published on 02/09/2023 at 13:00 from Computer Modelling Group Ltd. (isin : CA2052491057)

Computer Modelling Group Announces Third Quarter Results

CALGARY, AB / ACCESSWIRE / February 9, 2023 / Computer Modelling Group Ltd. ("CMG" or the "Company") announces its financial results for the three and nine months ended December 31, 2022.

Quarterly Performance

	Fiscal 2021⁽²⁾		Fiscal 2022⁽³⁾			Fiscal 2023 ⁽⁴⁾
($ thousands, unless otherwise stated)	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3
Annuity/maintenance license revenue	13,790	12,286	13,239	13,575	14,306	13,529	14,825	15,533
Perpetual license revenue	1,184	125	846	1,497	2,351	386	780	518
Software license revenue	14,974	12,411	14,085	15,072	16,657	13,915	15,605	16,051
Professional services revenue	1,827	2,003	1,864	1,973	2,137	2,192	2,477	3,341
Total revenue	16,801	14,414	15,949	17,045	18,794	16,107	18,082	19,392
Operating profit	6,556	5,573	5,440	7,755	7,312	4,961	5,555	8,435
Operating profit (%)	39	39	34	45	39	31	31	43
Profit before income and other taxes	5,747	4,827	5,321	7,310	6,563	5,182	5,989	8,350
Income and other taxes	1,454	1,094	1,175	1,736	1,611	1,369	1,579	2,002
Net income for the period	4,293	3,733	4,146	5,574	4,952	3,813	4,410	6,348
EBITDA⁽¹⁾	7,627	6,596	6,473	8,843	8,366	5,892	6,492	9,300
Cash dividends declared and paid	4,014	4,015	4,016	4,017	4,016	4,017	4,025	4,025
Funds flow from operations	6,267	4,811	4,904	7,022	7,105	4,558	4,974	8,169
Free cash flow⁽¹⁾	5,755	4,478	4,494	6,227	6,584	4,255	4,505	7,545
Per share amounts - ($/share)
Earnings per share (EPS) - basic and diluted	0.05	0.05	0.05	0.07	0.06	0.05	0.05	0.08
Cash dividends declared and paid	0.05	0.05	0.05	0.05	0.05	0.05	0.05	0.05
Funds flow from operations per share - basic	0.08	0.06	0.06	0.09	0.09	0.06	0.06	0.10
Free cash flow per share - basic⁽¹⁾	0.07	0.06	0.06	0.08	0.08	0.05	0.06	0.09

^{(1) This is a non-IFRS financial measure. See the "Non-IFRS Financial Measures" section.}
^{(2) Q4 of fiscal 2021 includes $1.1 million in revenue that pertains to usage of CMG's products in prior quarters.}
^{(3) Q1, Q2 Q3 and Q4 of fiscal 2022 include $nil, $0.5 million, $nil and $0.8 million, respectively, in revenue that pertains to usage of CMG's products in prior quarters.}
^{(4) Q1, Q2 and Q3 of fiscal 2023 include $0.2 million, $0.3 million, and $0.3 million, respectively, in revenue that pertains to usage of CMG's products in prior quarters.}

Commentary on Quarterly Performance

For the Three Months Ended	For the Nine Months Ended
December 31, 2022 and compared to the same period of the previous fiscal year, when appropriate:

Annuity/maintenance license revenue increased by 14%;	Annuity/maintenance license revenue increased by 12%;
Total revenue increased by 14%;	Total revenue increased by 13%;
Total operating expenses increased by 18%. Adjusted for the restructuring charges, operating expenses increased by 13%, primarily due to an increase in variable direct employee costs;	Total operating expenses increased by 21%. Adjusted for the restructuring charges and CEWS/CERS benefits, operating expenses increased by 7%, primarily due to higher professional services and travel-related costs;



Quarterly operating profit margin was 43%, decreasing from 45% in the comparative quarter of the prior year. Adjusted for the restructuring charges, operating profit margin was 43%, consistent with the adjusted operating profit margin of the comparative quarter;	Year-to-date operating profit margin was 35%, decreasing from 40% in the comparative period. Adjusted for the restructuring charges and the CEWS/CERS benefits, operating profit margin was 43%, increasing from 40%, in the comparative quarter;
Basic EPS of $0.08 was higher than the comparative quarter's EPS of $0.07;	Basic EPS of $0.18 was higher than the comparative period's EPS of $0.17;
Achieved free cash flow per share of $0.09;	Achieved free cash flow per share of $0.20;
Declared and paid a dividend of $0.05 per share.	Declared and paid dividends of $0.15 per share.

