Copperleaf Technologies Inc. (“Copperleaf” or the “Company”), a provider of enterprise decision analytics software solutions, announced financial results for the fourth quarter and fiscal year ended December 31, 2023. All amounts are expressed in Canadian dollars unless otherwise stated.
Paul Sakrzewski, CEO of Copperleaf commented, “Copperleaf’s ability to generate substantial client value drove sustained demand for our solutions in 2023. This was highlighted by our strong financial performance during the fourth quarter where Copperleaf delivered a 30% YoY increase in Annual Recurring Revenue and a 21% YoY increase in subscription revenue. Additionally, we ended the quarter with a record backlog. These results are a testament to our improved scalability, efficiency of our sales team, and the progress we have made to enhance our go-to-market initiatives, despite challenging market conditions.”
“Furthermore, during 2023 our Partner and Alliance Ecosystem continued to gain traction as Copperleaf received Premium Certification from SAP, deepened its global relationship with Accenture, and entered into a strategic alliance with Siemens. These partnerships are resulting in material incremental pipeline for 2024 and beyond,” continued Mr. Sakrzewski.
“As a result of our continuous commitment to product innovation, our refreshed go-to-market model and increasing partner traction, we expect continuing robust ARR and pipeline growth in 2024 with our traditional Q4 weighting. These factors, along with our accelerating revenue growth and disciplined approach to managing costs, position us to make material progress back towards profitability” Mr. Sakrzewski concluded.
Fourth Quarter 2023 Financial Highlights
(All capitalized terms used but not defined in this press release have the meanings ascribed to them in Management’s Discussion and Analysis for the fiscal year ended December 31, 2023; Comparison period is to the fourth quarter ended December 31, 2022, unless otherwise stated)
- Revenue of $21.2 million, an increase of 11% compared to Q4 2022, primarily driven by an increase in subscription revenue.
- Annual Recurring Revenue1 as at December 31, 2023 of $60.2 million, a 30% increase from $46.4 million as at December 31, 2022.
- Subscription revenue of $13.6 million, an increase of 21% over Q4 2022.
- Gross profit of $15.0 million representing a gross margin of 71%, a 2% increase from $14.7 million and a gross margin of 76% in Q4 2022. Gross margin decreased temporarily primarily due to an increase in subcontractor costs and increased headcount to support our growing client base.
- Adjusted EBITDA[1] loss of $5.0 million, compared to Adjusted EBITDA1 loss of $2.0 million in Q4 2022.
- Net loss of $5.5 million, or a loss of $0.08 per basic and diluted share, compared to a net loss of $2.4 million, or a loss of $0.03 per basic and diluted share, in Q4 2022.
- As of December 31, 2023, Copperleaf’s Revenue Backlog1 grew 30% to $139.5 million compared to $107.3 million, as of December 31, 2022.
- Strong balance sheet with cash and cash equivalents of $34.1 million, short-term investments of $82.3 million, and long-term investments of $10.0 million as at December 31, 2023.
Fiscal Year 2023 Financial Highlights
(All capitalized terms used but not defined in this press release have the meanings ascribed to them in Management’s Discussion and Analysis for the fiscal year ended December 31, 2023; Comparison period is the year ended December 31, 2022, unless otherwise stated)
- Record revenue of $79.6 million, an increase of 8% over the prior year, driven by an increase in subscription revenue that was partially offset by a decrease in perpetual and term-based licenses and professional services revenue.
- Subscription revenue of $49.6 million, an increase of 24% over the prior year, offsetting a 37% decrease in perpetual and term-based license revenue year over year as our business continues to transition to SaaS.
- Annual Recurring Revenue1 as at December 31, 2023 of $60.2 million, a 30% increase from $46.4 million as at December 31, 2022.
- As of December 31, 2023, the Company’s Net Revenue Retention Rate1 was 111% compared to 110% as of December 31, 2022.
- Gross profit of $55.9 million representing a gross margin of 70%, compared to $54.8 million in the prior year, representing a gross margin of 75%. Gross margin decreased temporarily primarily due to an increase in subcontractor costs, increased headcount to support our growing client base, and a lower mix of perpetual and term-based software license revenue.
- Adjusted EBITDA1 loss of $31.5 million, compared to an Adjusted EBITDA1 loss of $24.9 million in the year ended December 31, 2022.
- Net loss of $35.2 million, or a loss of $0.49 per basic and diluted share, compared to net loss of $28.2 million, or a loss of $0.41 per basic and diluted share, in the prior year. Net loss increase is primarily due to more personnel supporting the Company’s growth strategy, increased incentive compensation, and the continued transition to SaaS.
