Espial reports First Quarter 2019 results

OTTAWA, Ontario — Espial® Group Inc. (“Espial” or the “Company”), (TSX: ESP), today announced its first quarter financial results for the three-month period ended March 31, 2019.

Recent Highlights

• First quarter revenue was $6.1 million.
• Q1 2019 SaaS annualized recurring revenue (ARR) increased 62% to $7.6 million from $4.7 million at the end of Q1 2018.
• First quarter adjusted EBITDA(1) was a loss of $0.6 million. Net loss was $1.5 million.
• Espial announced Alexa certification for 18 service providers using its Elevate TVaaS platform; an industry-first, bulk certification and introduction of intelligent voice services for search, discovery and navigation of the Elevate Pay-TV service.
• Espial was named one of the 20 Most Promising Media and Entertainment Solution Providers for 2019 by CIO Review.
• Espial and Enghouse Systems Limited, jointly announced that they have entered into an arrangement agreement pursuant to which Enghouse has agreed to acquire all of the issued and outstanding common shares of Espial.

“I’m pleased with the progress we continue to make on our Elevate SaaS solution. Over the last few quarters, we have introduced a variety of rich features on our Elevate IPTV and Cable platforms across set-top boxes and a variety of consumer-owned devices. Recently, we also announced a bulk certification of Amazon Alexa, a great example of how multiple customers receive the immediate benefit of scale from the Elevate SaaS video platform”, said Jaison Dolvane, CEO of Espial. “In the first quarter, our SaaS revenue grew to $2.2 million. We continued to add new SaaS wins in Q1, while growing our pipeline through our sales and demand generation initiatives. We are excited about the combination of Espial and Enghouse and the value this will bring to our customers through the increased scale and expertise.”

Financial Summary

For the three-month period ended March 31, 2019, revenue was $6.1 million compared with revenue of $5.9 million for the three months ended March 31, 2018. Adjusted EBITDA for the first quarter of fiscal 2019 was a loss of $0.6 million compared to $1.7 million for the first quarter of fiscal 2018. Net loss for the quarter was $1.5 million, compared to a loss of $3.7 million in the first quarter of fiscal 2018.

Q1 Financial Results

• First quarter revenue was $6,079,347 compared with revenue of $5,932,257 in the same period a year ago. First quarter software license revenue was $1,938,395 compared to $2,024,498 in the first quarter of fiscal 2018. Software subscription revenue increased to $2,194,168 from $1,166,843 in the first quarter of 2018. Professional services revenue for the first quarters of 2019 and 2018 were $656,702 and $906,072, respectively. Maintenance and support revenue for the first quarter was $1,290,082 compared to $1,834,844 last year.
• North American revenues were $3,854,130 in the first quarter of 2019 compared to $3,229,789 in 2018. European revenues were $1,960,103 in the first quarter of 2019 compared to $1,938,810 in 2018. Asia revenues were $265,114 in the first quarter of 2019 compared to $763,658 in 2018.
• Gross margin as a percentage of sales for the first quarter of fiscal 2019 increased to 73% from 71% in the first quarter of fiscal 2018.
• Operating expenses in the first quarter of fiscal 2019 were $5,524,475 compared to $8,468,065 in the first quarter of fiscal 2018.
• Adjusted EBITDA for the first quarter of fiscal 2019 was a loss of $591,215, compared to a loss of $1,740,749 in fiscal 2018.
• Net loss in the first quarter was $1,478,584 compared to $3,736,385 last year. Cash and cash equivalents on March 31, 2019 was $30,718,941.

1. Adjusted EBITDA is a non-IFRS measure. This measure is defined in the “Non-IFRS Financial Measures” of this news release.