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Victoria-based WeCommerce Reports Q4 and Full Year 2022 Results: Fiscal 2022 Net Loss Rises Sharply (to $22.6 Million)
Thursday, March 30, 2023Company Profile | Follow Company
Victoria, BC, March 30, 2023--(T-Net)--WeCommerce Holdings Ltd. (TSXV: WE), a provider of ecommerce enablement software and tools for merchants, today announced its financial results for the three- and twelve-month periods ended December 31, 2022.
The company reported a sharply higher net loss of $12.4 million in its fourth quarter, and of $22.6 million for the full year fiscal 2022.
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Editor's Note: WeCommerce and Tiny announced in January 2023 that they are combining their businesses in an all-share transaction by way of a three-cornered amalgamation under the Business Corporations Act (British Columbia). Tiny is a technology holding company founded by Andrew Wilkinson and Chris Sparling (who are also directors of WeCommerce).
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Currency amounts are expressed in Canadian dollars unless otherwise noted.
Q4 2022 and Fiscal 2022 Financial Results |
||||||||
|
For the three-months ended |
For the years ended |
||||||
|
2022 |
2021 |
2022 |
2021 |
||||
Revenue |
|
|
|
|
||||
Recurring subscription revenue |
8,387,200 |
|
7,346,415 |
|
31,176,044 |
|
22,383,829 |
|
Digital goods revenue |
4,075,340 |
|
3,953,600 |
|
13,864,245 |
|
10,977,020 |
|
Agency service revenue |
837,468 |
|
949,041 |
|
3,431,298 |
|
5,220,528 |
|
|
13,300,008 |
|
12,249,056 |
|
48,471,587 |
|
38,581,377 |
|
Operating loss |
(924,018 |
) |
(740,013 |
) |
(7,798,988 |
) |
(1,891,955 |
) |
Net (loss)/income |
(12,436,938 |
) |
4,126,028 |
|
(22,639,118 |
) |
(842,922 |
) |
EBITDA (1) |
(7,986,226 |
) |
8,240,075 |
|
(6,713,659 |
) |
12,594,526 |
|
EBITDA % (1) |
(60 |
%) |
67 |
% |
(14 |
%) |
33 |
% |
Adjusted EBITDA (1) |
3,288,029 |
|
3,490,740 |
|
9,508,611 |
|
11,586,037 |
|
Adjusted EBITDA % (1) |
25 |
% |
28 |
% |
20 |
% |
30 |
% |
Cash provided by operating activities |
3,234,302 |
|
3,652,074 |
|
10,511,491 |
|
8,001,967 |
|
Revenue in Q4 2022 was $13,300,008, an increase of 9% (0% on a constant currency basis (as described below) compared to Q4 2021.
Adjusted EBITDA for Q4 2022 amounted to $3,288,029 or 25% of revenue, compared to $3,490,740 or 28% of revenue in Q4 2021.
Unrestricted cash on hand at December 31, 2022 was $10,946,852 compared to $26,122,247 on December 31, 2021.
Total debt outstanding at December 31, 2022 was $46,935,066 compared to $60,203,418 on December 31, 2021.
Net loss was $12,436,938 in Q4 2022 compared to net income of $4,126,028 in Q4 2021. The majority of the net loss for Q4 2022 includes goodwill impairment of Stamped which was due to updated assumptions that reflect current macroeconomic conditions.
Chris Sparling, Chief Executive Officer, WeCommerce Holdings Ltd.
"We reported strong Q4 performances for our apps and themes segments, which have continued to demonstrate resilience and growth in the face of challenging market conditions," said Chris Sparling, Co-CEO. "The investments in product development across our portfolio continue to bear fruit, and we are looking forward to key feature launches in Q1 and Q2 of this year. As we prepare and move forward with the previously announced transformational transaction with Tiny, we are confident that we are well-positioned to capitalize on the significant potential of our combined businesses."
Financial Statements
WeCommerce's consolidated financial statements and Management's Discussion and Analysis ("MD&A") for Q4 and Fiscal 2022 are available on the Company's website at https://www.wecommerce.co and on SEDAR at www.sedar.com .
Annual General Meeting
WeCommerce will host its Annual General Meeting and Investor Day on June 15, 2023. Management and board members will be available to answer questions.
