Route1 Announces Q1 2022 Financial Results

Rhea-AI Summary

Route1 Inc. (OTCQB:ROIUF) reported a total revenue of 4,695 CAD for Q1 2022, down from 7,035 CAD in Q4 2021, marking a significant decline in performance. Subscription and services revenue also decreased to 1,911 CAD from 1,977 CAD. The company achieved a gross profit of 2,123 CAD but incurred a net loss of 315 CAD. Despite these challenges, the CEO indicated a focus on generating new recurring revenue and expressed optimism for sequential improvement in Q2 2022 amidst a tough macro environment.

Positive

• Recovery expected in Q2 2022
• Focus on generating new recurring revenue from professional services and support contracts
• Strong demand for post-sales support in ALPR accounts

Negative

• Total revenue decreased to 4,695 CAD from 7,035 CAD in Q4 2021
• Net loss of 315 CAD
• Subscription and services revenue fell to 1,911 CAD from 1,977 CAD

TORONTO, ON / ACCESSWIRE / May 25, 2022 / Route1 Inc. (OTCQB:ROIUF) and (TSXV:ROI) (the "Company" or "Route1"), an advanced North American provider of data-centric business empowerment solutions, today reported its financial results for the three-month period ended March 31, 2022.

The Company's operating results for Q1 2022 with comparatives are as follows:

			Q12022				Q42021				Q32021				Q22021				Q12021				Q42020
Revenue
Subscription and services			1,911				1,977				2,297				2,671				2,758				2,528
Devices and appliances			2,781				5,022				4,960				3,663				3,786				4,637
Other			3				36				31				4				67				62
Total revenue			4,695				7,035				7,288				6,338				6,611				7,227
Cost of revenue			2,572				4,660				4,696				3,443				3,647				4,315
Gross profit			2,123				2,375				2,592				2,895				2,964				2,912
Operating expenses			2,012				2,382				2,437				2,451				2,542				2,469
Operating profit 1			111				(7	)			155				444				422				443
Patent litigation 2 Total other expenses 3			- 110				- 308				- 216				- (17)				- 284				1,058 321
Net income (loss)			1				(315	)			(61	)			461				138				(936	)

¹ Before stock-based compensation

² For FY 2020, the Company incurred expenses for patent litigation net of the reversal of an accounting liability reflecting the funds the Company received from its litigation funding agreement. The Company has concluded the litigation with VMWare in both Canada and the United States and will incur no additional expense for this litigation.

³ Includes gain on litigation, gain or loss on asset disposal, stock-based compensation expense, interest expense, income tax recovery, foreign exchange loss or gain, other expenses and acquisition expense.

Subscription and services revenue in 000s of CAD dollars			Q12022				Q42021				Q32021				Q22021				Q12021				Q42020
Application software			1,483				1,504				1,628				1,724				1,977				2,015
Technology as a service (TaaS)			-				50				150				435				293				204
Other services			428				423				519				512				488				309
Total			1,911				1,977				2,297				2,671				2,758				2,528

Other services revenue in 000s of CAD dollars			Q12022				Q42021				Q32021				Q22021				Q12021				Q42020
Technology life-cycle maintenance and support			209				175				177				200				195				179
Professional services			219				248				342				312				293				130
Total			428				423				519				512				488				309

Adjusted EBITDA in 000s of CAD dollars			Q12022				Q42021				Q32021				Q22021				Q12021				Q42020
Adjusted EBITDA 4			446				341				465				760				764				768
Amortization			335				348				310				316				342				325
Operating profit			111				(7	)			155				444				422				443

⁴ Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, stock-based compensation, patent litigation, restructuring and other costs. Adjusted EBITDA does not have any standardized meaning prescribed under IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. Adjusted EBITDA allows Route1 to compare its operating performance over time on a consistent basis.

Balance sheet extracts In 000s of CAD dollars		Mar 31 2022				Dec 31 2021				Sep 30 2021				Jun 30 2021				Mar 31 2021				Dec 31 2020
Cash			481				63				727				166				513				1,137
Total current assets			3,618				5,726				7,543				5,008				5,357				6,408
Total current liabilities			8,147				10,563				11,542				9,095				9,887				9,779
Net working capital			(4,529	)			(4,837	)			(3,999	)			(4,087	)			(4,530	)			(3,371	)
Net working capital (adjusted for contract liability)			(2,337	)			(2,205	)			(228	)			(1,263	)			(853	)			256
Total assets			12,574				15,097				16,833				13,739				14,386				14,176
Net bank debt and seller notes			2,297				2,926				2,194				1,673				1,215				655
Total shareholders' equity			2,774				2,728				2,982				2,906				2,443				2,141

As of May 25, 2022, there are a total of 2,925,000 options currently outstanding under the stock option plan.

"Our first quarter saw an advancement of the Company's transition into a new growth paradigm, while the macro business environment continued to be challenging. As a result, we were and continue to be short-term in focus with the underlying goal of driving new, recurring revenue derived from professional services and support contracts and to control our costs", said Tony Busseri, Route1's President and CEO. "We also expect our second quarter to show sequential improvement over the first quarter."

Route1's Growth Focus

Route1's growth focus is now tied to its core services and engineering competencies.

