Skip to main content

nDivision Inc. Reports Results for the First Quarter 2020

DALLAS, TX / ACCESSWIRE / May 13, 2020 / nDivision Inc. (OTCQB:NDVN), the experts in using "digital labor" to reduce costs and increase service levels, today announced its financial and business results for the three months ended March 31, 2020.

Key Highlights

  • Grew quarter-end Monthly Recurring Revenues by 34 percent compared to prior year quarter-end
  • First quarter EBITDA of $24,024 compared to ($10,765) over prior year quarter
  • First quarter Adjusted EBITDA* growth of 133% over the prior year quarter
  • First quarter Adjusted Run Rate EBITDA* of $153,843 compared to ($114,574) over prior year quarter
   Quarter Financial Results 
    Three Months Ending 
   March 31,    June 30,    Sept. 30,    Dec. 31,    March 31, 
   2019    2019    2019    2019    2020 
Revenue  1,455,927    1,385,303    1,416,432    1,615,105    1,666,889 
Gross Profit  541,329    460,215    443,196    633,831    616,738 
Net Loss  (165,072)  (341,530)  (337,685)  (135,938)  (119,262)
Net Cash Provided by Operating Activities  108,094    4,293    110,911    1,829,618    (198,893)
EBITDA  (10,765)  (193,353)  (191,326)  7,418    24,024 
Adjusted EBITDA*  72,799    (36,887)  (41,890)  153,214    169,821 
Adjusted Run Rate EBITDA*  (114,574)  (170,146)  (172,620)  (56,495)  153,843 
                                        

* Non-GAAP financial measure - See Use of Non-GAAP Financial Measures for more information about Adjusted EBITDA and Adjusted Run Rate EBITDA

The Company uses the above-mentioned non-GAAP financial measure, Adjusted Run Rate EBITDA*, as its primary indicator of financial performance and intrinsic financial health. Adjusted Run Rate EBITDA* is calculated using contracted recurring revenues less Cost of Goods Sold (COGS) and known customer attrition. The metric excludes professional services, other income, and sales and marketing costs, other than long-term customer acquisition referral fees. The metric does not include sales forecasts or anticipated new business wins. The reconciliations of non-GAAP Adjusted EBITDA* and Adjusted Run Rate EBITDA* to GAAP net income (net loss) are provided in schedules that are a part of this press release in the section titled Use of Non-GAAP Financial Measures. Using this methodology, the company is able to project key performance metrics, including Adjusted Run Rate EBITDA* through the first quarter of 2021.

   Projected Key Metrics Through Fourth Quarter 2020 
   Three Months Ending 
   June 30,    Sept. 30,    Dec. 31,    March 31, 
   2020    2020    2020    2021 
Adjusted EBITDA*  169,821    169,821    169,821    169,821 
Non-Recurring Revenue  (60,872)  (60,872)  (60,872)  (60,872)
Customer Acquisition Costs  44,893    44,893    44,893    44,893 
Estimated Backlog of Recurring Services                               
Contracted Recurring Revenue Not Yet Billed, Less Attrition  (130,513)  (36,708)  (21,708)  (21,708)
Estimated Recurring Cost of Services Not Yet Incurred  (10,630)  (10,630)  (10,630)  (10,630)
Adjusted Run Rate EBITDA*  12,700    106,505    121,505    121,505 
                                

* Non-GAAP financial measure - See Use of Non-GAAP Financial Measures for more information about Adjusted EBITDA and Adjusted Run Rate EBITDA

"nDivision had a very strong first quarter, which benefitted from three full month's billing from the contract with a Fortune 500 customer, plus some additional new business wins," said Alan Hixon, Chairman and CEO of nDivision. "We have experienced some losses of recurring revenue and our non-recurring revenue was lower than prior year first quarter. The effects of the Coronavirus pandemic has also slowed the decision-making process for a proportion of the opportunities in the sales pipeline, however, we still expect to see additional new business wins during the remainder of the year. If the Coronavirus pandemic causes further losses of revenue, we are prepared to take mitigating actions, as needed." continued Hixon.

2020 Financial Highlights and Outlook

nDivision's business improved significantly in the first quarter compared to the prior year quarter, across a number of key financial metrics: monthly recurring revenue, reduction in net losses, EBITDA, Adjusted EBITDA* and Adjusted Run Rate EBITDA*.

