Constellation Software Inc. and Topicus.Com Inc. Announce Results for Topicus.com Inc. for the Third Quarter Ended September 30, 2023

TORONTO, Nov. 02, 2023 (GLOBE NEWSWIRE) -- Topicus.com Inc. (TSXV:TOI) in a joint release with Constellation Software Inc. (TSX:CSU) today announced financial results for Topicus.com Inc. (“Topicus” or the “Company”) for the third quarter ended September 30, 2023. Please note that all amounts referred to in this press release are in Euros unless otherwise stated.

The following press release should be read in conjunction with the Company’s Unaudited Condensed Consolidated Interim Financial Statements for the three and nine months ended September 30, 2023 and the accompanying notes, our Management’s Discussion and Analysis for the three and nine months ended September 30, 2023 and the Annual Consolidated Financial Statements of Topicus.com Inc. for the year ended December 31, 2022, which we prepared in accordance with International Financial Reporting Standards (“IFRS”) and the Company’s annual Management’s Discussion and Analysis for the year ended December 31, 2022, which can be found on SEDAR at www.sedarplus.ca and on Topicus.com Inc.’s website www.topicus.com. Additional information about Topicus.com Inc. is also available on SEDAR at www.sedarplus.ca.

Q3 2023 Headlines:

• Revenue increased 22% (8% organic growth) to €278.8 million compared to €228.6 million in Q3 2022.  
• Net income increased to €28.3 million (€0.22 on a diluted per share basis) from €18.4 million (€0.15 on a diluted per share basis).  
• Acquisitions were completed for aggregate cash consideration of €7.2 million (which includes acquired cash). Deferred payments associated with these acquisitions have an estimated value of €0.2 million resulting in total consideration of €7.4 million.
• Cash flows from operations (“CFO”) increased €14.6 million to €25.5 million compared to €10.9 million in Q3 2022 representing an increase of 134%.
• Free cash flow available to shareholders¹ (“FCFA2S”) increased €7.0 million to €6.5 million compared to negative €0.5 million in Q3 2022.
  

Total revenue for the quarter ended September 30, 2023 was €278.8 million, an increase of 22%, or €50.2 million, compared to €228.6 million for the comparable period in 2022.   For the first nine months of 2023 total revenues were €815.3 million, an increase of 25%, or €162.4 million, compared to €653.0 million for the comparable period in 2022. The increase for both the three and nine-month periods compared to the same periods in the prior year is primarily attributable to growth from acquisitions as the Company experienced organic growth of 8% and 7%.   Organic growth is not a standardized financial measure and might not be comparable to measures disclosed by other issuers.

Net income for the quarter ended September 30, 2023 increased €9.9 million to €28.3 million compared to €18.4 million for the same period in 2022. On a per share basis, this translated into net income per basic and diluted share of €0.22 in the quarter ended September 30, 2023 compared to net income per basic and diluted share of €0.15 for the same period in 2022. For the nine months ended September 30, 2023 net income increased €14.0 million to €72.9 million compared to €58.9 million for the same period in 2022. On a per share basis, this translated into net income per basic and diluted share of €0.57 in the nine months ended September 30, 2023 compared to €0.45 for the same period in 2022.   

For the quarter ended September 30, 2023, CFO were €25.5 million compared to €10.9 million for the same period in 2022 representing an increase of 134%. Many of the businesses invoice customers for annual software maintenance fees in Q1 each year resulting in a disproportionate amount of cash being received in the first quarter as compared to the remaining three quarters. A longer collection cycle for the Q1 invoiced amounts in 2023 as compared to 2022 is the primary reason for the large Q3 increase. For the nine months ended September 30, 2023, CFO increased €29.2 million to €184.1 million compared to €154.9 million for the same period in 2022 representing an increase of 19%.  

For the quarter ended September 30, 2023, FCFA2S was €6.5 million compared to negative €0.5 million for the same period in 2022. For the nine months ended September 30, 2023, FCFA2S increased €58.8 million to €94.5 million compared to €35.7 million for the same period in 2022 representing an increase of 165%. The increase for the nine month period is primarily as a result of the dividend paid to the Preferred Securities holders during the quarter ended March 31, 2022. Excluding the dividend, FCFA2S increased €18.4 million or 24% for the nine months ended September 30, 2023.

1.  See Non-IFRS measures. 
   

Forward Looking Statements

Certain statements herein may be “forward looking” statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Topicus or the industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward looking statements. These forward looking statements reflect current assumptions and expectations regarding future events and operating performance and are made as of the date hereof and Topicus assumes no obligation, except as required by law, to update any forward looking statements to reflect new events or circumstances.