The Company is emphasizing its turn-key engineering services for clients using video and sensor capture technology to deliver real-time, secure actionable intelligence. We amplify our customers' return on investment by driving outcomes through the application of advanced technological solutions and by leveraging our expertise in video intelligence data. Our continued investment in data security and user authentication technologies including our flagship software application MobiKEY and service delivery platform DEFIMNET, separate us from our turn-key engineering services competitors as we bring a unique skill set as a service to our clients.

Route1 currently excels as an engineering and professional services provider for automated license plate recognition ("ALPR") clients and is seeing growth in the number of accounts, increased investment in the technology once deployed by an account, and strong demand for post-sales support from these accounts.

Technology Focus: Route1 currently is or intends to be active with its turn-key engineering and professional services to support clients investing in video and sensor capture technologies including ALPR, surveillance video, body worn cameras and drones. Further, Route1 intends to expand on its capability to support clients adopting access control technology. Genetec will continue to be an important technology partner for Route1.

Turn-key Services: Route1's turn-key engineering and professional services to support our clients are as follows:

• Advisory and analysis including operations assessment
• Design and engineering
• Hardware and software procurement
• Project management
• Installation and configuration
• End user and administrator training
• Technology life-cycle maintenance and support
• Operations optimization

Operations optimization is centered around data integration and intelligence. Areas of expertise are: (a) data transport, hosting and storage; (b) data presentation including cloud based software applications to deliver data captured in an actionable format; (c) data analytics including integration of multiple data sets; and (d) data and network security, and user authentication.

Our focus is on situations in which video and sensor intelligence, and related environmental data can augment an organization's capabilities - whether in the private or public sector. Building on our expertise in the video space, combined with our deep-rooted background in software development, system infrastructure operations and cybersecurity, Route1 has a significant competitive advantage and is in position to differentiate itself in the engineering and professional services arena.

The subscription-based revenue model for Route1's MobiKEY product was one of the first in the industry. Now, Route1 will augment and solidify that recurring revenue stream by adopting the model throughout our Company. Unlike traditional turn-key engineering and professional-services organizations, the emphasis is on engaging our customers in a way that creates an on-going interaction and drives long term recurring revenue. Our investment will be in people and relationships with independent software vendors ("ISV") and OEMs to leverage their intellectual property to gain actionable intelligence that generates exceptional outcomes for our clients.

Business Update Conference Call and Webcast

The Company will hold a conference call and web cast to provide a business update on Wednesday, May 25, 2022 at 4:30 pm Eastern Time.

Participants should dial Toll-Free 888-506-0062 or Toll/International 973-528-0011 at least 10 minutes prior to the conference call and web cast. The participant access code is 775672. For those unable to attend the call, a replay will be available at Toll-Free 877-481-4010 passcode 45656until 4:30 pm on June 8, 2022.

The webcast will be presented live at https://www.webcaster4.com/Webcast/Page/2167/45656.

About Route1 Inc.

Route1 Inc. is an advanced North American technology company that empowers their clients with data-centric solutions necessary to drive greater profitability, improve operational efficiency and gain sustainable competitive advantages, while always emphasizing a strong cybersecurity and information assurance posture. Route1 delivers exceptional client outcomes through real-time secure delivery of actionable intelligence to decision makers, whether it be in a manufacturing plant, in-theater or in a university parking lot. Route1 is listed on the OTCQB in the United States under the symbol ROIUF and in Canada on the TSX Venture Exchange under the symbol ROI. For more information, visit: www.route1.com.

For More Information, Contact:

Tony Busseri
President and Chief Executive Officer
+1 480 500-7030
tony.busseri@route1.com

This news release, required by applicable Canadian laws, does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

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 release.

© 2022 Route1 Inc. All rights reserved. No part of this document may be reproduced, transmitted or otherwise used in whole or in part or by any means without prior written consent of Route1 Inc. See https://www.route1.com/terms-of-use/ for notice of Route1's intellectual property.

This news release may contain statements that are not current or historical factual statements that may constitute forward-looking statements or future oriented financial information. These statements are based on certain factors and assumptions, including, expectations regarding the success of the private placement and the terms on which the Company will raise funds, price and liquidity of the common shares, expected financial performance, expected subscribers and subscription-based revenue, business prospects, technological developments, development activities, the ability of the Company to obtain the supersedeas bond in order to appeal the decision to the United States Court of Appeals for the Federal Circuit, and like matters. While Route1 considers these factors and assumptions to be reasonable, based on information currently available, they may prove to be incorrect. These statements involve risks and uncertainties, including but not limited to the risk factors described in reporting documents filed by the Company. Actual results could differ materially from those projected as a result of these and other risks and should not be relied upon as a prediction of future events. The Company undertakes no obligation to update any forward-looking statement or future oriented financial information to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, except as required by law. Estimates used in this presentation are from Company sources. Past or forecasted performance is not a guarantee of future performance and readers should not rely on historical results or forward-looking statements or future oriented financial information as an assurance of future results.

SOURCE: Route1 Inc.

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FAQ

What were Route1's Q1 2022 revenues?

Route1 reported total revenues of 4,695 CAD for Q1 2022.

How much was Route1's net income in Q1 2022?

Route1 posted a net loss of 315 CAD in Q1 2022.

What is Route1's outlook for Q2 2022?

Route1 expects sequential improvement in Q2 2022.

What was the change in subscription and services revenue for Route1 in Q1 2022?

Subscription and services revenue decreased to 1,911 CAD from 1,977 CAD in the previous quarter.