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Pivotree Announces Record Revenue for the Fourth Quarter of 2021

03/31/2022

Fourth quarter revenue growth of 34%, positive Adjusted EBITDA and record total bookings of $16 million

TORONTO, March 31, 2022 /CNW/ - Pivotree Inc. (TSXV: PVT) ("Pivotree" or the "Company"), a leader in frictionless commerce solutions, today reported financial results for the three and twelve months ended December 31, 2021. All amounts are expressed in Canadian dollars unless otherwise stated.

"The complementary pieces of our Frictionless Commerce strategy are coming together through the depth and scale we have added across our core categories of digital commerce, supply chain and data management. The fourth quarter was a prime example, with our second consecutive quarter of sequential revenue growth and record total bookings as new and existing customers turn to us to manage their end-to-end frictionless needs," said Bill Di Nardo, CEO of Pivotree. "This momentum has continued into 2022, and through the ongoing investments we are making in people, technology and capabilities, we are well positioned to execute on the growth path we envisioned when we started our journey as a public company."

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.com.

Fourth Quarter 2021 Financial Highlights
(All figures are in Canadian dollars and all comparisons are relative to the three-month period ended December 31, 2020 unless otherwise stated):

  • Total Revenue of $22.2 million, an increase of 34.1% or 37.7% on a constant currency basis. Included in total revenue is $6.1 million from acquisitions. Total revenue increased 38.6% from the third quarter of 2021.
  • Managed Services Revenue of $9.9 million, a decrease of 9.1% or 6.1% on a constant currency basis, and includes $0.6 million from acquisitions.
  • Record Professional Services Revenue of $12.3 million, an increase of 116.8% or 121.6% on a constant currency basis, driven by growth from existing customers as well as new customer wins. Professional Services revenue includes $5.5 million from acquisitions.
  • Annual Recurring Revenue1,2 as at December 31, 2021 of $44.7 million, an increase from $41.0 million as at September 30, 2021 and a 5.9% decline from the prior year period.
  • Total Bookings1,2 of $16.4 million, an increase of $11.5 million or 236.4%, driven by strong demand in data management services and recent acquisitions.
  • Gross profit of $9.8 million, an increase of 19.6% and representing 44.0% of total revenue.
  • Net loss of $2.9 million, an improvement from net loss of $4.8 million for the prior year period.
  • Positive Adjusted EBITDA2 of $2,574 compared to adjusted EBITDA of $0.9 million for the prior year period. Adjusted EBITDA improved from ($1.0) million for the third quarter of 2021.
  • Adjusted Free Cash Flow2 of ($0.4) million a decline from $0.6 million for the prior year period.

2021 Financial Highlights

  • Total Revenue of $67.5 million, an increase of 6.2%.
  • Managed Services Revenue of $37.2 million, a decrease of 14.4%.
  • Professional Services Revenue of $30.3 million, an increase of 50.7%.
  • Record Total Bookings1,2 of $44.2 million, an increase of 64.5%.
  • Gross profit of $29.9 million, a decrease of 10.7%, and representing 44.2% of total revenue.
  • Net loss of $11.6 million compared to a net loss of $5.8 million for 2020.
  • Adjusted EBITDA2 loss of $3.5 million compared to adjusted EBITDA of $5.6 million for 2020.
  • Adjusted Free Cash Flow2 of ($5.6) million compared to $3.5 million for 2020.

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.

Fourth Quarter 2021 Business Highlights

  • Completed the acquisition of Codifyd Inc. ("Codifyd"), a leading Data Services and Master Data Management ("MDM") firm, for US$12.0 million in cash, with potential of additional amounts of up to US$4.0 million payable in cash and equity if the acquired operations achieve certain earnout targets on revenue.
  • Working with VTEX launched four digital storefronts to date for CAE's B2B Marketplace
  • Pivotree clients, including leaders across several retail categories, experienced record-breaking 2021 sales throughout the Cyber 5: Thanksgiving, Black Friday, Small Business Saturday, Sunday and Cyber Monday leveraging the Company's Tuning, Load Testing, and Scaling services to ensure a frictionless experience through peak traffic.
  • Subsequent to quarter end, expanded the leadership team appointing Todd Jurkuta as President, Edgar Aranha as Chief People and Culture Officer and Joseph Lee as General Manager of Commerce.

