OneSoft Reports Fiscal 2022 Financial Summary Estimates, Corporate Update and Fiscal 2023 Guidance

Rhea-AI Summary

OneSoft Solutions Inc. reported a strong fiscal 2022, achieving $6.9 million in revenue, a 55% increase from 2021. Q4 2022 revenue hit $2.2 million, up 81% year-over-year. The company forecasts fiscal 2023 revenue to exceed $10 million, driven primarily by existing customers' software-as-a-service (SaaS) adoption, with 90% of anticipated revenue coming from this segment. Cash at year-end 2023 is projected to be $4 million, with operations expected to break even. Risks include potential regulatory changes and economic conditions affecting customer spending. Despite these, the company is optimistic about continued growth and no immediate need for additional financing.

Positive

• Fiscal 2022 revenue of $6.9 million, 55% increase over 2021.
• Q4 2022 revenue reached $2.2 million, up 81% from Q4 2021.
• Projected fiscal 2023 revenue exceeding $10 million, a 47% increase.
• Expected cash balance of $4 million and near break-even cash flow by year-end 2023.

Negative

• Revenue projections depend heavily on existing customers' continued SaaS adoption.
• Potential risks from regulatory changes that may impact customer technology adoption.

Company Anticipates Continued Growth in Fiscal 2023

EDMONTON, AB / ACCESSWIRE / January 24, 2023 / OneSoft Solutions Inc. (TSXV:OSS)(OTCQB:OSSIF) ("OneSoft" or "Company") is providing a summary of operations for the Company's fiscal year ended December 31, 2022 ("Fiscal 2022"), and corporate update and guidance for the fiscal year ending December 31, 2023 ("Fiscal 2023").

"OneSoft had a strong finish to the year, with $2.2 million in revenue for Q4 2022, almost $1 million or 81% higher than Q4 2021, contributing to a 55% increase in Fiscal 2022 revenue over Fiscal 2021," said Dwayne Kushniruk, OneSoft CEO. "We believe the Company is well positioned to continue revenue growth and with another year behind us and improved visibility regarding software onboarding and use patterns by our customers we can now provide some guidance regarding forecasted revenue in Fiscal 2023."

Brandon Taylor, Chief Operating Officer, added, "Beside questions about revenue growth expectations and its drivers, people who follow the Company commonly ask two other questions: (1) whether additional financing is imminently required by the Company; and (2) when the Company expects to operate cash positive. Regarding revenue growth, we believe Fiscal 2023 revenue will exceed $10 million, of which about 90% is forecast to come from increased use of our software-as-a-service ("SaaS") solutions as existing customers onboard more of their pipeline assets. We are forecasting cash to be $4 million at Fiscal 2023 year-end and cash from operations to be approximately break even near the end of the year, thus we do not anticipate raising additional capital based on our current plan and budget."

Key Operating & Financial Metrics and Fiscal 2023 Guidance

The information in the following "Comprehensive Statement of Income (Loss)" table is based on actual audited figures reported for Fiscal 2019 through Fiscal 2021, estimated figures for Fiscal 2022 and the Company's operational budget for Fiscal 2023, as at the date of this news release.

Comprehensive Statement of Income (Loss)
$ 000's except percentages		Fiscal 2019 (Actual)			Fiscal 2020 (Actual)			Fiscal 2021 (Actual)			Fiscal 2022 (Estimated)			Fiscal 2023 (Forecast)			% Change 2022 to 2021			% Change 2023 to 2022
Revenue			$2,712			$4,056			$4,442			$6,880			$10,104			55%			47%
Direct costs			$(702)			$(921)			$(1,125)			$(1,978)			$(2,526)
Gross Profit			$2,010			$3,135			$3,317			$4,901			$7,578			48%			55%
Operating expense, net of costs capitalized			$(4,601)			$(5,654)			$(5,792)			$(7,002)			$(7,707)			21%			10%
Other expense			$(1,015)			$(737)			$(1,414)			$(785)			$(1,101)
Net Loss			$(3,606)			$(3,256)			$(3,889)			$(2,885)			$(1,297)			26%			55%

