mdf commerce reports Third Quarter of Fiscal 2024 Financial Results

by

in

Q3 FY2024 revenues of $30.2 million compared to $31.7 million in Q3 FY2023, a decrease of $1.5 million or 4.6%

Q3 year-over-year revenue decrease of $0.2 million or 0.6% when excluding InterTrade5 revenues and post-closing transition services revenues from Q3 FY2023
Revenues from eprocurement solutions increased by 4.5% to $20.7 million for Q3 FY2024

Adjusted EBITDA1 of $2.5 million for Q3 FY2024, a significant improvement of $1.6 million compared to $0.9 million in Q3 FY2023
Net loss and Adjusted net loss2 of $4.2 million for Q3 FY2024 compared to net earnings of $15.1 million which included a $22.9 million gain on the disposal of InterTrade5. Significant improvement of $3.6 million in Adjusted net loss2 compared to $7.8 million for Q3 FY2023.
Net cash generated by operating activities of $6.4 million for Q3 FY2024, used to reduce long-term debt. Strong improvement over the net cash used in operating activities of $2.8 million in Q3 prior year.
Over $5.0 million in cash and cash equivalents at the end of Q3 FY2024

MONTREAL, Feb. 13, 2024 (GLOBE NEWSWIRE) — mdf commerce inc. (the “Corporation”) (TSX:MDF), a SaaS leader in digital commerce technologies, reported third quarter financial results for the three-month period ended December 31, 2023 (“Q3 FY2024”). All dollar amounts are expressed in Canadian dollars unless otherwise indicated.

“We’ve seen a clear shift in public sector focus on digital transformation, with procurement process digitalization listed among the top priorities of state and local governments”, said Luc Filiatreault, President and Chief Executive Officer of mdf commerce. “Our innovative suite of eprocurement solutions purpose-fit for state and local governments, provide efficiencies critical to government agencies who are ultimately seeking to generate taxpayer value. We are excited that we’ve seen year-over-year growth in our eprocurement products, implying broad strength across our product suite. We are well-positioned for strong growth as this digital transformation is primed to accelerate over the next few years.”

During the third quarter we welcomed new mid-market customers to our eprocurement community, closing several multi-year contracts for our eprocurement solutions, mainly focused on our Source, Contract and Connect offerings. Our full-suite of end-to-end procurement solutions offered in modules Source, Contract, Procure, Connect and Shop, are tailored for public sector procurement and provide a strong competitive advantage.

New customer wins in the 2024 fiscal year, including the State of Hawaii which was announced last quarter, and new agency customers in the eprocurement mid-market strategy, are starting to show in our financial results as customer deployments ramp up. “The eprocurement platform revenue grew by 4.5% and 7.4% in Q3 FY2024 and in the nine-month period ended December 31, 2023 (“YTD Q3 FY2024″) respectively compared to the same periods of prior year, and eprocurement Recurring Revenue4 continues to trend at 88% of total platform revenues”, said Deborah Dumoulin, Chief Financial Officer of mdf commerce. “We reported a sixth sequential quarter of positive Adjusted EBITDA1 at $2.5 million, a significant improvement from $0.9 million in Q3 prior year, with notable improvements in profitability over the last year and positive cash flow from operations for the quarter. We reported positive net cash generated from operating activities of $6.4 million for Q3 FY2024, compared to net cash used in operating activities of $2.8 million in the third quarter last year and ended the third quarter with over $5.0 million in cash and cash equivalents and with $1.5 million drawn on the Revolving Facility available under the Credit Agreement. We are pleased that our results show a notable improvement in cash flows from operations.”

Third Quarter Fiscal 2024 Financial Results

Revenues for Q3 FY2024 were $30.2 million compared to $31.7 million in Q3 FY2023, a decrease of $1.5 million or 4.6%. Q3 year-over-year revenue decreased by $0.2 million or 0.6% when excluding InterTrade5, a subsidiary that was sold on October 4, 2022 and contributed $0.4 million of revenue in Q3 FY2023 and other revenue from post-closing transition services of $0.9 million. On a Constant Currency3 basis, revenues decreased by $1.6 million or 4.9% compared to $31.8 million in Q3 FY2023.

Recurring Revenue4 was $24.8 million or 82.2% of revenues in Q3 FY2024 compared to $24.7 million or 77.8% in Q3 FY2023. Recurring Revenue4 in Q3 FY2023 included $0.3 million from InterTrade5.

Net loss was $4.2 million for Q3 FY2024 compared to net earnings of $15.1 million which included a $22.9 million gain on the disposal of InterTrade.