Fourth Quarter 2021 Results

Selected Financial Measures


Three months ended December 31,

Twelve months ended December 31,


2021

2020

$ Change

% Change

2021

2020

$ Change

% Change


$

$

$

%

$

$

$

%

Managed Services

9,885,399

10,874,163

(988,764)

-9.1%

37,206,031

43,464,258

(6,258,226)

-14.4%

Professional Services

12,295,573

5,672,377

6,623,195

116.8%

30,338,264

20,131,480

10,206,784

50.7%

Total Revenue

22,180,972

16,546,541

5,634,431

34.1%

67,544,295

63,595,737

3,948,558

6.2%










Total Gross Profit

9,751,122

8,155,930

1,595,192

19.6%

29,875,468

33,453,179

(3,577,711)

-10.7%

Percentage of total revenue

44.0%

49.3%



44.2%

52.6%



Key Performance Indicators


Three months ending
December 31,

YoY Change


Twelve months ending
December 31,

YoY Change


2021

2020

Change

%
Change


2021

2020

Change

%
Change











Total ARR (1)

44,688,720

47,474,408

-2,785,688

-5.9%


N/A

N/A

N/A

N/A

ARR Bookings

3,556,867

2,006,348

1,550,519

77.3%


8,707,208

10,794,272

-2,087,064

-19.3%

Non-Recurring Bookings

12,854,092

2,871,599

9,982,493

347.6%


35,478,500

16,064,152

19,414,348

120.9%

Total Bookings

16,410,959

4,877,947

11,533,012

236.4%


44,185,708

26,858,424

17,327,284

64.5%











Net Revenue Retention Rate in
Constant Currency (1)

95.1%

113.7%

-18.6%

N/A


N/A

N/A

N/A

N/A











Note:











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

Non-IFRS Metrics


Three months ended December 31,

Nine months ended December 30,


2021

2020

2021

2020






Adjusted EBITDA

2,574

974,320

(3,543,013)

5,569,281

Adjusted Free Cash Flow

(419,659)

557,203

(5,550,094)

3,491,913

Conference Call

Management will host a live Zoom Video Webinar on Thursday, March 31, 2022 at 8:30 am ET to discuss these fourth quarter and year end 2021 results. The webinar can be accessed through the following registration link: https://pivotree.zoom.us/webinar/register/WN_j89cNGt3TS2ca9PmdtqNJQ. 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 twelve months ended December 31, 2021 and 2020.


Three months ended December 31,

Twelve months ended December 31,


2021

2020

2021

2020


$

$

$

$

Revenue

22,180,972

16,546,541

67,544,295

63,595,737

Cost of revenue

12,429,850

8,390,611

37,668,828

30,142,558

Gross profit

9,751,122

8,155,930

29,875,468

33,453,179

Operating expenses





General and administrative

3,088,184

4,273,068

10,110,226

9,529,842

Sales and marketing

2,462,787

798,367

6,760,706

3,103,993

Research and
development

473,884

(769,073)

1,919,320

602,302

IT and Operations

4,372,223

4,665,068

16,266,633

16,513,064

Loss (gain) on foreign exchange

(344,789)

456,142

(312,111)

510,190

Amortization and
Depreciation

2,147,809

1,008,796

5,493,851

4,318,268

Restructuring and Other

88,006

85,870

1,150,703

1,023,135

Interest

191,636

2,342,458

421,710

3,802,763


12,479,740

12,860,697

41,811,038

39,403,556

Income before other items

(2,728,618)

(4,704,767)

(11,935,570)

(5,950,377)

Other items





Interest income

62,893

-

208,638

-

Operating loss

(2,665,725)

(4,704,767)

(11,726,933)

(5,950,377)

