VersaPay Announces Q4 and Full Year 2017 Financial Results

- Monthly Recurring Revenue Grows by 104.8% Year over Year -

TORONTO, April 12, 2018 /CNW/ - VersaPay Corporation (TSXV: VPY) ("VersaPay" or the "Company"), a leading provider of cloud-based invoicing, accounts receiv­able management and payment solutions, today announced fourth quarter ("Q4") financial results for the three and twelve-month periods ended December 31, 2017.

"2017 was a year of transformation and growth for VersaPay, as we sold our POS Merchant Services business at the beginning of the year and focused on building our Accounts Receivable ("AR") automation software business," said Craig O'Neill, CEO of VersaPay. "We've built significant momentum in the business, driven by a growing list of successful clients who are achieving material reductions in Days Sales Outstanding ("DSO") and AR process costs."

Operational Highlights:

• Strong increases in ARC™ metrics were achieved by the close of Q4: 124 suppliers were signed up to use ARC, up from 90 at the end of last year; 97.0 thousand end-customers were active on the platform, up from 29.1 thousand, last year; 436.5 thousand invoices were delivered to end-customers, up from 184,116 in Q4 2016; payments in quarter were $101 million, compared to $38 million in Q4 of last year.
• The Company signed a strategic partnership with Royal Bank of Canada for RBC to market and sell ARC™, VersaPay's accounts receivable automation platform, under the RBC brand.
• Two seasoned executives joined the Company's executive leadership team: Chief Revenue Officer, Ross Pellizzari, and Chief Product Officer, Jason Read, and two directors with extensive technology sector experience joined the board: Sheldon Pollack and Mark Kohler.
• The Company completed a private placement in October for $10.7 million, led by the Canadian arm of a US institutional investor.

Financial Highlights:

The following highlights treat the Company's POS Merchant Services business, sold in February 2017, as a discontinued operation.

• Monthly Recurring Revenue ("MRR") at the end of 2017 was $319.9 thousand, compared to $156.2 thousand at the end of 2016, an increase of 104.9%
• Revenue for Q4 2017 increased by 126.5% to $1.16 million compared to $0.50 million in Q4 2016.
• Revenue for the twelve months ended December 31, 2017 increased by 95.5% to $2.96 million compared to $1.51 million for the twelve months ended December 31, 2016.
• Gross margin percentage for Q4 2017 was 63.5%, compared to 54.5% in Q4 2016.
• Gross margin percentage for the twelve months period ended December 31, 2017 was 66.8%, compared to 54.3% for the twelve months ended December 31, 2016.
• Adjusted EBITDA⁽¹⁾ was ($1.84) million in Q4 2017, compared to ($1.59) million in Q4 2016.
• Adjusted EBITDA was ($7.54) million for the twelve months ended December 31, 2017, compared to ($6.44) million for the same period in 2016, in accordance with the Company's plans to invest in people, software development and infrastructure.
• Net earnings from discontinued operations of $8.52 million for the twelve-months ended December 31, 2017 and reflects the gain on sale of our POS Merchant Services business, compared to $1.4 million for the same period in 2016
• Total comprehensive loss for Q4 2017 was ($2.52) million, compared to a loss of ($1.82) million for Q4 2016.
• Total comprehensive income for the twelve-months ended December 31, 2017 was $0.35 million, compared to a loss of ($5.93) million for the same period in 2016, due to the gain related to the sale of the POS Merchant Services business.
• Total operating expense for the twelve-months ended December 31, 2017 increased by 24.3% to $10.1 million, compared to $8.2 million for the twelve-months ended December 31, 2016.
• As at December 31, 2017, the Company had cash on hand of $15.83 million compared to $2.75 million as at December 31, 2017.

The Company has previously noted a proposed assessment from Revenue Quebec under various rules contained in the Excise Tax Act and the Act Respecting the Quebec Sales Tax. Since the release of its Q3 2017 financial statements, the Company received an assessment from Revenue Quebec of GST/HST and QST taxes owing of $1.7 million before investment tax credits.  After applying estimated investments tax credits paid or payable during the period of assessment, the Company has accrued an additional $392 thousand in its Q4 2017 financial statements as the net amount owing to Revenue Quebec.

The term Adjusted EBITDA ("Adjusted EBITDA") is a non-IFRS measure and refers to earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") and is a non-IFRS financial measure which does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other issuers. Adjusted EBITDA provides useful information to users as it reflects the net earnings prior to the effect of non-operating expenses and unusual items such as discontinued operations. Management uses Adjusted EBITDA in measuring the financial performance of the Company as this measure reflects results that are controllable by management in day-to-day operations. Management monitors Adjusted EBITDA against budget and past results on a regular basis

The term Monthly Recurring Revenue ("MRR") is a non-IFRS measure and includes revenues earned in a given month relating to monthly fixed subscription fee, monthly transaction fees, ARC Lite™ revenue, and PayPort™ revenue. MRR is a common metric used in Software as a Service ("SaaS") companies and its definition is not guided by IFRS standards. Accordingly, MRR is unlikely to be comparable to similar measures presented by other issuers.

Conference Call Details:

Date: Friday, April 13, 2018
Time: 9:00 AM Eastern Time

Participant Dial-in Numbers:
Local – Toronto (+1) 416 764 8609
Toll Free – North America (+1) 888 390 0605
Conference ID: 77508470

Recording Playback Numbers:
Toronto (+1) 416 764 8677
Toll Free – North America (+1) 888 390 0541
Passcode: 508470 #
Expiry Date: Friday, April 20, 201811:59 PM

A live audio webcast and archive of the conference call will be available by visiting the Company's website at http://www.versapay.com/company/investor-relations/. Please connect at least 15 minutes prior to the conference call to ensure time for any software download that may be needed to hear the webcast.

About VersaPay

VersaPay is a leading cloud-based invoice presentment and payment provider for businesses of all sizes. VersaPay's ARC software-as-a-service offering allows businesses to easily deliver customized electronic invoices to their customers, to accept credit card and EFT payments and automatically reconcile payments to their ERP and accounting software. VersaPay is headquartered in Toronto, Canada and has operations in Montreal.

More information about VersaPay can be found on the Company's website at www.versapay.com or under the Company's profile on SEDAR at www.sedar.com.

Forward Looking and Other Cautionary Statements

This news release contains "forward-looking information" which may include, but is not limited to, statements with respect to the activities, events or developments that the Company expects or anticipates will or may occur in the future. Such forward-looking information is often, but not always, identified by the use of words and phrases such as "plans," "expects," "is expected," "budget," "scheduled," "estimates," "forecasts," "intends," "anticipates," or "believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved.

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. Management believes that these assumptions are reasonable. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, risks related to the speculative nature of the Company's business, the Company's formative stage of development and the Company's financial position.

Forward-looking statements contained herein are made as of the date of this news release and the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results, except as may be required by applicable securities laws. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information.

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.

SOURCE VersaPay Corporation