exactEarth Announces Q2 Fiscal 2021 Financial Results
  • Increased total revenue by 33%
  • Increased Subscription Services revenue by 34%
  • Increased 2021 guidance for Subscription Services annual revenue growth to 21-26% from 15-20%
  • Generated positive Adjusted EBITDA of $840 thousand
  • Completed the redemption of all convertible debentures

CAMBRIDGE, ON, June 10, 2021 /CNW/ - exactEarth Ltd. ("the Company"), a leading provider of Satellite-AIS data services, announces its financial results for the three- and six-month periods ended April 30, 2021. All financial figures are in Canadian dollars unless otherwise stated.

Q2 and Year-to-Date Fiscal 2021 Highlights:

  • Revenue was $5.9 million, up 33% compared to $4.4 million in Q2 2020; revenue Year-to-Date ("YTD") was $11.2 million, up 32% compared to $8.5 million in the same period last year.
  • Subscription Services1 revenue was $5.2 million, up 34% compared to Q2 2020; subscription Services revenue YTD was $10.1 million, up 30% compared to $7.7 million in the same period last year.
  • New Order Bookings were $6.5 million compared to $3.5 million in Q2 2020; New Order Bookings YTD were $10.8 million compared to $10.6 million in the same period last year.
  • Order Bookings backlog at the end of Q2 2021 was $27.1 million compared to $24.9 million at the end of Q2 2020.
  • Adjusted EBITDA2 was a gain of $840 thousand compared to a loss of ($548) thousand in Q2 2020; Adjusted EBITDA YTD was a gain of $1.7 million compared to a loss of ($299) thousand in the same period last year.
  • Cash used in operations was ($1.1) million compared to cash used in operations of ($1.3) million in Q2 2020; Cash used in operations YTD was ($325) thousand compared to cash used in operations of ($3.2) million in the same period last year.
  • Cash, cash equivalents and short-term investments were $6.7 million at the end of Q2 2021 compared to $7.5 million at the end of Fiscal 2020.
  • Completed the redemption of the convertible unsecured subordinated debentures due 2023.
  • Announced participation in MDA's Dark Vessel Detection program, which is supporting the Canadian Government's fight against illegal, unreported and unregulated ("IUU") fishing.
  • Launched exactAIS Platinum Plus to enhance vessel detection in ports and regions of high vessel density.
  • Announced a $6.0 million Revolving Credit Facility from National Bank of Canada, which remains undrawn as of the date of this press release.

"We continued to execute on our growth plan in Q2, which led to significant increases in revenue and Adjusted EBITDA and to high levels of recurring revenue and customer retention," said Peter Mabson, CEO at exactEarth. "In addition, strong New Order Bookings led to an increase in Order Backlog at quarter-end giving us good visibility on revenue for the second half of the year. As a result of our solid performance in the first half of the year and our positive outlook for the remainder of 2021, we are pleased to increase our guidance for Subscription Services revenue growth in 2021 to 21-26% from our previous target of 15-20% growth. Our strong year over year Adjusted EBITDA growth is a reflection of the high contribution margin we derive from revenue growth in this data services business."

Mr. Mabson continued: "Going forward, we remain focused on expanding our customer base and increasing the level of services provided to those customers. We believe we have the world's largest database of vessel movements with more than 40 billion data records spanning over ten years, and, together with our partners, we are only beginning to scratch the surface on using analytics and artificial intelligence to derive additional value from this dataset. To achieve our goals, we are investing this year in both our direct salesforce as well as our channel partner relationships and we are also looking to expand our application partner base while increasing our own internal analytics capabilities."

Sean Maybee, CFO at exactEarth added: "We strengthened our balance sheet and improved our financial flexibility in Q2 with the redemption of our convertible debentures and the addition of a new $6.0 million credit facility with National Bank. With these achievements in place, we are well positioned to maintain our momentum, invest in the business and explore new growth opportunities."

Q2 and Year-to-Date Fiscal 2021 Financial Review

Total revenue in the three- and six-month periods ended April 30, 2021 ("Q2 2021" and "YTD 2021") was $5.9 million and $11.2 million, compared to $4.4 million and $8.5 million in the same prior year periods.  Subscription Services revenue was 89% of total revenue in Q2 2021 and 90% of total revenue in the YTD 2021 period.

