~Company delivers significant year-over-year growth in revenue~
VANCOUVER, BC, October 25, 2018 – TIMIA Capital Corporation (“TIMIA” or the “Company”) (TSX-V:TCA / OTC: TIMCF) today announced financial results for the third quarter ended August 31, 2018.
Third Quarter 2018 Highlights include:
- Revenue of $399,991, up 59% over the same period last year.
- Included in total revenue, interest income from investments increased 26% to $317,787 compared with the same period last year.
- Total assets have increased 65% to $13.1 million compared to the same period last year. Cash balance, as part of assets, was $5,477,794 compared to $713,792 as at November 30, 2017.
- Raised $1,750,000 in capital through the co-investment model including $1,000,000 from an existing institutional investor.
- Adjusted EBITDA* of $109,686 compared with an Adjusted EBITDA of $97,115 for the same period last year.
- Reported a net loss of $413,221 or $0.01 per share compared with a net income of $235,016 or $0.01 per share for the same period last year. Q3 2018 results reflect investments in deal generation to scale our business, increased public market activities, and higher interest expenses associated with the closing of new co-investments and debenture financing. Q3 2017 net income was primarily driven by a $330,301 gain in an equity investment.
- TIMIA’s loan investment portfolio (Loans receivable) increased 56% to $7,227,824 compared to $4,635,340 in the same period last year.
“We have increased the pace of investing in the private software sector where growth and returns have helped us increase our revenue by 59%,” said Mike Walkinshaw, CEO of TIMIA Capital Corporation. “We finished the quarter with a strong cash balance of over $5 million and have been focused on investing the capital to help drive further returns. The Canadian market has been a great launch pad for our revenue-financing solution however, we have recently expanded into the United States to help drive our own growth and to support the U.S. SaaS market.”
“It was a very busy quarter as we rebalanced investments as a result of a successful exit and invested in marketing and sales activities to help scale our business,” added Walkinshaw. “We believe we’re at the right scale and infrastructure now to achieve new levels of growth and, as our portfolio of SaaS investments grow, help drive shareholder value and investor returns.”
TIMIA’s business model is delivering two distinct returns that help drive shareholder value:
- High yield interest income, as a result of the successful performance of TIMIA’s underlying investments, delivers a stream of profitable cash flow that has been growing, as TIMIA’s asset base grows.
- TIMIA is investing in high-quality companies in an active industry. As a result, we’ve seen successful early exits in investee companies such as Rise, Beanworks and QuickMobile delivering periodic gains manifesting in profitable quarters. At the same time, TIMIA is focused on investing in new and exciting opportunities to support longer term profitability.
Detailed Financial Review
During the quarter ended August 31, 2018, the Company continued to grow its revenue-financing (“RF”) business by completing three new investments as well as successfully exiting an existing investment. The Company’s revenue is principally interest income generated under the Company’s RF model. Interest income in the quarter ended August 31, 2018 increased 26% to $317,787 compared with $251,599 in the same period last year. Consulting revenue was $82,204 in the quarter ended August 31, 2018 compared to nil consulting revenue in the same period last year, resulting in total revenue of $399,991. The increase in total revenue, compared to the same period last year, is primarily due to the increase in scale in loan disbursements and a greater number of transactions leading to an increase in consulting revenue. The chart below highlights the Company’s revenue growth since Q3 of 2016.
The decrease in revenue for the third quarter ended August 31, 2018 compared to the second quarter ended May 31, 2018 reflects the timing of multiple exits that have occurred over the last two quarters and their short-term impact on revenue. This same effect significantly increased the Company’s cash balance and helped drive profitable gains on investments. This cash balance is actively being reinvested, including $2,000,000 in disbursements during the quarter, to reverse this revenue trend.
TIMIA continues to build the value and size of its portfolio by making new investments and follow-on investments in existing portfolio companies, and actively assisting the portfolio companies with their growth plans. At the same time, the Company is investing to support its future growth. Total expenses for the quarter ended August 31, 2018 were $747,473 compared with $382,170 for the same period last year. This amount is only marginally higher than the second quarter of 2018 as the Company invests in the business to build a scalable investment platform. Highlighted expenses have been separated into two different segments, financing and operational:
- Interest expense makes up $207,481 of the total expense amount of $747,473, an increase of $71,680 over the same period last year. The increase in interest expense is associated with new debentures with warrants.
- Marketing and sales related expenses included in Office, promotion and miscellaneous has increased as the Company invests in its deal origination engine in addition to an increase in public market activities.
