BSM Technologies Inc. Reports Fiscal 2018 Second Quarter Results

TORONTO, May 10, 2018 /CNW/ - BSM Technologies Inc. ("BSM" or the "Company") (TSX: GPS), a leading provider of real-time GPS fleet and asset management solutions, today announced its unaudited consolidated financial and operating results for the three months ended March 31, 2018 (the "Second Quarter" or "Q2 FY2018"). All amounts are in Canadian dollars unless otherwise stated.

Second Quarter of Fiscal 2018 Highlights:

• Total revenue of $14.8 million, a decrease of 7% compared to $16.0 million in the second quarter of fiscal 2017 ("Q2 FY2017"), primarily as a result of lower hardware sales as well as the impact of a weaker United States dollar in Q2 FY2018.
  
  
• Total gross profit margin of 59%, no change compared to 59% in Q2 FY2017.
  
  
• Recurring Revenue ⁽ⁱ⁾ of $11.2 million, a decrease of 5% compared to $11.8 million in Q2 FY2017 and a decrease of 1% compared to $11.3 million in the first quarter of fiscal 2018 ("Q1 FY2018").
  
  
• Gross Subscriber additions⁽ⁱⁱ⁾ of 3,700 and Subscriber churn⁽ⁱⁱ⁾ of 3,100, resulting in a March 31, 2018 Subscriber⁽ⁱⁱ⁾ base of 166,700, up from 166,100 as at December 31, 2017.
  
  
• Average Revenue Per Subscriber⁽ⁱⁱ⁾ calculated on a constant currency basis⁽ⁱⁱⁱ⁾ was $22.48 compared to $23.18 in Q2 FY2017 and $22.18 in Q1 FY2018.
  
  
• Adjusted EBITDA⁽ⁱ⁾ of $1.6 million, a decrease of 27% compared to $2.2 million in Q2 FY2017 and an increase of 14% compared to $1.4 million in Q1 FY2018.

Management Commentary:

"We are encouraged by the subscriber retention rate achieved in the quarter as we focus on our core strategic objectives for fiscal 2018 – platform integration, sales success and customer health," said Aly Rahemtulla, BSM's President and CEO. "We are happy with the progress to date on consolidating our products into a single unified platform, and are confident in our ability to continue a smooth transition as the process continues."

"Throughout fiscal 2018 to date, we have been able to maintain positive adjusted EBITDA margin performance despite increasing investments in our engineering capacity.  This shift in resources leaves us better positioned to achieve our strategic objectives moving forward," added Mr. Rahemtulla. "We are excited about the strength of our customer pipeline as well as the expanded features that our new unified solution will offer our customer base. Focusing on customer satisfaction and customer requests ensures we are continuously evolving the BSM product portfolio with our users in mind. We will continue to invest in research and development efforts to become  a key player in the internet of things (IOT) and telematics market."

Financial Highlights for the Second Quarter of Fiscal 2018:

($ thousands except gross margin % and per share data)

The Company's interim unaudited consolidated financial statements for the three months ending March 31, 2018 and 2017, together with its corresponding management's discussion and analysis can be found under the Company's profile on SEDAR at www.sedar.com and on the Company's website at http://www.bsmtechnologies.com.

Conference Call Details:

About BSM Technologies:

BSM, through its subsidiaries, is a provider of GPS telematics and Internet of Things (IoT) asset management solutions. The Company offers a variety of product solutions to its customers including both hardware and software technologies. BSM's product solutions provide, among other things, near real-time tracking and management of customer assets through BSM's web-based platform. The Company's product solutions extend beyond basic location tracking and encompass a host of solutions including: driver compliance, asset utilization metrics, real-time dynamic scheduling and routing, and enhanced data reporting capabilities. Customers use our product solutions to, among other things, enhance asset utilization, improve the security of their drivers and vehicles, improve customer service and lower business costs, thereby improving the overall efficiency of their operations. BSM's common shares are publicly traded on the Toronto Stock Exchange (TSX: GPS).

For more information, please visit http://www.bsmtechnologies.com.

Non-GAAP Financial Measures and KPI's:

This news release includes the measures "Recurring Revenue", "Hardware Revenue", "Professional Services Revenue", "EBITDA" and "Adjusted EBITDA", which are "non-GAAP financial measures" under applicable laws. Non-GAAP financial measures do not have any standardized meaning under the Company's GAAP and therefore may not be comparable to similar measures presented by other companies. Readers are cautioned that the disclosure of these items are meant to add to, and not replace, the discussion of financial results or cash flows from operations as determined by the Company's GAAP under International Financial Reporting Standards. BSM believes that investors use these non-GAAP financial measures as indicators to assess telematics companies.

Reconciliation of Recurring Revenue, Hardware Revenue and Professional Services Revenue to Total Revenue:

Each of these revenue categories are components of total revenue as disclosed in the statement of operations in the Company's financial statements and presented within the financial highlights table of this press release.

Key Performance Indicators:

In addition to the non-GAAP financial measures previously described, the Company uses a number of key performance indicators (KPIs). BSM believes these KPIs allow the Company to appropriately measure its performance against its operating strategy. The following KPIs are not measurements in accordance with GAAP and should not be considered as an alternative to any other measure of performance under GAAP.

A "Subscriber" is defined as a BSM customer's individual asset monitored by a telematics device. The Company believes that a Subscriber is an important metric for the Company investors because it provides an indication of the Company's ability to generate Recurring Revenue from providing recurring service to its customers. Subscriber additions occur when the Company invoices for monthly services to a new telematics device not previously in the Company's Subscriber base, and Subscriber churn occurs when the Company no longer invoices a Subscriber for monthly services due to cancellation or expiry of the monthly services.

"Average Revenue Per User or Subscriber" or "ARPU" is calculated monthly as Recurring Revenue divided by the average number of Subscribers during the month. The Company believes that ARPU helps to identify trends and to indicate whether it is successful in attracting and retaining higher value Subscribers. ARPU calculated on a constant currency basis is presented in Canadian dollars (the Company's presentation currency) using the effective average foreign exchange rate from the current period for all prior periods presented. Calculating ARPU on a constant currency basis removes the impact of foreign currency fluctuations on foreign denominated revenue when ARPU is presented in the Company's consolidated currency.

Cautionary Note Regarding Forward-Looking Statements:

This news release includes certain forward-looking statements or information under applicable Canadian, U.S. and other securities laws. Such forward-looking information and statements are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect" and "intend" and statements that an event or result "may", "will", "should", "could", or "might" occur or be achieved and any other similar expressions. Such forward-looking information includes but is not limited to, statements with respect to BSM's being able to complete a software platform consolidation plan, software migration to the Mobi software platform, and plans to expand BSM's product solutions. These forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business and include, but are not limited to, successfully completing a hardware and software platform consolidation and developing an enhanced enterprise solution, and current and future customers reacting positively to the enhance enterprise solution leading to increased commercial growth. Management believes that these assumptions are reasonable; however, some risks include, but are not limited to, failing to efficiently or successfully complete hardware and software consolidation and migrate to the Mobi software platform on time, failing to develop an enhanced enterprise solution, and failing to engage customers or position products effectively with customers. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those contained in the forward-looking information. Some of these risks, uncertainties and other factors are described under the heading "Risk Factors" in BSM's most recent annual information form available at www.sedar.com. Forward-looking statements or information are based on estimates and opinions of management at the date the statements are made. Except as required by applicable law, BSM does not undertake any obligation to update forward-looking information. Readers should not place undue reliance on forward-looking information.

SOURCE BSM Technologies Inc.