VersaPay Announces Q2 2019 Financial Results

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Published on • 7 min read

- Revenues grow 88% year over year to $2.18 million in quarter -

Toronto, ON – August 7, 2019 – VersaPay Corporation (TSXV: VPY) (“VersaPay” or the “Company”), a leading provider of cloud-based invoice-to-cash solutions including electronic invoice presentment and payment, automated collections and cash application, today announced its financial results for the three and six-month periods ended June 30, 2019. “I’m pleased to announce that VersaPay continued its strong growth for a third consecutive quarter, with total revenues increasing 88% year-over-year to $2.18 million,” said Craig O’Neill, CEO of VersaPay. “ARCTM continues to be our primary growth driver with growth of 156% year-over-year to $1.66 million. Our recurring business (ARR) is approximately $7.50 million at the end of the quarter with ARCTM representing approximately 73% of this figure. As a result, our gross margins were positively impacted, growing to 81% this quarter, up from 75% in Q2 2018.” Mr. O’Neill continued, “Our new ARCTM sales of $0.92 million and professional services sales of $0.42 million in the quarter resulted in an increase to the subscription and professional services backlog to $1.18 million and $0.83 million, respectively. We expect the bulk of this backlog will translate to revenue in the coming one to two quarters.”

Operational Highlights for Q2:

    • Partnership with MasterCard: During the quarter, VersaPay successfully completed a deal with MasterCard, a leading global payments leader, to partner together to introduce a Virtual Card Receivables Service. This Virtual Card Receivables Service will aggregate information from MasterCard Issuers related to Virtual Card payments by their corporate customers and compile it into one comprehensive file, available in a digital format that is preferred by suppliers. The solution eliminates the manual process of reconciling incoming payment information. This joint initiative will improve the experience of accepting virtual credit cards for businesses across the US, Canada, and around the globe.
    • Strong quarter for ARC™ sales: 15 new ARCTM wins during the quarter that represented over $0.92 million in new ARCTM ARR, with about 34% of sales coming through channel partners. From a geographic standpoint, 85% of sales came from the U.S. Moreover, the Company signed professional services contracts worth approximately $0.42 million in the quarter representing the highest quarter of such sales to-date.
    • High conversion of backlog to ARC™ Revenue: The Company converted approximately 69% of its ARCTM subscription backlog (which are contractually signed but unbilled clients) as of March 31, 2019 to revenue in the quarter, while growing its backlog of clients from $1.10 million at the end of Q1, 2019 to $1.18 million at the end of Q2 2019. This signals a healthy growth in the business, and continued revenue growth in the near term.
    • Continued growth in ARC™ usage metrics: The usage of ARCTM is an important indicator of the value clients are receiving from the platform and a good predictor of continued sales and revenue growth. As at the end of the quarter, 182,435 end-customers were using ARCTM compared to 117,578 at the end of Q2 2018, and approximately 679,000 invoices were delivered to end-customers during the quarter compared to 451,000 invoices in Q2 2018. 279,000 invoices worth $266 million were paid on ARCTM in Q2 2019, compared to 203,000 invoices worth $149 million in Q2 2018.

Financial Highlights:

  • Total Revenue for Q2 2019 increased by 88% to $2.18 million compared to $1.18 million in Q2 2018.
  • Gross margin percentage for the three-month period ended June 30, 2019 was 81%, compared to 75% in Q2 2018.
  • ARCTM ARR increased to $5.50 million compared to $2.30 million in Q2 2018 and $4.57 million in Q1 2019. This represents an increase of 139% year-over-year, and an increase of 20% quarter-over-quarter.
  • PayPortTM ARR grew to $1.99 million, bringing our total recurring revenue to a run rate of approximately $7.50 million at the end of Q2 2019, compared to $4.22 million in the prior year, an increase of 78%.
  • Operating expenses increased by $0.53 million to $5.03 million (Q2 2018: $4.50 million), an increase of 12% year over year. The increase is comprised of various research & development costs, and marketing and promotion activities which are required to support the growing revenue trend of the business.
  • Adjusted EBITDA was a loss of $2.62 million in Q2 2019, compared to a loss of $2.81 million in Q2 2018.
The following is a reconciliation of Adjusted EBITDA to total comprehensive (loss) income: The term Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) is a non-IFRS financial measure which does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. Adjusted EBITDA provides useful information to users as it reflects the net earnings before interest, taxes, depreciation and amortization and adjusted for the effect of non-operating expenses (including M&A and non-recurring restructuring activities), share-based compensation (which includes share-based payments, restricted share units, performance share units, and deferred share units), and unusual items such as discontinued operations and sales tax accrual. Management uses Adjusted EBITDA in measuring the financial performance of the Company as this measure reflects results that are controllable by management in day-to-day operations. Management monitors Adjusted EBITDA against budget and past results on a regular basis. The term Annualized Recurring Revenue (“ARR”) is a non-IFRS measure and refers to multiplying the MRR value defined above by 12 to represent management’s best estimate of forward looking 12 months of recurring revenues that the Company would earn based on the current Monthly Recurring Revenue The term Operating Expense is the aggregation of general and administrative expenses, research and development expenses, and sales and marketing expenses. The term Backlog for ARCTM Subscriptions represents the annual recurring amount that customers have contractually committed to but have not yet been billed. The term Backlog for ARCTM Professional Services represents revenue expected to be recognized in the future related to contracted non-recurring implementation services that are yet to be performed. About VersaPay VersaPay is a Fintech company and leading provider of cloud-based invoice-to-cash solutions, enabling businesses to provide a superior customer experience, get paid faster, streamline financial operations, and dramatically reduce DSO and costs. VersaPay ARC is the new standard in accounts receivable and collections management with a customer self-service environment to view invoices online, collaborate on inquiries and disputes, and facilitate secure online payments (EFT/ACH and credit card). Businesses gain access to a suite of powerful tools that enable efficient collections, cash application and real-time insight into accounts receivable. VersaPay ARC automatically reconciles payments and account information through integrations with a wide range of ERPs and accounting software providers. More information about VersaPay is available at www.versapay.com or under the Company's profile on SEDAR at www.sedar.com. For additional information, please contact:
John McLeod Vice President, Marketing VersaPay Corporation 647-258-9406 john.mcleod@versapay.com Babak Pedram Investor Relations Virtus Advisory Group Inc. 416-644-5081 bpedram@virtusadvisory.com
Forward Looking and Other Cautionary Statements This news release contains “forward-looking information” which may include, but is not limited to, statements with respect to the activities, events or developments that the Company expects or anticipates will or may occur in the future. Such forward-looking information is often, but not always, identified by the use of words and phrases such as “plans,” “expects,” “is expected,” “budget,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates,” or “believes” or variations (including negative variations) of such words and phrases, or state that certain actions, events or results “may,” “could,” “would,” “might” or “will” be taken, occur or be achieved. These forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business. Management believes that these assumptions are reasonable. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, risks related to the speculative nature of the Company’s business, the Company’s formative stage of development and the Company’s financial position. Forward-looking statements contained herein are made as of the date of this news release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. 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.