VirtualArmour Reports Q1 2019 Results; Managed and Professional Services Revenue up 17%
Q1 2019 Financial Highlights
- Revenue increased to
$3.5 million, supported by growth in the number of customers served as well as the size of orders from new and existing customers.
- Managed and professional services revenue increased 17% to a record
$1.3 million, due primarily to the addition of 14 new clients signed under multi-year contracts over the last 12 months.
- Gross profit as a percentage of revenue increased to 30.5% from 28.1% due to a favorable shift in revenue mix to higher margin managed and professional services revenue.
- Adjusted EBITDA was a negative
$233,000. Net of a one-time extraordinary event Adjusted EBITDA was a positive $24,000(see Extraordinary Event below).
- Annual recurring revenue (ARR) totaled
$4.3 millionat March 31, 2019, up from $3.7 millionat March 31, 2018. The company defines ARR as the value of its service contracts normalized to a one-year period.
- Total contract value (TCV) was
$9 millionat March 31, 2019, up from $6.1 millionat March 31, 2018. The company defines TCV as the total value of its service contracts including one time and recurring charges.
Q1 2019 Operational Highlights
- Engaged subsidiary of major pharmaceutical company in a new two-year,
$300,000managed service contract, which also represented VirtualArmour’s first entry into the pharmaceutical industry.
- Expanded engagement over next 12 months with a
$400,000managed and professional services contract with an existing global non-profit specializing in research and education customer.
- Hired Partner Account Manager to focus and expand on the partner program.
- Received ISO-27001:2014 Certification for Information Security Management System.
- Registered trademark for CloudCastr approved by United States Patent and Trademark Office.
Q1 2019 Financial Summary
Cost of sales were
Net and comprehensive loss was
Adjusted EBITDA was a negative
“Our first quarter top line and Gross Profit results are in line with expectations while the bottom line and adjusted EBITDA, net of a notable extraordinary expense, compare favorably with recent results,” remarked
Panec added: “Looking ahead in 2019, with the ongoing growth in customer acquisition and the addition of customers on a monthly recurring revenue model, coupled with its high customer retention,
“In Q1 2019, our top-line growth was driven by an expanding revenue stream from global managed services and professional services,” said
During this quarter,
The company maintains 24/7 client monitoring and service management with specialist teams located in its U.S. and
Supplemental Non-GAAP Financial Measures
In addition to GAAP financial measures, management uses non-GAAP financial measures to assess the company's operational performance. It is likely that the non-GAAP financial measures used by the company will not be comparable to similar measures reported by other issuers or those used by financial analysts as their measures may have different definitions.
Generally, a non-GAAP financial measure is a numerical measure of an entity's historical or future financial performance, financial position or cash flows that is neither calculated nor recognized under IFRS. Management believes that such non-GAAP financial measures can be important as they provide users of the financial statements with a better understanding of the results of the company's recurring operations and their related trends, while increasing transparency and clarity into its operating results. Management also believes these measures can be useful in assessing the company's capacity to discharge its financial obligations.
In Q1 2018, management began assessing its operational performance using supplemental non-GAAP statement of income, adjusted GAAP, which is defined as loss for the period as reported excluding depreciation and amortization, change in fair value of warrant derivative liabilities, share-based compensation and interest expense.
Adjusted EBITDA is not a term recognized under GAAP and non-GAAP measures do not have standardized meaning. Accordingly, non-GAAP measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
As disclosed in its press release of
|The table below provides a reconciliation of net (loss) for the period as reported to non-GAAP adjusted EBITDA for the three months ended March 31, 2019 and 2018:|
|Q1 2019||Q1 2018|
|Loss for the period as reported||$(402,926)||$(127,212)|
|Depreciation and amortization||100,555||32,740|
|Change in fair value of warrant derivative liabilities||-||(2,589)|
|One-time Extraordinary Expense||257,000||-|
|Adjusted EBITDA net of Extraordinary Expense||$24,014||$14,911|
Important Cautions Regarding Forward Looking Statements
This press release may include forward-looking information within the meaning of Canadian securities legislation and U.S. securities laws. This press release includes certain forward-looking statements concerning the future performance of our business, its operations and its financial performance and condition, as well as management’s objectives, strategies, beliefs and intentions. The forward-looking information is based on certain key expectations and assumptions made by the management of
Forward-looking statements are frequently identified by such words as “may”, “will”, “plan”, “expect”, “anticipate”, “estimate”, “intend” and similar words referring to future events and results. Forward-looking statements are based on the current opinions and expectations of management. All forward-looking information is inherently uncertain and subject to a variety of assumptions, risks and uncertainties, including the success of the Academies, the future employee potential from the Academies, future interest in such programs, competitive risks and the availability of financing. These forward-looking statements are made as of the date of this press release and
|VirtualArmour International Inc.|
|Condensed Interim Consolidated Statements of Comprehensive Loss|
|For the three months ended March 31, 2019 and 2018|
|(Unaudited - Expressed in U.S. Dollars)|
|March 31,||March 31,|
|Cost of sales||(2,466,080)||(2,348,985)|
|General and administrative||778,203||425,783|
|Research and development||49,433||35,679|
|Sales and marketing||605,666||548,006|
|Loss from Operations||(351,196)||(90,800)|
|Other Income (Expense)|
|Change in fair value of warrant derivative liabilities||–||2,589|
|Net Loss and Comprehensive Loss||(402,926)||(127,212)|
|Loss per share – basic and diluted||(0.01)||(0.00)|
|Weighted average number of shares outstanding – basic and diluted||63,599,447||57,936,114|
|VirtualArmour International Inc.|
|Interim Consolidated Balance Sheets|
|As at March 31, 2019 and December 31, 2018|
|(Unaudited - Expressed in U.S. Dollars)|
|March 31,||December 31,|
|Total Current Assets||3,192,874||3,762,915|
|Property and equipment||613,228||513,984|
|Accounts payable and accrued liabilities||3,152,188||3,728,051|
|Current portion of lease obligations||546,416||679,647|
|Due to related parties||170,570||–|
|Total Current Liabilities||5,152,964||5,296,291|
|Common stock, no par value, 300,000,000 shares authorized Issued and outstanding: 63,599,447 (2018 – 63,599,447) shares||7,670,975||7,670,975|
|Additional paid-in capital||1,972,877||1,955,222|
|Total Stockholders’ Deficit||(1,560,509)||(1,175,238)|
|Total Liabilities and Stockholders’ Deficit||4,947,516||5,602,941|
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Source: VirtualArmour International Inc.