Adjusted net loss2 was $4.2 million for Q3 FY2024, a significant improvement of $3.6 million compared to $7.8 million for Q3 FY2023.

Adjusted EBITDA1 was $2.5 million in Q3 FY2024 marking the sixth sequential quarter with positive Adjusted EBITDA1, a significant improvement of $1.6 million from $0.9 million in Q3 FY2023.

Profitability and cash flows from operations have improved significantly in Q3 FY2024 compared to the third quarter of the prior year from new sales, mainly for eprocurement solutions, and as a result of the various right-sizing measures, including a focus on operational efficiency. The US state transaction model agreements (TRX) in eprocurement, for which we collect fees based on a percentage of our customers’ spend on eligible goods and services, have contributed positively to cash flows both for Q3 FY2024 and YTD Q3 FY2024 as compared to the same periods in the prior year. We reported net cash generated by operating activities of $6.4 million for the third quarter this year, compared to net cash used in operating activities of $2.8 million in the third quarter last year. The net cash generated by operating activities has been used to reduce long-term debt during Q3 FY2024.

As at December 31, 2023, cash and cash equivalents was $5.0 million and the amount drawn on the Revolving Facility was $1.5 million, compared to cash and cash equivalents of $4.0 million and $7.4 million drawn on the Revolving Facility at March 31, 2023.

Revenue

The eprocurement platform revenues were $20.7 million in Q3 FY2024, an increase of $0.9 million or 4.5% compared to $19.8 million in Q3 FY2023, driven by higher right of use revenues. The Corporation’s US-based eprocurement platform revenues were $15.5 million for Q3 FY2024, an increase of $0.4 million compared to $15.1 million for Q3 FY2023.

Recurring Revenue4 for the eprocurement platform was $18.2 million for Q3 FY2024, an increase from $17.7 million in Q3 FY2023 and representing 88.0% and 88.6% of platform revenues respectively.

The year-to-date Q3 FY2024 revenues from the eprocurement platform were $61.2 million, an increase of $4.2 million or 7.4% in comparison to $57.0 million for the same period of FY2023. The increase is mainly attributable to a $4.8 million increase in right of use revenues, partially offset by decreases in maintenance and hosting revenue of $0.3 million, and professional services revenue of $0.2 million.

The eprocurement platform represents 69% of total consolidated revenues in Q3 FY2024. Our fully integrated end-to-end suite of eprocurement products are offered in modules: Source, Contract, Procure, Connect and Shop. Our full suite of products uniquely supports digital transformation in the public sector, bringing efficiency, transparency and modernization to customer procurement processes, and positions us well for increased market penetration.

Our solutions and the services that we provide to customers are tailored for public sector procurement and provide a strong competitive advantage for both state, large cities and for mid-market agency customers, as well as the supplier network.

Our supplier network in North America includes over 650,000 suppliers and over 6,500 buying organizations. This large customer base and a strong presence in US states position us well for market growth.

During the third quarter of FY2024 we welcomed new mid-market customers to our eprocurement community, including several with multi-year contracts for our eprocurement solutions, mainly for our Source, Contract and Connect offerings. There is a large addressable market for mid-market offerings. Demand for eprocurement digitalization in the mid-market is strong and we expect to see continued acceleration as the mid-market offering gains traction with customers, pipeline conversion is a focus area to generate revenue growth.

The ecommerce6 platform revenues were $5.4 million for Q3 FY2024, compared to $5.5 million for Q3 FY2023, when excluding Q3 FY2023 revenues from InterTrade5 and the related post-closing transition revenues recognized in Q3 FY2023 which represented a decrease of $0.4 million and $0.9 million respectively. Total Unified Commerce6 platform revenues were $6.8 million for Q3 FY2023.

Recurring Revenue4 for the Unified Commerce platform, which included only ecommerce for Q3 FY2024 was $3.0 million and represented 55.0% of platform revenues compared to $2.9 million or 43.5% in Q3 FY2023 which also included InterTrade5 with Recurring Revenue4 of $0.3 million.

The emarketplaces platform revenues were $4.1 million in Q3 FY2024, a decrease of $0.9 million compared to $5.0 million in Q3 FY2023. Certain emarketplaces solutions such as The Broker Forum and Jobboom benefited from the macro-economic conditions of recent years. As the worldwide supply chain issues experienced over the past few years subside, revenues from The Broker Forum, an electronic components marketplace, decreased by $0.7 million in Q3 FY2024 compared to Q3 FY2023. A softer labour market in FY2024 has impacted Jobboom which had a $0.2 million decrease in revenue in Q3 year-over-year. The closure of Reseau Contact and Power Source Online in Q3 FY2024 resulted in a $0.1 million decrease in revenues. Revenues from the other emarketplaces solutions were stable compared to Q3 FY2023.