About WeCommerce Holdings Ltd
WeCommerce provides merchants with a suite of ecommerce software tools to start and grow their online stores. Our family of companies and brands includes Pixel Union, Out of the Sandbox, KnoCommerce, Archetype, Yopify, SuppleApps, Rehash, Foursixty and Stamped. As one of Shopify's first partners since 2010, WeCommerce is focused on building, acquiring, and investing in leading technology businesses operating in the Shopify partner ecosystem.
For more about WeCommerce, please visit www.wecommerce.co or refer to the public disclosure documents available under WeCommerce's SEDAR profile on SEDAR at www.sedar.com.
Non-IFRS Financial Measures
This news release makes to reference to certain non-IFRS measures and ratios, hereafter, referred to as "non-IFRS measures". These measures are not recognised measures under IFRS, and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be 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 the results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the financial information reported under IFRS. The Company uses non-IFRS measures including "EBITDA", "EBITDA %", "Adjusted EBITDA", "Adjusted EBITDA %", and "Constant Currency". Management uses these non-IFRS measures to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. As required by Canadian securities laws, the Company defines and reconciles these non-IFRS measures below:
EBITDA and EBITDA %
EBITDA is defined as earnings (net income or loss) before finance costs, income taxes, depreciation and amortization. EBITDA is reconciled to net income (loss) from the financial statements.
EBITDA % ratio is determined by dividing EBITDA by total revenue for the year.
EBITDA and EBITDA % is frequently used to assess profitability before the impact of finance costs, income taxes, depreciation and amortization. Management uses non-IFRS measures in order to facilitate operating performance comparisons from period to period and to prepare annual operating budgets.. EBITDA and EBITDA % are measures commonly reported and widely used as a valuation metric.
Adjusted EBITDA and Adjusted EBITDA %
Adjusted EBITDA removes unusual, non-cash or non-operating items from EBITDA such as listing expenses, acquisition costs, restructuring charges, asset impairments, non-cash stock-based compensation, fair value adjustments to contingent consideration payable and foreign exchange gains and losses. The Company believes adjusted EBITDA provides improved continuity with respect to the comparison of its operating performance over a period of time. Adjusted EBITDA is reconciled to net income (loss) from the financial statements.
Adjusted EBITDA % is determined by dividing Adjusted EBITDA by total revenue for the year.
Adjusted EBITDA and Adjusted EBITDA % is frequently used by securities analysts and investors when evaluating a Company's ability to generate liquidity from the Company's core operations. It provides a consistent basis to evaluate profitability and performance trends by excluding items that the Company does not consider to be controllable activities for this purpose. Adjusted EBITDA and EBITDA % are measures commonly reported and widely used as a valuation metric.
Constant Currency
Constant currency is determined by applying the same foreign currency exchange rates to the financial results of the current and equivalent prior-year period. The Company's reporting currency is the Canadian dollar but we conduct business in Canadian, U.S. and Singapore dollars. The Company measures its performance before the impact of foreign currency. Constant currency is reconciled to revenue from the financial statements.
The Company believes Constant Currency allows for current financial performance to be understood against comparative periods without the impact of fluctuations in foreign exchange rates against the Canadian dollar.
