News Press Releases

NexJ Systems Reports First Quarter Fiscal 2017 Results

April 27, 2017

Canada NewsWire

TORONTO, April 27, 2017

Growth in Revenue and Profit Continues

TORONTO, April 27, 2017 /CNW/ - NexJ Systems Inc. (TSX: NXJ), a provider of enterprise customer management solutions to the financial services industry, today announced financial results for its first quarter ended March 31, 2017.

Highlights

$8.8M in revenue for the first quarter represents 9% growth over the same period in the prior year
$733K in Adjusted EBITDA for the first quarter is an improvement over the Adjusted EBITDA of $282K for the comparative period
$327K in net income for the first quarter is a $2.3M improvement over the net loss of $2.0M for the comparative period

"We are pleased to have delivered growth in revenue, adjusted EBITDA and earnings in the quarter," said William M. Tatham, Chief Executive Officer of NexJ Systems. "We remain committed to delivering profitable revenue growth moving ahead."

Conference Call Information
NexJ will be hosting an earnings report conference call today at 5:00 p.m. ET. The call can be accessed via webcast or by phone by dialing 647-427-7450 (Toronto local or international) or 1-888-231-8191 (North America Toll Free). Investors should dial in approximately 10 minutes before the teleconference is scheduled to begin.

A replay of the call will be available beginning today at 8:00 p.m. ET through 11:59 p.m. on May 4, 2017 and can be accessed by dialing 416-849-0833 (Toronto local) or toll free at 1-855-859-2056 and using password 7185891.

NexJ Systems Inc.
	First Quarter Financial Results
	(Expressed in thousands of Canadian dollars)
	(Unaudited)
		Quarter ended	Quarter ended
		March 31, 2017	March 31, 2016

Revenue:		$	$
	License fees	3,183	1,067
	Professional services	3,686	5,121
	Maintenance and support	1,947	1,900
		8,816	8,088
Expenses:
	Professional services	2,918	3,125
	Research and development, net	1,848	2,115
	Sales and marketing	1,339	1,134
	General and administrative, net	1,978	1,432
		8,083	7,806

Adjusted EBITDA		733	282

	Loss from discontinued operation	-	252
	Impairment of loan receivable	-	641
	Share-based payment expense	95	350
	Depreciation and amortization	232	212
Income (loss) from operations		406	(1,173)

	Foreign exchange loss	98	873
	Finance income	(19)	(18)
Net income (loss)		327	(2,028)

Non-IFRS Measures
This news release includes certain measures that have not been prepared in accordance with International Financial Reporting Standards ("IFRS") such as Adjusted EBITDA and Adjusted EBITDA margin which are used to evaluate the Company's operating performance as a complement to results provided in accordance with IFRS. The Company believes that Adjusted EBITDA and Adjusted EBITDA margin are useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation and the other items listed below.

The term "Adjusted EBITDA" refers to net income (loss) before adjusting for loss from discontinued operation, share-based payment expense, depreciation and amortization, impairment charge on non-financial assets, impairment of loan receivable and shared services, lease-exit charges, net, earn-out expense (recovery), foreign exchange loss (gain), finance income, finance costs, and income taxes. "Adjusted EBITDA margin" refers to the percentage that Adjusted EBITDA for any period represents as a portion of total revenue for that period.

The term Adjusted EBITDA and Adjusted EBITDA margin are not measures recognized by IFRS and do not have standardized meanings prescribed by IFRS. Therefore, Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similar measures presented by other issuers. Investors are cautioned that Adjusted EBITDA and Adjusted EBITDA margin should not be construed as an alternative to net income (loss) as determined in accordance with IFRS.

About NexJ Systems Inc.
NexJ Systems provides enterprise customer management solutions to the financial services industry. Our solutions include industry-specific customer relationship management (CRM) for multi-channel engagement and collaboration; customer process management (CPM) for client onboarding and KYC; and customer data management (CDM) to deliver a holistic view of customers across line of business and regional data silos. Our solutions integrate information from multiple systems into a unified view to help firms better understand and share information about their customers to increase loyalty, drive cross-sell and improve the customer experience.

Based in Toronto, NexJ has clients throughout North America, Asia Pacific and in Europe. For more information about NexJ visit www.nexj.com, e-mail info@nexj.com, or call 416-222-5611. Join us on LinkedIn, follow us on Twitter, subscribe to our YouTube channel, like us on Facebook or hang out with us on Google+.

NexJ Forward-looking Statement
Certain statements in this press release, including statements about the financial conditions, and results of operations and earnings, may contain words such as "could", "expects", "may", "should", "will", "anticipates", "believes", "intends", "estimates", "targets", "plans", "envisions", "seeks" and other similar language and are considered forward-looking statements or information under applicable securities laws. These statements are based on the Company's current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which the Company operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. The Company's assumptions, although considered reasonable by the Company at the date of this press release, may provide to be inaccurate and consequently the Company's actual results could differ materially from the expectations set out herein.

Actual results or events could differ materially from those contemplated in forward-looking statements as a result of the following: (i) the future performance, financial and otherwise, of NexJ; (ii) the ability of NexJ to protect, maintain and enforce its intellectual property rights; (iii) the acceptance by the Company's customers and the marketplace of new technologies and solutions; (iv) the Company's growth and profitability prospects; (v) the estimated size and growth prospects of the CRM market; (vi) the Company's competitive position in the CRM market and its ability to take advantage of future opportunities in this market; (vii) the Company's ability to attract new customers and develop and maintain existing customers; and (viii) the demand for the Company's product and the extent of deployment of the company's products in the CRM marketplace. Forward-looking statements may also include, without limitation, any statement relating to future events, conditions or circumstances.