• Fiscal 2022 revenue is estimated at $6.9 million, representing a 55% increase over Fiscal 2021 revenue. Fiscal 2022 figures are comprised of actual results as reported for Q1 through Q3 2022 plus Management's estimates for Q4 2022 based on non-audited, preliminary results. The Company expects to file its audited financial statements and annual report for Fiscal 2022 in March 2023.
• Fiscal 2023 revenue is forecasted to be $10.1 million, an increase of 47% over Fiscal 2022. $9.2 million of forecasted revenue is expected to come from existing customers including those acquired in the IM Group acquisition on June 30, 2022. This forecast reflects existing customers' projected consumption of the Company's Cognitive Integrity Management SaaS solution ("CIM") and related services including certain customers who plan to expand their CIM usage to newly acquired pipeline assets and the adoption of new products OneBridge is bringing to market. The remaining $0.9 million is forecasted sales to prospective customers which the Company anticipates will close in 2023.
• Potential risks to these revenue projections are unforeseen factors that might negatively affect our customers' and prospects' decisions to purchase our solutions, such as regulatory changes that reduce pipeline operators' urgency to adopt new technologies or changes in economic conditions that might affect pipeline industry operations. Such events may reduce industry spending, resulting in delays to expected CIM adoption by prospective customers, OneBridge's new modules not selling as expected and a reduction of expected CIM usage by customers. To mitigate the impact of a reduced Cdn to U.S. dollar exchange rate, the Company assumed an exchange rate of $1.25 Cdn to U.S. dollars in its Fiscal 2023 forecast. Rates below and above this rate would reduce or increase, respectively, the Canadian dollar equivalent of forecasted revenues, all of which are invoiced in U.S. dollars.
• Direct Costs as a percentage of revenue is estimated to be 29% in Fiscal 2022 and forecasted to decrease to 25% in Fiscal 2023 as a result of certain expenses not rising commensurately with higher revenue.
• Fiscal 2023 budgeted expenditures reflect increased spending by approximately 10% over Fiscal 2022. Increases in operating expenses reflect the Company's strategy to maximize advancements of next generation solutions and enhance the Company's suite of products which Management believes will assist market share increase, generate future revenues and ultimately contribute to increasing value of the Company. Expense forecasts include contingency expenses of $600,000, of which $500,000 is allocated potentially for additional product or other business development projects, such as a geohazard management module that may be pursued pending the outcome of research that is currently ongoing in the Company's Innovation Lab. The $100,000 contingency balance is allocated to upgrade our internal control over financial reporting which the Company will ultimately require to up-list to a tier one Canadian stock exchange and for audit to Public Company Accounting Oversite Board standards as is required by tier one U.S. stock exchanges.

Net Loss and Adjusted EBITDA for Fiscal 2019 to Fiscal 2021, estimated figures for Fiscal 2022 and forecasted figures for Fiscal 2023 based on the operational budget are stated in the following table. Adjusted EBITDA, a non-GAAP measure, is defined by the Company as earnings before interest, income taxes, stock option expense, depreciation, amortization and impairment charges.

Adjusted EBITDA Reconciliation
$ 000's except percentages		Fiscal 2019 (Actual)			Fiscal 2020 (Actual)			Fiscal 2021 (Actual)			Fiscal 2022 (Estimated)			Fiscal 2023 (Forecast)			% Change 2022 to 2021			% Change 2023 to 2022
Net Loss			$(3,606)			$(3,256)			(3,889)			$(2,885)			$(1,297)			26%			55%
Add (subtract):
Depreciation and amortization			$407			$416			$456			$455			$564
Stock based compensation			$663			$589			$960			$619			$813
Interest (income)			$(147)			$(115)			$(24)			$(67)			$(108)
Adjusted EBITDA			$(2,683)			$(2,366)			$(2,497)			$(1,878)			$(28)			25%			98%

The following table states the estimated Fiscal 2022 and forecasted Fiscal 2023 cash and deferred revenue balances as at fiscal year ends. The Company does not have any long-term debt.

Cash and Deferred Revenue
$ 000's except percentages		Fiscal 2019 (Actual)			Fiscal 2020 (Actual)			Fiscal 2021 (Actual)			Fiscal 2022 (Estimated)			Fiscal 2023 (Forecast)			% Change 2022 to 2021			% Change 2023 to 2022
Cash and cash equivalents			$10,512			$7,223			$5,509			$4,392			$4,040			(20) %			(8) %
Deferred revenue			$1,640			$414			$1,184			$2,099			$1,815			77 %			(14) %

• The cash balance may vary materially if certain scenarios that are not currently anticipated occur during 2023, including but not limited to: (i) revenue, deferred revenue and cash collections not occurring as anticipated; (ii) material variances in planned expenditures and (iii) the Company's current business plan being changed during the year; and/or (iv) the Company incurring a material expenditure such as an acquisition during the year. At this point in time, Management does not anticipate any requirement to raise additional capital in Fiscal 2023 if no such unforeseen events occur.
• Management anticipates that deferred revenue will continue to contribute to finance operations in Fiscal 2023. Deferred revenue is forecasted to be approximately $1.8 million at Fiscal 2023 year-end. This figure may vary materially due to timing of cash receipts and CIM utilization by customers and is also dependent upon achieving planned revenue and closing of sales to new customers during 2023 as anticipated.

