CALGARY, ALBERTA – December 8, 2015 - Cortex Business Solutions Inc. (TSXV: CBX), the online network helping companies connect and interact with each other to transmit documents and grow their businesses, today announces its Q1 F2016 results.
Joel Leetzow, President and CEO commented, “The Company took an important first step in fiscal 2015, reducing staffing costs to be more in line with revenue. I had asked that you stand by to witness the actual results of these decisions as they materialize over fiscal 2016. The three months ended October 31, 2015 (“Q1 F2016”) is a testament to the actions taken and the results to the bottom line. I think everyone will be as excited to see the results as we are sharing them.
I also made reference to the hard work we had been doing to improve the relationships with our workflow partner network; including expansion into new verticals, which was not previously successful. The investment in a dedicated Business Development Executive whose focus is on our partner channel has resulted in an increased pipeline from our existing partners. With the solidifying of these relationships, our clients receive better customer service from our partners, additional value add from the product bundles and a lower cost to implement.
There is now a full sales pipeline of leads to work on with our channel partners. Even with the reduction in the size of our sales team; the number of potential new customers remains steady. It’s an exciting time to be involved with Cortex. I am proud of the results that we have achieved together in a very short time. I can feel the momentum building across our customers, our staff, our partners and our shareholders.”
Q1 F2016 Highlights:
During the Q1 F2016 there were some significant developments as highlighted below:
- The cash used in operating activities improved 86% to $138,521 from $1,004,797.
- The Company’s revenue has remained consistent in comparison to the three months ended October 31, 2014; despite lower billable transaction volumes. This highlights the value additional buying organizations and related suppliers bring to overall revenue stability and growth.
- During fiscal 2015 the Company made changes to the organization which were expected to result in material cost savings. Q1 F2016 was the first quarter to fully realize these cost savings, resulting in overall costs being reduced by 25%, or $1,153,551.
- The maintenance of revenue combined with cost savings initiatives resulted in a 31% improvement to gross profit. The gross profit in Q1 F2015 was 35% of total revenue compared to 46% of total revenue in F2016.
- The Company raised $2,738,384 in the quarter through a bought deal private placement of 1,551,375 common shares.
Total revenue remained flat at $2,627,272 for the three months ended October 31, 2015 compared to $2,631,647 during the quarter ended October 31 2014. Although the growth was flat year over year, this was expected. The Company made conscious cost-cutting decisions; knowing these could impact revenue growth in the short term.
- Access and usage fees increased 4%
- Integration and set up declined 31%
- Project management declined 78%
Gross Profit and Cost of Sales
During F2015, the Company improved its gross profit, as reported from 35% of total revenue to 46% of total revenue; a 31% improvement.
The changes made in fiscal 2015 materialized by way of cost reductions in Q1 F2016.
- Sales and marketing decreased 64% to $348,634 (Q1 F2015 - $963,818). This was the largest impact in cost reductions.
- Research and development costs were up slightly 2% over Q1 F2015. (Q1 F2016 - $585,703: Q1 F2015 - $576,507). The large increase in research and development for fiscal 2015 didn’t occur until Q2. As discussed, the Company is moving this cost line back to the level before an additional team was added.
- General and administrative expenses reduced 23% to $1,017,901 (Q1 F2015 - $1,330,332).
- Severance and termination charges were $56,108 in Q1 F2016 compared to nil in Q1 F2015. This was the result of additional staff reductions at the end of October; which will further reduce expenses in Q2 F2016.
Investor Relations Contacts:
|Joel Leetzow||Sandra Fawcett (formerly Weiler)||Andrew Stewart|
|President and CEO||CFO||Director, Marketing & Investor Relations|