Espial Reports Third Quarter 2017 Results

OTTAWA, Ontario--()--Espial® Group Inc. ("Espial" or the "Company"), (TSX:ESP), today announced its third quarter financial results for the three-month period ended September 30, 2017.


  • Third quarter revenue was $6.8 million, an increase of 13% over the same period in 2016.
  • Third quarter adjusted EBITDA loss was $2.0 million.
  • Revenue for the nine-month period was up 46% to $23.3 million from $15.9 million last year.
  • Recurring revenue for the nine-month period grew 60% to $6.4 million from $4.0 million last year.
  • Announced that MCTV, a Pay TV operator in Ohio, launched the Elevate SaaS cloud platform for IPTV.
  • Announced that Optic Communications in Kansas, launched the Elevate Cloud SaaS platform.
  • In addition to Optic Communications and MCTV, we closed 2 new SaaS contracts in the quarter.
  • Signed a strategic deal with Netflix to seamlessly bring Netflix to operators on our Elevate SaaS cloud platform.
  • Introduced Amazon Alexa voice capabilities for our Elevate SaaS cloud platform.
  • Formed a partnership with Google, to introduce YouTube support for all operators on our Elevate SaaS Cloud platform.
  • Expanded our North American sales team to focus on sales growth of the Elevate SaaS cloud platform.
  • Won the TV Tech Global IBC2017 Best of Show award for Elevate SaaS cloud platform.
  • Released our 5th generation G4 RDK Client to power operator devops and showcased this at IBC.
  • Announced a devops Agreement with NOS to collaborate on rapid feature development and introduction.

“We made tremendous progress in Q3 on our product and customer initiatives, launching 2 operators on our Elevate SaaS platform in about 90 days. In addition, we introduced voice control using Amazon’s Alexa and made it significantly easier for operators to offer Netflix and YouTube to their subscribers. This fast time-to-market, along with the scale and rapid innovation of our Elevate SaaS platform, provides significant benefits to service providers,” said Jaison Dolvane, CEO, Espial. “In Q3, revenue increased by 13% and grew 46% year to date. Our third quarter recurring revenue increased 44% over last year, however we saw lower license revenue in Q3 due to the fluctuation in the pace of deployments. As our recurring SaaS revenue grows, we expect this will improve predictability of revenue. We believe that our product and customer accomplishments this quarter will further strengthen our competitive position.”

Financial Summary

For the three-month period ended September 30, 2017, revenue was $6.8 million compared with revenue of $6.0 million for the three months ended September 30, 2016. Adjusted EBITDA loss for the third quarter of fiscal 2017 was $2.0 million compared to adjusted EBITDA loss of $1.9 million for the third quarter of fiscal 2016. Net loss for the quarter was $3.1 million, compared with a net loss of $2.4 million for the third quarter of fiscal 2016.

Q3 Financial Results

  • Third quarter revenue was $6,801,812 compared with revenue of $6,018,117 in the same period a year ago. Third quarter software license revenue was $3,088,162 compared to $3,448,616 in the third quarter of fiscal 2016. Professional services for the third quarters of 2017 and 2016 were $1,553,636 and $1,069,103 respectively. Maintenance and support revenue for the third quarter was $2,160,014 compared to $1,500,398 last year.
  • North American revenue was $3,672,267 in the third quarter of 2017 compared to $2,134,716 in 2016. Asia revenue was $892,054 in the third quarter of 2017 compared to $580,017 in 2016. European revenue was $2,237,491 in the third quarter of 2017 compared to $3,303,384 in 2016.
  • Gross margin for the third quarter of fiscal 2017 was 71%; unchanged from the third quarter of fiscal 2016.
  • Operating expenses in the third quarter of fiscal 2017 were $7,623,409 compared to $6,809,070 in the third quarter of fiscal 2016.
  • Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (adjusted EBITDA) for the third quarter of fiscal 2017 was a loss of $2,012,869, compared to a loss of $1,885,253 in fiscal 2016.
  • Net loss, which includes non-cash items like depreciation, amortization of intangibles and stock compensation, in the third quarter was $3,144,241 compared to a net loss of $2,435,969 last year.

Cash and cash equivalents on September 30, 2017 was $38,029,378.

