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Pivotree Announces First Quarter of 2022 Results

05/26/2022

Second consecutive quarter of record revenue, record bookings, and positive Adjusted EBITDA

TORONTO, May 26, 2022 /CNW/ - Pivotree Inc. (TSXV: PVT) ("Pivotree" or the "Company"), a leader in frictionless commerce solutions, today reported financial results for the three ended March 31, 2022. All amounts are expressed in Canadian dollars unless otherwise stated.

"Business momentum was strong through the first quarter leading to our second consecutive quarter of record revenue and bookings," said Bill Di Nardo, CEO of Pivotree. "The breadth of products and services we have assembled around frictionless commerce is allowing us to capture an increasing portion of budgets that large enterprise B2B and B2C companies allocate to their long-term digital transformation journeys."

Added Mr. Di Nardo, "With the investments we've made into new technologies, categories and capabilities over the past 12 months we believe we have set ourselves up to drive our growth strategy. Over the next 12 to 24 months our focus will be to drive greater efficiency and profitability in the business, leveraging the investments we are making into packaged digital products and automation to drive highly scalable growth."

Letter to Shareholders

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.ca.

First Quarter 2022 Financial Highlights
(All figures are in Canadian dollars and all comparisons are relative to the three-month period ended March 31, 2021 unless otherwise stated):

  • Total Revenue of $24.5 million, an increase of 63.3%. Adjusted for the estimated revenue from acquisitions, organic growth would be 10%. Organic growth shared within is not a standardized financial measure and might not be comparable to measures disclosed by other issuers.
  • Managed Services Revenue of $9.8 million, an increase of 3.8%. Adjusted for the acquisitions, organic growth would be negative 2%.
  • Record Professional Services Revenue of $14.7 million, an increase of 164.8%, driven by contributions from the acquisitions of Bridge Solutions and Codifyd and new and existing customer wins over the last three quarters of fiscal 2021. Adjusted for the estimated revenue from acquisitions, organic growth would be 31%.
  • Annual Recurring Revenue1,2 as at March 31, 2021 of $43.5 million, an increase of $1.6 million or 3.7%
  • Total Bookings1,2 of $19.0 million, an increase of $8.0 million or 72.8%, driven by high customer renewal and expansion activity in supply chain and commerce and continued growth in demand for data management services.
  • Gross profit of $10.4 million, an increase of 54.7% and representing 42.6% of total revenue.
  • Net loss of $3.3 million compared to a net loss of $2.5 million for the prior year period.
  • Positive Adjusted EBITDA2 of $0.2 million compared to an adjusted EBITDA loss of $0.9 million for the prior year period.
  • Adjusted Free Cash Flow2 of ($0.3) million compared to adjusted free cash flow of ($1.5) million for the prior year period.

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.

First Quarter 2022 Business Highlights

  • In Commerce, signed several renewal and expansion agreements including a support agreement with a long-time online sporting goods retailer customer, site enhancements as part of a multi-year transformational journey with a large tire-distributor, and an extended managed services and professional services relationship with a privately-owned Canadian fashion retailer
  • As part of an ongoing managed services agreement for a leading specialty manufacturer and retailer of women's fashion apparel and accessories, completed a rapid move of their Oracle Commerce platform to Amazon Web Services (AWS) in the cloud.
  • In Data Management, secured new logo, renewal and expansion wins including a data services and consulting agreement with a leading global supplier of electronic components, large SKU management agreements with two national distributors in the residential and commercial construction industry, and a cross-sell commerce and MDM agreement with a Fortune 500 retail chain
  • In Supply Chain, added new logo, renewal and expansion agreements including a Fortune 1000 provider of animal health products and related services
  • Appointed Todd Jurkuta as President, Edgar Aranha as Chief People and Culture Officer and Joseph Lee as General Manager of Commerce.

