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Copperleaf Announces Third Quarter 2021 Results

11/11/2021
  • Q3 revenue increases 55% YoY to $16.8 million
  • Annual Recurring Revenue grows 52% YoY to $33.2

VANCOUVER, BC, Nov. 11, 2021 /CNW/ - Copperleaf Technologies Inc. (TSX: CPLF) ("Copperleaf" or the "Company"), a provider of enterprise decision analytics software solutions, today announced financial results for the three and nine months ended September 30, 2021. All amounts are expressed in Canadian dollars unless otherwise stated.

"Our third quarter results demonstrated strong progress on our key financial metrics. We delivered 52% YoY growth in Annual Recurring Revenue, 50% YoY growth in our Revenue Backlog, and a 125% Net Revenue Retention Rate," said Judi Hess, CEO of Copperleaf. "For more than a decade, Copperleaf has been helping organizations allocate their resources, time, and funds toward the most valuable areas of their businesses to optimize their performance. With the successful completion of our IPO, we are in an even stronger financial position to build on our advantage and capture a greater share of the decision analytics market, which is still in the early stages of a long-term growth cycle."

Third Quarter 2021 Financial Highlights

(All Capitalized terms not defined herein, shall have the meaning ascribed to them in the Management's Discussion and Analysis for the three months ended September 30, 2021; Comparison periods in each case are the three months ended September 30,2020, unless otherwise stated)

  • Record revenue of $16.8 million, an increase of 55% over Q3 2020, driven by the increase in new clients and the expansion of existing clients.
  • Annual Recurring Revenue1 as at September 30, 2021 of $33.2 million, a 52% increase from $21.8 million as of September 30, 2020.
  • Subscription revenue of $8.2 million (49% of total revenue), an increase of 52% from the prior year.
  • Gross profit of $12.9 million, a 67% increase from $7.7 million in Q3 2020, representing a Gross Margin of 77%. The year-over-year growth reflects an increase in revenue, successful remote delivery resulting in less travel, as well as an improvement in utilization.
  • Adjusted EBITDA1,2 loss of $1.4 million, compared to a loss of $2.0 million in Q3 2020.
  • Net loss of $3.3 million, or $0.20 per share, compared to a net loss of $2.8 million, or $0.19 per share, in Q3 2020.
  • As of September 30, 2021, our Net Revenue Retention Rate1 was 125%.
  • As of September 30, 2021, our Revenue Backlog1 grew 50% to $79.1 million, compared to $52.6 million as of September 30, 2020. 
  • Cash and cash equivalents of $12.2 million as at September 30, 2021, compared to $15.9 million at December 31, 2020.  Subsequent to quarter end, Copperleaf completed its IPO for net cash proceeds of $151.5 million.

1 Please refer to "Key Performance Indicators" section of this press release

2 Please refer to "Non-IFRS Measures" section of this press release

"We delivered record revenue and Annual Recurring Revenue in the third quarter," continued Ms. Hess. "Some of the world's largest and most respected organizations trust Copperleaf to guide their investment decisions. We have built a strong global brand and we intend to continue making investments to support future growth. These investments continue to drive new client acquisition and existing client expansions, increasing our Annual Recurring Revenue, and demonstrate the power of our land and expand model."

Key Developments

  • On October 14, 2021, Copperleaf completed its oversubscribed and upsized IPO and listing on the Toronto Stock Exchange.
  • Our Alliance Ecosystem continues to gain traction as partners build their Copperleaf practice areas, resulting in an increase in active partner pursuits during fiscal year 2021.
  • At the end of Q3 2021, the water and wastewater verticals officially became core sectors at Copperleaf alongside energy, with transportation starting to gain global traction in our emerging verticals.
  • Our environmental, social, and corporate governance ("ESG") enabled solutions empower our clients to move from aspirational goals to operational plans. Market traction for ESG and the energy transition continues to build. It has influenced half of our new 2021 deals as of the end of Q3 2021, and is leading to an expansion in our global pipeline.
  • The Copperleaf Community is engaged and growing, with one third of our clients participating in client-led innovation with Copperleaf Labs during Q3 2021.
  • During Q3 2021, we released version 21.3 of our product suite, which includes a new costing option to generate more accurate cost estimates using parameterized models, in addition to many other features. We believe better cost estimation results in better decisions.
  • Continuous improvement in product development for automated testing has reduced our test burden by 50% for the nine month period ended September 30, 2021, resulting in faster time to market and lower costs.

