Strong SaaS Results Drives Positive EBITDA
OTTAWA, Ontario–(BUSINESS WIRE)–Espial® Group Inc. (“Espial” or the “Company”), (TSX:ESP), today
announced its third quarter financial results for the three-month period
ended September 30, 2018.
- Third quarter revenue was $7.0 million.
- Annualized recurring SaaS revenue has increased 68% from $4.1 million
at the end of last year to $6.9 million at the end of the third
- Third quarter adjusted EBITDA1 income was $0.01 million.
Net loss was $0.6 million.
- Announced that WideOpenWest Inc. (“WOW!”), a leading broadband and
communications service provider, will use Espial’s Elevate video
platform to power its WOW! ULTRA set top box offering.
- Announced that TDS Broadband Services, LLC (“TDS”) signed an agreement
to license Espial’s Elevate Cloud video platform.
- Announced the Elevate Cloud IPTV Platform is available on Amazon Web
Services (AWS) and ready for deployment with AWS Elemental services.
- Announced a fully managed TV-as-a-Service (“TVaaS”) solution for
Android TV, including support for Android TV Operator Tier set-top
boxes and Android TV retail devices.
- Germany based Tele Columbus announced it will launch a new marketing
campaign in the fourth quarter to drive sales of their Espial powered
advanceTV video service.
“We are pleased with our financial performance for this quarter. We
demonstrated solid growth in our SaaS annual recurring revenues, up 68%
from Q4, 2017 and reported positive adjusted EBITDA for the quarter”,
said Jaison Dolvane, CEO of Espial. “We announced key deals with WOW!
and TDS that will contribute to our SaaS revenue. We also announced
initiatives with Harmonic, Amazon Web Services and AndroidTV as we
continue to enhance our IPTV and App-based TV offerings.”
For the three-month period ended September 30, 2018, revenue increased
to $7.0 million compared with revenue of $6.8 million for the three
months ended September 30, 2017. Adjusted EBITDA for the third quarter
of fiscal 2018 was positive $0.01 million compared to a loss of $2.0
million for the third quarter of fiscal 2017. Net loss for the quarter
was $0.6 million, compared to a loss of $3.1 million for the third
quarter of fiscal 2017.
Q3 Financial Results
- Third quarter revenue was $7,042,530 compared with revenue of
$6,801,812 in the same period a year ago. Third quarter software
license revenue was $2,225,200 compared to $3,088,162 in the third
quarter of fiscal 2017. Software subscription revenue from our Elevate
SaaS video platform, which included $349,279 for past performance, was
$2,079,080 compared to zero last year. Professional services revenue
for the third quarters of 2018 and 2017 were $1,272,921 and
$1,553,636, respectively. Maintenance and support revenue for the
third quarter was $1,465,329 compared to $2,160,014 last year.
- North American revenues were $4,268,955 in the third quarter of 2018
compared to $3,672,267 in 2017. European revenues were $2,487,674 in
the third quarter of 2018 compared to $2,237,491 in 2017. Asia
revenues were $285,901 in the third quarter of 2018 compared to
$892,054 in 2017
- Gross margin for the third quarter of fiscal 2018 was 71%, unchanged
from the third quarter of fiscal 2017.
- Operating expenses in the third quarter were $5,282,607 compared to
$7,623,409 in the third quarter of fiscal 2017.
- Adjusted EBITDA for the third quarter of fiscal 2018 was a positive
$11,813, compared to a loss of $2,012,869 in fiscal 2017.
- Net loss, which includes non-cash items like depreciation,
amortization of intangibles, and stock compensation, in the third
quarter was $557,902 compared to a loss of $3,144,241 last year.
Cash and cash equivalents at September 30, 2018 was $29,801,512.
A complete set of financial statements and management’s discussion and
analysis for the period ended September 30, 2018 will be available at http://www.sedar.com.
