Calgary, Canada — September 14, 2022 — Blackline Safety Corp. ("Blackline" or the "Company") (TSX: BLN), a global leader in connected safety technology, today reported record fiscal third quarter financial results for the period ended July 31, 2022.
Comentario de la dirección
“Our Q3 results reflect our continued success in driving strong revenue growth of 46% to $18.6 million amidst a still challenging operating environment that includes inflationary cost increases and longer cycle times as global supply chain challenges remain,” said Cody Slater, CEO and Chair of Blackline Safety. “Revenue growth was primarily driven by another robust quarter of product growth at 69% and service growth accelerated to 30%, our highest quarterly growth of the last two years, as we delivered on numerous deployments during the quarter and our rental business continues to ramp. This service growth demonstrates the attractiveness of our hardware-enabled software-as-a-service business model as our growing customer base deploys more of our devices that utilize our high-margin services. This led to Blackline exiting the quarter with annual recurring revenue of $32.9 million(1)
“We are also encouraged with our margin performance in Q3 as service margins maintained their strong levels at 70% and hardware margins improved sequentially from 13% to 17% as we continue to proactively seek ways to mitigate elevated component costs and shipping charges. It is important to note that these margins do not reflect any benefit from the approximate 15% pricing increase being implemented in Q4 on both hardware and services. We expect to realize a step-change improvement in our hardware margins in the near-term with the pricing increase, while our service margins should see a steady uplift over the coming quarters as we add new customers and renew existing customers on the new pricing model. Our differentiated product and service offerings along with our net dollar retention (1) of 103% in Q3 give us confidence that the pricing increase will not impact our competitive positioning.”
“In terms of our operating costs, we remain confident in our ability to achieve our goal of Q4 operating costs at or below Q2 levels of $21.5 million. Operating costs in Q3 remained elevated, as we incurred total one-time restructuring costs of $1.4 million, including severance and redundancy costs of $0.5 million, associated with our previously announced cost reduction initiatives. While a portion of our operating costs are correlated to revenue and may increase on an absolute basis, we expect Q3 operating costs to be the high-water mark for Blackline as a percentage of sales as we expect to generate improved operating leverage going forward.”
“We remain on track to release our G6 product in October to capture the $240 million annual zero-maintenance gas detection market. Early feedback remains positive with high levels of interest, and we look forward to building on this momentum with the launch of the G6 at the NSC Safety Congress & Expo, North America’s largest event for workplace safety, next week.”
“Lastly, to help bolster our liquidity position amidst an uncertain macro environment, we successfully raised nearly $25 million in gross proceeds through a bought deal financing and concurrent private placement and signed a non-binding term sheet for a new $15 million senior secured operating facility in August. This influx of capital, along with our pricing increases and cost reductions, put us in a strong position to execute on our plans to couple continued robust top-line growth with improved line-of-sight to sustained profitability.”
Fiscal Third Quarter 2022 and Recent Financial and Operational Highlights
(1) This news release presents certain non-GAAP and supplementary financial measures, including key performance indicators used by management and typically used by companies in the software-as-a-service industry, as well as non-GAAP ratios to assist readers in understanding the Company’s performance. Further details on these measures and ratios are included in the “Key Performance Indicators,” and “Non-GAAP and Supplementary Financial Measures” sections of this news release.
Aspectos financieros destacados
Información financiera clave
Fiscal third quarter revenue was $18.6 million, an increase of 46% from $12.7 million in the prior year quarter, with Canada up 68%, Rest of World up 64% and U.S. revenues up 75% being the largest geographic growth regions quarter-over-quarter. The increases in each region were assisted by the recovery of the energy sector.
Service revenue during the fiscal third quarter was $9.7 million, an increase of 30% compared to $7.4 million in the prior year quarter. Software services revenue increased 26% to $8.3 million, operating lease revenue decreased 27% to $0.6 million and rental revenue increased 730% to $0.8 million. Retention rates of our existing customers across geographic regions and industry sectors remained robust with net dollar retention of 103% for the quarter. Rental revenue growth continues to be strong as a result of the demand for the Company’s complete suite of connected solutions in the industrial turnaround and maintenance market.
Product revenue during the fiscal third quarter was $8.9 million, an increase of 69% compared to $5.3 million in the prior year quarter, which reflects the prior investment in the Company’s expanded sales network and global sales team with continued strong demand generation and sales development activities.
Overall gross margin percentage for the fiscal third quarter was 45%, a 1% decrease compared to the prior year quarter driven by a heavier product versus service mix. The decrease in total gross margin percentage is due to the sales mix with product revenue comprising 48% of total revenue in the third quarter of 2022 compared to 42% in the third quarter of 2021. Service gross margin percentage remained consistent at 70% compared to the prior year quarter as service revenue continued to grow, offsetting an increased cost base.
Product gross margin percentage increased to 17% from 13% in the prior year quarter and the fiscal second quarter of 2022 as the Company has been able to mitigate some of the global supply chain challenges that it is has experienced since the third quarter of 2021. Higher sales volumes also contributed to lower unabsorbed overhead costs during the current period. The increase was offset by write-offs of $0.7 million which reduced Product gross margin by 8%.
