exactEarth Ltd. (“the Company”), the leading provider of Satellite AIS data services, announces its financial results for the three months ended January 31, 2016. All amounts are stated in Canadian dollars unless otherwise noted.
“The demand drivers for S-AIS and other maritime information applications remain firmly in place. As our product offerings expand, we are growing our addressable market and long-term revenue growth potential. We continue to progress on our growth plan to capitalize on these new and emerging market opportunities,” said Peter Mabson, CEO of exactEarth. “Q1 results were in-line with our expectations as we delivered both revenue and adjusted EBITDA growth. With more than $21.0 million in cash today, we have a solid balance sheet to support our growth initiatives. We are confident that the investments we are making today in our data services and analytics capabilities, will set the foundation to drive compelling long-term growth rates for the business.”
Financial Review
Total revenue was $6.4 million for the three months ended January 31, 2016 (“Q1 F2016”), an increase of 17.8% compared to $5.4 million for the same period last year. The increase in revenue is primarily a result of the growing number of subscription-based revenue customers and greater sales of the Company’s expanded product offerings.
Subscription services revenue was $5.4 million for Q1 F2016, an increase of 6.5% compared to $5.1 million for the same period last year. Subscription services revenue represented 84% of total revenue in Q1 F2016 compared to 93% in Q1 F2015. Subscription services revenue from commercial customers in Q1 F2016 rose 33% compared to Q1 F2015.
Data Products revenue was $0.3 million for Q1 F2016, compared to $0.05 million for the same period last year.
Other Products & Services contributed $0.7 million of revenue for Q1 F2016 compared to $0.3 million for the same period last year. This revenue tends to be unpredictable as it is generated from on-demand customer requests.
Gross profit was $3.8 million and gross margin was 58.8% for Q1 F2016 compared to gross profit of $2.8 million and gross margin of 52.3% for the same period last year. The increase reflects the growing customer base, offset in part by the increased operational costs of the Company’s expanded, and largely completed, satellite constellation and ground station network.
Total operating expenses were $3.8 million for Q1 F2016 compared to $3.3 million from the same period last year. The majority of the increase was attributable to selling, general and administrative expenses (“SG&A”) which grew by $0.4 million to $1.94 million. The increase in SG&A expense reflects the volume of new subscriptions and the Company’s investment in sales and marketing activity as it executes on its strategic plan.
Adjusted EBITDA was $1.5 million for Q1 F2016, an increase of 68% compared to $0.9 million the same period last year. (Adjusted EBITDA is a non-IFRS measure, which is defined below.)
Net loss was $1.0 million for Q1 F2016 compared to a net loss of $0.95 million for the same period last year. The Company’s revenue increase was greater than the increase in its operating expenses, however, net loss increased due to foreign exchange loss, which grew to $0.68 million in Q1 F2016 compared to $0.15 million in Q1 F2015. Foreign exchange gains or losses arise from the translation of foreign denominated balances on the Company’s financial statements and are impacted by global currency fluctuations, not operations.
The Company used $0.4 million of cash from operating activities in Q1 F2016 compared with cash used in operations of $1.5 million in the same period last year. exactEarth ended the period with $1.7 million in cash, compared with $2.4 million at October 31, 2015.
The Company’s balance sheet strengthened subsequent to quarter-end, when the spinout of exactEarth from COM DEV International was completed. More details on the Spinout Transaction are provided below. A pro forma balance sheet showing exactEarth’s improved financial condition post-closing of the Spinout Transaction is also included below.
Subsequent to quarter-end: Spinout Transaction
exactEarth’s previous majority shareholder, COM DEV, completed a Spinout Transaction under which COM DEV distributed its shareholdings in exactEarth to its own shareholders and exactEarth became a publicly traded company. exactEarth shares started trading on the Toronto Stock Exchange (“TSX”) on February 9, 2016 under the symbol XCT.
Following the completion of the Spinout Transaction, the Company has 21,605,506 shares outstanding.
– Read the full financial results here.