There has been some adverse impact to nDivision's revenues during the second quarter as a result of the Coronavirus pandemic. It is not clear how much further impact the Coronavirus pandemic and potential recession will have, however, it is encouraging that nDivision has been able to win some new business and it is cautiously optimistic that is can make up for the remaining lost revenues before the end of the 2020 fiscal year.

* Non-GAAP financial measure - See Use of Non-GAAP Financial Measures for more information about Adjusted Run Rate EBITDA

Expanded Partnership with IPsoft

nDivision has made significant progress in preparing for a migration from IPsoft's IPcenter to its new platform, 1Desk. When nDivision begins migrating to 1Desk, it will also start exploring the capabilities of the other two IPsoft platforms that are integrated with 1Desk. 1RPA is IPsoft's robotic process automation platform which will allow nDivision to create more sophisticated automations that could reach beyond IT Operations into business areas such as finance, sales & marketing, HR, etc. Amelia, is IPsoft's cognitive agent and a cornerstone of its ‘digital workforce', capable of handling human interactions that call center staff would normally perform via telephone, chat and email. nDivision will initially investigate the use of Amelia to supplement End User Help Desk services, but anticipates evolving it service offerings into other call center functions to address broader business requirements.

Business Strategy Highlights

As a result of the Coronavirus pandemic, a number of nDivision's End User Help Desk customers moved to a work-from-home model. Initially, this led to an approximate doubling of call volumes from several large enterprise customers; however, nDivision was able to absorb this additional workload with minimal degradation to service levels, until the situation normalized. nDivision was able to do this while also flexing its normal 70%/30% work-from-home to office-based ratio to 100%-0%. This achievement is evidence of nDivision's flexibility and tried and tested, business continuity strategies. nDivision intends to maintain its 100% work-from-home strategy until such time as the Coronavirus pandemic subsides and is no longer a material risk for its office-based employees.

About nDivision Inc.

nDivision Inc. provides Autonomic Managed Services and End User Help Desk services to private and public entities, ranging from small businesses to global enterprises. nDivision's services are valuable for any industry and are being provided to customers in multiple segments. The company supports approximately 100 customers across 45 countries, 24 hours a day, 365 days a year. nDivision leverages advanced automation technologies to replace human labor with digital labor. By the end of the first year of the service, nDivision typically automates between 70% and 80% of all incidents, across the datacenter and network for its midmarket and large enterprise customers. More information can be found at www.ndivision.com.

Investor Relations:
Brad Wiggins
214-272-2148
bwiggins@ndivision.com

Use of Non-GAAP Financial Measures

The Company uses the above-mentioned non-GAAP financial measures internally to evaluate its operating performance and for planning purposes and believes that these are useful financial measures also used by investors. These non-GAAP financial measures are not a substitute for nor superior to financial measures provided by GAAP and all measures and disclosures of financial information pursuant to GAAP, as reflected in the Form 10Q filed with the SEC for the respective periods, should be read to obtain a comprehensive and thorough understanding of the Company's financial results. The reconciliations of non-GAAP adjusted EBITDA to GAAP net income (net loss) are provided in schedules that are a part of this press release.

The aforementioned 2020 Fiscal Quarterly Highlights should be read in conjunction with all of the financial and other information included in the Company's Quarterly Reports filed with the SEC on Form 10Q for the respective periods, Current Reports on Forms 8K & 8K/A and Information Statements on Schedules 14A & 14C filed with the SEC, and Annual Reports on Form 10K filed with the SEC; and, the discussion of financial results in this press release and the use of non-GAAP financial measures and the related schedules attached hereto which reconcile non-GAAP financial measures and financial information to that prescribed by GAAP. These non-GAAP financial measures and metrics of financial results or financial performance are not a substitute for the financial measures provided by GAAP and should not be considered as alternatives, substitutes or superior to financial measures presented in accordance with GAAP. Financial information provided in this press release may consist of estimates, projections and certain assumptions that are considered forward looking statements and that are predictive in nature, depend on future events and the projected financial results may not be realized nor are they guarantees of future performance.