Data Products revenue and Other Products & Services revenue combined in Q2 2021 was $662 thousand and $1.2 million for the YTD 2021 period, compared to $513 thousand and $807 thousand in the respective prior year periods. Data Products revenue and Other Products & Services revenue is typically generated from on-demand customer requests and/or projects, including the sale of historical datasets, which results in variability in quarter-to-quarter revenue levels from these segments.

Total revenue and Subscription Services revenue growth for Q2 2021 and for the YTD 2021 period was driven primarily by customer growth in the commercial market segment. Commercial market revenue was up 46% in Q2 2021 and 40% for the YTD period. Government market revenue was down 6% in Q2 2021 and up 3% for the YTD period.

Order Bookings backlog at April 30, 2021 was $27.1 million compared to $24.9 million at the end of Q2 2020. The Company's foreign currency denominated Order Bookings backlog is affected by fluctuations in foreign exchange rates, which resulted in a decrease to stated backlog of $162 thousand in Q2 2021 and $1.1 million for the YTD 2021 period. Revenue of $9.5 million from the current revenue backlog is forecasted to be earned in the remainder of Fiscal 2021.

Gross margin for Q2 2021 and the YTD 2021 period was 50% and 51%, compared to 32% and 40% in the respective periods of the prior year. Gross margin improved year-over-year due primarily to revenue growth. Cost of revenue, excluding a favourable one-time $648 thousand net adjustment recognized in Q1 2020 related to the completion of the amended L3Harris agreement, was lower for both periods in 2021.   

Selling, general and administrative ("SG&A") expense for Q2 2021 and the YTD 2021 period was $1.9 million and $4.7 million, compared to $2.6 million and $4.3 million in the respective periods of the prior year. The Q2 2021 decrease was primarily due to the net recovery of bad debt expense related to a distributor in China as well as a decrease in travel expenses. This was partially offset by an increase in payroll, management incentive compensation, marketing and legal expenses. The YTD 2021 increase was primarily due to an increase in the value of directors' fees paid in DSUs arising from the appreciating stock price, as well as an increase in payroll, management incentive compensation, and legal expenses. This was partially offset by the net recovery of bad debt expense and decrease in travel expenses.

Product development and research and development ("R&D") expense for Q2 2021 and for the YTD 2021 period was $332 thousand and $523 thousand, compared to $208 thousand and $512 thousand in the respective periods of the prior year. The year-over-year increases primarily reflect the Company's ongoing development of web-based functionality and new analytics-based product offerings.

Adjusted EBITDA1 gains for Q2 2021 and the YTD 2021 period were $840 thousand and $1.7 million, compared to losses of ($548) thousand and ($299) thousand in the respective periods of the prior year. Adjusted EBITDA improved year-over-year primarily due to higher revenue and increased gross margin.

Adjusted EBITDA

 

 

Three months ended April 30

 

Six months ended April 30

 


2021

2020

2021

2020

Net income (loss)

$

100

$

(2,878)

$

(1,234)

$

(3,491)

Interest income


(12)


(20)


(26)


(54)

Interest expense


149


434


646


860

Income tax expense


51


45


109


119

Depreciation and amortization


177


237


355


491

Unrealized foreign exchange loss (gain)


377


(201)


819


(368)

Long-term incentive plan expense


119


145


1,164


454

Impairment loss


-


838


-


838

COVID-19-related ECL


(121)


852


(93)


852

Adjusted EBITDA

$

840

$

(548)

$

1,740

$

(299)

Net income for Q2 2021 was $100 thousand, or $0.00 per basic and diluted share, compared to a net loss of ($2.9) million, or ($0.13) per basic and diluted share, in Q2 2020. Net loss for the YTD 2021 period was ($1.2) million, or ($0.03) per basic and diluted share, compared to a loss of ($3.5) million, or ($0.16) per basic and diluted share in the same period last year. Net loss improved year-over-year due to higher revenue, higher gross margin and an $838 thousand impairment loss incurred in Q2 2020.  

