exactEarth Announces Q1 Fiscal 2020 Financial Results
  • Subscription Services revenue increases 23% to $3.8 million
  • Order Bookings increase 134% to $7.1 million
  • Completed updated Satellite-AIS Business Agreement with L3Harris that substantially reduces expenses

CAMBRIDGE, ON, March 12, 2020 /CNW/ - exactEarth Ltd. ("the Company"), a leading provider of Satellite-AIS data services, announces its financial results for the three-month period ended January 31, 2020. All financial figures are in Canadian dollars unless otherwise stated.

Q1 Fiscal 2020 Highlights:

  • Revenue was $4.1 million, up 17% compared to $3.5 million in Q1 Fiscal 2019
  • Subscription Services revenue was $3.8 million, up 23% compared to $3.1 million in Q1 Fiscal 2019
  • Order Bookings were $7.1 million compared to $3.0 million in Q1 Fiscal 2019
  • Adjusted EBITDA* was $0.3 million compared to ($0.9) million in Q1 Fiscal 2019
  • Cash and short-term investments were $8.7 million at the end of Q1 Fiscal 2020 compared to $10.2 million at the end of Fiscal 2019
  • Completed updated Satellite-AIS Business Agreement ("A&R SABA") with L3Harris Technologies, Inc. ("L3Harris") that substantially reduces the Company's operating expenses
  • In partnership with Hisdesat, selected by the European Maritime Safety Agency ("EMSA") to provide Satellite-AIS data services for estimated revenues of $5.0-$7.0 million over a four-year period
  • Renewed agreement with Antrix Corporation to provide the Indian Navy with exactView RT Satellite-AIS data services for $1.6 million over two years

"With its broad coverage, true reliability and unique real-time capabilities, exactView RT has gained acceptance in the market as the leading Satellite-AIS data service available. This is reflected in our Q1 results with strong Subscription Services revenue growth of 23% and with the 134% increase in our Order Bookings, which will contribute to top-line performance in future quarters," said Peter Mabson, President and CEO of exactEarth.

"Operationally, the key achievement in the quarter was the completion of our updated Satellite-AIS Business Agreement - the A&R SABA - with L3Harris. This is a very positive development for exactEarth, and its impact is reflected favourably in our Q1 margins. The updated agreement provides us with a reduced, simplified and relatively-fixed cost structure for the foreseeable future, it accelerates our timeline to achieve positive cash flow and it further shifts our revenue model towards that of a Software-as-a-Service business."

Q1 Fiscal 2020 Financial Review
Total revenue in the three-month period ended January 31, 2020 ("Q1 2020") was $4.1 million, up 17% compared to $3.5 million in the three-month period ended January 31, 2019 ("Q1 2019"). Revenue rose primarily due to the increase in Subscription Services revenue, which was $3.8 million (93% of total revenue) in Q1 2020, up 23% from $3.1 million (89% of total revenue) in Q1 2019.

Data Products revenue for Q1 2020 was $0.15 million compared to $0.1 million in Q1 2019. Data Products revenue is typically generated from on-demand customer requests, which results in some variability in quarter-to-quarter revenue levels. Other Products & Services revenue for Q1 2020 was $0.15 million compared to $0.31 million in Q1 2019.

Revenue from commercial customers for Q1 2020 was $3.3 million, up 35% from Q1 2019. The increases reflect growing market interest in the Company's real-time Satellite-AIS service, exactView RT, and expansion of the Company's channel partner strategy. Revenue from government customers for Q1 2020 was $0.8 million, down 25% from Q1 2019. The Company expects performance in the government vertical to improve in Fiscal 2020, due in part to new customer contracts signed in Q1 2020, such as that with EMSA.

Order bookings for Q1 2020 were $7.1 million, compared to $3.0 million in Q1 2019. The improvement was due to orders received in Q1 2020 from a number of customers including, India, EMSA and Denmark. Order bookings will fluctuate on a quarter-to-quarter basis reflecting the timing to complete new customer agreements. Revenue backlog at January 31, 2020 was $25.6 million compared to $22.4 million at the end of Fiscal 2019. Revenue of $10.8 million from the current revenue backlog is forecasted to be earned over the remainder of 2020.

Gross Margin for Q1 2020 was 50% compared to 39% in Q1 2019. Gross margin improved due to higher revenue and lower cost of revenue. Cost of revenue decreased primarily due to lower satellite operating costs related to the Second-Generation Constellation and $648,000 of one-time net adjustments related to the A&R SABA with L3Harris.

"Excluding the $648,000 of one-time net adjustments related to the A&R SABA provides a clearer view of what our rough cost base will look like in the coming quarters," said Sean Maybee, CFO of exactEarth. "Doing so also helps to indicate where we stand in terms of working towards our goal of generating sustainable positive Adjusted EBITDA and cash from operations."

Selling, general and administrative ("SG&A") expense for Q1 2020 was $1.8 million compared to $2.0 million in Q1 2019. Lower SG&A was primarily due to a decrease in bad debt expense and legal fees, partially offset by an increase in long-term incentive plan expense.