First Quarter 2022 Results

Selected Financial Measures


Three months ended March 31,





2022

2021

$ Change

% Change


$

$

$

%

Managed Services

9,828,477

9,465,946

362,531

3.8%

Professional Services

14,668,647

5,538,942

9,129,705

164.8%

Total Revenue

24,497,124

15,004,888

9,492,236

63.3%






Total Gross Profit

10,424,277

6,737,804

3,686,472

54.7%

Percentage of total revenue

42.6%

44.9%



Key Performance Indicators


Ending March 31,


YoY Change


2022

2021


Change

% Change







Total ARR(1)

43,482,436

41,927,248


1,555,188

3.7%

YTDARR Bookings

1,479,327

1,779,388


(300,061)

-16.9%

YTD Non-Recurring Bookings

17,532,941

9,221,799


8,311,142

90.1%

YTD Total Bookings

19,012,268

11,001,187


8,011,081

72.8%

Net Revenue Retention Rate in Constant Currency (1)

88.5%

99.8%


-11.3%

N/A







Note:






(1) Point-in-time metrics for current quarter only

Non-IFRS Metrics


Three months ended March 31,


2022

2021




Adjusted EBITDA

205,754

(892,710)

Adjusted Free Cash Flow

(319,620)

(1,513,039)

Conference Call

Management will host a live Zoom Video Webinar on Thursday, May 26, 2022 at 8:30 am ET to discuss these first quarter 2022 results. The webinar can be accessed through the following registration link: https://pivotree.zoom.us/webinar/register/WN_BW8dokMzTba7QpvEm-kuaQ. 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 months ended March 31, 2022 and 2021.


Three months ended March 31,


2022

2021


$

$

Revenue

24,497,124

15,004,888

Cost of revenue

14,072,847

8,267,084

Gross profit

10,424,277

6,737,804

Operating expenses



General and administrative

3,209,796

2,037,327

Sales and marketing

2,151,425

1,201,236

Research and
development

1,048,498

419,451

IT and Operations

3,760,687

3,843,713

Loss (gain) on foreign exchange

68,792

185,146

Amortization and
Depreciation

2,686,669

1,106,598

Stock based compensation

268,531

341,893

Restructuring and Other

113,709

100,929

Interest

71,910

58,594


13,380,017

9,294,886

Income before other items

(2,955,740)

(2,557,082)

Other items (expenses)

(0)

-

Interest income

20,673

56,357

Operating loss

(2,935,068)

(2,500,725)

Current taxes

(580,326)

28,000

Deferred taxes

212,394

-

Net income (loss)

(3,302,999)

(2,472,725)

Other comprehensive income (loss)



Foreign translation adjustment

(986,907)

(181,705)

Comprehensive income (loss)

(4,289,906)

(2,654,430)




Income (Loss) per share - basic

(0.13)

(0.10)

Weighted average number of common shares outstanding -
basic

25,298,992

24,718,893

Cash Flows

The following table presents cash and cash equivalents as at March 31, 2022 and 2021:


Three months ended March 31,


2022

2021


$

$

Cash and cash equivalents, beginning of period

24,570,287

53,942,263

Net cash provided by (used in):



   Operating activities

(4,160,079)

(5,500,503)

   Investing activities

(189,266)

(271,851)

   Financing activities

(262,233)

(273,233)

Effect of foreign exchange on cash and cash equivalents

-

-

Net increase (decrease) in cash and cash

(4,611,578)

(6,045,587)

Cash and cash equivalents, end of period

19,958,709

47,896,676

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".

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 March 31,





2022

2021




Net Income (loss)

(3,302,999)

(2,472,725)

Depreciation & Amortization (1)

2,686,669

1,106,598

Interest (2)

71,910

58,594

Taxes

367,932

(28,000)

EBITDA

(176,488)

(1,335,532)

Stock-Based Compensation (3)

268,531

341,893

Restructuring & Other (4)

113,711

100,929

Adjusted EBITDA

205,754

(892,710)

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 represent 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.

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 March 31,





2022

2021




Adjusted EBITDA

205,754

(892,710)

Cash Financed Capital Expenditure

(140,350)

(258,142)

Payment of Capital Leases

(336,108)

(348,478)

Deferred Development

(48,916)

(13,709)

Adjusted Free Cash Flow

(319,620)

(1,513,039)

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.