CIM Use and Revenue Generating Data-miles

The following pipeline miles table estimates the miles of customers' pipeline assets that are subject to multi-year SaaS agreements and miles of pipeline data ingested into CIM on which revenue was earned ("data-miles").

CIM Use & Revenue Generating Data-miles		Fiscal 2019 (Actual)			Fiscal 2020 (Actual)			Fiscal 2021 (Actual)			Fiscal 2022 (Estimated)			Fiscal 2023 (Forecast)			% Change 2022 to 2021			% Change 2023 to 2022
Pipeline miles on SaaS subscription			38,631			38,793			91,266			98,839			151,195			8%			53%
Pipeline miles generating revenue			22,549			29,544			41,320			53,483			65,697			29%			23%
% of subscription miles generating revenue			42%			24%			55%			46%			57%			n/a			n/a
Revenue per mile for revenue generating miles			$120.26			$137.29			$107.50			$128.63			$153.80			n/a			n/a

• Based on CIM usage patterns by our customers to date, the Company now prices and budgets CIM consumption revenue to ramp up for new individual customers over a 5 or 7 year period, to coincide with regulatory inline inspection schedules for liquid and gas pipelines, respectively. While some customers may onboard all of their pipeline assets over shorter or longer periods, we believe this metric is generally reasonable to forecast revenue. For example, assuming a $100 per data-mile figure, revenue expectations for a customer with 10,000 miles of liquid pipeline would approximate $200,000 in year 1; $400,000 in year 2; $600,000 in year 3; $800,000 in year 4; and $1 million in the fifth and subsequent years. Readers are cautioned that this theoretical assumption will not be accurate for all customer scenarios and that pricing strategies may be changed, potentially affecting forecasted revenue generation timelines.
• Two other factors are expected to result in increasing revenue over time. Multi-year customer contracts signed today include a price escalation clause which allows the Company to increase pricing in accordance with either a stated percentage or increases in the U.S. CPI index. Also, customers will be charged for use of new module functionality that they purchase. Maximum revenue for the Company's customers will occur only after all pipeline asset data has been ingested and all additional functionality modules have been fully implemented.
• "Pipeline miles generating revenue" approximates the cumulative data-miles ingested into CIM that are revenue generating. "% of subscription miles generating revenue" is the percentage of revenue generating data-miles compared to total miles operated, cumulatively for all customers. "Revenue per mile for revenue generating miles" is the calculation of total revenue divided by cumulative revenue generating data-miles. This calculation is only an approximation, as the revenue per data-mile figure will only be accurate when all customers' miles become revenue generating for the entire fiscal year and is subject to fluctuation due to customer pipeline maintenance schedules. Management uses this revenue per mile figure as a metric for trending analysis.

Business Operations and Technology

Management believes that the Company's solutions are continuing to lead the market in cloud computing, data science and machine learning technologies and that our solutions are progressing towards becoming the de facto standard for next generation computing solutions for oil and gas pipeline operators. Based on discussions currently underway, we anticipate that the Company will enter collaborative arrangements in Fiscal 2023 with certain industry vendors who may choose to use our solutions rather than continue with their legacy systems or commence development of competing products. Forecasted Fiscal 2023 revenue does not include any revenue from these potential arrangements.

We intend to continue to maintain our technological and market lead by enhancing our revolutionary solutions and approach to pipeline integrity management. The Company's technology roadmap is developed and updated in collaboration with customers, who we believe will adopt new companion software modules that integrate with the CIM SaaS platform. The Company's strategy in developing new modules is to initially build minimally viable products ("MVP") that customers desire and thereafter enhance the functionality in accordance with customer input and feedback. Risk Management and Crack Management MVP modules are currently in private preview use by certain customers, with commercial release dates scheduled for Q2 2023. Management is forecasting limited revenue generation from Corrosion (which MVP was completed in Fiscal 2022), Risk and Crack Management modules in Fiscal 2023, with the expectation that material revenues from these modules will not commence until Fiscal 2024. A new module with functionality designed for geohazard risk management is in early research and prototyping phases.

Optimization of Management Teams and Board of Directors

In Fiscal 2022, the Company formulated a succession plan for the senior executive management team and the Board of Directors. The Company has and will continue to augment its departmental management teams with deep domain expertise in integrity management, engineering and related services including recruiting some personnel who worked with major competitors. The Company appointed new VP Sales and VP Marketing personnel in 2022, which has contributed to improved visibility of a strong sales funnel.

The succession plan for the Board of Directors will require the recruitment of new Directors to optimize the Board's collective skillset and experience pool. The Company anticipates maintaining a 5-person, diverse Board with term limits for Directors, comprised of a majority of independent Directors who will collectively have oil and gas pipeline operational, capital markets, mergers and acquisitions and legal and financial expertise.