Cash used in operations in Q2 2021 and for the YTD 2021 period was ($1.1) million and ($325) thousand, compared to cash used in operations of ($1.3) million and ($3.2) million in the respective periods of the prior year. Cash flows used in operations in Q2 2021 resulted from adjustments in non-cash working capital balances. exactEarth's cash, cash-equivalents and short-term investments were $6.7 million at April 30, 2021 compared to $7.5 million at October 31, 2020.

On January 8, 2021, exactEarth issued a redemption notice to redeem in full all of its outstanding convertible unsecured subordinated debentures due December 13, 2023, which amounted to an aggregate of $13.0 million. As anticipated, on February 8, 2021, all holders converted the Debentures prior to Redemption. In connection with the conversion the Company issued an aggregate of 27,369,585 common shares to satisfy the principal amount and accrued and unpaid interest.

As of June 9, 2021, the number of basic and fully-diluted issued and outstanding common shares was 49,816,065 and 52,362,249, respectively. 

Q2 2021 Conference Call
exactEarth will hold a conference call today at 8:30 am Eastern Daylight Time to discuss its Q2 2021 and YTD 2021 financial results. The call will be hosted by Mr. Peter Mabson, President and Chief Executive Officer and Mr. Sean Maybee, Chief Financial Officer.

CONFERENCE ID: 6945348

DATE: Thursday, June 10, 2021

TIME: 8:30 a.m. Eastern Daylight Time

DIAL-IN NUMBER: 1-888-231-8191 or 647-427-7450

WEBCAST LINK: https://produceredition.webcasts.com/starthere.jsp?ei=1461054&tp_key=1c04fd6bc9   

TAPED REPLAY: 1-855-859-2056 or 416-849-0833

REPLAY CODE: 6945348

The taped replay will be available for seven days and the archived webcast will be available for 90 days.

A link to the live audio webcast of the conference call will also be available on the events page of the investors section of exactEarth website at www.exactearth.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to hear the webcast.

1,2Non-IFRS Measures
We measure Adjusted EBITDA as earnings before interest expense, taxes, depreciation and amortization ("EBITDA"), plus unrealized foreign exchange losses, share-based compensation costs, impairment losses, share of equity investment loss and COVID-19 related allowances for doubtful accounts, less interest income and unrealized foreign exchange gains. 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.

The Company defines "Order Bookings" as the dollar sum of contracts for the supply of products and services to its customers. "Order Bookings backlog" is the dollar sum of revenue that is expected to be recognized derived from customer contracts.  Order Bookings and Order Bookings backlog are indicative of firm future revenue streams; however, they do not provide a guarantee of future net income and provide no information about the timing of future revenue.

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.

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, 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, expectations of the exactView RT capabilities driving growth, growth opportunities for the Company in the maritime information services market and expectations related to subscription revenue. 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 impact of the COVID-19 pandemic on customers and the market generally, the reduced scope of significant existing contracts; the impact of anticipated benefits of satisfying the convertible debentures;  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


As at




April 30,


October 31,




2021


2020




$


$

ASSETS





Current assets






Cash and cash equivalents


6,692


7,423


Short-term investments


-


29


Accounts receivable


3,539


3,215


Unbilled revenue


1,032


1,698


Prepaid expenses


712


392


Other current assets


437


359

Total current assets


12,412


13,116








Property, plant and equipment


5,157


5,272


Intangible assets


1,193


1,286


Other long-term assets


489


566

Total assets


19,251


20,240







LIABILITIES & SHAREHOLDERS' EQUITY (DEFICIENCY)





Current liabilities






Accounts payable and accrued liabilities


5,236


6,402


Deferred revenue


2,803


2,548

Total current liabilities


8,039


8,950








Loans payable


1,642


11,131


Long-term incentive plan liability


2,064


1,124


Other long-term liabilities 


103


1,660

Total liabilities


11,848


22,865







Shareholders' equity (deficiency)






Share capital


138,934


123,923


Contributed surplus


1,160


4,956


Accumulated other comprehensive loss


(108)


(155)


Deficit


(132,583)


(131,349)

Total shareholders' equity (deficiency)


7,403


(2,625)







Total liabilities and shareholders' equity (deficiency)


19,251


20,240

 

exactEarth™ Ltd.