The Company will be hosting a conference call to discuss the Q3 2018
financial results on November 1, 2018 at 5:00PM EDT and the phone number
to join the results discussion is:
- Toll Free line (Canada/US) 866-521-4909
- Toll line (International/Local) 647-427-2311
The playback for the call will be available two hours after the call’s
completion and will be available until 11:59pm ET on December 3, 2018,
at the following numbers and passcode:
Toll-free line: +1-800-585-8367 or +1-416-621-4642, Passcode: 5979476
About Espial (www.espial.com)
Espial is transforming viewing experiences worldwide by enabling video
services at web speed and web scale. From immersive user experience and
discovery solutions to advanced cloud-based platforms, Espial solutions
help service providers manage, deliver and monetize video and
entertainment services. Espial’s customers span six continents, have
deployed tens of million devices, and are serviced through Espial’s
global sales, support, and innovation centers across North America,
Europe, and Asia. www.espial.com
Forward Looking Statement
This press release contains information that is forward looking
information with respect to Espial within the meaning of Section
138.4(9) of the Ontario Securities Act (forward looking statements) and
other applicable securities laws. In some cases, forward-looking
information can be identified by the use of terms such as “may”, “will”,
“should”, “expect”, “plan”, “anticipate”, “believe”, “intend”,
“estimate”, “predict”, “potential”, “continue” or the negative of these
terms or other similar expressions concerning matters that are not
historical facts. In particular, statements or assumptions about,
economic conditions, ongoing or future benefits of existing and new
customer, and partner relationships or new board nominees, our position
or ability to capitalize on the move to more open systems by service
providers, existing or future opportunities for the company and products
(including our ability to successfully execute on market opportunities
and secure new customer wins) and any other statements regarding
Espial’s objectives (and strategies to achieve such objectives), future
expectations, beliefs, goals or prospects are or involve forward-looking
Forward-looking information is based on certain factors and assumptions.
While the company considers these assumptions to be reasonable based on
information currently available to it, they may prove to be incorrect.
Forward-looking information, by its nature necessarily involves known
and unknown risks and uncertainties. A number of factors could cause
actual results to differ materially from those in the forward-looking
statements or could cause our current objectives and strategies to
change, including but not limited to changing conditions and other risks
associated with the on-demand TV software industry and the market
segments in which Espial operates, competition, Espial’s ability to
continue to supply existing customers and partners with its products and
services and avoid being displaced by competitive offerings, effectively
grow its integration and support capabilities, execute on market
opportunities, develop its distribution channels and generate increased
demand for its products, economic conditions, technological change,
unanticipated changes in our costs, regulatory changes, litigation, the
emergence of new opportunities, many of which are beyond our control and
current expectation or knowledge.
Additional risks and uncertainties affecting Espial can be found in
Management’s Discussion and Analysis of Results of Operations and
Financial Condition and its Annual Information Form for the fiscal years
ended December 31, 2016 and 2017 on SEDAR at www.sedar.com.
If any of these risks or uncertainties were to materialize, or if the
factors and assumptions underlying the forward-looking information were
to prove incorrect, actual results could vary materially from those that
are expressed or implied by the forward-looking information contained
herein and our current objectives or strategies may change. Espial
assumes no obligation to update or revise any forward looking
statements, whether as a result of new information, future events or
otherwise, except as required by law. Readers are cautioned not to place
undue reliance on these forward-looking statements that speak only as of
the date hereof.
Non-IFRS Financial Measures
Adjusted EBITDA represents net income (loss) adjusted to exclude
shared-based compensation, amortization, depreciation, business
restructuring expenses, interest income, other expense (income), and
income tax expense. We use Adjusted EBITDA to provide investors with a
supplemental measure of our operating performance and thus highlight
trends in our core business that may not otherwise be apparent when
relying solely on IFRS financial measures. We believe that securities
analysts, investors and other interested parties frequently use non-IFRS
measures in the evaluation of issuers. Management also uses non-IFRS
measures in order to facilitate operating performance comparisons from
period to period, prepare annual operating budgets and assess our
ability to meet our capital expenditure and working capital requirements.
Adjusted EBITDA is not a recognized, defined or standardized measure
under IFRS. Our definition of Adjusted EBITDA will likely differ from
that used by other companies and therefore comparability may be limited.