Q3 2021 Financial Results Conference Call Details

Judi Hess, Chief Executive Officer and Chris Allen, Chief Financial Officer, will host a conference call followed by a question-and-answer session today, November 11, 2021, at 4:30 PM ET.

Date:

November 11, 2021

Time:

4:30pm ET

Dial-In Number:

416-764-8659 or 1-888-664-6392

Webcast:

https://bit.ly/3Cl97T2

Replay:

416-764-8677 or 1-888-390-0541 (Available until November 18, 2021)

Replay Entry Code:

410571#

1 Key Performance Indicators

The Company monitors a number of key performance indicators (KPIs) to evaluate performance. Some of the KPIs used by management are recognized under IFRS, whereas others are non-IFRS measures and are not recognized under IFRS. These non-IFRS measures are included as additional information to complement the IFRS measures, providing further understanding of our results of operations from management's perspective. We believe that non-IFRS financial measures are useful to investors and others in assessing our performance; however, these measures should not be considered as a substitute for reported IFRS measures nor should they be considered in isolation. As these measures are not recognized measures under IFRS, they do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. For a reconciliation of non-IFRS measures to the most directly comparable measures calculated in accordance with IFRS, see section "Non-IFRS Measures" below.

Annual Recurring Revenue

We define Annual Recurring Revenue (ARR) as the annualized equivalent value of the subscription revenue of all existing contracts as at the date being measured, excluding non-recurring SaaS and hosting fees. Our clients generally enter into three-to-five-year contracts that are non-cancelable or cancelable with penalty. Our current gross client retention is 100%, and our calculation of ARR assumes clients will renew their contractual commitments on a periodic basis as those commitments come up for renewal. We believe that this measure provides a fair real-time measure of performance in a subscription-based environment.

Net Revenue Retention Rate

We believe that our Net Revenue Retention Rate is a key measure to provide insight into the long-term value of our clients and our ability to retain and expand revenue from our client base over time. Our Net Revenue Retention Rate is calculated over a trailing twelve-month period by considering the group of clients on our platform as of the beginning of the period and dividing our ARR attributable to this same group of clients at the end of the period by the ARR at the beginning of the period. By implication, this ratio excludes any ARR from new clients acquired during the period but does include incremental sales added to the cohort base of clients during the period being measured. This measure provides insight into client expansions, downgrades, and churn, and illustrates the growth potential of our client base alone.

Revenue Backlog

Revenue Backlog represents the total revenue expected to be recognized in the future, related to performance obligations that are unsatisfied or partially unsatisfied at period end. The recurring nature of our revenue provides high visibility into future performance, and upfront payments result in cash flow generation in advance of revenue recognition. Subscription contracts require annual upfront payments; however, some clients pay multiple years upfront.  Typically, approximately 50% of our expected annual revenue is recognized from client contracts that are in place at the beginning of the year, and this continues to be our target model going forward. However, this also means that agreements with new clients or agreements with existing clients purchasing incremental products and services in a quarter may not contribute significantly to revenue in the current quarter. For example, for SaaS contracts and professional services, a new client who enters into an agreement late in a quarter will typically have limited contribution to revenue recognized in that quarter. Perpetual licenses, by contrast, are often recognized as revenue upon delivery of the software which typically occurs immediately upon contracting, and thus rarely enters Revenue Backlog.