Non-IFRS Measures

Free cash flow available to shareholders ‘‘FCFA2S’’ refers to net cash flows from operating activities less interest paid on lease obligations, interest paid on other facilities, credit facility transaction costs, repayments of lease obligations, dividends paid to redeemable preferred securities holders, and property and equipment purchased, and includes interest and dividends received, and the proceeds from sale of interest rate caps. The portion of this amount applicable to non-controlling interests is then deducted. Topicus believes that FCFA2S is useful supplemental information as it provides an indication of the uncommitted cash flow that is available to shareholders if Topicus does not make any acquisitions, or investments, and does not repay any debts. While Topicus could use the FCFA2S to pay dividends or repurchase shares, Topicus’ objective is to invest all of our FCFA2S in acquisitions which meet Topicus’ hurdle rate.

FCFA2S is not a recognized measure under IFRS and, accordingly, readers are cautioned that FCFA2S should not be construed as an alternative to net cash flows from operating activities.

The following table reconciles FCFA2S to net cash flows from operating activities:

			Three months ended September 30,							Nine months ended September 30,
			2023		2022					2023		2022
		(€ in millions)							(€ in millions)
Net cash flows from operating activities			25.5		10.9					184.1		154.9
Adjusted for:
Interest paid on lease obligations			(0.4	)	(0.3	)				(1.0	)	(0.9	)
Interest paid on other facilities			(4.8	)	(3.4	)				(11.4	)	(7.4	)
Proceeds from sale of interest rate cap			(0.7	)	-					4.8		-
Credit facility transaction costs			-		(0.1	)				(0.2	)	(0.1	)
Payments of lease obligations			(5.5	)	(5.2	)				(16.3	)	(14.8	)
Property and equipment purchased			(1.4	)	(1.2	)				(5.2	)	(4.8	)
Dividends paid to redeemable preferred securities holders			-		-					-		(66.6	)
			12.8		0.6					154.8		60.3
Less amount attributable to
non-controlling interests			(6.3	)	(1.2	)				(60.3	)	(24.6	)
Free cash flow available to shareholders			6.5		(0.5	)				94.5		35.7
Due to rounding, certain totals may not foot.

About Topicus.com Inc.

Topicus’ subordinate voting shares are listed on the Toronto Venture Stock Exchange under the symbol "TOI". Topicus acquires, manages and builds vertical market software businesses.

About Constellation Software Inc.

Constellation's common shares are listed on the Toronto Stock Exchange under the symbol "CSU". Constellation acquires, manages and builds vertical market software businesses.

For further information:
Jamal Baksh
Chief Financial Officer
[phone]
[e-mail]
www.topicus.com

SOURCE: TOPICUS.COM INC.

Topicus.com Inc.
Condensed Consolidated Interim Statements of Financial Position
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
			September 30, 2023	December 31, 2022		September 30, 2022
Assets
Current assets:
	Cash		161,707	136,772		135,797
	Accounts receivable		114,818	95,790		83,182
	Unbilled revenue		48,132	41,036		44,335
	Inventories		4,797	1,419		1,336
	Other assets		59,685	34,778		35,413
			389,139	309,795		300,063
Non-current assets:
	Property and equipment		19,437	19,579		19,328
	Right of use assets		55,631	54,412		56,854
	Deferred income taxes		5,148	19,978		9,135
	Other assets		13,540	17,030		16,439
	Intangible assets		917,219	874,000		896,251
			1,010,976	984,999		998,007
Total assets			1,400,115	1,294,794		1,298,070
Liabilities and Shareholders' Equity
Current liabilities:
	Topicus Revolving Credit Facility and current portion of term and other loans		175,845	201,275		156,945
	Loan from CSI		-	30,867		33,707
	Accounts payable and accrued liabilities		172,183	174,824		139,581
	Deferred revenue		179,833	116,989		152,486
	Provisions		1,208	1,884		1,186
	Acquisition holdback payables		9,875	14,009		14,527
	Lease obligations		19,055	18,824		19,040
	Income taxes payable		19,689	11,467		16,826
			577,688	570,141		534,299
Non-current liabilities:
	Term and other loans		65,468	41,280		106,201
	Deferred income taxes		138,752	150,521		147,642
	Acquisition holdback payables		1,529	2,316		2,578
	Lease obligations		37,665	36,634		38,931
	Other liabilities		26,787	26,118		23,879
			270,201	256,869		319,231
Total liabilities			847,889	827,009		853,530
Shareholders' Equity:
	Capital stock		39,412	39,412		39,412
	Accumulated other comprehensive income (loss)		839	(232	)	1,828
	Retained earnings (deficit)		273,519	226,919		205,812
	Non-controlling interests		238,456	201,685		197,488
			552,226	467,784		444,541
Total liabilities and shareholders' equity			1,400,115	1,294,794		1,298,070

 