NON-IFRS MEASURES RECONCILIATIONS
EBITDA and Adjusted EBITDA |
||||||||
|
For the three-months ended |
For the years ended |
||||||
|
2022 |
2021 |
2022 |
2021 |
||||
Net (loss)/income |
(12,436,938 |
) |
4,126,028 |
|
(22,639,118 |
) |
(842,922 |
) |
Income tax (recovery)/expense |
(20,962 |
) |
183,071 |
|
(199,028 |
) |
298,022 |
|
Depreciation and amortization |
3,316,760 |
|
3,295,125 |
|
12,661,061 |
|
10,087,571 |
|
Finance costs |
1,154,914 |
|
635,850 |
|
3,463,426 |
|
3,051,855 |
|
EBITDA |
(7,986,226 |
) |
8,240,074 |
|
(6,713,659 |
) |
12,594,526 |
|
|
|
|
|
|
||||
EBITDA Adjustments |
|
|
|
|
||||
Share-based compensation |
525,465 |
|
917,702 |
|
3,382,771 |
|
1,890,466 |
|
Foreign exchange (gain)/loss |
(821,553 |
) |
(396,232 |
) |
3,714,338 |
|
1,010,460 |
|
Acquisition costs |
193,440 |
|
30,616 |
|
344,580 |
|
1,461,844 |
|
Impairment of non-financial assets |
11,812,308 |
|
- |
|
11,812,308 |
|
|
|
Fair value adjustments of contingent consideration |
(609,480 |
) |
(5,302,617 |
) |
(3,962,003 |
) |
(5,302,617 |
) |
Professional fees |
- |
|
- |
|
- |
|
91,560 |
|
Severance costs |
128,785 |
|
- |
|
839,722 |
|
26,767 |
|
Acquisition-related compensation |
46,000 |
|
- |
|
46,000 |
|
- |
|
Restructuring |
- |
|
- |
|
33,465 |
|
- |
|
(Gain)/loss on sale of intangibles and property and equipment |
(710 |
) |
1,197 |
|
11,089 |
|
(186,969 |
) |
Adjusted EBITDA |
3,288,029 |
|
3,490,740 |
|
9,508,611 |
|
11,586,037 |
|
EBITDA % and Adjusted EBITDA % |
||||||||
|
For the three-months ended |
For the years ended |
||||||
|
2022 |
2021 |
2022 |
2021 |
||||
EBITDA |
(7,986,226 |
) |
8,240,074 |
|
(6,713,659 |
) |
12,594,526 |
|
Revenue |
13,300,008 |
|
12,249,056 |
|
48,471,587 |
|
38,581,377 |
|
EBITDA % |
(60 |
%) |
67 |
% |
(14 |
%) |
33 |
% |
|
|
|
|
|
||||
Adjusted EBITDA |
3,288,029 |
|
3,490,740 |
|
9,508,611 |
|
11,586,037 |
|
Revenue |
13,300,008 |
|
12,249,056 |
|
48,471,587 |
|
38,581,377 |
|
Adjusted EBITDA % |
25 |
% |
28 |
% |
20 |
% |
30 |
% |
Constant Currency |
||||||||
|
For the three-months ended |
% Change |
||||||
|
2022 |
2021 |
As |
Foreign |
Constant |
|||
Revenue |
|
|
|
|
|
|||
Recurring subscription revenue |
8,387,200 |
7,346,415 |
14 |
% |
(9 |
%) |
5 |
% |
Digital goods revenue |
4,075,340 |
3,953,600 |
3 |
% |
(7 |
%) |
(4 |
%) |
Agency service revenue |
837,468 |
949,041 |
(12 |
%) |
(4 |
%) |
(16 |
%) |
|
13,300,008 |
12,249,056 |
9 |
% |
(8 |
%) |
1 |
% |
|
For the years ended December 31, |
% Change |
|||
|
2022 |
2021 |
As reported |
Foreign exchange impact |
Constant currency |
Revenue |
|
|
|
|
|
Recurring subscription revenue |
31,176,044 |
22,383,829 |
39% |
(5%) |
34% |
Digital goods revenue |
13,864,245 |
10,977,020 |
26% |
(3%) |
23% |
Agency service revenue |
3,431,298 |
5,220,528 |
(34%) |
(1%) |
(35%) |
|
48,471,587 |
38,581,377 |
26% |
(5%) |
21% |
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
___________________________
(1) Refer to "Non-IFRS Measures" for further information
This press release contains statements which constitute "forward-looking statements" and "forward-looking information" within the meaning of applicable securities laws (collectively, "forward-looking statements"), including statements regarding the plans, intentions, beliefs and current expectations of the Company and Tiny with respect to future business activities and operating performance. Forward-looking statements are often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions and forward-looking statements in this press release includes, but is not limited to, information and statements regarding: whether and when the Transaction will be consummated; the anticipated benefits of the Transaction, including continued growth, financial and operating scale, stronger balance sheet, business objectives and plans of the combined entity; the anticipated timing for closing of the Transaction; the pro forma ownership of the combined entity following the Transaction and the anticipated treatment of the restricted share units of Tiny; Tiny's operating segments and businesses following the Transaction; the terms and parties of the voting support agreements; the mailing and contents of the management information circular in respect of the special meeting of shareholders of WeCommerce and the timing thereof; the anticipated timing for the special meeting of shareholders of WeCommerce; the Company and Tiny obtaining and/or satisfying customary approvals and conditions, including TSXV approval, and requisite shareholder, regulatory and third party approvals; and expectations for other economic, business, and/or competitive factors. [ MORE ] |
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Victoria (Non-Tech Sectors)
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