Interim Condensed Consolidated Statements of Changes in Shareholders' Equity (Deficiency)

(in thousands of Canadian dollars)

(unaudited)

For the six months ended April 30, 2021


Total


Deficit

Accumulated
Other
Comprehensive
Loss

Share
Capital


Contributed
Surplus




$


$


$

$


$

Balance at October 31, 2020


(2,625)


(131,349)


(155)


123,923


4,956


Stock-based compensation


95


-


-


13


82


Restricted share units


(449)


-


-


511


(960)


Debenture conversion


11,569


-


-


14,487


(2,918)


Comprehensive income (loss)


(1,187)


(1,234)


47


-


-

Balance at April 30, 2021


7,403


(132,583)


(108)


138,934


1,160













For the six months ended April 30, 2020














$


$


$

$


$

Balance at October 31, 2019


2,119


(126,238)


(113)


123,823


4,647


Stock-based compensation


79


-


-


11


68


Restricted share units


180


-


-


89


91


Comprehensive loss


(3,555)


(3,491)


(64)


-


-

Balance at April 30, 2020


(1,177)


(129,729)


(177)


123,923


4,806

 

exactEarth™ Ltd.

Interim Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

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

(unaudited)





Three months ended 


Six months ended 





April  30,


April  30,


April  30,


April  30,





2021


2020


2021


2020





$


$


$


$
























Revenue



5,876


4,407


11,240


8,540


Cost of revenue



2,939


2,984


5,522


5,043


Gross profit



2,937


1,423


5,718


3,497
























Selling, general and administrative



1,875


2,560


4,674


4,340


Product development and research
   and development



332


208


523


512


Depreciation and amortization



177


237


355


491


Impairment loss



-


838


-


838

Income (loss) from operations



553


(2,420)


166


(2,684)












Other expenses











Other expense



18


-


27


-


Foreign exchange loss (gain)



247


(1)


644


(118)


Interest income



(12)


(20)


(26)


(54)


Interest expense



149


434


646


860

Total other expenses



402


413


1,291


688


Income tax expense



51


45


109


119

Net income (loss)



100


(2,878)


(1,234)


(3,491)












Other comprehensive income (loss)











Item that may be subsequently reclassified to net loss:










Foreign currency translation, net of income tax expense of nil

110


(2)


47


(64)


Total other comprehensive income (loss)



110


(2)


47


(64)












Comprehensive income (loss)



210


(2,880)


(1,187)


(3,555)












Earnings (loss) per share











Basic and diluted earnings (loss) per share



0.00


(0.13)


(0.03)


(0.16)


 

exactEarth™ Ltd.

Interim Condensed Consolidated Statements of Cash Flows

(in thousands of Canadian dollars)

(unaudited)




Three months ended


Six months ended




April  30,


April  30,


April  30,


April  30,




2021


2020


2021


2020




$


$


$


$

Operating activities










Net income (loss)


100


(2,878)


(1,234)


(3,491)

Add (deduct) items not involving cash










Non-cash interest


36


131


315


249


Depreciation and amortization


177


237


355


491


Impairment Loss


-


838


-


838


Operating grant recognized on SIF loan


(8)


(152)


(156)


(361)


Long-term incentive plan expense


119


145


1,164


454


Net change in non-cash balances


(1,520)


343


(769)


(1,331)

Cash flows used in operating activities


(1,096)


(1,336)


(325)


(3,151)











Investing activities










Acquisition of property, plant and equipment


(126)


(1,195)


(667)


(1,573)


Reimbursement of acquisition costs of property, plant
   and equipment


-


331


-


331

Cash flows used in investing activities


(126)


(864)


(667)


(1,242)











Financing activities










Government loan repayment


-


(82)


-


(205)


Government loan advance


258


375


688


1,208


Payment of principal portion of lease obligations


(43)


(36)


(76)


(73)


Debenture transaction costs


(91)


-


(91)


-

Cash flows from financing activities


124


257


521


930











Effect of exchange rate changes on cash


(162)


107


(260)


111











Net decrease in cash


(1,260)


(1,836)


(731)


(3,352)

Cash, beginning of the period


7,952


8,672


7,423


10,188

Cash, end of the period


6,692


6,836


6,692


6,836











Supplemental cash flow information










Interest paid


2


4


199


203


Interest received


-


8


-


32


Income taxes paid


51


45


109


119

 

SOURCE exactEarth Ltd.

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