The risks and uncertainties that may affect forward-looking statements include, but are not limited to: (i) our dependence on a limited number of customers and large project size; (ii) fluctuation in our quarterly operating results; (iii) our dependence on key personnel and our compensation structure; (iv) risks associated with managing large and complex software implementation projects; (v) uncertainties and assumptions in our sales forecasts, including the extent to which sales proposals are converted into sales; (vi) risks associated with our ability to design, develop, test, market, license and support our software products on a timely basis; (vii) market acceptance of our products and services; (viii) commercial success of products resulting from our investment in research and development; (ix) our success in expanding sales into new international markets; * competition in our industry; (xi) failure to protect our intellectual property or infringement of intellectual property rights of third parties; (xii) reliance upon a limited number of third-party software products to develop our products; (xiii) defects or disruptions in our products and services; (xiv) currency exchange rate fluctuations; (xv) lengthy sales cycles for our software; (xvi) global financial market conditions; (xvii) failure to manage our growth successfully; and (xiii) failure to successfully manage and integrate acquisitions.

For additional information with respect to risks and other factors which could occur, see the Company's most recently filed Annual Information Form for the year ended December 31, 2016 dated February 15, 2017, and other securities filings with the Canadian securities regulators available on www.sedar.com. Unless otherwise required by applicable securities laws, the Company disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

NexJ Systems Inc.
Condensed Interim Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)
(Unaudited)

		March 31, 2017	December 31, 2016

Assets
		$	$
Current assets:
	Cash and cash equivalents	13,655	14,678
	Accounts receivable	13,891	12,573
	Prepaid expenses and other assets	1,142	1,094
Total current assets		28,688	28,345

Non-current assets:
	Property and equipment	1,893	1,965
	Goodwill	1,753	1,753
	Other assets	260	260
Total non-current assets		3,906	3,978

Total assets		32,594	32,323

Liabilities and Shareholders' Equity

Current liabilities:
	Accounts payable and accrued liabilities	4,899	5,871
	Deferred revenue	7,458	7,137
	Provisions	168	224
	Current portion of finance lease liability	148	148
Total current liabilities		12,673	13,380

Non-current liabilities:
	Accrued liabilities	1,821	1,259
	Finance lease liability	123	160
Total non-current liabilities		1,944	1,419

Total liabilities		14,617	14,799

Shareholders' equity:
	Share capital	82,752	82,648
	Share purchase loans	(3,622)	(3,622)
	Contributed surplus	7,161	7,139
	Deficit	(68,314)	(68,641)
Total shareholders' equity		17,977	17,524


Total liabilities and shareholders' equity		32,594	32,323

NexJ Systems Inc.
Condensed Interim Consolidated Statements of Comprehensive Income (Loss)
(Expressed in thousands of Canadian dollars, except per share amounts)
(Unaudited)

		Three months ended March 31,
		2017	2016


Revenue:		$	$
	License fees	3,183	1,067
	Professional services	3,686	5,121
	Maintenance and support	1,947	1,900
		8,816	8,088

Expenses*:
	Professional services	2,936	3,226
	Research and development, net	1,881	2,229
	Sales and marketing	1,345	1,151
	General and administrative, net	2,248	1,762
	Impairment of loan receivable	-	641
		8,410	9,009

Income (loss) from operations:		406	(921)

	Foreign exchange loss	(98)	(873)
	Finance income	19	18
		(79)	(855)

Income (loss) from continuing operations:		327	(1,776)
Loss from discontinued operation:		-	(252)

Net Income (loss) and comprehensive income (loss):		327	(2,028)

Earnings (loss) per share:
	Basic and diluted from continuing operations	0.02	(0.09)
	Basic and diluted from discontinued operation	-	(0.01)
	Basic and diluted	0.02	(0.10)

Weighted average number of
common shares outstanding, in thousands:
	Basic	20,052	20,300
	Diluted	21,270	20,300


*Share-based payment expense has
been included in expenses as follows:
	Professional services	18	101
	Research and development, net	33	114
	Sales and marketing	6	17
	General and administrative, net	38	118
		95	350

NexJ Systems Inc.
Condensed Intertim Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
(Unaudited)

			Three months ended March 31,
			2017	2016

Cash flows from (used in) operating activities:			$	$
	Net income (loss)		327	(2,028)
	Adjustments for:
		Impairment of loan receivable	-	641
		Depreciation and amortization	232	212
		Share-based payment expense	95	350
		Finance income	(19)	(18)
		Foreign exchange loss	6	170
		Loss from discontinued operation	-	252
	Change in non-cash operating working capital:
		Accounts receivable	(1,318)	628
		Prepaid expenses and other assets	(48)	(130)
		Accounts payable and accrued liabilities and provisions	(486)	(711)
		Deferred revenue	321	213
			(890)	(421)
Net cash flows used in discontinued operation			-	(270)
Net cash flows used in operating activities			(890)	(691)

Cash flows from (used in) financing activities:
		Repurchase of common shares	(104)	(48)
		Proceeds from exercise of stock options	135	135
		Payment of finance lease liability	(37)	(25)
Net cash flows from (used in) financing activities			(6)	62

Cash flows from (used in) investing activities:
		Purchase of property and equipment	(140)	(9)
		Advances to NexJ Health Inc.	-	(641)
		Distribution, net of cash	-	(40)
		Interest received	19	18
Net cash flows used in investing activities			(121)	(672)

		Effects of exchange rates on cash and cash equivalents	(6)	(170)

		Decrease in cash and cash equivalents	(1,023)	(1,471)

Cash and cash equivalents, beginning of period			14,678	14,699

Cash and cash equivalents, end of period			13,655	13,228

Supplemental cash flow information:
		Acquisition of property and equipment not yet paid	20	94
		Acquisition of property and equipment under finance lease	-	444