A complete set of financial statements and management’s discussion and analysis for the period ended September 30, 2017 will be available at

Conference Call

The Company will be hosting a conference call to discuss the Q3 2017 financial results on November 2, 2017 at 5:00PM EDT and the phone number to join the results discussion is:

  • Toll Free line (Canada/US) 866-521-4909
  • Toll line (International/Local) 647-427-2311

The playback for the call will be available two hours after the call’s completion and will be available until 11:59pm ET on December 1st, 2017, at the following numbers and passcode:

Toll-free line: +1-800-585-8367 or +1-416-621-4642, Passcode: 9799919

About Espial (

Espial is transforming viewing experiences worldwide by enabling video services at web speed and web scale. From immersive user experience and discovery solutions to advanced cloud-based platforms, Espial solutions help service providers manage, deliver and monetize video and entertainment services. Espial’s customers span six continents, have deployed tens of millions of devices, and are serviced through Espial’s global sales, support, and innovation centers across North America, Europe, and Asia.

Forward Looking Statement

This press release contains information that is forward looking information with respect to Espial within the meaning of Section 138.4(9) of the Ontario Securities Act (forward looking statements) and other applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements or assumptions about, economic conditions, ongoing or future benefits of existing and new customer, and partner relationships or new board nominees, our position or ability to capitalize on the move to more open systems by service providers, existing or future opportunities for the company and products (including our ability to successfully execute on market opportunities and secure new customer wins) and any other statements regarding Espial's objectives (and strategies to achieve such objectives), future expectations, beliefs, goals or prospects are or involve forward-looking information.

Forward-looking information is based on certain factors and assumptions. While the company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information, by its nature necessarily involves known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those in the forward-looking statements or could cause our current objectives and strategies to change, including but not limited to changing conditions and other risks associated with the on-demand TV software industry and the market segments in which Espial operates, competition, Espial’s ability to continue to supply existing customers and partners with its products and services and avoid being displaced by competitive offerings, effectively grow its integration and support capabilities, execute on market opportunities, develop its distribution channels and generate increased demand for its products, economic conditions, technological change, unanticipated changes in our costs, regulatory changes, litigation, the emergence of new opportunities, many of which are beyond our control and current expectation or knowledge.

Additional risks and uncertainties affecting Espial can be found in Management’s Discussion and Analysis of Results of Operations and Financial Condition and its Annual Information Form for the fiscal years ended December 31, 2016 on SEDAR at If any of these risks or uncertainties were to materialize, or if the factors and assumptions underlying the forward-looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein and our current objectives or strategies may change. Espial assumes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

Non-IFRS Financial Measures

We use Adjusted net income (loss) which removes the impact of our amortization of intangible assets and stock based compensation expense, to measure our performance as these measures align our results and improve comparability against our peers. We use Adjusted EBITDA to provide investors with a supplemental measure of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our capital expenditure and working capital requirements.

Adjusted net income (loss) and Adjusted EBITDA are not recognized, defined or standardized measures under IFRS. Our definition of Adjusted net income (loss) and Adjusted EBITDA will likely differ from that used by other companies and therefore comparability may be limited. Adjusted net income (loss) and Adjusted EBITDA should not be considered a substitute for or in isolation from measures prepared in accordance with IFRS. Investors are encouraged to review our financial statements and disclosures in their entirety and are cautioned not to put undue reliance on non-IFRS measures and view them in conjunction with the most comparable IFRS financial measures. We have reconciled Adjusted net income (loss) and Adjusted EBITDA to the most comparable IFRS financial measure as follows:


Three months ended
September 30, 2017


Three months ended
September 30, 2016


Nine months ended
September 30, 2017


Nine months ended
September 30, 2016

Net loss $ (3,144,241) $ (2,435,969) $ (8,750,753) $ (7,349,477)
Share-based compensation 368,403 360,363 1,247,399 1,135,282
Amortization of intangibles   251,220   186,395  


Adjusted net loss (2,524,618) (1,889,211)


Add (less)
Depreciation 145,996 112,441 349,232 261,053
Net interest (income) expense (77,103) (81,443) (203,626) (253,391)
Other income/expense 253,172 (216,565)


Income tax   189,684   189,525   388,828   307,188
Adjusted EBITDA $ (2,012,869) $ (1,885,253) $ (5,830,406) $ (5,144,467)

Consolidated Statements of Income and
Comprehensive Income
(In Canadian dollars)

