mdf commerce inc.

Welcome to the MDF Commerce, Inc. conference call on second quarter of fiscal 2022 financial results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Luke Filiapu. Thank you. Please go ahead.

Thank you, Stephanie, and welcome everyone to the MDF second quarter of fiscal 2022 earnings call. Before we begin, we'd like to take a moment to remember those who served and sacrificed their lives for peace on this Remembrance Day. Thank you. We hope that you are following along on the webcast because we are accompanying our prepared remarks with a slide presentation and a video. Once we have completed our prepared remarks, Debra Dumoulin, our CFO, and I will be available for analyst questions. Of course, a transcript of the call will be available on our website a little bit later. MDF Commerce enables the flow of commerce for businesses and governments globally. We're a global company with more than 800 employees and offices in five countries. we are focused on growing two platforms. First, Unified Commerce, and two, eProcurement. Following our strategic acquisition of Periscope Holdings on August 31st, just about two months ago, we rebranded the strategic sourcing platform as eProcurement to better reflect the more complete product and solution offering that we now have. During the second quarter, we completed the acquisition of Periscope Holdings, a public e-procurement platform based in the US. With this transformation acquisition, historical annual revenue on a combined basis was approximately $116 million, and we're trending towards recurring revenue of approximately 80%. With Periscope, eProcurement will represent approximately 55% of our total consolidated revenue, while Unified Commerce will represent about 30, sorry, 35%. Together, these two core platforms will represent now approximately 90% of our consolidated revenue.

Good morning. I'd like to take you through the Q2 fiscal 2022 highlights from a financial perspective. The consolidated revenue was $25.1 million for Q2. This is an increase of 20.8% from the $20.8 million in Q2 of the previous year. On a constant currency basis, the Q2 fiscal 2022 growth was even higher at 23.2% compared to the same quarter prior year. With just one, only one month of revenue from Periscope, The e-procurement platform generated $11.3 million of revenue. This is a 40% increase compared to the $8 million for Q2 in the previous year. Unified Commerce, its revenue also grew, increasing to $10 million, up from $9.1 million in Q2 of the previous year. While net loss for Q2 was $6.3 million, Q2 results were impacted by $4.6 million of acquisition-related expenses for the Periscope transaction and $600,000 of restructuring costs during the quarter. Net loss was also impacted by newly acquired assets, which resulted in non-cash amortization expense on property equipment, intangible assets, and unright-of-use assets relating to leases. Adjusted EBITDA loss for the quarter was $400,000. However, adjusted EBITDA loss of $400,000 for Q2 has improved relative to Q1 which had an adjusted EBITDA loss of $1.5 million. This sequential improvement of $1.1 million includes $2.4 million of revenue from Periscope which generated a positive contribution for one month of operations. QQ also benefited from higher e-business tax credits and income tax recovery. And these, of course, are partially offset by some higher costs of professional services incurred to support both our strategic initiatives and to support some of our larger client contract implementation. As you can see on slide five, Our first six months year-to-date clearly shows progress on all fronts and on all platforms. With the addition of Periscope, our U.S.-based revenue now represents approximately 50% of total Q2 revenues, which is up from 43% in Q2 of the prior year. With one month of revenue recognition from Periscope, the e-procurement platform has generated $20.1 million, a 28% increase compared to $15 million in the previous quarter. At the end of Q2, e-procurement recurring revenue represents 93% of the total platform revenue. Unified commerce revenues grew by 10%, 9.7%. In contrast to e-procurement, Q2 recurring revenues for e-commerce represents just short of 60% of total revenues. While e-commerce continues to benefit from recurring right of use or subscription revenue, professional services revenue, which is mainly from large client deployments, is not included in monthly recurring revenue. Year-to-date net loss was $10.6 million, and again, this was impacted by the $4.6 million of acquisition-related costs and $600,000 of restructuring costs during the quarter. Year-to-date adjusted EBITDA loss was $1.9 million compared to $4.5 million in fiscal 2021. Year-to-date adjusted EBITDA loss has decreased compared to the first six months of fiscal 2021. This is mainly relating to foundational investments in operations, including additional salaries and benefits, higher year-over-year sales and marketing and technology costs. In addition, higher professional fee expense, which is encouraged to support our implementation of corporate strategic initiatives, our transformation plan, and again, large client deployments. We closed off the quarter with a strong balance sheet. As of September 30th, cash and cash equivalents represented almost $9 million, and the company incurred long-term debt to finance a portion of the acquisition. This includes, at September 30th, a balance of long-term debt of $47.7 million from both a revolving facility and a term loan representing net debt of $38.7. With that, I'll transfer it back over to Luc.