  • Annual Recurring Revenue (ARR). We define Annual Recurring Revenue as the annualized equivalent value of the most recent quarter's recurring revenue of all existing managed services and professional services contracts that contain a minimum committed spend with total ARR being inclusive of related overage fees and customer credits as at the date being measured, and excluding any non-recurring set up fees and short-term standalone projects. The revenues captured are related to customer contracts that generally span a one to three-year contract term with most of the managed services being non-cancelable. Almost all of our customer contracts, contributing to ARR, automatically renew unless cancelled by our customers. Our calculation of ARR assumes that customers will renew the contractual commitments on a periodic basis as those commitments come up for renewal. Actual ARR versus new ARR Bookings would be expected to increase with the related overage charges and through the upsell of additional services across our categories. ARR provides us with visibility for consistent and predictable growth to our cash flows. ARR will continue to be a key performance indicator for the Company on a go-forward basis. See "Non-IFRS Measures and Reconciliation of Non-IFRS Measures - Recurring and Non-Recurring Revenue" for the recurring revenue in the most recent quarter to support ARR.


  • ARR Bookings. This is defined as the new contractual bookings with existing and new customers for services that include minimum committed levels that automatically renew and generally span a one to three-year contract term. This amount does not include any projects, set up fees or overages charges. The ARR Bookings conversion to revenue, and ARR, will depend on the time it takes to deploy a given purchased service, which is driven by the complexity of the solution. The actual impact on revenue and ARR could vary from actuals once overage charges are captured. The revenue conversion may also be impacted as booking will capture amendments in existing services that convert on demand services to longer term agreements with minimum commitments. It is important to note that while this is an indicator of revenue and future potential revenue, it cannot be reconciled to actual revenue recognized.


  • Non-Recurring Bookings: This is defined as contractual bookings with existing and new customers primarily for professional services projects but would also include one-time managed service set up fees, and short-term managed services arrangements. The conversion to non-recurring revenue, will depend on the start date and ramp up with revenue being recognized through the duration of the projects, as the defined scope is delivered. The bookings amount may differ from actual revenues where the fees are based on a time and material structure.


  • Total Bookings: This is defined as ARR booking plus the contract value of the Non- Recurring Bookings


  • Net Revenue Retention Rate in Constant Currency: We define Net Revenue Retention Rate in constant currency for a period by considering the group of customers on our platform as of twelve months prior and dividing our ARR attributable to such group of customers at the end of the period by the ARR at the beginning of such period. By implication, this ratio excludes any ARR from new customers acquired during the period, but it does include incremental sales added to the cohort base of customers during the period being measured. The benefits of cross selling and expanding our level of integrations and support is realized when we can achieve high Net Revenue Retention Rates. We reach constant currency for the reported period by applying the average foreign exchange of the comparable period from twelve months prior to translate the reported period results.

Net Revenue Retention Rate and Annual Recurring Revenue for the three months ended March 31, 2022 are as follows:


Ending March 31,


YoY Change


2022

2021


Change

% Change







Total ARR(1)

43,482,436

41,927,248


1,555,188

3.7%

YTDARR Bookings

1,479,327

1,779,388


(300,061)

-16.9%

YTD Non-Recurring Bookings

17,532,941

9,221,799


8,311,142

90.1%

YTD Total Bookings

19,012,268

11,001,187


8,011,081

72.8%

Net Revenue Retention Rate in Constant Currency (1)

88.5%

99.8%


-11.3%

N/A







Note:






(1) Point-in-time metrics for current quarter only

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, designs, builds and manages digital platforms in Commerce, Data Management, and Supply Chain for over 250 major retail and branded manufacturers globally. Pivotree's portfolio of digital solutions, managed and professional services help provide retailers with true end-to-end solutions to manage complex digital commerce platforms, along with ongoing support from strategic planning through platform selection, deployment, and hosting, to data and supply chain management. 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.

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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