Product development and research and development ("R&D") expense for Q1 2020 was $0.3 million compared to $0.3 million in Q1 2019. The Company's product development and R&D activities continue to be focused primarily on the development of web-based functionality and new analytics-based product offerings.

Adjusted EBITDA for Q1 2020 was $0.3 million compared to ($0.9) million in Q1 2019. Adjusted EBITDA improved year-over-year due to higher revenue, lower cost of revenue and, lower SG&A. Cost of revenue, and in turn, Adjusted EBITDA, benefited in Q1 2020 from the one-time net adjustments related to the A&R SABA. (Adjusted EBITDA is a non-IFRS measure and is defined below)

Net loss for Q1 2020 was ($0.6) million, or ($0.03) per share, compared to ($1.2) million, or ($0.06) per share, in Q1 2019. Net loss in Q1 2020 benefited from the factors noted above in the section on Adjusted EBITDA, offset in part by higher interest expense of $0.4 million compared to $0.2 million in Q1 2019.

Cash used in operations for Q1 2020 was ($1.8) million, compared to ($2.2) million in Q1 2019. Cash used in operations improved in Q1 2020 primarily due to higher revenue. The A&R SABA with L3Harris was completed on January 21, 2020, and the revised terms of that agreement along with 2020 revenue expectations are expected to have a favourable impact on the Company's use of cash in operations during the remainder of 2020.

exactEarth's cash balance at January 31, 2020 was $8.7 million compared to $10.2 million at October 31, 2019.

As at March 11, 2020, the Company had 21,746,264 shares outstanding on a non-diluted basis. 

*Non-IFRS Measures
We measure Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization ("EBITDA"), plus offering related expenses, unrealized foreign exchange losses, share-based compensation costs, restructuring costs and impairment losses, less unrealized foreign exchange gains and gains from insurance settlements. We believe that Adjusted EBITDA provides useful supplemental information as it provides an indication of the income generated by our main business activities before taking into consideration how they are financed or taxed and exclude the impact of items that are considered by management to be outside of the Company's ongoing operating results. Adjusted EBITDA should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indicator of our performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flows.

We define Subscription Revenue as the dollar sum of fully executed contracts for our products and/or services to our customers that are subscription-based, typically sold with a one-year period of service and recognized in our "Subscription Services" segmented revenue.

Adjusted EBITDA (000's)



Three months ended January 31



2020

2019

Net loss


$

(613)

$

(1,235)

Interest income



(34)


(26)

Interest expense



426


223

Income tax expense



74


60

Depreciation and amortization



254


168

Unrealized foreign exchange gain



(167)


(111)

Share-based compensation



310


66

Adjusted EBITDA


$

250

$

(855)

 

About exactEarth Ltd.
exactEarth is a leading provider of global maritime vessel data for ship tracking and maritime situational awareness solutions. Since its formation in 2009, exactEarth has pioneered a powerful new method of maritime surveillance called Satellite AIS and has delivered to its clients a view of maritime behaviours across all regions of the world's oceans unrestricted by terrestrial limitations. exactEarth's second-generation constellation, exactView RT, securely relays satellite-detected AIS vessel signals from any location on the earth's surface to the ground in seconds – thus enabling global real-time vessel tracking. This unique capability consists of 58 advanced satellite payloads designed and built by L3Harris Technologies, Inc. under agreement with exactEarth and that are hosted onboard the Iridium NEXT constellation of satellites. www.exactearth.com 

Forward-Looking Statements
This news release contains statements that, to the extent they are not recitations of historical fact, may constitute "forward-looking statements" within the meaning of applicable Canadian securities laws. Forward-looking statements may include financial and other projections, as well as statements regarding exactEarth's future plans, our ability to continue as a going concern, objectives or economic performance, or the assumptions underlying any of the foregoing, including statements regarding, among other things, expectations of our exactView RT offering relative to competitors, financial impact of the A&R SABA, expectations of the exactView RT capabilities driving growth, growth opportunities for the Company in the maritime information services market and the cost and revenue share in connection with the Harris Agreement. exactEarth uses words such as "may", "would", "could", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "project", "estimate" and similar expressions to identify forward-looking statements. Any such forward-looking statements are based on assumptions and analyses made by exactEarth in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors exactEarth believes are appropriate under the relevant circumstances. However, whether actual results and developments will conform to exactEarth's expectations and predictions is subject to any number of risks, assumptions and uncertainties. Many factors could cause exactEarth's actual results, historical financial statements, or future events to differ materially from those expressed or implied by the forward-looking statements contained in this news release. These factors include, without limitation: uncertainty in the global economic environment; fluctuations in currency exchange rates; delays in the purchasing decisions of exactEarth's customers; the competition exactEarth faces in its industry and/or marketplace; the further delayed launch of satellites, the anticipated benefits of the A&R SABA; the reduced scope of significant existing contracts; and the possibility of technical, logistical or planning issues in connection with the deployment of exactEarth's products or services.

exactEarth™ Ltd.