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 reflects our ability to generate cash-based earnings. It provides a more relevant picture of operating results by excluding the effects of financing and investing activities, which removes the effects of interest and other expenses such as non-cash items and other one-time or non-recurring expenses that are not reflective of our underlying business. Our management also uses Adjusted EBITDA to facilitate operating performance comparisons and decision making from period to period and to prepare annual operating budgets and forecasts. In addition, it is used to provide securities analysts, investors, and other interested parties with supplemental measures of our operating performance and thus highlight trends in our business that may not otherwise be apparent when relying solely on IFRS measures.

2Non-IFRS Measures

As required by Canadian securities laws, we reconcile the non-IFRS measures to the most comparable IFRS measures. For more information on non-IFRS measures and other measures, see the Company's Management's Discussion and Analysis of Financial Condition and Results of Operations for the three and nine-months ended September 30, 2021, filed on SEDAR and available on the Company's investor relations website at https://investors.copperleaf.com/.   

The following table reconciles Adjusted EBITDA to net income (loss) for the periods indicated:


For three months ended September 30


2021

2020

$ Change

% Change

Net income (loss)

($3,281,416)

($2,828,932)

($452,484)

(16%)

Depreciation and amortization

$547,734

$535,493

$12,241

2%

Share-based payments expense

$426,768

$220,215

$206,553

94%

Finance costs

$186,874

$123,671

$63,203

51%

Finance income

($738)

($5,215)

$4,477

(86%)

Foreign exchange loss (gain)

($349,639)

($61,874)

($287,765)

(465%)

Income taxes (recovery)

($92,762)

$27,568

($120,330)

(436%)

IPO transaction related costs

$1,143,600

-

$1,143,600

100%

Adjusted EBITDA

($1,419,579)

($1,989,074)

$569,495

29%




For nine months ended September 30,







2021

2020

$ Change

% Change

Net income (loss)

($6,674,784)

($11,250,852)

$4,576,068

41%

Depreciation and amortization

$1,685,183

$1,642,466

$42,717

3%

Share-based payments expense

$1,431,997

$876,451

$555,546

63%

Finance costs

$600,042

$395,552

$204,490

52%

Finance income

($8,748)

($80,300)

$71,552

(89%)

Gain on lease modification

($181,372)

-

($181,372)

100%

Foreign exchange loss (gain)

$701,814

($596,196)

$1,298,010

218%

Income taxes (recovery)

$98,782

$216,286

($117,504)

(54%)

IPO transaction related costs

$2,092,582

-

$2,092,582

100%

Adjusted EBITDA

($254,504)

($8,796,593)

$8,542,089

97%

Selected Financial Information
Consolidated Statements of Loss and Comprehensive Loss
(expressed in Canadian dollars)
(unaudited)


For the three months ended
September 30,

For the nine months ended
September 30,


2021

2020

2021

2020


$

$

$

$

Revenue

16,802,972

10,827,117

47,485,285

28,086,716






Cost of revenue

3,934,755

3,100,818

9,861,210

9,115,359






Gross profit

12,868,217

7,726,299

37,624,075

18,971,357






Operating expenses





Sales and marketing

6,384,224

3,940,753

16,125,910

10,921,409

Research and development

5,268,994

3,936,882

14,534,271

11,851,854

General and administrative

4,752,680

2,593,446

12,428,160

7,513,604


16,405,898

10,471,081

43,088,341

30,286,867






Loss from operations

(3,537,681)

(2,744,782)

(5,464,266)

(11,315,510)






Other expenses (income)





Finance costs

186,874

123,671

600,042

395,552

Finance income

(738)

(5,215)

(8,748)

(80,300)

Gain on lease modification

-

-

(181,372)

-

Foreign exchange loss (gain)

(349,639)

(61,874)

701,814

(596,196)


(163,503)

56,582

1,111,736

(280,944)






Loss before income taxes

(3,374,178)

(2,801,364)

(6,576,002)

(11,034,566)






Income taxes (recovery)