Revenue

Three months ended December 31,	2022	2021	$ change	% change
($ thousands)

Software license revenue	16,051	15,072	979	6%
Professional services revenue	3,341	1,973	1,368	69%
Total revenue	19,392	17,045	2,347	14%

Software license revenue as a % of total revenue	83%	88%
Professional services revenue as a % of total revenue	17%	12%

Nine months ended December 31,	2022	2021	$ change	% change
($ thousands)

Software license revenue	45,571	41,568	4,003	10%
Professional services revenue	8,010	5,840	2,170	37%
Total revenue	53,581	47,408	6,173	13%
Software license revenue as a % of total revenue	85%	88%
Professional services revenue as a % of total revenue	15%	12%

CMG's revenue is comprised of software license sales, which provides the majority of the Company's revenue, and fees for professional services.

Total revenue for the three and nine months ended December 31, 2022 increased by 14% and 13%, respectively, due to increases in both software license revenue and professional services revenue.

Software License Revenue

Three months ended December 31,	2022	2021	$ change	% change
($ thousands)

Annuity/maintenance license revenue	15,533	13,575	1,958		14%
Perpetual license revenue	518	1,497	(979)		-65%
Total software license revenue	16,051	15,072	979		6%

Annuity/maintenance as a % of total software license revenue	97%	90%
Perpetual as a % of total software license revenue	3%	10%

Nine months ended December 31,	2022	2021	$ change	% change
($ thousands)

Annuity/maintenance license revenue	43,887	39,100	4,787	12%
Perpetual license revenue	1,684	2,468	(784)	-32%
Total software license revenue	45,571	41,568	4,003	10%

Annuity/maintenance as a % of total software license revenue	96%	94%
Perpetual as a % of total software license revenue	4%	6%

Total software license revenue for the three and nine months ended December 31, 2022 increased by 6% and 10%, respectively, compared to the same periods of the previous fiscal year, due to the increases in annuity/maintenance license revenue, partially offset by the decreases in perpetual license revenue.

Annuity/maintenance license revenue increased by 14% and 12% during the three and nine months ended December 31, 2022, respectively, due to increases in all regions except Canada, supported by license fee increases, increased license usage by existing customers and the addition of new customers. In particular, we are seeing an increase in revenue from the customers involved in carbon capture and storage projects, and estimate that about 15% and 13% of total software revenue for the three and nine months ended December 31, 2022, respectively, is attributable to the energy transition segment.

Perpetual license revenue during the three and nine months ended December 31, 2022 decreased by 65% and 32%, respectively, compared to the same periods of the previous fiscal year. Sales of perpetual licenses may fluctuate significantly between periods due to the uncertainty associated with the timing and the location where sales are generated. For this reason, even though we expect to achieve a certain level of perpetual sales on an annual basis, we expect to observe fluctuations in the quarterly perpetual revenue amounts throughout the fiscal year. In our experience, the majority of perpetual sales are generated in South America and the Eastern Hemisphere, as North American customers usually prefer annuity licenses to perpetual purchases.

Software Revenue by Geographic Region

Three months ended December 31,	2022	2021	$ change	% change
($ thousands)
Annuity/maintenance license revenue
Canada	3,268	3,303	(35)	-1%
United States	4,061	3,429	632	18%
South America	2,247	1,884	363	19%
Eastern Hemisphere⁽¹⁾	5,957	4,959	998	20%
	15,533	13,575	1,958	14%
Perpetual license revenue
Canada	-	-	-	0%
United States	-	180	(180)	-100%
South America	-	-	-	0%
Eastern Hemisphere	518	1,317	(799)	-61%
	518	1,497	(979)	-65%
Total software license revenue
Canada	3,268	3,303	(35)	-1%
United States	4,061	3,609	452	13%
South America	2,247	1,884	363	19%
Eastern Hemisphere	6,475	6,276	199	3%
	16,051	15,072	979	6%

Nine months ended December 31,	2022	2021	$ change	% change
($ thousands)
Annuity/maintenance license revenue
Canada	9,399	9,425	(26)	0%
United States	11,115	9,502	1,613	17%
South America	5,840	5,195	645	12%
Eastern Hemisphere⁽¹⁾	17,533	14,978	2,555	17%
	43,887	39,100	4,787	12%
Perpetual license revenue
Canada	-	-	-	0%
United States	157	401	(244)	-61%
South America	-	-	-	0%
Eastern Hemisphere	1,527	2,067	(540)	-26%

See all Computer Modelling Group Ltd. news