  Three Months Ended   Nine Months Ended

September 30,


September 30,

September 30,


September 30,

Software $ 3,088,162 $ 3,448,616 $ 11,837,886 $ 8,389,279
Professional services 1,553,636 1,069,103 5,055,099 3,517,836
Support and maintenance   2,160,014   1,500,398   6,382,602   3,983,754
Total revenue 6,801,812 6,018,117 23,275,587 15,890,869
Cost of revenue   1,956,892   1,753,499   6,303,804   4,925,053
Gross margin   4,844,920   4,264,618   16,971,783   10,965,816
Sales and marketing 1,773,906 1,397,239 5,333,371 4,079,535
General and administrative 1,117,289 1,187,202 3,827,866 3,057,912
Research and development 4,480,994 4,038,234 15,237,585 10,369,171
Amortization of intangible assets   251,220   186,395   735,928   535,761
    7,623,409   6,809,070   25,134,750   18,042,379
Loss before other income (expense) (2,778,489) (2,544,452) (8,162,967) (7,076,563)
Other income (expense) (253,172) 216,565 (402,586) (219,117)
Interest income   77,103   81,443   203,626   253,391
Loss before taxes (2,954,558) (2,246,444) (8,361,927) (7,042,289)
Income taxes   (189,683)   (189,525)   (388,826)   (307,188)
Net loss and comprehensive loss $ (3,144,241) $ (2,435,969) $ (8,750,753) $ (7,349,477)
Loss per common share - basic $ (0.09) $ (0.07) $ (0.24) $ (0.20)

Weighted average number of common
shares outstanding - basic

36,318,406 37,341,312 36,327,921 37,352,967

Consolidated Balance Sheets
(In Canadian Dollars)

    September 30, 2017   December 31, 2016
Cash and cash equivalents $ 38,029,378 $ 43,047,878
Accounts receivable 6,261,494 10,475,563
Investment tax credits receivable 300,572 321,018
Prepaid expenses and other assets   1,016,127   653,055
45,607,571 54,497,514
Property plant and equipment 2,297,602 1,420,957
Intangible assets 1,160,941 1,818,067
Goodwill   3,632,604   3,632,604
  $ 52,698,718 $ 61,369,142
Accounts payable and accrued liabilities $ 3,682,834 $ 4,542,527
Provisions 179,953 334,591
Deferred revenue   3,132,482   2,054,323
Total Liabilities 6,995,269 6,931,441
Share capital 124,138,149 125,362,413
Share based payments reserve 16,842,626 15,601,861
Deficit   (95,277,326)   (86,526,573)
    45,703,449   54,437,701
  $ 52,698,718 $ 61,369,142

Statements of Cash Flows
(In Canadian Dollars)

    Nine Months Ended
  September 30, 2017   September 30, 2016
Net loss $ (8,750,753) $ (7,349,477)
Items not affecting cash
Depreciation of property and equipment 349,232 261,053
Amortization of intangible assets 735,928 535,761
Share-based compensation expense 1,247,399 1,135,282
Provisions   (154,638)   -
(6,572,832) (5,417,381)

Changes in non-cash operating
working capital items


  4,089,909   403,753
    (2,482,923)   (5,013,628)
Purchase of equipment (1,225,877) (321,212)
Purchase of intangibles (78,802) (229,229)
Purchase of business, net of cash acquired     162,769
    (1,304,679)   (387,672)
Options exercised 8,214 15,206
Share repurchase program   (1,239,112)   (259,626)
    (1,230,898)   (244,420)
Net cash and cash equivalents outflow (5,018,500) (5,645,720)
Cash and cash equivalents, beginning of period   43,047,878   49,947,096
Cash and cash equivalents, end of period $ 38,029,378 $ 44,301,376
Supplementary information:
Interest received $ 203,626 $ 253,392
Taxes paid $ (388,828) $ (307,189)


For inquiries from the financial press or analysts, contact:
Espial Group Inc.
Carl Smith, +1 613-230-4770
Chief Financial Officer
Kirk Edwardson, +1-613-230-4770 x1145
Director, Marketing


For inquiries from the financial press or analysts, contact:
Espial Group Inc.
Carl Smith, +1 613-230-4770
Chief Financial Officer
Kirk Edwardson, +1-613-230-4770 x1145
Director, Marketing