 |
Taxes |
215,475 |
(1,835,176) |
612,377 |
(1,212,254) |
EBITDA |
360,129 |
1,110,336 |
(159,946) |
(1,393,161) |
Stock-Based Compensation (3) |
181,350 |
127,046 |
860,413 |
925,878 |
Restructuring & Other (4) |
74,086 |
73,320 |
1,414,179 |
1,402,956 |
Adjusted EBITDA |
615,565 |
1,310,702 |
2,114,646 |
935,673 |
Notes:
(1) Depreciation and amortization expense is primarily related to depreciation expense on right-of-use assets (“ROU assets”), intangibles and property and equipment.
(2) Interest expenses are primarily related to interest and accretion expense on the secured debentures and convertible promissory notes. Included within is also the interest incurred on lease obligations.
(3) Stock-Based Compensation represents non-cash expenditures recognized in connection with the issuance of share-based compensation to our employees, advisors, and directors.
(4) Restructuring & Other expenses are related to restructuring, merger and acquisitions and extraordinary events that are not considered an expense indicative of continuing operations.
Adjusted Free Cash Flow
(Note: This metric will be discontinued in all 2024 MD&A reports. The reader should reference the cash flow statement for the required visibility into the company’s cash performance.) Adjusted Free Cash Flow is defined as adjusted EBITDA less capital expenditure, capital leases, deferred development, and interest(1) to provide readers an indication of the potential cash flow generated through accrual accounting from the core business but excluding the impact of working capital taxes. This is not the actual cash flows in the period. The following table provides a proxy of cash flow from the business:
|
Three months ended December 31, |
Twelve months ended December 31, |
||
|
2023 |
2022 |
2023 |
2022 |
|
|
|
|
|
Adjusted EBITDA |
615,565 |
1,310,702 |
2,114,646 |
935,673 |
Cash Financed Capital Expenditure |
(373,534) |
(176,634) |
(1,103,900) |
(705,657) |
Payment of Capital Leases |
(213,787) |
(285,118) |
(972,541) |
(1,345,160) |
Deferred Development |
(127,719) |
(19,131) |
(418,320) |
(136,363) |
Interest (1) |
64,044 |
(116,718) |
(46,228) |
(284,377) |
Adjusted Free Cash Flow |
(35,431) |
713,101 |
(426,343) |
(1,535,884) |
Notes:
(1) Interest expenses net of interest income.
New KPIs Introduced for 2024 Comparison
Starting in the first quarter of 2024, quarterly results will be compared to the below KPIs which will replace some of the previously reported KPIs. We have provided these tables to allow the readers the ability to make comparisons when 2024 results are produced.
Total Contract Value (TCV) Booking for the previous four quarters ending December 31, 2023 are as follows:
|
Q1-2023 |
Q2-2023 |
Q3-2023 |
Q4-2023 |
Grand Total |
PS |
$14,585,271 |
$9,711,277 |
$7,702,683 |
$11,822,156 |
$43,821,387 |
MIPS |
$1,194,962 |
$5,520,717 |
$3,730,499 |
$3,867,072 |
$14,313,250 |
LMS |
$5,561,933 |
$1,743,189 |
$5,505,583 |
$1,112,033 |
$13,922,738 |
Total TCV Booking |
$21,342,166 |
$16,975,182 |
$16,938,764 |
$16,801,261 |
$72,057,374 |
Total LMS & MIPS Revenue Segmentation for the previous four quarters, ending December 31, 2023, results are as follows:
|
Q1-2023 |
Q2-2023 |
Q3-2023 |
Q4-2023 |
Managed & IP Solutions - Excl. LegacyMIPS |
$2,887,317 |
$3,077,004 |
$4,465,740 |
$4,597,694 |
Legacy Managed ServicesLMS |
$8,123,837 |
$7,583,777 |
$6,727,655 |
$6,112,623 |
Managed & IP SolutionsTotal LMS & MIPS |
$11,011,154 |
$10,660,781 |
$11,193,395 |
$10,710,317 |
Credit Facility
Today, Pivotree announced that it has entered into a new senior secured credit facility with the National Bank of Canada. The debt provides a $12M senior secured revolving credit facility with an accordion feature of up to an additional $15M. The new facility replaces the amended credit facility with the Bank of Montreal ("BMO”) amended and completed on December 7, 2020 (the “BMO Credit Facility") which has matured and has not been renewed by the Company.
Change in Leadership
Pivotree has been transitioning its organizational structure from a business unit-centric model towards an integrated model as a part of its long-term strategy. This includes organizing by function to offer a seamless customer experience across capabilities. The company is announcing that effective January 1, 2024, Ted Smith Jr. has stepped down from his prior role as Chief Operating Officer and will lead the Managed Services practice as Senior Vice President, Global Managed Services. To ensure Pivotree continues to deliver on its strategic vision, the company has been actively recruiting other key senior roles including Chief Revenue Officer and Chief Technology Officer.
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 October 23, 2020 should be considered carefully.
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 Pivotree
Pivotree, a leader in frictionless commerce, strategizes, designs, builds, and manages digital Commerce, Data Management, and Supply Chain solutions for over 200 major retailers and branded manufacturers globally. With a portfolio of digital products as well as managed and professional services, Pivotree provides businesses of all sizes with true end-to-end solutions. Headquartered in Toronto, Canada, with offices and customers in the Americas, EMEA, and APAC, Pivotree is widely recognized as a high-growth company and industry leader. For more information, visit www.pivotree.com or follow us on LinkedIn.
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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240327367373/en/