- Share-based expense was higher due to the vesting of options from an option grant on May 10, 2018 to management, and directors.
Adjusted EBITDA increased $12,571 to $109,686 for the quarter ended August 31, 2018 compared with an Adjusted EBITDA of $97,115 for the same period last year. Adjusted EBITDA is consistent with the prior year period due to the growth in cash-based operational expenses being consistent with the growth in the cash-based revenue of the organization.
During the quarter ended August 31, 2018, the Company posted a net loss of $413,221 compared with net income of $235,016 in the same period last year. As noted above, Q3 2018 results reflect investments in deal generation to scale our business, increased public market activities, and higher interest expenses associated with the closing of new co-investments and debenture financing.
As at August 31, 2018, the Company’s cash balance was approximately $5.5 million and working capital was approximately $5 million compared with approximately $714K and $1.2 million respectively, as of November 30, 2017.
This news release is qualified in its entirety by the Company’s condensed interim financial statements for the three and nine months ended August 31, 2018 and 2017 and the associated Management’s Discussion & Analysis respecting the same period, which can be downloaded from the Company’s profile on SEDAR at http://www.sedar.com.
*Non-GAAP Measures and Other Financial Measures
In managing our business and assessing our financial performance, we supplement the information provided by the GAAP-based financial statements with metrics and non-GAAP financial measures which are utilized by our management to evaluate our performance. Although we believe these measures are widely used in the specialty finance industry, some may not be defined by us in precisely the same way as by other companies in the specialty finance industry, so there may not be reliable ways to compare us to other companies. Adjusted EBITDA represents net loss and comprehensive loss from continuing operations (the most directly comparable GAAP measure) excluding amounts for: income tax expense; interest expense; depreciation and amortization; non-cash revenue; non-cash gains; equity-based compensation; and all other non-cash expenses. We believe Adjusted EBITDA is a helpful measure because it allows us to evaluate our performance by removing from our operating results items that do not relate to our core operating performance. Adjusted EBITDA is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net loss and comprehensive loss from continuing operations, the most directly comparable GAAP financial measure. Adjusted EBITDA is not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies unless the definition is the same.
About TIMIA Capital Corporation
TIMIA Capital Corporation is a specialty finance company that provides growth capital to technology companies in exchange for payments based on monthly revenue. This alternative financing option complements both debt and equity financing, while allowing entrepreneurs and existing stakeholders to retain ownership and control of their business. TIMIA’s singular focus is the fast growing, global, business-to-business Software-as-a-Service (or SaaS) segment. We align ourselves with entrepreneurial management teams growing their sales from $1 Million to $10 Million in Annual Recurring Revenue. For more information about TIMIA Capital Corporation, please visit www.timiacapital.com
For more information, please contact:
Vice President, Capital Markets & Communications
Mike Walkinshaw, CEO
TIMIA Capital Corporation
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 news release.
Certain information and statements in this news release contain and constitute forward-looking information or forward-looking statements as defined under applicable securities laws (collectively, “forward-looking statements”). Forward-looking statements normally contain words like ‘believe’, ‘expect’, ‘anticipate’, ‘plan’, ‘intend’, ‘continue’, ‘estimate’, ‘may’, ‘will’, ‘should’, ‘ongoing’ and similar expressions, and within this news release include any statements (express or implied) respecting beliefs as to the Company being at the right scale and infrastructure to achieve new levels of growth and the future reinvestment of cash balances. Forward-looking statements are not guarantees of future performance, actions, or developments and are based on expectations, assumptions and other factors that management currently believes are relevant, reasonable and appropriate in the circumstances, including, without limitation, the following assumptions: that the Company and its investee companies are able to meet their respective future objectives and priorities, assumptions concerning general economic growth and the absence of unforeseen changes in the legislative and regulatory framework for the Company. Although management believes that the forward-looking statements are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to Timia’s business. Material risks and uncertainties applicable to the forward-looking statements set out herein include, but are not limited to, the Company having insufficient financial resources to achieve its objectives; availability of further investments that are appropriate for the Company on terms that it finds acceptable or at all; successful completion of exits from investments on terms that constitute a gain when no such exits are currently anticipated; intense competition in all aspects of business; reliance on limited management resources; general economic risks; new laws and regulations and risk of litigation. Although Timia has attempted to identify factors that may cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, predicted, estimated or intended. Also, many of the factors are beyond the control of Timia. Accordingly, readers should not place undue reliance on forward-looking statements. Timia undertakes no obligation to reissue or update any forward-looking statements as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements contained in this news release are qualified by this cautionary statement.