Recurring Revenue4 for the emarketplaces platform represented $3.6 million or 88.9% in Q3 FY2024 compared to $4.1 million or 81.0% in Q3 FY2023.

Gross margin for Q3 FY2024 was $17.7 million or 58.5% compared to $17.8 million or 56.3% for Q3 FY2023. The gross margin percentage increased by 2.2% compared to Q3 of prior year.

Revenues decreased by $1.5 million while cost of revenues improved by $1.3 million compared to Q3 FY2023, mostly due to lower salaries expenses of $0.8 million from workforce reduction initiatives implemented across the Corporation in FY2023 and in early Q1 FY2024, and from lower professional services expenses of $0.4 million due to a decrease in the use of contractual consultants.

Operating expenses in Q3 FY2024 were $20.7 million, a significant decrease of $2.9 million or 12.3% compared to $23.6 million in Q3 FY2023.

General and administrative expenses totalled $6.2 million in Q3 FY2024, selling and marketing expenses were $6.8 million and technology expenses were $7.7 million, compared to $6.4 million, $8.5 million, and $8.7 million respectively for Q3 FY2023. The reduction in operating expenses is mainly from $1.2 million of salary savings from workforce reductions and from the sale of InterTrade, a decrease of $0.9 million in restructuring costs mainly related to termination benefits, a decrease of $0.4 million in professional services expenses and a decrease of $0.3 million in amortization and depreciation expenses. This was partially offset by lower capitalized internally developed software of $0.2 million.

Operating loss The Corporation significantly improved its operating loss by $2.7 million or 47.2%, from $5.8 million in Q3 FY2023 to $3.1 million in Q3 FY2024. This is mainly due to the decrease in operating expenses of $2.9 million.

Net loss was $4.2 million, or $0.10 net loss per share (basic and diluted) for Q3 FY2024, compared to net earnings of $15.1 million for Q3 FY2023, which included a $22.9 million gain on disposal of InterTrade, or $0.34 net earnings per share (basic and diluted) for Q3 FY2023.

Adjusted net loss2 was equal to Net loss of $4.2 million, or $0.10 Adjusted net loss2 per share (basic and diluted) for Q3 FY2024. Adjusted net loss2 for Q3 FY2023 was $7.8 million or $0.18 Adjusted net loss2 per share (basic and diluted).

As a result of the operational efficiencies and cost saving initiatives in FY2023 and in early Q1 FY2024 to improve profitability, there was a significant improvement of $3.6 million in Adjusted net loss2 and $0.08 in Adjusted net loss2 per share (basic and diluted) in Q3 FY2024 compared to Q3 FY2023.

Adjusted EBITDA1 was $2.5 million for Q3 FY2024, a significant improvement of $1.6 million compared to $0.9 million for Q3 FY2023. This significant improvement in Adjusted EBITDA1 is mainly due to decreases in operating expenses, following workforce reductions and other cost savings initiatives, partially offset by the reduction in total revenues.

Our Q3 FY2024 financial results show the positive impacts of our focus on operational efficiency, profitability and cash flows, with significant Q3 year-over-year improvements in net loss, Adjusted net loss2, and Adjusted EBITDA1.


Summary
of consolidated results

Financial Highlights
In thousands of Canadian dollars,
except number of shares and per share data
 
Q3
FY2024
 
Q2
FY2024
 
Q3
FY2023

 
YTD Q3
FY2024

 
YTD Q3
FY2023

 

Revenues
 
30,189
 
30,749
 
31,652
 
91,942
 
97,064
 

Recurring Revenue4
 
24,822
 
24,360
 
24,728
 
73,739
 
77,233
 

Gross margin
 
17,653
 
18,457
 
17,832
 
53,823
 
55,693
 

Operating loss
 
(3,053
)
(2,031
)
(5,787
)
(8,138
)
(16,708
)

Net earnings (loss)
 
(4,179
)
(784
)
15,082
 
(10,078
)
(81,010
)

Adjusted net loss2
 
(4,179
)
(784
)
(7,804
)
(10,078
)
(18,896
)

Adjusted EBITDA1
 
2,501
 
3,998
 
898
 
9,139
 
1,168
 

Net earning (loss) per share (basic and diluted)
 
(0.10
)
(0.02
)
0.34
 
(0.23
)


Comments

Leave a Reply

Your email address will not be published. Required fields are marked *