Topicus.com Inc. (TSXV:TOI) in a joint release with Constellation Software Inc. (TSX:CSU) today announced financial results for Topicus.com Inc. (“Topicus” or the “Company”) for the third quarter ended September 30, 2022. Please note that all amounts referred to in this press release are in Euros unless otherwise stated.
The following press release should be read in conjunction with the Company’s Unaudited Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2022 and the accompanying notes, our Management’s Discussion and Analysis for the three and nine months ended September 30, 2022 and the Annual Consolidated Financial Statements of Topicus.com Inc. for the year ended December 31, 2021, which we prepared in accordance with International Financial Reporting Standards (“IFRS”) and the Company’s annual Management’s Discussion and Analysis for the year ended December 31, 2021, which can be found on SEDAR at www.sedar.com and on Topicus.com Inc.’s website www.topicus.com. Additional information about Topicus.com Inc. is also available on SEDAR at www.sedar.com.
Q3 2022 Headlines:
- Revenue increased 29% (3% organic growth) to €228.6 million compared to €177.1 million in Q3 2021.
- Net income increased to €18.4 million (€0.15 on a diluted per share basis) from €18.1 million (€0.09 on a diluted per share basis).
- Acquisitions were completed for aggregate cash consideration of €35.7 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €7.9 million resulting in total consideration of €43.6 million.
- Cash flows from operations (“CFO”) increased €2.4 million to €10.9 million compared to €8.5 million in Q3 2021 representing an increase of 29%.
- Free cash flow available to shareholders1 (“FCFA2S”) was negative €0.5 million for both Q3 2022 and Q3 2021.
- On October 28, 2022 the Company’s credit facility was amended increasing the amount available to borrow to €550 million from €300 million.
Total revenue for the quarter ended September 30, 2022 was €228.6 million, an increase of 29%, or €51.5 million, compared to €177.1 million for the comparable period in 2021. For the first nine months of 2022 total revenues were €653.0 million, an increase of 22%, or €118.0 million, compared to €535.0 million for the comparable period in 2021. The increase for both the three and nine month periods compared to the same periods in the prior year is primarily attributable to growth from acquisitions as the Company experienced organic growth of 3% and 4% respectively. Organic growth is not a standardized financial measure and might not be comparable to measures disclosed by other issuers.
Net income for the quarter ended September 30, 2022 increased €0.3 million to €18.4 million compared to €18.1 million for the same period in 2021. On a per share basis, this translated into net income per basic and diluted share of €0.15 in the quarter ended September 30, 2022 compared to €0.09 for the same period in 2021. For the nine months ended September 30, 2022, net income was €58.9 million or €0.45 per basic and diluted share compared to a net loss of €2,249.3 million or €32.78 per basic and diluted share for the same period in 2021. The net loss per basic and diluted share for the nine months ended September 30, 2021 primarily resulted from the €2,302.2 million redeemable preferred securities expense. Diluted shares outstanding increased from 129.5 million to 129.8 million for the nine months ended September 30, 2022.
For the quarter ended September 30, 2022, CFO increased €2.4 million to €10.9 million compared to €8.5 million for the same period in 2021 representing an increase of 29%. Many of the businesses invoice customers for annual software maintenance fees in Q1 each year resulting in a disproportionate amount of cash being received in the first quarter as compared to the remaining three quarters. For the nine months ended September 30, 2022, CFO increased €21.3 million to €154.9 million compared to €133.7 million for the same period in 2021 representing an increase of 16%.
For the quarter ended September 30, 2022, FCFA2S was negative €0.5 million compared to negative €0.5 million for the same period in 2021. For the nine months ended September 30, 2022, FCFA2S decreased €30.6 million to €35.7 million compared to €66.3 million for the same period in 2021 representing a decrease of 46%. The decline is primarily as a result of the dividend paid to the Preferred Securities holders.
Forward Looking Statements
Certain statements herein may be “forward looking” statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Topicus or the industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward looking statements. These forward looking statements reflect current assumptions and expectations regarding future events and operating performance and are made as of the date hereof and Topicus assumes no obligation, except as required by law, to update any forward looking statements to reflect new events or circumstances.
Free cash flow available to shareholders ‘‘FCFA2S’’ refers to net cash flows from operating activities less interest paid on lease obligations, interest paid on other facilities, credit facility transaction costs, repayments of lease obligations, dividends paid to redeemable preferred securities holders, and property and equipment purchased, and includes interest and dividends received. The portion of this amount applicable to non-controlling interests is then deducted. Topicus believes that FCFA2S is useful supplemental information as it provides an indication of the uncommitted cash flow that is available to shareholders if Topicus does not make any acquisitions, or investments, and does not repay any debts. While Topicus could use the FCFA2S to pay dividends or repurchase shares, Topicus’ objective is to invest all of our FCFA2S in acquisitions which meet Topicus’ hurdle rate.
FCFA2S is not a recognized measure under IFRS and, accordingly, readers are cautioned that FCFA2S should not be construed as an alternative to net cash flows from operating activities.
The following table reconciles FCFA2S to net cash flows from operating activities:
About Topicus.com Inc.
Topicus’ subordinate voting shares are listed on the Toronto Venture Stock Exchange under the symbol "TOI". Topicus acquires, manages and builds vertical market software businesses.
About Constellation Software Inc.
Constellation's common shares are listed on the Toronto Stock Exchange under the symbol "CSU". Constellation acquires, manages and builds vertical market software businesses.
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Chief Financial Officer