Company executes on significant changes to support future operating cash flows while maintaining focus on growth

TORONTO: Pivotree Inc. (TSXV:PVT) (“Pivotree” or the “Company”), a leader in frictionless commerce solutions, today reported financial results for the three and nine month period ended September 30, 2024. All amounts are expressed in Canadian dollars unless otherwise stated.

“The quarter has been marked by a focused effort in 2024 to streamline our operational and administrative functions, positioning us for leaner and more sustainable growth. We expect to see the effects of these changes in our financial results beginning in Q4 and fully reflected by Q2 2025.” said Bill Di Nardo, CEO of Pivotree. “We continue to have world class delivery people who have a very strong reputation in the market which is contributing to our overall pipeline health.”

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.

Third Quarter 2024 Financial Highlights

(All figures are in Canadian dollars and all comparisons are relative to the three-month period ended September 30, 2023 unless otherwise stated):

• Total Revenue of $18.8 million, a decrease of 10.6% or a decrease of 11.9% in constant currency.
  • Total Managed & IP Solutions + Legacy Managed Services (MIPS + LMS) of $8.7 million, a decrease of 22.4%, or 23.5% in constant currency.
    • Managed & IP Solutions (MIPS) Revenue declined 14.4% to $3.8M in Q3 2024, due to one time SKU Build volume benefit in the prior year and within the range company has been expecting
    • Legacy Managed Services (LMS) Revenue declined 27.7% to $4.9M in Q3 2024, from $6.7M in Q3 2023, related to churn and melt of Legacy Oracle customers
  • Professional Services Revenue of $10.1 million, an increase of 2.8% or 1.3% in constant currency. The year-over-year increase was primarily due to the addition of new logo customers and additional projects among our existing professional service customer base.
• Gross profit of $7.3 million, a decrease of 25.3% and representing 38.7% of total revenue compared to $9.7 million or 46.2% of revenue for the prior year period.
  • The decrease is a one-time adjustment to Q3 2024 revenue to align to fixed fee milestone program
• Net loss of $5.1 million compared to net loss of $1.8 million for the prior year period primarily due to restructure costs, foreign exchange impact, and decline in gross profits.
• Adjusted EBITDA1 of $(0.8) million compared to an adjusted EBITDA1 of $0.6 million for the prior year period.

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.

Third Quarter 2024 Business Highlights

• Commerce has continued to reinforce strong client relationships as evidenced by multiple extensions of Professional Service projects on Vtex, Shopify, and SAP hybris. Additionally, Commerce secured a new digital strategy project with a prominent retail client, marking an important win in the industry. These strategic engagements build a robust pipeline of extension bookings through multi-phase projects. The Oracle ATG business had two clients renew their LMS contracts on 12-month terms.
• Data achieved a strong quarter in Professional Service bookings, driven by extensions on key Stibo and Syndigo projects. Additionally, Data secured two SKU Build proof-of-concepts in the automotive sector, including a new logo. Another major win was a new Stibo implementation, with additional phases anticipated. Renewals in our FAS category will provide added visibility into 12 months of recurring revenue within the MIPS category.
• Supply Chain marked its best quarter of bookings in 2024, driven by multiple 12-24 month renewals of Fluent OMS Support contracts and the expansion of Fluent OMS Professional Service projects. Additionally, Supply Chain continues to see ongoing extensions of Professional Service work for Sterling OMS.

Third Quarter 2024 Results

Selected Financial Measures

Results of Operations

The following table outlines our consolidated statements of loss and comprehensive loss for the three and nine months ended September 30, 2024 and 2023.

Cash Flows

Conference Call

Management will host a live Zoom Video Webinar on Wednesday, November 13, 2024 at 8:30 am ET to discuss these third quarter 2024 results. The webinar can be accessed through the following registration link: https://pivotree.zoom.us/webinar/register/WN_3ImixfaEQaKixSq7tsycjQ#/registration.

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, “Total Contract Value (TCV) Booking”, “Managed & IP Solutions (MIPS) Revenue”, “Legacy Managed Services (LMS) Revenue”, "Adjusted EBITDA".

Key Performance Indicators

Due to our operating model, we recognize revenue within Total MIPS & LMS and professional services. Total MIPS & LMS, 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.

• Total Contract Value (TCV) Booking: This is defined as the total value of the contract executed with customers by the Company in the quarter. This is a new KPI to provide improved visibility to total bookings. 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 or industry book to bill metrics due to variances to time and material estimates, transactional or overage revenue that may not appear in bookings. The TCV Booking will be reported for the professional and Managed and IP Solutions (MIPS) & Legacy Managed Services (LMS) revenue segments. For this quarter we h