The reconciliations of non-GAAP adjusted EBITDA to GAAP net income (net loss) is provided in schedules below:

   Reconciliation of Non-GAAP Adjusted EBITDA to GAAP Net Income (Net Loss) 
   The Quarters Ended ThroughMarch 31, 2020 
   March 31,    June 30,    Sept. 30,    Dec.    March 31, 
   2019    2019    2019    2019    2020 
Revenue  1,455,927    1,385,303    1,416,432    1,615,105    1,666,889 
Gross Profit  541,329    460,215    443,196    633,831    616,738 
Net Loss  (165,072)  (341,530)  (337,685)  (135,938)  (119,262)
Net Cash (used in) provided by operating activities  108,094    4,293    110,911    1,829,618    (198,893)
Interest  18,896    13,544    18,891    29,726    30,047 
Tax  -    -    -    -    - 
Depreciation and amortization  135,411    134,633    127,468    113,630    113,239 
EBITDA  (10,765)  (193,353)  (191,326)  7,418    24,024 
Stock Compensation  114,321    156,466    149,436    145,796    145,797 
Other non-cash expenses or gains  -    -    -    -    - 
Change in Contingent Liability  (30,757)  -    -    -    - 
Adjusted EBITDA  72,799    (36,887)  (41,890)  153,214    169,821 
Non Recurring Revenue  (276,308)  (216,917)  (215,591)  (263,197)  (60,872)
Customer Acquisition Costs  88,935    83,657    84,862    53,488    44,893 
Net contracted; recurring revenue not yet billed    N/A      N/A      N/A      N/A      N/A 
Estimated, recurring cost of services not yet incurred    N/A      N/A      N/A      N/A      N/A 
Adjusted Run Rate EBITDA  (114,574)  (170,146)  (172,620)  (56,495)  153,843 
                                        

To supplement the Company's consolidated financial statements presented on a GAAP basis, the Company discloses certain financial information including non-GAAP adjusted EBITDA because management uses these supplemental non-GAAP financial measures to help evaluate performance period over period, to analyze the underlying trends in its business, to establish operational goals, to provide additional measures of operating performance, including using the information for internal planning relating to the Company's ability to meet debt service, make capital expenditures and provide working capital needs. In addition, the Company believes investors already use these non-GAAP measures to monitor the Company's performance. Non-GAAP adjusted EBITDA is defined by the Company as net income or net loss before interest, taxes, depreciation and amortization (EBITDA) plus non-cash stock option and stock-based compensation expenses and acquisition, integration and restructuring costs, change in contingent consideration and loss on disposal of assets. Non-GAAP adjusted EBITDA is not a term defined by GAAP and, as a result, the Company's measure of non-GAAP adjusted EBITDA might not be comparable to similarly titled measures used by other companies. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flow that either excludes or includes amounts that are not normally included in the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measures discussed above, however, should be considered in addition to, and not as a substitute for, or superior to net income or net loss as reported for GAAP on the Consolidated Statements of Income, cash and cash flows as reported for GAAP on the Consolidated Statement of Cash Flows or other measures of financial performance prepared in accordance with GAAP, and as reflected on the Company's financial statements prepared in accordance with GAAP included in the Company's Form 10Q and Form 10K filed for the respective fiscal periods with the SEC. Reconciliations of GAAP net income or GAAP net loss to non-GAAP adjusted EBITDA are attached hereto.

EBITDA is defined as net income before provision for income taxes, interest expense and depreciation and amortization.

Adjusted EBITDA is defined as EBITDA minus non-cash expense not eliminated in the EBITDA calculation, such as stock compensation and other non-routine expenses such gain or loss on changes on contingent consideration.

We define "Adjusted Run Rate EBITDA" as Adjusted EBITDA (i) less Non-Recurring Revenue, (ii) adding back Customer Acquisition Costs, (iii) plus Net Contracted, Recurring Revenue not yet billed and (iv) less estimated, Recurring Cost of Services not yet incurred.

Non-Recurring Revenue is defined as professional service revenue.

Customer Acquisition Costs is defined as those sales expense incurred by the Company for new sales, including payroll costs, commission expenses, travel expense and miscellaneous sales expense.