Current taxes

(834,256)

(1,000,664)

(813,339)

(603,539)

Deferred taxes

628,850

881,264

947,623

795,639

Net income (loss)

(2,871,131)

(4,824,167)

(11,592,649)

(5,758,277)

Other comprehensive income (loss)





Foreign translation adjustment

(58,907)

(206,770)

280,084

(970,626)

Comprehensive income (loss)

(2,930,038)

(5,030,937)

(11,312,565)

(6,728,903)






Income (Loss) per share - basic

(0.12)

(0.48)

(0.47)

(0.57)

Weighted average number of common
shares outstanding - basic

24,900,192

10,104,942

24,900,192

10,104,942

Cash Flows

The following table presents cash and cash equivalents as at December 31, 2021 and 2020:


Three months ended December 31,

Twelve months ended December 31,


2021

2020

2021

2020


$

$

$

$

Cash and cash equivalents, beginning of
period

40,755,642

9,510,477

53,942,263

2,984,657

Net cash provided by (used in):





Operating activities

(524,655)

16,983

(8,025,551)

3,462,020

Investing activities

(15,430,130)

(733,002)

(20,489,178)

(5,597,578)

Financing activities

(230,571)

45,147,805

(857,248)

53,093,164

Effect of foreign exchange on cash and cash
equivalents

-

-

-

-

Net increase (decrease) in cash and cash

(16,185,356)

44,431,785

(29,371,977)

50,957,605

Cash and cash equivalents, end of period

24,570,286

53,942,263

24,570,286

53,942,263

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 December 31,

Twelve months ended December 31,


2021

2020

2021

2020






Net Income (loss)

(2,871,131)

(4,824,167)

(11,592,649)

(5,758,277)

Depreciation & Amortization (1)

2,147,809

1,008,796

5,493,851

4,318,268

Interest (2)

191,636

2,342,458

421,710

3,802,763

Taxes

205,406

119,400

(134,284)

(192,100)

EBITDA

(326,281)

(1,353,513)

(5,811,372)

2,170,653

Stock-Based Compensation (3)

240,849

2,241,963

1,117,656

2,375,493

Restructuring & Other (4)

88,006

85,870

1,150,703

1,023,135

Adjusted EBITDA

2,574

974,320

(3,543,013)

5,569,281


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 expense 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.  Prior year started to recognize the options expense in the fourth quarter of 2020



(4)

Restructuring & Other expenses are related to restructuring, IPO costs, 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 December 31,

Twelve months ended December 31,


2021

2020

2021

2020






Adjusted EBITDA

2,574

974,320

(3,543,013)

5,569,281

Cash Financed Capital Expenditure

(136,972)

(35,397)

(571,388)

(124,218)

Payment of Capital Leases

(354,757)

(240,414)

(1,380,765)

(1,167,530)

Deferred Development

69,496

(141,306)

(54,928)

(785,620)

Adjusted Free Cash Flow

(419,659)

557,203

(5,550,094)

3,491,913

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 and nine months ended December 31, 2021 are as follows:


Three months ending
December 31,

YoY Change

Twelve months ending
December 31,

YoY Change


2021

2020

Change

% Change

2021

2020

Change

% Change










Total ARR (1)

44,688,720

47,474,408

-2,785,688

-5.9%

N/A

N/A

N/A

N/A

ARR Bookings

3,556,867

2,006,348

1,550,519

77.3%

8,707,208

10,794,272

-2,087,064

-19.3%

Non-Recurring Bookings

12,854,092

2,871,599

9,982,493

347.6%

35,478,500

16,064,152

19,414,348

120.9%

Total Bookings

16,410,959

4,877,947

11,533,012

236.4%

44,185,708

26,858,424

17,327,284

64.5%










Net Revenue Retention Rate in
Constant Currency (1)

95.1%

113.7%

-18.6%

N/A

N/A

N/A

N/A

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 is a leader in frictionless commerce with expertise in eCommerce, MDM, Cloud, Cybersecurity, and Supply Chain solutions. 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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