Copperleaf Announces Third Quarter 2023 Results

• Annual Recurring Revenue increases 26% YoY to $53.3 million
• Subscription Revenue grows 30% YoY to $13.0 million
• Backlog grows 23% to $114.2 million

VANCOUVER, BC, Nov. 8, 2023 /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, 2023. All amounts are expressed in Canadian dollars unless otherwise stated.

"Copperleaf's third quarter results demonstrated continued momentum across all of our key financial metrics," said Paul Sakrzewski, CEO of Copperleaf. "We delivered a 26% YoY increase in Annual Recurring Revenue, drove a 30% YoY increase in subscription revenue and ended the quarter with a record $114.2 million backlog."

"Our third quarter performance underscores the effectiveness of our industry-leading decision analytics software, the strength of our refreshed operating model and the improved execution of our team, despite continuing uncertain market conditions. During the quarter, we made further progress on geographic and industry sector expansion with the addition of one of the largest gas distribution companies in the United States as well as signing one of Brazil's largest integrated power utilities, validating go-to-market investments made in the region. Additionally, we continued to make substantial progress across our Alliance and Partner Ecosystem. In the third quarter we saw the commencement of co-operative go-to-market activities with SAP under the Endorsed Apps program, resulting in material incremental pipeline for 2024 and beyond. These results highlight the significant value we provide to our clients, as well as the sustained demand for the innovative solutions Copperleaf provides," added Mr. Sakrzewski.

"For the remainder of 2023, we will remain focused on executing our go-to-market strategy while continuing to prudently manage company expenses as we navigate uncertain economic conditions. We anticipate that growth in ARR and pipeline for the remainder of the year will be driven by ongoing refinement of our go-to-market model, the maturation of our salesforce, and increasing partner traction," Mr. Sakrzewski concluded.

Third Quarter 2023 Financial Highlights

(All Capitalized terms used but not defined in this press release have the meanings ascribed to them in Management's Discussion and Analysis for the three and nine months ended September 30, 2023; Comparison periods in each case are the three months ended September 30, 2022, unless otherwise stated)

• Revenue of $19.9 million, an increase of 10% compared to Q3 2022, driven by an increase in subscription and perpetual and term-based license revenue partially offset by a decrease in professional services revenue.
• Annual Recurring Revenue1 as at September 30, 2023 of $53.3 million, a 26% increase from $42.3 million as at September 30, 2022.
• Subscription revenue of $13.0 million, an increase of 30% over Q3 2022.
• Gross profit of $14.5 million representing a Gross margin of 73%, a 9% increase from $13.3 million and 73% in Q3 2022.
• Adjusted EBITDA1 loss of $5.9 million, compared to Adjusted EBITDA1 loss of $8.1 million in Q3 2022.
• Net loss of $5.2 million, or a loss of $0.07 per basic and diluted share, compared to a net loss of $7.5 million, or a loss of $0.11 per basic and diluted share, in Q3 2022.
• As of September 30, 2023, the Company's Net Revenue Retention Rate1 was 111% compared to 109% as of September 30, 2022.
• As of September 30, 2023, Copperleaf's Revenue Backlog1 grew 23% to $114.2 million compared to $93.1 million as of September 30, 2022.
• Strong balance sheet with cash and cash equivalents of $46.3 million, short-term investments of $62.2 million, and long-term investments of $20.0 million as at September 30, 2023.

Key Developments

• In Q3, Copperleaf made further progress on geographic and industry sector expansion with the addition of one of the USA's largest gas distribution companies which materially extends our footprint in natural gas distribution in the USA, as well as the signing of one of Brazil's largest integrated power utilities which represents another important geographic expansion while establishing our beach-head in Brazil.
• Further to the announcements in Q1 and Q2 regarding the developing relationship with SAP under the Endorsed Apps program, Q3 saw the commencement of cooperative go-to-market activities resulting in material incremental pipeline for 2024 and beyond, across all regions.
• Q3 also saw the deepening of Copperleaf's global relationship with Accenture as they assigned a Global Partner Director to programmatically coordinate joint go-to-market activities across all regions.
• Verdantix published its inaugural "Green Quadrant" report on AIP during Q3 with Copperleaf positioned as the clear leader in the segment.
• As part of Copperleaf's ongoing commitment to best-in-class cyber security standards, in Q3 the Company successfully completed SOC 2 and ISO 27001 audits.
• In Q3, Copperleaf was granted a US patent for an advanced software optimizer which enhances the Company's comprehensive asset management capabilities to accommodate large numbers of assets, across all stages of an asset's lifecycle. This patent highlights Copperleaf's dedication to developing pioneering solutions that facilitate better investment decisions.
• During Q3, Copperleaf released version 23.3 of its product suite which included numerous new innovations including: new modelling for complex asset relationships and asset interventions in the Copperleaf Value Model Library (CVML); visualization of Predictive Analytics asset strategies in our Interactive GIS Experience option; and significant enhancements to our popular Dashboard Library which empowers our clients to communicate their value-based decision outcomes more effectively.