Net Contracted, Recurring Revenue not yet billed is defined as the estimated revenue from recurring contracts that are in the implementation phase and have not begun monthly recurring billing, minus those contracts that are terminating and not expected to renew.

Recurring Cost of Services not yet incurred is defined as the estimated incremental expenses related to the Net Contracted, Recurring Revenue not yet billed.

We believe that the presentation of these Key Performance Indicators ("KPI') provides information useful to investors in assessing our liquidity and financial condition and results of operations and that these KPI's are also useful to investors as a financial indicator of a company's ability to incur and service debt, pay dividends and fund capital expenditures. These KPI's are supplemental financial measure that management and external users of our condensed combined and consolidated financial statements, such as industry analysts, investors, commercial banks and rating agencies, use to assess the following, among other measures:

Cautionary Statements Regarding Forward-Looking Information:

This earnings news release issued by nDivision Inc. ("nDivision" or "nD") is for informational purposes only and shall not constitute an offer to buy, sell, issue or subscribe for, or the solicitation of an offer to buy, sell or issue, or subscribe for any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The information contained herein is subject to change without notice and is based on publicly available information, internally developed data and other sources. Where any opinion or belief is expressed in this news release, it is based on the assumptions and limitations mentioned herein, and is an expression of present opinion or belief only.

This news release should not be construed as legal, financial or tax advice to any individual, as each individual's circumstances are different. Readers should consult with their own professional advisors regarding their particular circumstances.

This news release includes forward-looking information and forward-looking statements within the meaning of applicable Canadian and United States securities laws. Statements containing the words "believe", "expect", "intend", "should", "seek", "anticipate", "will", "positioned", "project", "risk", "plan", "may", "estimate" or, in each case, their negative and words of similar meaning are intended to identify forward-looking information. Forward-looking information involves risks and uncertainties including, but not limited to, the nD's anticipated business strategies, anticipated trends in nD's business and anticipated market share, factors that could cause actual results or events to differ materially from those expressed or implied by the forward-looking information, general business, economic and competitive uncertainties, regulatory risks, risks associated with acquisitions and expansion, risks inherent in the information technology (IT) and internet sectors, other general risks of the IT industry as well as those risk factors disclosed elsewhere below.

Such statements are based upon the current beliefs and expectations of nD's management and are subject to significant business, social, economic, political, regulatory, competitive and other risks, uncertainties, contingencies and other factors. Many assumptions are based on factors and events that are not within the control of nD. Actual future results may differ materially from historical results or current expectations. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. In addition, even if the outcome and financial effects of the plans and events described herein are consistent with the forward-looking information contained in this news release, those results or developments may not be indicative of results or developments in subsequent periods.

Although nD has attempted to identify important risks and factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors and risks that cause actions, events or results not to be as anticipated, estimated or intended. Forward-looking information contained in this news release is based on nD's current estimates, expectations and projections, which nD believes are reasonable as of the current date. nD can give no assurance that these estimates, expectations and projections will prove to have been correct. You should not place undue reliance on forward-looking information, which is based on the information available as of the date of this news release. Forward-looking information contained in this news release is as of the date of this news release and, except as require by applicable law, nD assumes no obligation to update or revise them to reflect new events or circumstances.

Historical statements should not be taken as assurance that such trends will be replicated in the future. No statement in this news release is intended to be nor may be construed as a profit forecast. To the extent any forward-looking information in this news release constitutes "future-oriented financial information" or "financial outlooks" within the meaning of applicable securities laws, such information is being provided to demonstrate the anticipated market penetration and the reader is cautioned that this information may not be appropriate for any other purpose, and the reader should not place undue reliance on such future-oriented financial information and financial outlooks. Future-oriented financial information and financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to the risks set out above under the heading "Cautionary Note Regarding Forward Looking Statements". nDivision's actual financial position and results of operations may differ materially from management's current expectations and, as a result, nD's revenue and expenses may differ materially from the revenue and expense profiles provided in this news release. Such information is presented for illustrative purposes only and may not be an indication of nDivision's actual financial position or operating results.

SOURCE: nDivision Inc.



View source version on accesswire.com:
https://www.accesswire.com/589697/nDivision-Inc-Reports-Results-for-the-First-Quarter-2020

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.