Pivotree Inc. (TSXV:PVT) (“Pivotree” or the “Company”), a leader in frictionless commerce solutions, today reported financial results for the three and twelve month period ended December 31, 2...
Fifth consecutive quarter of positive Adjusted EBITDA with continued investment in frictionless products
TORONTO: Pivotree Inc. (TSXV:PVT) (“Pivotree” or the “Company”), a leader in frictionless commerce solutions, today reported financial results for the three and twelve month period ended December 31, 2023. All amounts are expressed in Canadian dollars unless otherwise stated.
“We achieved a number of the objectives we set out to accomplish in 2023 including four consecutive quarters of positive Adjusted EBITDA despite PS revenue softness. Coming off a record Q4 2022, the team adjusted well to an environment of reduced project spend and I am confident we will continue to make adjustments as necessary for profitable growth.” said Bill Di Nardo, CEO of Pivotree. “ Our focus on frictionless products is bearing fruit, where we saw measurable progress with our IP based solutions through the year which we expect to continue into 2024.”
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 2023 Financial Highlights
(All figures are in Canadian dollars and all comparisons are relative to the three-month period ended December 31, 2022 unless otherwise stated):
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 2023 Business Highlights
Fourth Quarter 2023 Results
Selected Financial Measures
| Three months ended December 31, | Twelve months ended December 31, | ||||||
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| 2023 | 2022 | $ Change | % Change | 2023 | 2022 | $ Change | % Change |
| $ | $ | $ | % | $ | $ | $ | % |
Total LMS & MIPS | 10,710,317 | 11,143,928 | (433,611) | -3.9% | 43,575,647 | 41,187,567 | 2,388,080 | 5.8% |
Professional Services | 10,321,007 | 15,019,104 | (4,698,097) | -31.3% | 46,230,160 | 60,505,911 | (14,275,751) | -23.6% |
Total Revenue | 21,031,324 | 26,163,032 | (5,131,708) | -19.6% | 89,805,807 | 101,693,478 | (11,887,671) | -11.7% |
Results of Operations
The following table outlines our consolidated statements of loss and comprehensive loss for the three and twelve months ended December 31, 2023 and 2022.
| Three months ended December 31, | Twelve months ended December 31, | ||
| 2023 | 2022 | 2023 | 2022 |
| $ | $ | $ | $ |
Revenue | 21,031,324 | 26,163,032 | 89,805,807 | 101,693,478 |
Cost of revenue | 11,200,359 | 13,783,681 | 48,321,418 | 55,964,500 |
Gross profit | 9,830,965 | 12,379,351 | 41,484,389 | 45,728,978 |
Operating expenses |
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General and administrative | 2,910,213 | 3,860,358 | 12,231,918 | 15,481,120 |
Sales and marketing | 2,235,968 | 2,590,421 | 9,877,260 | 9,997,599 |
Research and development | 518,949 | 735,123 | 2,394,136 | 4,202,619 |
IT and Operations | 3,447,126 | 3,882,543 | 14,581,825 | 15,643,150 |
Loss (gain) on foreign exchange | 103,143 | 203 | 284,604 | (531,183) |
Amortization and Depreciation | 1,597,263 | 1,366,335 | 6,411,507 | 8,621,237 |
Stock based compensation | 181,350 | 127,046 | 860,413 | 925,878 |
Restructuring and Other | 74,086 | 73,320 | 1,414,179 | 1,402,956 |
Interest | 5,718 | 116,718 | 269,260 | 349,071 |
| 11,073,816 | 12,752,067 | 48,325,102 | 56,092,447 |
Income before other items | (1,242,851) | (372,716) | (6,840,713) | (10,363,469) |
Other items (expenses) | - | (2) | - | - |
Interest income | 69,762 | - | 223,032 | 64,694 |
Operating loss | (1,173,089) | (372,718) | (6,617,681) | (10,298,775) |
Current taxes | (168,661) | 1,073,962 | (565,563) | (525,437) |
Deferred taxes | (46,814) | 761,214 | (46,814) | 1,737,691 |
Net income (loss) | (1,388,564) | 1,462,458 | (7,230,058) | (9,086,521) |
Other comprehensive income (loss) | - | - | - | - |
Foreign translation adjustment | (572,644) | 1,971,814 | (904,463) | 2,582,362 |
Comprehensive income (loss) | (1,961,208) | 3,434,272 | (8,134,521) | (6,504,159) |
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Income (Loss) per share - basic | (0.05) | 0.05 | (0.27) | (0.35) |
Weighted average number of common shares outstanding - basic | 26,576,306 | 26,600,896 | 26,605,913 | 26,180,606 |
Cash Flows
| Three months ended December 31, | Twelve months ended December 31, | ||
| 2023 | 2022 | 2023 | 2022 |
| $ | $ | $ | $ |
Cash and cash equivalents, beginning of period | 8,969,128 | 13,844,455 | 17,346,028 | 24,570,287 |
Net cash provided by (used in): |
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Operating activities | 1,091,770 | 3,914,309 | (2,576,863) | (1,689,094) |
Investing activities | (501,254) | 45,208 | (3,632,679) | (4,852,809) |
Financing activities | (940,484) | (457,944) | (2,517,325) | (682,356) |
Net increase (decrease) in cash and cash | (349,967) | 3,501,573 | (8,726,867) | (7,224,259) |
Cash and cash equivalents, end of period | 8,619,161 | 17,346,028 | 8,619,161 | 17,346,028 |
Conference Call
Management will host a live Zoom Video Webinar on Wednesday, March 27, 2024 at 8:30 am ET to discuss these fourth quarter 2023 results. The webinar can be accessed through the following registration link: https://pivotree.zoom.us/webinar/register/WN_QyIg3_HJQmWwRdXxWSL_7g.
A replay will be available approximately two hours after the conclusion of the live event and posted on https://investor.pivotree.com/.
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".
Key Performance Indicators
Due to our operating model, we recognize revenue within Total LMS & MIPS and professional services. Total LMS & MIPS Solutions, while largely based on minimum monthly recurring fees, also includes transactional and overage charges that may be variable from month to month.
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, Bookings and Net Revenue Retention Rate for the three and twelve months ended December 31, 2023 are as follows:
The ARR, ARR Bookings, Non-Recurring Bookings and Net Revenue retention rate will be discontinued in all 2024 MD&A reports.
| Three Months Ended |
| YoY Change |
| Twelve Months Ended |
| YoY Change | ||||
| 2023 | 2022 |
| Change | % Change |
| 2023 | 2022 |
| Change | % Change |
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Total ARR (1) | 41,396,468 | 48,786,824 |
| (7,390,356) | -15.1% |
| N/A | N/A |
| N/A | N/A |
YTD ARR Bookings | 1,043,907 | 872,727 |
| 171,180 | 19.6% |
| 4,025,908 | 4,321,354 |
| (295,446) | -6.8% |
YTD Non-Recurring Bookings | 12,286,022 | 20,457,472 |
| (8,171,450) | -39.9% |
| 45,091,085 | 69,050,148 |
| (23,959,063) | -34.7% |
YTD Total Bookings | 13,329,929 | 21,330,199 |
| (8,000,270) | -37.5% |
| 49,116,993 | 73,371,502 |
| (24,254,509) | -33.1% |
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Net Revenue Retention Rate in Constant Currency (1) | 70.3% | 98.8% |
| -28.5% | N/A |
| N/A | N/A |
| N/A | N/A |
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, | ||
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