Adjusted EBITDA should not be considered a substitute for or in
isolation from measures prepared in accordance with IFRS. Investors are
encouraged to review our financial statements and disclosures in their
entirety and are cautioned not to put undue reliance on non-IFRS
measures and view them in conjunction with the most comparable IFRS
financial measures. We have reconciled Adjusted EBITDA to the most
comparable IFRS financial measure as follows:
Three months ended September 30, 2018
Three months endedSeptember 30, 2017
|Amortization of intangibles||148,427||251,220|
|Adjusted net loss||(396,965)||(2,524,618)|
|Net interest (income) expense||(116,796)||(77,103)|
Consolidated Statements of Loss and
(In Canadian dollars)
|Three Months Ended||Nine Months Ended|
|Software licenses||$ 2,225,200||$ 3,088,162||$ 6,929,862||$ 11,837,886|
|Support and maintenance||1,465,329||2,160,014||5,072,935||6,382,602|
|Cost of revenue||2,021,487||1,956,892||5,451,200||6,303,804|
|Sales and marketing||1,604,289||1,773,906||4,883,425||5,333,371|
|General and administrative||660,414||1,117,289||2,344,771||3,827,866|
|Research and development||2,869,477||4,480,994||10,086,561||15,237,585|
|Amortization of intangible assets||148,427||251,220||470,566||735,928|
|Loss before other income (expenses)||(261,564)||(2,778,489)||(5,107,936)||(8,162,967)|
|Other income (expenses)||(324,307)||(253,172)||281,353||(402,586)|
|Loss before taxes||(469,075)||(2,954,558)||(4,505,736)||(8,361,927)|
| Items that are or may be reclassifiedsubsequently to profit or|
|Foreign currency translationdifferences – foreign operations|
|Total comprehensive loss||$ (410,005)||$ (3,144,241)||$ (5,048,383)||$ (8,750,753)|
|Net loss per common share – basic||$ (0.02)||$ (0.09)||$ (0.13)||$ (0.24)|
|Weighted average number of common shares outstanding – basic||35,450,913||36,318,406||35,682,161||36,456,336|
|Net loss per common share – diluted||$ (0.02)||$ (0.09)||$ (0.13)||$ (0.24)|
|Weighted average number of common shares outstanding – diluted||35,450,913||36,318,406||35,682,161||36,456,336|
Consolidated Balance Sheets
(In Canadian Dollars)
September 30, 2018
December 31, 2017
|Cash and cash equivalents||$ 29,801,512||$ 38,813,911|
|Investment tax credits receivable||426,854||924,630|
|Prepaid expenses and other assets||1,110,493||841,617|
|Property, plant and equipment||1,710,156||2,046,905|
|$ 47,533,253||$ 53,993,274|
|Accounts payable and accrued liabilities||$ 2,855,119||$ 4,778,111|
|Share based payments reserve||17,610,920||17,179,915|
|Accumulated other comprehensive loss||(269,628)||–|
|$ 47,533,253||$ 53,993,274|
Statements of Cash Flows
(In Canadian Dollars)
|Nine Months Ended|
|CASH (USED IN) PROVIDED BY|
|Net loss||$ (4,778,755)||$ (8,750,753)|
|Items not affecting cash|
|Depreciation of property plant and equipment||350,649||349,232|
|Amortization of intangible assets||470,405||735,928|
|Share-based compensation expense||599,208||1,247,399|
|Business restructuring provisions||344,446||–|
| Changes in non-cash operating|
working capital items
|Purchase of equipment||(111,853)||(1,225,877)|
|Purchase of intangibles||(330,651)||(78,802)|
|Share repurchase program||(1,167,389)||(1,239,112)|
|Net cash and cash equivalents outflow||(9,228,872)||(5,018,500)|
|Cash and cash equivalents, beginning of period||38,813,911||43,047,878|
|Effects of exchange rates on cash and cash equivalents||216,473||–|
|Cash and cash equivalents, end of period||$ 29,801,512||$ 38,029,378|
|Taxes paid||$ 273,019||$ 203,626|
1 Adjusted EBITDA is a non-IFRS measure. This measure is
defined in the “Non-IFRS Financial Measures” of this news release.
Espial Group Inc.Carl Smith, +1 613-230-4770Chief
Financial Officer[email protected]