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Subject: ERN

Pivotree Reports Third Quarter of Fiscal 2020 Results


Annual Recurring Revenue growth of 22% and Managed Services Revenue growth of 14%

TORONTO, Nov. 25, 2020 /CNW/ - Pivotree Inc. (TSXV: PVT) ("Pivotree" or the "Company"), a leading global commerce and master data management ("MDM") services provider, today reported financial results for the three and nine months ended September 30, 2020. All amounts are expressed in Canadian dollars unless otherwise stated.

"The steady year over year growth in our Managed Services Revenue and ARR in the third quarter reflects the strength and stability of our business while Professional Services Revenue recovered nicely growing 26% from the second quarter. Through the pandemic, large retailers and enterprises are continuing to look to Pivotree to support them through their journey to achieve frictionless commerce," said Bill Di Nardo, CEO of Pivotree. "With the recent completion of our successful IPO, we are now accelerating our investments to expand our market position as we drive organic growth and look to execute on our active pipeline of acquisition opportunities."

Third Quarter 2020 Financial Highlights
(All comparisons are relative to the three-month period ended September 30, 2019 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.

Third Quarter 2020 Results

Selected Financial Measures


Three months ended September 30,

Nine months ended September 30,


2020

2019

Change

Change

2020

2019

Change

Change


$

$

$

%

$

$

$

%

Managed Services

11,324,049

9,932,973

1,391,076

14.0%

32,590,094

28,816,654

3,773,440

13.1%

Professional Services

4,918,529

5,285,716

(367,187)

-6.9%

14,459,102

14,863,332

(404,229)

-2.7%

Total Revenue

16,242,578

15,218,689

1,023,890

6.7%

47,049,197

43,679,985

3,369,211

7.7%










Gross Profit

8,375,684

8,577,361

(201,677)

-2.4%

25,297,249

24,666,612

630,637

2.6%

Percentage of total revenue

51.6%

56.4%



53.8%

56.5%



Key Performance Indicators


Ending September 30,

YoY Change


2020

2019

Change

% Change


$

$

$

%






Total ARR

48,961,374

40,066,245

8,895,129

22%

YTD ARR Bookings

8,787,915

6,481,107

2,306,808

36%






Net Dollar Retention Rate

113%

96%

17%

N/A

Non-IFRS Metrics


Three months ended September 30,

Nine months ended September 30,


2020

2019

Change

Change

2020

2019

Change

Change


$

$

$

%

$

$

$

%

Adjusted EBITDA

852,374

1,596,330

(743,956)

-46.6%

4,594,962

3,889,331

705,631

18.1%

Adjusted Free Cash Flow

263,475

64,423

199,052

309.0%

2,608,107

(46,867)

2,654,974

NA

Conference Call
Management will host a live Zoom Video Webinar on Thursday, November 25, 2020 at 8:30 am ET to discuss these third quarter results. The webinar can be accessed through the following registration link: https://pivotree.zoom.us/webinar/register/WN_SS--IGWjSzmOK7rEMxiPrA. A replay will be available approximately two hours after the conclusion of the live event.

Results of Operations

The following table outlines our consolidated statements of loss and comprehensive loss for the three and nine months ended September 30, 2020 and 2019.


Three months ended September 30,

Nine months ended September 30,


2020

2019

2020

2019


$

$

$

$

Revenue

16,242,578

15,218,689

47,049,197

43,679,985

Cost of revenue

7,866,894

6,641,328

21,751,948

19,013,373

Gross profit

8,375,684

8,577,361

25,297,249

24,666,612

Operating expenses





General and administrative

2,073,714

1,977,224

5,256,775

5,998,777

Sales and marketing

946,162

926,605

2,305,625

2,888,078

Research and development

459,281

374,341

1,371,375

1,374,229

IT and Operations

3,998,987

3,705,001

11,847,995

10,563,895

Interest

480,084

246,064

1,460,304

661,971

Loss (gain) on foreign exchange

106,336

44,860

54,047

149,302

Amortization and Depreciation

1,071,162

1,455,785

3,309,472

3,402,938

Restructuring and Other

594,114

266,765

937,264

1,183,102


9,729,840

8,996,645

26,542,857

26,222,292

Operating loss

(1,354,156)

(419,284)

(1,245,608)

(1,555,680)

Current taxes

204,125

(146,397)