Net loss and EBITDA were $16.3 million and ($14.6) million, respectively, in the fiscal third quarter, compared to net loss and EBITDA of $10.3 million and ($8.9) million in the prior year quarter. The increased net loss in the periods is due primarily to increases in general and administrative expenses, sales and marketing expenses and product research and development costs, offset by an increase in gross margin. The decrease in EBITDA is primarily due to increases in total expenses and other non-recurring transactions in the third quarter, offset by increased gross margin compared to the prior year comparable period.
Adjusted EBITDA was ($5.7) million for the fiscal third quarter compared to ($4.5) million in the prior year quarter. The decrease in Adjusted EBITDA is a result of increases in general and administrative expenses and sales and marketing expenses, offset by increased gross margin compared to the prior year comparable periods.
At quarter end, Blackline had total cash on hand of $10.5 million and no debt. The decrease in cash and short-term investments is mainly due to increased operating expenses and the Company’s investment in the G6 product line launching during the fourth quarter of the year. Blackline has invested $1.6 million in this fiscal year to grow the rental fleet as we have expanded our share of the industrial turnaround market. Subsequent to the end of the period, the company closed a bought deal financing and concurrent private placement, raising gross proceeds of $24.9 million.
Blackline’s Interim Condensed Consolidated Financial Statements and Management’s Discussion and Analysis on Financial Condition and Results of Operations for the three and nine-months ended July 31, 2022 are available on SEDAR under the Company’s profile at www.sedar.com. All results are reported in Canadian dollars.
Conferencia telefónica
A conference call and live webcast have been scheduled for 11:00 am ET on Wednesday, September 14, 2022. Participants should dial 1-800-319-4610 or +1-416-915-3239 at least 10 minutes prior to the conference time. A live webcast will also be available at https://www.gowebcasting.com/12014. Participants should join the webcast at least 10 minutes prior to the conference time to register and install any necessary software. If you cannot make the call live, a replay will be available within 24 hours by dialing in to dialing 1-800-319-6413 and entering access code 9294.
Acerca de Blackline Safety
Blackline Safety is a technology leader driving innovation in the industrial workforce through IoT (Internet of Things). With connected safety devices and predictive analytics, Blackline enables companies to drive towards zero safety incidents and improved operational performance. Blackline provides wearable devices, personal and area gas monitoring, cloud-connected software and data analytics to meet demanding safety challenges and enhance overall productivity for organizations with coverage in more than 100 countries. Armed with cellular and satellite connectivity, Blackline provides a lifeline to tens of thousands of people, having reported over 187 billion data-points and initiated over five million emergency alerts. For more information, visit BlacklineSafety.com and connect with us on Facebook, Twitter, LinkedIn and Instagram.
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CONTACTOS PARA INVERSORES Y ANALISTAS:
Matt Glover o Jeff Grampp, CFA
Teléfono: +1 949 574 3860
CONTACTO CON LOS MEDIOS DE COMUNICACIÓN
Christine Gillies, directora de marketing
cgillies@blacklinesafety.com
Teléfono: +1 403 629 9434
Medidas financieras no ajustadas a los PCGA y complementarias
Este comunicado de prensa presenta ciertas medidas financieras complementarias y no conformes con los PCGA, incluidos los indicadores clave de rendimiento utilizados por la dirección y que suelen emplear nuestros competidores en el sector del software como servicio, así como ratios no conformes con los PCGA para ayudar a los lectores a comprender el rendimiento de la empresa. Estas medidas no tienen un significado estandarizado y, por lo tanto, es poco probable que sean comparables con medidas similares presentadas por otros emisores y no deben considerarse de forma aislada ni como sustituto de las medidas de rendimiento preparadas de acuerdo con los GAAP.
La dirección utiliza estas medidas financieras complementarias y no ajustadas a los PCGA, así como ratios no ajustados a los PCGA e indicadores clave de rendimiento, para analizar y evaluar el rendimiento operativo. Blackline también cree que las medidas financieras complementarias y no ajustadas a los PCGA que se definen a continuación son utilizadas habitualmente por la comunidad inversora con fines de valoración, son medidas complementarias útiles de la rentabilidad y proporcionan métricas útiles en el sector de Blackline.
A lo largo de este comunicado de prensa, se utilizan los siguientes términos, que no tienen un significado estandarizado según los PCGA.
Indicadores clave de rendimiento
La Compañía reconoce los ingresos por servicios de manera proporcional durante el plazo del período de servicio, de conformidad con las disposiciones de los acuerdos con los clientes. Los términos de los acuerdos, combinados con las altas tasas de retención de clientes, proporcionan a la Compañía un grado significativo de visibilidad de los ingresos a corto plazo. La dirección utiliza una serie de métricas, incluidas las que se identifican a continuación, para medir el rendimiento de la Compañía y las tendencias de los clientes, que se utilizan para preparar planes financieros y definir la estrategia futura. Los indicadores clave de rendimiento pueden calcularse de forma diferente a los indicadores clave de rendimiento similares utilizados por otras empresas.
