Halogen Software Inc. (“Halogen” or the “Company”) (TSX: HGN), a leading provider of cloud based talent management solutions, today announced its financial results for the three and twelve months ended December 31, 2013.
- Highlights include record recurring, total and international revenue
- Record number of new customer wins; customer count increased to nearly 2,000
OTTAWA , Feb. 20, 2014 /CNW/ – Halogen Software Inc. (“Halogen” or the “Company”) (TSX: HGN), a leading provider of cloud based talent management solutions, today announced its financial results for the three and twelve months ended December 31, 2013 . All figures are stated in United States dollars unless otherwise noted.
Fourth Quarter 2013 Financial Highlights
- Recurring revenue increased 28% from Q4 2012 to a record $11.2 million , representing 89% of total revenue in the quarter.
- Total revenue increased 24% from Q4 2012 to a record $12.6 million .
- Revenue generated in international markets outside Canada and the United States increased a record 99% over Q4 2012.
- Adjusted EBITDA1 was $(0.6) million in Q4 2013 compared to $(1.2) million in Q4 2012; Adjusted EBITDA per share1 was $(0.03) per share in Q4 2013, compared to $(0.10) per share in Q4 2012.
- Total cash, cash equivalents and investments was $55.9 million at December 31, 2013 compared to $8.9 million at December 31, 2012 .
Full Year 2013 Financial and Operating Highlights
- Recurring revenue increased 29% from 2012 to a record $42.1 million , representing 88% of total revenue in the year.
- Total revenue increased 26% from 2012 to a record $48.0 million .
- Revenue generated in international markets outside Canada and the United States increased 71% over 2012.
- Adjusted EBITDA1 was $(2.5) million in fiscal 2013 versus $(3.5) million in fiscal 2012; Adjusted EBITDA per share1 was $(0.14) per share in fiscal 2013, versus $(0.29) per share in fiscal 2012.
|1 Adjusted EBITDA is a non-IFRS measure defined by the Company as earnings before interest income or expense, other income, depreciation and amortization, share-based compensation, foreign exchange gains or losses and loss related to change in fair value of redeemable preferred shares. Adjusted EBITDA per share is calculated by dividing the Adjusted EBITDA by the weighted average number of shares outstanding in each period. Adjusted EBITDA and Adjusted EBITDA per share do not have a uniform definition. Our definition will likely differ from the definitions used by other companies, including peer companies, and therefore comparability may be limited. Thus, our non-IFRS measure of Adjusted EBITDA and Adjusted EBITDA per share should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with IFRS. There are inherent limitations with non-IFRS measures; we compensate for these limitations by reconciling Adjusted EBITDA to the most comparable IFRS financial measure. Management encourages investors and others to review our financial information in its entirety, not to rely on any single financial measure, and to view our non-IFRS financial measures in conjunction with the most comparable IFRS financial measures.|
“Fiscal 2013 was a transformational year for our business,” said Paul Loucks, Halogen’s CEO. “We completed our highly successful IPO in May to strengthen our balance sheet and provide us with the resources to fund our growth plans. Throughout the year, we made good progress on a number of operational initiatives. We expanded our product offering with new modules and partnerships, and we continued our push into international markets with the expansion of our office in Australia . We grew recurring revenue as a share of total revenue. We had a record year in recurring and total revenue and record new customer wins. Q4 continued the new customer acquisition strength with record new customers selecting Halogen. Looking ahead to fiscal 2014, we are expecting continued strong organic growth. We are focused on investing in both domestic and international markets in order to grow our customer base and market share in the mid-market for Talent Management solutions.”
Halogen’s recurring revenue in the fourth quarter of 2013 was $11.2 million , a 28% increase over Q4 2012. Total revenue increased 24% over Q4 2012, driven by increases in recurring revenue and professional services revenue. In the fourth quarter of 2013, approximately 79% of revenue was generated from customers located in the United States (82% in Q4 2012), 11% in Canada (12% in Q4 2012) and 10% in international markets (6% in Q4 2012).
Gross margin was $9.6 million , or 76% of total revenue, in the fourth quarter of 2013, compared to $7.4 million , or 73% of total revenue, in Q4 2012.
Net loss was $2.1 million in the fourth quarter of 2013 versus a loss of $6.4 million in Q4 2012. The decreased loss was primarily due to a $4.6 million loss related to change in the fair value of the Company’s redeemable preferred shares in Q4 2012 versus $nil in the fourth quarter of 2013. With the conversion of the preferred shares to common shares in the second quarter of 2013 the Company no longer incurs this expense.
|Adjusted EBITDA reconciliation||Three months ended
|Twelve months ended
|($000’s except per share amounts)||2013||2012||2013||2012|
|Net income (loss)||$||(2,066)||$||(6,351)||$||(12,820)||$||(19,578)|
|Interest (income) expense and other, net||(72)||(25)||(210)||(100)|
|Foreign exchange (gain) loss||777||51||1,390||(380)|
|Income tax expense||35||–||74||5|
|Depreciation and amortization||629||524||2,281||2,007|
|Loss related to change in fair market value of
redeemable preferred shares
|Adjusted EBITDA per share||$||(0.03)||$||(0.10)||$||(0.14)||$||(0.29)|
Cash and investments increased from $8.9 million at December 31, 2012 to $55.9 million at December 31, 2013 , primarily due to proceeds from the issuance of 5.1 million common shares as part of the Company’s initial public offering.
Deferred revenue was $27.0 million at December 31, 2013 compared to $22.9 million a year earlier. This 18% increase is primarily attributed to new business generated during the last 12 months from new and existing customers.
First Quarter and Full Year 2014 Financial Guidance
For the first quarter of 2014, the Company is expecting:
- Recurring revenue in the range of $11.9 to $12.1 million
- Total revenue in the range of $13.4 to $13.6 million
For the full year 2014, the Company is expecting:
- Recurring revenue in the range of $50.3 to $51.3 million
- Total revenue in the range of $56.8 to $57.8 million
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