Interim Condensed Consolidated Statements of Financial Position

(in thousands of Canadian dollars)

(unaudited)



As at
January 31,


As at
October 31,



2020


2019



$


$

ASSETS





Current assets





Cash and cash equivalents


8,672


10,188

Short-term investments


49


49

Accounts receivable


2,804


3,073

Unbilled revenue


2,945


2,149

Prepaid expenses


459


448

Other assets


198


209

Total current assets


15,127


16,116






Property, plant and equipment


4,572


4,398

Intangible assets


1,492


1,538

Other long-term assets


445


366

Total assets


21,636


22,418






LIABILITIES & SHAREHOLDERS' EQUITY





Current liabilities





Accounts payable and accrued liabilities


4,009


4,840

Deferred revenue


4,075


3,499

Loans payable - current


82


202

Total current liabilities


8,166


8,541






Loans payable


10,324


10,089

Long-term incentive plan liability


381


203

Other long-term liabilities 


1,189


1,466

Total liabilities


20,060


20,299






Shareholders' equity





Share capital


123,823


123,823

Contributed surplus


4,779


4,647

Accumulated other comprehensive loss


(175)


(113)

Deficit


(126,851)


(126,238)

Total shareholders' equity


1,576


2,119






Total liabilities and shareholders' equity


21,636


22,418

 

exactEarth™ Ltd.

Interim Condensed Consolidated Statements of Changes in Shareholders' Equity

(in thousands of Canadian dollars)

(unaudited)

For the three months ended January 31, 2020


Total

Deficit

Accumulated
Other
Comprehensive
Loss

Share
Capital

Contributed
Surplus



$

$

$

$

$

Balance at October 31, 2019


2,119

(126,238)

(113)

123,823

4,647

Stock-based compensation expense


42

-

-

-

42

Restricted share unit expense


90

-

-

-

90

Comprehensive loss


(675)

(613)

(62)

-

-

Balance at January 31, 2020


1,576

(126,851)

(175)

123,823

4,779








For the three months ended January 31, 2019














Balance at October 31, 2018


7,207

(118,027)

(11)

123,794

1,451

Impact of change in accounting policy


272

272

-

-

-

Adjusted balance at October 31, 2018


7,479

(117,755)

(11)

123,794

1,451

Stock-based compensation expense


58

-

-

-

58

Restricted share unit expense


8

-

-

-

8

Convertible debenture


2,917

-

-

-

2,917

Comprehensive loss


(1,314)

(1,235)

(79)

-

-

Balance at January 31, 2019


9,148

(118,990)

(90)

123,794

4,434

 

exactEarth™ Ltd.

Interim Condensed Consolidated Statements of Loss and Comprehensive Loss

(in thousands of Canadian dollars except for per share figures)

(unaudited)



Three months ended 



January  31,


January  31,



2020


2019



$


$











Revenue


4,133


3,522

Cost of revenue


2,059


2,144

Gross profit


2,074


1,378











Selling, general and administrative


1,780


1,996

Product development and research and development


304


293

Depreciation and amortization


254


168

Loss from operations


(264)


(1,079)






Other expenses





Foreign exchange gain


(117)


(101)

Interest income


(34)


(26)

Interest expense


426


223

Total other expenses


275


96

Income tax expense


74


60

Net loss


(613)


(1,235)






Other comprehensive loss





Item that may be subsequently reclassified to net loss:





Foreign currency translation, net of income tax expense of nil


(62)


(79)

Total other comprehensive loss


(62)


(79)






Comprehensive loss


(675)


(1,314)






Loss per share





Basic and diluted loss per share


(0.03)


(0.06)

 

exactEarth™ Ltd.

Interim Condensed Consolidated Statements of Cash Flows

(in thousands of Canadian dollars)

(unaudited)



Three months ended 



January  31,


January  31,



2020


2019



$


$

Operating activities





Net loss


(613)


(1,235)

Add (deduct) items not involving cash





Non-cash interest


118


21

Depreciation and amortization


254


168

Operating grant recognized on SIF loan


(209)


(692)

Long-term incentive plan expense


267


9

Stock-based compensation


42


58

Net change in non-cash working capital balances


(1,674)


(495)

Other operating cash flows





Settlement of share units


-


(24)

Cash flows used in operating activities


(1,815)


(2,190)






Investing activities





Acquisition of property, plant and equipment


(378)


(167)

Reimbursement of acquisition costs of property, plant and


-


288

equipment

Cash flows (used in) from investing activities


(378)


121






Financing activities





Government loan repayment


(123)


(123)

Government loan advance


833


-

Convertible debenture advance


-


13,000

Convertible debenture issue costs


-


(1,146)

Payment of principal poriton of lease obligations


(37)


-

Cash flows from financing activities


673


11,731






Effect of exchange rate changes on cash


4


33






Net (decrease) increase in cash


(1,516)


9,695

Cash, beginning of the period


10,188


4,774

Cash, end of the period


8,672


14,469






Supplemental cash flow information





Interest paid


199


-

Interest received


24


24

Income taxes paid


74


60

 

SOURCE exactEarth Ltd.

For further information: Contact information: INVESTORS: Dave Mason, Investor Relations, Tel: +1 416-247-9652, investors@exactearth.com
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