Current income tax expense (recovery)

(92,762)

27,568

98,782

216,286


(92,762)

27,568

98,782

216,286






Net loss and comprehensive loss for the period

(3,281,416)

(2,828,932)

(6,674,784)

(11,250,852)

Net loss per share





Basic

(0.20)

(0.19)

(0.41)

(0.75)

Diluted

(0.20)

(0.19)

(0.41)

(0.75)

Weighted average number of common shares outstanding, basic

16,781,900

15,224,756

16,428,684

15,027,915

Weighted average number of common shares outstanding, diluted

16,781,900

15,224,756

16,428,684

15,027,915






Consolidated Statements of Financial Position
(expressed in Canadian Dollars)
(unaudited)


September 30,
2021

December 31,
2020


$

$

Assets



Current assets



Cash and cash equivalents

12,166,925

15,916,417

Prepaid expenses

1,716,294

1,326,691

Contract costs

668,004

601,283

Accounts receivable

12,471,327

26,169,662

Investment tax credits receivable

2,916,282

1,586,673

Contract assets

3,815,426

594,310


33,754,258

46,195,036

Non-current assets



Deposit

80,629

81,513

Contract costs

1,194,179

1,216,571

Deferred share issuance costs

639,948

-

Right-of-use assets

1,402,422

2,421,832

Intangible assets

1,160,537

1,333,890

Property and equipment

1,949,468

2,389,296


6,427,183

7,443,102




Total assets

40,181,441

53,638,138




Liabilities and shareholders' equity



Current liabilities



Accounts payable and accrued liabilities

11,787,760

11,276,887

Lease liabilities

913,080

1,049,762

Contract liabilities

12,713,704

18,198,658


25,414,544

30,525,307

Non-current liabilities



Lease liabilities

1,426,756

2,694,460

Contract liabilities

10,162,615

12,906,512


11,589,371

15,600,972




Total liabilities

37,003,915

46,126,279




Shareholders' equity



Share capital

30,447,072

29,069,354

Share-based payments reserve

4,055,004

3,092,271

Deficit

(31,324,550)

(24,649,766)

Total shareholders' equity

3,177,526

7,511,859

Total liabilities and shareholders' equity

40,181,441

53,638,138






Consolidated Statements of Cash Flows
(expressed in Canadian Dollars)
(unaudited)


For the three months ended
September 30

For the nine months ended
September 30


2021

2020

2021

2020


$

$

$

$

Cash provided by (used in)





Operating activities





Net loss

(3,281,416)

(2,828,932)

(6,674,784)

(11,250,852)

Items not involving cash





Depreciation of property and equipment

262,895

211,335

766,808

708,867

Amortization of intangible assets

93,941

115,293

304,383

312,928

Depreciation of right-of-use assets 

190,898

208,865

613,992

620,671

Foreign exchange loss (gain)

(349,639)

(61,874)

701,814

(596,196)

Gain on lease modification

-

-

(181,372)

-

Income tax expense (recovery)

(92,762)

27,568

98,782

216,286

Finance income

(738)

(5,215)

(8,748)

(80,300)

Finance costs

186,874

123,671

600,042

395,552

Share-based payments

426,768

220,215

1,431,997

876,451

Changes in non-cash working capital items

1,209,295

5,131,463

382,183

10,124,654

Interest paid

(23,824)

(46,687)

(87,382)

(148,151)

Interest received

738

5,215

8,748

80,300

Income taxes paid

(124,656)

-

(627,642)

-

Net cash provided by (used in) operating activities

(1,501,626)

3,100,917

(2,671,179)

1,260,210






Financing activities





Proceeds from exercise of stock options

498,655

11,414

908,454

203,725

Deferred share issuance costs

(270,668)

-

(270,668)

-

Payment of principal on lease liabilities

(237,890)

(266,890)

(816,454)

(784,940)

Net cash used in financing activities

(9,903)

(255,476)

(178,668)