Corporate Development

OneSoft closed its first acquisition on June 30, 2022, wherein certain software, intellectual property, new customer relationships and recurring services business opportunities were acquired. This acquisition also resulted in the addition of seven individuals who are contributing deep domain expertise associated with high consequence area analysis and risk management solutions and services. The acquired business was successfully integrated in Fiscal 2022, was immediately accretive and is expected to be very beneficial to the Company's growth plans. OneSoft continues to seek similar acquisition scenarios.

We believe that our cloud solutions based on data science and machine learning have been strongly validated by key industry participants and that they provide unparalleled, next generation functionality that can benefit pipeline operators globally. We wish to thank all employees, customers and investors who have helped us achieve our progress to date. We believe that OneSoft is well positioned for continued growth as our solutions continue to gain traction in our marketplace and look forward to advancing the Company in 2023.

About OneSoft and OneBridge

OneSoft has developed software technology and products that have capability to transition legacy, on-premises licensed software applications to operate on the Microsoft Azure Cloud Platform. Our business strategy is to seek opportunities to incorporate Data Science and Machine Learning, business intelligence and predictive analytics to create cost-efficient, subscription-based software-as-a-service solutions. Visit www.onesoft.ca for more information.

OneSoft's wholly owned subsidiary, OneBridge Solutions Canada Inc., develops and markets revolutionary new SaaS solutions that use advanced Data Sciences and Machine Learning to analyze big data using predictive analytics to assist Oil & Gas pipeline operators to predict pipeline failures and thereby save lives, protect the environment, reduce operational costs, and address regulatory compliance requirements. Visit www.onebridgesolutions.com for more information.

For more information, please contact.

OneSoft Solutions Inc. Dwayne Kushniruk, CEO dkushniruk@onesoft.ca 587-416-6787

Sean Peasgood, Investor Relations Sean@SophicCapital.com 647-494-7710

Forward-looking Statements

This news release contains forward-looking statements relating to the future operations and profitability of OneSoft Solutions Inc. (the "Company") and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "expects", "believe", "will", "intends", "plans" and similar expressions. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking information is provided to deliver information about management's current expectations and plans relating to the future. Investors are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions.

In respect of the forward-looking information and statements the Company has placed reliance on certain assumptions that it believes are reasonable at this time, including expectations and assumptions concerning, among other things: the impact of Covid-19 on the business operations of the Company and its current and prospective customers; the availability and cost of labor and services; the efficacy of its software; our interpretation based on various industry information sources regarding the total miles of pipeline in the USA and globally and which segments are piggable; our understanding of metrics, activities and costs regarding evaluation, inspection and maintenance is in alignment with various industry information sources and is reasonably accurate; that counterparties to material agreements will continue to perform in a timely manner; that there are no unforeseen events preventing the performance of contracts; that there are no unforeseen material development or other costs related to current growth projects or current operations; the success of growth projects; future operating costs; interest and foreign exchange rates; planned synergies, capital efficiencies and cost-savings; the sufficiency of budgeted capital expenditures in carrying out planned activities; and no changes in applicable tax laws. Accordingly, readers should not place undue reliance on the forward-looking information contained in this press release. Since forward-looking information addresses future events and conditions, such information by its very nature involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to many factors and risks. These include but are not limited to the risks associated with the industries in which the Company operates in general such as: costs and expenses; interest rate and exchange rate fluctuations; competition; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws.

Readers are cautioned that the foregoing list of factors is not exhaustive. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release, and the Company will publicly update or revise any of the included forward-looking information, based on new knowledge, future events or otherwise, in accordance with Canadian securities law.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities within the United States. The securities to be offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act or other laws.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

SOURCE: OneSoft Solutions Inc.

View source version on accesswire.com:
https://www.accesswire.com/736469/OneSoft-Reports-Fiscal-2022-Financial-Summary-Estimates-Corporate-Update-and-Fiscal-2023-Guidance

FAQ

What was OneSoft's revenue for fiscal 2022?

OneSoft's revenue for fiscal 2022 was approximately $6.9 million, a 55% increase over fiscal 2021.

What are OneSoft's revenue projections for fiscal 2023?

OneSoft anticipates revenue in fiscal 2023 to exceed $10 million, representing a 47% increase from fiscal 2022.

What factors could affect OneSoft's projected revenue?

Revenue projections could be affected by regulatory changes and economic conditions that impact spending in the pipeline industry.

Does OneSoft expect to raise additional capital in fiscal 2023?

OneSoft does not anticipate requiring additional financing in fiscal 2023 based on current plans and budgets.