397,125

(373,397)

Deferred taxes

142,375

(25,226)

(85,625)

(58,226)

Net income/(loss)

(1,007,656)

(590,907)

(934,110)

(1,987,302)

Other comprehensive income/(loss)





Foreign translation adjustment

(1,434,384)

24,615

(763,856)

(309,134)

Comprehensive
income/(loss)

(2,442,040)

(566,292)

(1,697,966)

(2,296,436)






Income (Loss) per share - basic

(0.14)

(0.08)

(0.13)

(0.28)

Weighted average number of common





shares outstanding - basic

7,118,584

7,083,870

7,118,584

7,083,870

Cash Flows

The following table presents cash and cash equivalents as at September 30, 2020 and 2019, and cash flows from operating, investing, and financing activities for nine months ended September 30, 2020 and 2019:


Nine months ended September 30,


2020

2019


$

$

Cash and cash equivalents, beginning of period

2,984,657

3,202,819




Net cash provided by (used in):



Operating activities

3,445,037

2,328,450

Investing activities

(4,864,576)

(3,845,716)

Financing activities

7,945,359

(449,515)

Effect of foreign exchange on cash and cash equivalents

-

-

Net increase (decrease) in cash and cash

6,525,820

(1,966,781)

Cash and cash equivalents, end of period

9,510,477

1,236,038

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 "Adjusted EBITDA" and "Free Cash Flow".

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 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.

Adjusted EBITDA

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


Three Months Ended September 30,

Nine Months Ended September 30,


2020

2019

2020

2019


$

$

$

$

Net Income (loss)

(1,007,656)

(590,907)

(934,110)

(1,987,302)

Depreciation & Amortization

1,071,162

1,455,785

3,309,472

3,402,938

Interest

480,084

246,064

1,460,304

661,971

Taxes

(346,500)

171,623

(311,498)

431,622

EBITDA

197,090

1,282,564

3,524,168

2,509,229

Stock-Based Compensation

61,170

47,000

133,530

197,000

Restructuring & Other

594,114

266,765

937,264

1,183,102

Adjusted EBITDA

852,374

1,596,330

4,594,962

3,889,331

Free Cash Flow

Free Cash Flow is defined as cash provided by (used in) operating activities less additions to property and equipment, deferred development costs and principal lease payments. The following table reconciles our cash flow from (used in) operating activities to Free Cash Flow:


Three Months Ended September 30,

Nine Months Ended September 30,


2020

2019

2020

2019


$

$


$

$

Adjusted EBITDA

852,374

1,596,330

4,594,962

3,889,331

Cash Financed Capital Expenditure

18,216

189,588

88,820

581,890

Payment of Capital Leases

367,677

440,645

1,253,721

1,436,723

Deferred Development

203,006

901,673

644,314

1,917,585

Adjusted Free Cash Flow

263,475

64,423

2,608,107

(46,867)

Key Performance Indicators

Due to our service model, we recognize revenue within managed and professional services based on the recurring nature of the work and the actual effort extended. Both managed and professional services carry a recurring component where we recognize revenues based on the contractual committed fees with contract terms being one to three years, providing for a high degree of visibility into near-term revenues.

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.

Net Revenue Retention Rate and Annual Recurring Revenue for the nine months ended September 30, 2020 are as follows:


Ending September 30,

YoY Change


2020

2019

Change

Change


$

$

$

%

Total ARR

48,961,374

40,066,245

8,895,129

22%

YTD ARR Bookings

8,787,915

6,481,107

2,306,808

36%






Net Revenue Retention Rate

113%

96%

17%

N/A

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 is a leading global commerce and MDM services provider. It is an end-to-end vendor supporting clients from strategy, platform selection, deployment, and hosting through to ongoing support. It operates as a single expert resource to help companies adapt relentlessly in an ever-changing digital commerce landscape. Leading and innovative clients rely on Pivotree's deep expertise to choose enterprise-proven solutions and design, build, and connect critical systems to run smoothly at defining moments in a commerce business. Pivotree serves as a trusted partner to over 170 market-leading brands and forward-thinking B2C and B2B companies, including many companies in the Fortune 1000. With offices and customers in the Americas, EMEA, and APAC, Pivotree is widely recognized as a high-growth company and industry leader around the globe. For more information, visit http://www.pivotree.com.

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.

SOURCE Pivotree Inc.


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