(581,215)






Investing activities





Additions to property and equipment

(108,886)

(14,853)

(326,959)

(222,697)

Additions to intangible assets

(48,142)

(420,696)

(135,827)

(467,992)

Net cash used in investing activities

(157,028)

(435,549)

(462,786)

(690,689)






Effect of foreign currency on cash and cash equivalents

267,896

(76,151)

(436,859)

338,033

Increase (decrease) in cash during the period

(1,400,661)

2,333,741

(3,749,492)

326,339






Cash and cash equivalents – beginning of period

13,567,586

12,918,834

15,916,417

14,926,236

Cash and cash equivalents – end of period

12,166,925

15,252,575

12,166,925

15,252,575












Disaggregation of revenue

Revenue

For three months ended
September 30
(1)

For nine months ended
September 30
(1)


2021

2020

2021

2020

Subscription

$8,211,319

$5,419,774

$22,853,746

$13,980,994

Professional services and other

$7,924,758

$3,991,666

$18,727,731

$11,283,892

Perpetual software licenses

$666,895

$1,415,677

$5,903,808

$2,821,830


$16,802,972

$10,827,117

$47,485,285

$28,086,716

Forward-Looking Statements

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking information") within the meaning of applicable securities laws in Canada.

Forward-looking information may relate to our future business, financial outlook, and anticipated events or results, and may include information regarding our financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding our expectations of future results, performance, achievements, prospects, or opportunities, or the markets in which we operate, 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" or "does not expect", "is expected", "an opportunity exists", "budget", "scheduled", "estimates", "outlook", "financial outlook", "forecasts", "projection", "prospects", "strategy", "intends", "anticipates", "does not anticipate", "believes", or variations of such words and phrases, or statements that certain actions, events, or results "may", "could", "would", "might", "will", "will be taken", "occur" or "be achieved". 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 possible future events or circumstances.

Forward-looking information may include, among other things: (i) the Company's expectations regarding its financial performance, including among others, revenue, gross profit, expenses, Adjusted EBITDA; (ii) the Company's expectations regarding industry trends, addressable market growth, overall market growth rates, and growth rates and growth strategies; (iii) our business plans and strategies; (iv) the continued success of our commercial model; (v) our expectations regarding growth in our customer base, our ability to retain customers and increase margin per customer; (vi) acceleration in the growth and adoption of new technologies; (vii) relationships with our technology partners; (viii) our ability to continue to attract and retain talent; (ix) our competitive position in our industry; and (xi) and the long-term impact of COVID-19 on our business, financial position, results of operations and/or cash flows.

Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that we considered appropriate and reasonable as at the date such statements are made, and 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 the risk factors described in our Q3 2021 MD&A and under "Risk Factors" within the Company's IPO prospectus (the "Prospectus"). A copy of the Prospectus can be accessed under our profile on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com. There can be no assurance that such forward-looking 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 at the date made.

In addition, forward-looking financial information with respect to potential outlook and future financial results contained in this press release are based on assumptions about future events including economic conditions, the assumptions noted above and proposed courses of action, based on management's reasonable assessment of the relevant information available as at the date of such forward-looking information. Readers are cautioned that any such forward-looking financial information should not be used for purposes other than for which it is disclosed.

About Copperleaf:

Copperleaf provides enterprise decision analytics software solutions to companies managing critical infrastructure. We leverage operational and financial data to empower our clients to make investment decisions that deliver the highest business value. What sets us apart is our commitment to providing extraordinary experiences, shaped by people who care deeply, products that deliver exceptional value, and partnerships that stand the test of time. Copperleaf is a patron of The Institute of Asset Management and actively participates in shaping the future of asset management standards, including ISO 55000. Headquartered in Vancouver, Canada, our solutions are distributed and supported by regional staff and partners worldwide. Together, we are transforming how the world sees value.

For more details, visit https://www.copperleaf.com/

SOURCE CopperLeaf Technologies Inc.

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