Una medida financiera no sujeta a los PCGA: (a) describe el rendimiento financiero histórico o previsto para el futuro, la situación financiera o el efectivo de la empresa; (b) con respecto a su composición, excluye un importe que se incluye en la composición de la medida financiera más comparable presentada en los estados financieros consolidados principales, o incluye un importe que se excluye de dicha composición; (c) no se presenta en los estados financieros principales de la empresa; y (d) no es un ratio.
Las medidas financieras no ajustadas a los PCGA presentadas y analizadas en este comunicado de prensa son las siguientes:
El «EBITDA» es útil para los analistas de valores, inversores y otras partes interesadas a la hora de evaluar el rendimiento operativo, ya que presenta los resultados de la empresa excluyendo el impacto de determinados elementos no operativos. El EBITDA se refiere a los beneficios antes de gastos por intereses, ingresos por intereses, impuestos sobre la renta, depreciación y amortización.
El «EBITDA ajustado» resulta útil para los analistas bursátiles, inversores y otras partes interesadas a la hora de evaluar el rendimiento operativo, ya que presenta los resultados de la empresa excluyendo el impacto de determinados elementos no operativos, los costes de investigación y desarrollo de productos nuevos y existentes, lo que permite a los principales lectores del comunicado de prensa evaluar los resultados de la empresa como si hubiera operado sin ningún gasto en investigación y desarrollo de productos, y determinados elementos no monetarios y no recurrentes, como los gastos de compensación con acciones, que la empresa considera apropiado ajustar dada su naturaleza irregular y su relevancia para empresas comparables. El EBITDA ajustado se calcula como los beneficios antes de gastos por intereses, ingresos por intereses, impuestos sobre la renta, depreciación y amortización, gastos de compensación con acciones, costes de desarrollo de productos y transacciones de impacto no recurrentes, si las hubiera. La Compañía considera que un elemento es no recurrente cuando no es razonablemente probable que se produzca un ingreso, gasto, pérdida o ganancia similar en los dos años siguientes o no se ha producido en los dos años anteriores.
Conciliación de medidas financieras no sujetas a los PCGA
Un ratio no GAAP es una medida financiera presentada en forma de ratio, fracción, porcentaje o representación similar y que tiene una medida financiera no GAAP como uno o varios de sus componentes.
Los ratios no GAAP presentados y analizados en este comunicado de prensa son los siguientes:
El «EBITDA por acción ordinaria» resulta útil para los analistas de valores, inversores y otras partes interesadas a la hora de evaluar el rendimiento operativo y financiero. El EBITDA por acción ordinaria se calcula sobre la misma base que la pérdida neta por acción ordinaria, utilizando el número medio ponderado básico y diluido de acciones ordinarias en circulación durante los periodos presentados.
El «EBITDA ajustado por acción ordinaria» resulta útil para los analistas de valores, inversores y otras partes interesadas a la hora de evaluar el rendimiento operativo y financiero. El EBITDA ajustado por acción ordinaria se calcula sobre la misma base que los ingresos (pérdidas) netos por acción ordinaria, utilizando el número medio ponderado básico y diluido de acciones ordinarias en circulación durante los periodos presentados.
Una medida financiera complementaria: (a) se divulga, o está destinada a divulgarse, periódicamente para describir el rendimiento financiero histórico o previsto para el futuro, la situación financiera o el flujo de caja de la empresa; (b) no se presenta en los estados financieros de la empresa; (c) no es una medida financiera no sujeta a los PCGA; y (d) no es un ratio no sujeto a los PCGA.
Las medidas financieras complementarias presentadas y analizadas en este comunicado de prensa son las siguientes:
Nota sobre declaraciones prospectivas
This news release contains forward-looking statements and forward-looking information (collectively "forward-looking information") within the meaning of applicable securities laws relating to, among other things, Blackline Safety's expectation of deployments being completed in the second half of the year, that the appointment of our Chief Growth Officer will help drive improved operating performance across our regions, including Europe; the evaluation of additional focused measures to optimize operating performance and accelerate timeline to profitability; the forthcoming G6 launch to disrupt the zero maintenance gas detection industrial market, the timeline of launch, and confidence in the potential for the product and service to take share in their respective market. Blackline provided such forward-looking statements in reliance on certain expectations and assumptions that it believes are reasonable at the time, including expectations and assumptions concerning business prospects and opportunities, customer demands, the availability and cost of financing, labor and services, that Blackline will pursue growth strategies and opportunities in the manner described herein, and that it will have sufficient resources and opportunities for the same, or that other strategies or opportunities may be pursued in the future, and the impact of increasing competition. Although Blackline believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Blackline can give no assurance that they will prove to be correct. Forward-looking information addresses future events and conditions, which by their very nature involve inherent risks and uncertainties, including the risks discussed in Blackline's Management's Discussion and Analysis and Annual Information Form for the year ended October 31, 2021 and available on SEDAR at www.sedar.com. Blackline's actual results, performance or achievement could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits Blackline will derive therefrom. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide readers with a more complete perspective on Blackline's future operations and such information may not be appropriate for other purposes. Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of this press release and Blackline disclaims any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.