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1 Please refer to “Non-IFRS Measures” section of this press release |
Key Developments
- In 2023 we completed the successful transition of our CEO and took significant steps to improve scalability, sales effectiveness and efficiency, by establishing a new Global Business Operations function and introducing the Global Growth Office which brings together Industries, Partners, and Value Engineering to better support the global go-to-market teams. Copperleaf’s strategic go-to-market investments have accelerated lead generation and adoption in new industries and geographies. During 2023, the Company expanded into the ports industry, airports, upstream Oil & Gas with its first Oil Sands client, its first Oil & Gas client in Europe, first water client in Australia with Sydney Water, and first transit agency in the USA.
- Copperleaf also closed its first clients in France, Ireland, Italy, and the Middle East, as well as the signing of one of Brazil’s largest integrated power utilities, representing another important geographic expansion while establishing our beach-head in Brazil.
- The Partner and Alliance Ecosystem continued to gain traction during 2023 as the Company’s partners invested in expanding their Copperleaf practice areas. Copperleaf signed an Endorsed Apps initiative agreement with SAP and also received Premium Certification which triggered the commencement of cooperative go-to-market activities resulting in material incremental pipeline for 2024 and beyond, across all regions.
- 2023 also saw the deepening of Copperleaf’s global relationship with Accenture as they assigned a Global Partner Director to programmatically coordinate joint go-to-market activities across all regions.
- In Q4, Copperleaf announced a strategic alliance with Siemens Smart Infrastructure, a leading provider of grid planning, operations and maintenance software, and a domain expert in power systems. Under this agreement, Copperleaf and Siemens will integrate technical planning with value-based investment planning to help utilities, including transmission system operators (TSOs) and distribution system operators (DSOs), make investment decisions that deliver the highest business value.
- The Company convened the first in-person Global Copperleaf Summit since 2019 in Vancouver, exceeding client attendance goals and record attendance from partners.
- Technology analysts continue to recognise Copperleaf as best-of-breed in our sector. Verdantix published its inaugural “Green Quadrant” report on Asset Investment Planning software in 2023 with Copperleaf positioned as the clear leader.
- The Company delivered four product releases over the year and released numerous new innovative features to the client base, including:
- Q1: A configurable performance management dashboard enabling nimble visualization and adaptation of plans; improved GIS integration allowing users to manage their portfolios and plans directly through the GIS mapping interface; and improved support for multi-part or dependent projects coupled with an intuitive graphical user interface which will drive better outcomes and improved optimization results.
- Q2: Interactive GIS Experience, a new chargeable option where users can improve their decision making and storytelling on their asset management plans by directly visualizing their Copperleaf Asset results in ESRI’s ArcGIS (Geographic Information System) system; a new enterprise-standard SCIM (System for Cross-domain Identity Management) API which enables automatic management of users and groups directly through user management systems such as Azure Active Directory or OKTA.
- Q3: Two new methodologies added to the Copperleaf Value Model Library (CVML); visualization of Predictive Analytics asset strategies in our Interactive GIS Experience option; and significant enhancements to the popular Dashboard Library which empowers clients to communicate their value-based decision outcomes more effectively.
- Q4: Added improved scenario organization for managing large numbers of scenarios; ability to create investments in Portfolio directly from Predictive Analytics; and added new ESG-related CVML models, covering GHG Scope 1, 2 and 3 emissions.
- In 2023, Copperleaf was granted a US patent for an advanced software optimizer which enhances the Company’s comprehensive asset management capabilities to accommodate large numbers of assets, across all stages of an asset’s lifecycle. This patent highlights Copperleaf’s dedication to developing pioneering solutions that facilitate better investment decisions.
- During 2023, the Company released its inaugural Environmental, Social and Governance (ESG) Report for the year ended December 31, 2022. The ESG Report included responses to the recommendations outlined by the Task Force on Climate Related Disclosures (TCFD) and shared the Company’s progress and plans to address important ESG issues, in addition to showcasing Copperleaf’s internal and external ESG impact.
- Copperleaf also submitted its United Nations Global Compact (UNGC) Communication on Progress (CoP). As a voluntary participant of the UNGC the Company has committed to conducting business responsibly and continues to incorporate the UNGC’s Ten Principles and the UN Sustainable Development Goals into its strategy and operations.
Q4 2023 Financial Results Conference Call Details
Paul Sakrzewski, Chief Executive Officer and Chris Allen, Chief Financial and Chief Operating Officer, will host a conference call followed by a question-and-answer session today, March 12, 2024, at 5:00 PM ET.
Date: March 12, 2024
Time: 5:00pm ET
Dial-In Number: 416-764-8659 or 1-888-664-6392
Webcast: https://app.webinar.net/gyGvJy0BRb3
Replay: 416-764-8677 or 1-888-390-0541 (Available until March 19, 2024)
Replay Entry Code: 528651#