Topicus.com Inc.
Condensed Consolidated Interim Statements of Income (Loss)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
		Three months ended September 30,						Nine months ended September 30,
		2023			2022			2023			2022
Revenue
License		7,513			6,409			22,338			18,294
Professional services		72,104			59,576			213,418			166,165
Hardware and other		3,906			2,039			10,291			6,573
Maintenance and other recurring		195,286			160,565			569,276			461,940
		278,810			228,589			815,322			652,972
Expenses
Staff		152,862			128,687			458,811			364,392
Hardware		2,988			1,575			7,111			3,809
Third party license, maintenance and professional services		22,265			18,602			64,153			54,701
Occupancy		679			2,039			5,705			5,379
Travel, telecommunications, supplies, software and equipment		11,140			8,399			31,407			22,947
Professional fees		3,815			3,960			12,653			11,536
Other, net		3,303			3,722			10,481			12,903
Depreciation		7,718			7,333			22,708			20,536
Amortization of intangible assets		31,874			28,905			89,820			77,894
		236,644			203,222			702,848			574,098
Finance and other expenses (income)		5,308			1,700			14,705			3,380
		5,308			1,700			14,705			3,380
Income (loss) before income taxes		36,857			23,666			97,769			75,494
Current income tax expense (recovery)		14,317			11,934			41,543			34,198
Deferred income tax expense (recovery)		(5,805	)		(6,690	)		(16,699	)		(17,584	)
Income tax expense (recovery)		8,512			5,245			24,844			16,614
Net income (loss)		28,345			18,421			72,926			58,880
Net income (loss) attributable to:
Equity holders of Topicus		17,983			11,834			46,455			35,931
Non-controlling interests		10,362			6,587			26,471			22,949
Net income (loss)		28,345			18,421			72,926			58,880
Weighted average shares
Basic shares outstanding		81,889,764			80,477,481			81,889,764			80,168,445
Diluted shares outstanding		129,841,819			129,841,819			129,841,819			129,841,819
Earnings (loss) per common share of Topicus
Basic		0.22			0.15			0.57			0.45
Diluted		0.22			0.15			0.57			0.45

  

Topicus.com Inc.
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
		Three months ended September 30,					Nine months ended September 30,
		2023			2022		2023		2022
Net income (loss)		28,345			18,421		72,926		58,880
Items that are or may be reclassified subsequently to net income (loss):
Foreign currency translation differences from foreign operations and other		481			1,742		2,684		6,613
Other comprehensive (loss) income for the period, net of income tax		481			1,742		2,684		6,613
Total comprehensive income (loss) for the period		28,826			20,164		75,610		65,493
Total other comprehensive income (loss) attributable to:
Equity holders of Topicus		(5	)		252		1,078		2,208
Non-controlling interests		486			1,490		1,606		4,405
Total other comprehensive income (loss)		481			1,742		2,684		6,613
Total comprehensive income (loss) attributable to:
Equity holders of Topicus		17,978			12,086		47,533		38,138
Non-controlling interests		10,848			8,078		28,076		27,354
Total comprehensive income (loss)		28,826			20,164		75,610		65,493

  

Topicus.com Inc.
Condensed Consolidated Interim Statement of Changes in Shareholders' Equity (Deficiency)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
Nine months ended September 30, 2023
		Attributable to equity holders of Topicus
		Preferred Shares	Capital Stock	Other equity	Accumulated other comprehensive (loss) income		Retained earnings (Deficit)	Total	Non-controlling interests		Total equity
Balance at January 1, 2023		-	39,412	-	(232	)	226,919	266,099	201,685		467,784
Total comprehensive income (loss) for the period:
Net income (loss)		-	-	-	-		46,455	46,455	26,471		72,926
Other comprehensive income (loss)
Foreign currency translation differences from foreign operations and other, net of income tax		-	-	-	1,078		-	1,078	1,606		2,684
Total other comprehensive income (loss) for the period		-	-	-	1,078		-	1,078	1,606		2,684
Total comprehensive income (loss) for the period		-	-	-	1,078		46,455	47,533	28,076		75,610
Transactions with owners, recorded directly in equity
Other movements in non-controlling interests and equity		-	-	-	(7	)	144	138	(196	)	(58	)
Contribution by non-controlling interests		-	-	-	-		-	-	9,617		9,617
Dividends paid to non-controlling interests		-	-	-	-		-	-	(726	)	(726	)
Balance at September 30, 2023		-	39,412	-	839		273,519	313,770	238,456		552,226

 

