CALGARY, AB / ACCESSWIRE / August 10, 2023 / Computer Modelling Group Ltd. ("CMG" or the "Company") announces its financial results for the three months ended June 30, 2023.
Quarterly Performance
Fiscal 2022 Fiscal 2023Commentary on Quarterly Performance
For the Three Months Ended
June 30, 2023 and compared to the same period of the previous fiscal year:
Revenue
($ thousands)
CMG's revenue is comprised of software license sales, which provides the majority of the Company's revenue, and fees for professional services.
Total revenue for the three months ended June 30, 2023, increased by 29%, due to increases in both software license revenue and professional services revenue.
Software License Revenue
($ thousands)
Total software license revenue for the three months ended June 30, 2023 increased by 25%, compared to the same period of the previous fiscal year, due to increases in both annuity/maintenance license revenue and perpetual license revenue.
Software Revenue by Geographic Region
($ thousands)
During the three months ended June 30, 2023 compared to the same period of the previous fiscal year, total software license revenue increased in all regions.
The Canadian region (representing 19% of year-to-date total software license revenue) experienced a 10% increase in annuity/maintenance license revenue, due to increased license fee and licensing by existing customers. Perpetual license revenue increased by 100% during the quarter due to a license purchase.
The United States (representing 26% of year-to-date total software license revenue) experienced a 27% increase in annuity/maintenance license revenue, due to new customers and increased licensing and pricing by existing customers. Perpetual license revenue increased by 100% during the quarter due to a new customer license purchase.
South America (representing 10% of year-to-date total software license revenue) experienced a 7% increase in annuity/maintenance license revenue, due to increased licensing by existing customers. There were no perpetual sales in South America during the current quarter.
The Eastern Hemisphere (representing 45% of year-to-date total software license revenue) experienced a 14% increase in annuity/maintenance license revenue, due to increased license fees and licensing by existing customers. Several perpetual sales were realized during the quarter, which resulted in a 289% increase over the same period of the previous fiscal year.
Deferred Revenue
CMG's deferred revenue consists primarily of amounts for prepaid licenses. Our annuity/maintenance revenue is deferred and recognized ratably over the license period, which is generally one year or less. Amounts are deferred for licenses that have been provided and revenue recognition reflects the passage of time.
The above table illustrates the normal trend in the deferred revenue balance from the beginning of the calendar year (which corresponds with Q4 of our fiscal year), when most renewals occur, to the end of the calendar year (which corresponds with Q3 of our fiscal year). Our fourth quarter corresponds with the beginning of the fiscal year for most oil and gas companies, representing a time when they enter a new budget year and sign/renew their contracts.
The deferred revenue balance at the end of Q1 of fiscal 2024 was 9% higher than Q1 of fiscal 2023 which was negatively impacted by timing differences on the balance.
Cost of Revenue
($ thousands)
Cost of revenues increased by 8% for the three months ended June 30, 2023 compared to the same period of the previous fiscal year related to headcount driven direct employee costs.
Operating Expenses
($ thousands)
Adjusted total operating expenses, adjusted direct employee costs and adjusted other corporate costs are non-IFRS financial measures. They do not have a standard meaning prescribed by IFRS and, accordingly, may not be comparable to measures used by other companies. Restructuring charges are excluded from total operating expenses. Management believes that analyzing the Company's expenses exclusive of these items illustrates underlying trends in our costs and provides better comparability between periods.
The following tables provide a reconciliation of total operating expenses to adjusted total operating expenses, direct employee costs to adjusted direct employee costs and other corporate costs to adjusted other corporate costs:
($ thousands)
As a technology company, CMG's largest investment is its people, and approximately 85% of total operating expenses relate to direct employee costs. At June 30, 2023, CMG's full-time equivalent staff complement was 184 employees and consultants (June 30, 2022 - 173 employees). For the three months ended June 30, 2023, adjusted direct employee costs increased by 2%, compared to the same period of the previous fiscal year primarily due to an increase in headcount.
Adjusted other corporate costs increased by 65% for the three months ended June 30, 2023 compared to the same period of the previous fiscal year, primarily due to higher general professional services and legal costs, travel-related, office-related and marketing corporate costs. As the Company resumes post-pandemic operations, travel, marketing and office-related activities have increased as compared to the first quarter of the previous fiscal year.
Additional IFRS Measure
Funds flow from operations is an additional IFRS measure that the Company presents in its consolidated statements of cash flows. Funds flow from operations is calculated as cash flows provided by operating activities adjusted for changes in non-cash working capital. Management believes that this measure provides useful supplemental information about operating performance and liquidity, as it represents cash generated during the period, regardless of the timing of collection of receivables and payment of payables, which may reduce comparability between periods.
Non-IFRS Financial Measures
Certain financial measures in this MD&A - namely, Adjusted EBITDA, free cash flow, adjusted total operating expenses, direct employee costs, adjusted direct employee costs, other corporate costs, adjusted other corporate costs, adjusted operating profit, and adjusted net income - do not have a standard meaning prescribed by IFRS and, accordingly, may not be comparable to measures used by other companies. Management believes that these indicators nevertheless provide useful measures in evaluating the Company's performance.
Certain additional disclosures for these non-IFRS financial measures have been incorporated by reference and can be found on page 2 in the Company's MD&A for the three months ended June 30, 2023, available on SEDAR at www.sedar.com and on the Company's website under the Investors section at www.cmgl.ca /investors.
Reconciliations of the non-IFRS financial measures to the most directly comparable IFRS financial measure are presented below:
Free Cash Flow Reconciliation to Funds Flow from Operations
(thousands)
Forward-Looking Information
Certain information included in this MD&A is forward-looking. Forward-looking information includes statements that are not statements of historical fact and which address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such things as investment objectives and strategy, the development plans and status of the Company's software development projects, the Company's intentions, results of operations, levels of activity, future capital and other expenditures (including the amount, nature and sources of funding thereof), business prospects and opportunities, research and development timetable, and future growth and performance. When used in this MD&A, statements to the effect that the Company or its management "believes", "expects", "expected", "plans", "may", "will", "projects", "anticipates", "estimates", "would", "could", "should", "endeavours", "seeks", "predicts" or "intends" or similar statements, including "potential", "opportunity", "target" or other variations thereof that are not statements of historical fact should be construed as forward-looking information. These statements reflect management's current beliefs with respect to future events and are based on information currently available to management of the Company. The Company believes that the expectations reflected in such forward-looking information are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking information should not be unduly relied upon.
Corporate Profile
CMG (TSX:CMG, Financial) is a global software and consulting company that combines science and technology with
deep industry expertise to solve complex subsurface and surface challenges for the new energy industry
around the world. CMG is headquartered in Calgary, AB, with offices in Houston, London, Dubai, Bogota,
Rio de Janeiro, Bengaluru, and Kuala Lumpur. For more information, please visit www.cmgl.ca.
Consolidated Statements of Financial Position
Consolidated Statements of Operations and Comprehensive Income
UNAUDITED (thousands of Canadian $ except per share amounts)
Consolidated Statements of Cash Flows
UNAUDITED (thousands of Canadian $)
See accompanying notes to consolidated financial statements, which are available on SEDAR at www.sedar.com or on CMG's website at www.cmgl.ca
For further information, please contact:
Pramod JainChief Executive Officer
(403) 531-1300
[email protected]orSandra Balic
Vice President, Finance & CFO
(403) 531-1300
[email protected]
SOURCE: Computer Modelling Group Ltd.
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