Q3 2023 Financial Results Conference Call Details

Paul Sakrzewski, Chief Executive Officer and Chris Allen, Chief Financial and Operating Officer, will host a conference call followed by a question-and-answer session today, November 8, 2023, at 5:00 PM ET.

Date:November 8, 2023
Time:5:00pm ET
Dial-In Number: 416-764-8659 or 1-888-664-6392
Webcast: https://app.webinar.net/MXGV4yL7Z5x
Replay: 416-764-8677 or 1-888-390-0541 (Available until November 15, 2023)
Replay Entry Code: 038919#

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.

1Non-IFRS Measures

Annual Recurring Revenue ("ARR")

We define ARR as the annualized equivalent value of the subscription and term-based software license 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 calculation of Annual Recurring Revenue assumes that clients will renew the contractual commitments on a periodic basis as those commitments come up for renewal. Subscription and term-based software license agreements are subject to price increases upon renewal reflecting both inflationary increases and the additional value provided by our solutions. In addition to the expected increase in subscription and term-based software license revenue from price increases over time, existing clients may subscribe for additional products or services during the term. 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 Annual Recurring Revenue attributable to this same group of clients at the end of the period by the Annual Recurring Revenue at the beginning of the period. By implication, this ratio excludes any Annual Recurring Revenue 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. Our success in delivering exceptional value and extraordinary experiences to our clients is fully realized when we can achieve a high Net Revenue Retention Rate. However, this percentage can vary from period to period due to the timing of large expansion contracts with our existing clients. In addition, only the recurring component of expansions with our perpetual license clients, such as on-going support & maintenance, is recognized in this calculation.

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. Roughly 50% to 75% of our expected annual revenue is recognized from client contracts that are in place at the beginning of the year; however, this percentage will vary year over year and we expect this percentage to generally increase going forward as our client base continues to transition toward SaaS and our Q4 seasonality persists. Agreements with new clients or agreements with existing clients purchasing incremental product 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 the revenue recognized in that quarter. Software 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 to 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 more relevant picture of operating results by excluding the effects of financing and investing activities, including removing the effects of interest and other expenses such as non-cash items and non-recurring expenses that are not reflective of our underlying business. In addition to interest, the other non-cash or non-recurring items adjusted for include depreciation and amortization, share-based payments expense, foreign exchange loss (gain), current income tax expense (recovery), and CEO transition expenses. Our management also uses Adjusted EBITDA in order 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.

The following tables reconciles Adjusted EBITDA to net loss for the periods indicated:

Selected Financial Information

Consolidated Statements of Loss and Comprehensive Loss
(expressed in thousands of Canadian dollars, except for share and per share amounts)

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

Disaggregation of revenue
(expressed in thousands of Canadian Dollars, except percentages)

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", "expect" or "does not expect", "is expected", "is poised to", "an opportunity exists", "budget", "scheduled", "estimates", "outlook", "future", "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" occur or be taken , or "will continue to" or "are poised to" 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 clients 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 2022 Annual Information Form ("AIF") under "Risk Factors". A copy of the 2022 AIF can be accessed under our profile on the System for Electronic Document Analysis and Retrieval ("SEDAR+") at www.sedarplus.ca. 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 (TSX:CPLF) 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 industry-leading products and our commitment to providing extraordinary experiences, shaped by people who care deeply and partnerships that stand the test of time. Copperleaf is actively involved in shaping and implementing global industry standards and sustainability principles through our participation in the United Nations Global Compact, the Institute of Asset Management, and other organizations. 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/

For further information:

James Bowen, CFA
416-519-9442
investors@copperleaf.com

Source: Copperleaf Technologies Inc. CPLF-IR

SOURCE Copperleaf Technologies Inc.

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