Topicus.com Inc.
Condensed Consolidated Interim Statement of Changes in Shareholders' Equity (Deficiency)
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
Nine months ended September 30, 2022
	Attributable to equity holders of Topicus
	Preferred Shares		Capital Stock	Other equity		Accumulated other comprehensive (loss) income		Retained earnings (deficit)		Total		Non-controlling interests		Total equity
Balance at January 1, 2022	2,047,473		39,412	(1,009,996	)	(380	)	(1,782,113	)	(705,604	)	1,061,236		355,632
Total comprehensive income (loss) for the period:
Net income (loss)	-		-	-		-		35,931		35,931		22,949		58,880
Other comprehensive income (loss)
Foreign currency translation differences from foreign operations and other	-		-	-		2,208		-		2,208		4,405		6,613
Total other comprehensive income (loss) for the period	-		-	-		2,208		-		2,208		4,405		6,613
Total comprehensive income (loss) for the period	-		-	-		2,208		35,931		38,138		27,354		65,493
Transactions with owners, recorded directly in equity
Conversion of preferred shares to subordinate voting shares	(2,047,473	)	-	2,047,473		-		-		-		-		-
Conversion of non-controlling interest preferred units to ordinary units and other movements in non-controlling interests	-		-	912,788		-		-		912,788		(912,788	)	-
Net acquisition of non-controlling interest associated with business combinations	-		-	(23	)	(0	)	(166	)	(189	)	24,478		24,289
Reductions of non-controlling interest associated with disposals	-		-	-		-		-		-		(873	)	(873	)
Reclassification of other equity to retained earnings (deficit)	-		-	(1,950,242	)	-		1,950,242		-		-		-
Exchange of Topicus Coop ordinary units held by non-controlling interests to subordinate voting shares of Topicus	-		-	-		-		1,919		1,919		(1,919	)	-
Balance at September 30, 2022	-		39,412	-		1,828		205,812		247,052		197,488		444,541

Topicus.com Inc.
Condensed Consolidated Interim Statements of Cash Flows
(In thousands of euros, except per share amounts. Due to rounding, numbers presented may not foot.)
Unaudited
				Three months ended September 30,						Nine months ended September 30,
				2023			2022			2023			2022
Cash flows from (used in) operating activities:
	Net income (loss)			28,345			18,421			72,926			58,880
	Adjustments for:
		Depreciation		7,718			7,333			22,708			20,536
		Amortization of intangible assets		31,874			28,905			89,820			77,894
		Finance and other expenses (income)		5,308			1,700			14,705			3,380
		Income tax expense (recovery)		8,512			5,245			24,844			16,614
	Change in non-cash operating assets and liabilities
		exclusive of effects of business combinations		(42,776	)		(40,471	)		(1,642	)		8,517
	Income taxes (paid) received			(13,463	)		(10,211	)		(39,216	)		(30,884	)
	Net cash flows from (used in) operating activities			25,518			10,922			184,145			154,937
Cash flows from (used in) financing activities:
	Interest paid on lease obligations			(375	)		(310	)		(1,029	)		(866	)
	Interest paid on other facilities			(4,801	)		(3,430	)		(11,366	)		(7,417	)
	Proceeds from sale of interest rate cap			(707	)		-			4,809			-
	Net increase (decrease) in Topicus Revolving Credit Facility			5,000			5,000			40,000			105,000
	Proceeds from issuance of term and other loans			4,954			7,808			31,172			8,154
	Repayment of loan from CSI			(29,878	)		-			(29,878	)		-
	Increase (decrease) in loan from Vela Software Group			1,810			(7,904	)		1,342			(1,817	)
	Contribution from Vela Software Group into GeoSoftware and Geoactive			9,617			-			9,617			-
	Contribution from Vela Software Group towards the acquisition of Geoactive			-			7,905			-			7,905
	Repayments of term and other loans			(4,232	)		(2,706	)		(77,173	)		(4,375	)
	Credit facility transaction costs			-			(145	)		(238	)		(145	)
	Payments of lease obligations			(5,475	)		(5,203	)		(16,280	)		(14,777	)
	Other financing activities			(24	)		(15	)		(24	)		(595	)
	Dividends to non-controlling interests			-			-			(726	)		-
	Dividends paid to redeemable preferred securities holders			-			-			-			(66,614	)
	Net cash flows from (used in) in financing activities			(24,112	)		1,000			(49,775	)		24,452
Cash flows from (used in) investing activities:
	Acquisition of businesses			(7,190	)		(35,660	)		(95,238	)		(143,319	)
	Cash obtained with acquired businesses			1,443			9,872			7,026			37,484
	Post-acquisition settlement payments, net of receipts			(4,845	)		(8,869	)		(15,900	)		(11,300	)
	Interest, dividends and other proceeds received			-			-			-			3,028
	Property and equipment purchased			(1,381	)		(1,197	)		(5,249	)		(4,810	)
	Net cash flows from (used in) investing activities			(11,973	)		(35,853	)		(109,362	)		(118,918	)
Effect of foreign currency on
	cash and cash equivalents			(41	)		0			(73	)		0
Increase (decrease) in cash				(10,608	)		(23,931	)		24,935			60,471
Cash, beginning of period				172,315			159,728			136,772			75,326
Cash, end of period				161,707			135,797			161,707			135,797