WINNIPEG, Manitoba–(BUSINESS WIRE)–Farmers Edge Inc. (“Farmers Edge” or the “Company”) (TSX: FDGE), a pure-play digital agriculture company, reports its results for the three months ended March 31, 2023. All amounts are expressed in Canadian dollars. Certain key performance indicators and non-GAAP and other financial measures used in this news release do not have a standardized meaning as presented by IFRS. See “Key Performance Indicators and Non-GAAP and Other Financial Measures” section below.
Business Highlights
- The Company is on target to achieve $20 million of annualized cost savings and is continuing to assess its cost structure to achieve both operational effectiveness and stronger profitability.
- The Adjusted EBITDA deficiency improved by 18% over the comparable 2022 period.
- The Free Cash Flow deficiency in Q1 2023 improved by 28% on a year-over-year basis.
- Digital Agronomy Acres were 7.5 million on March 31, 2023. New Digital Agronomy Acres sold for the three months ending March 31, 2023 were 0.1 million acres and were offset by 2.4 million of discontinued acres which were primarily non-paying and unconverted PGP acres. On April 3rd, the Company launched new pricing and product offerings to deliver better value to customers and drive future revenue growth.
- ARR on March 31, 2023, was $27.9 million and is lower than December 31, 2022, primarily due to lower Digital Agronomy Acres as a result of the discontinuation of low-value acres and PGP acres.
“Our continuous focus on cost savings contributed to an 18% reduction in the Adjusted EBITDA deficit this quarter on a year-over-year basis,” Vibhore Arora, Chief Executive Officer of Farmers Edge, said. “We are actively engaging with our growers and enterprise customers to develop customized, industry-leading solutions that meet their unique needs and expect that our actions taken around revenue and acre growth will start to deliver results in the near term.”
OPERATING HIGHLIGHTS
|
in thousands, except per share amounts |
Three Months Ended |
|
||||
|
|
2023 |
|
2022 |
|
||
|
FINANCIAL PERFORMANCE for periods ended March 31 |
|
|
|
|
||
|
Digital Ag and Fertility solutions revenues |
$ |
4,665 |
|
$ |
5,677 |
|
|
Business analytics solutions and Agronomic services |
|
78 |
|
|
360 |
|
|
Crop input sales |
|
1,555 |
|
|
2,524 |
|
|
Revenues |
$ |
6,298 |
|
$ |
8,561 |
|
|
Operating expenses (1) |
|
(21,578 |
) |
|
(28,181 |
) |
|
Non-recurring items (2) |
|
608 |
|
|
1,786 |
|
|
Adjusted EBITDA (3) |
$ |
(14,672 |
) |
$ |
(17,834 |
) |
|
|
|
|
|
|
||
|
Net loss |
$ |
(18,692 |
) |
$ |
(22,182 |
) |
|
Loss per share – basic & diluted |
$ |
(0.44 |
) |
$ |
(0.53 |
) |
|
|
|
|
|
|
||
|
Free Cash Flow (3) |
$ |
(15,903 |
) |
$ |
(22,079 |
) |
|
|
|
|
|
|
||
|
|
March 31, 2023 |
|
December 31, 2022 |
|
||
|
FINANCIAL POSITION as at date specified |
|
|
|
|
||
|
Total assets |
$ |
74,807 |
|
$ |
87,018 |
|
|
Total liabilities |
$ |
71,982 |
|
$ |
65,554 |
|
|
Total equity |
$ |
2,825 |
|
$ |
21,464 |
|
|
|
|
|
|
|
||
|
|
March 31, 2023 |
|
December 31, 2022 |
|
||
|
KEY PERFORMANCE INDICATORS AND OTHER FINANCIAL MEASURES as at date specified |
|
|
|
|
||
|
Digital Agronomy Acres (4) |
|
7,459 |
|
|
9,773 |
|
|
Annual Recurring Revenue (ARR) (4) |
$ |
27,916 |
|
$ |
34,429 |
|
|
|
|
|
|
|
||
|
(1) Operating Expenses include Cost of revenue, Data and technology infrastructure expenses, Selling and marketing expenses, Product research and development expenses, and General and administrative expenses including restructuring expenses and non-recurring legal fees as set out in the Company’s Statements of Operations and Comprehensive Loss in its Unaudited Condensed Interim Financial Statements. (2) Non-recurring items include restructuring expenses of $0.2 million and legal and consulting fees of $0.4 million in Q1 2023 compared to $1.0 million and $0.8 million, respectively, in Q1 2022. (3) Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures used throughout the MD&A. See “Key Performance Indicators and Non-GAAP and Other Financial Measures” for more information on each non-GAAP financial measure. A quantitative reconciliation of Adjusted EBITDA to Net loss and Free Cash Flow, the most directly comparable IFRS financial measures are disclosed in our interim Financial Statements to which Adjusted EBITDA, Free Cash Flow, and Adjusted Free Cash Flow relates, is in the “Results of Operations” section of the MD&A. (4) Digital Agronomy Acres and ARR are supplementary financial measures used throughout the MD&A. See “Key Performance Indicators and Non-GAAP and Other Financial Measures” for more information on each supplementary financial measure. These numbers are unaudited. |
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- Revenues for the three months ended March 31, 2023, were $2.3M lower than the comparable period in 2022. Digital Ag and Fertility solutions subscription revenue was $4.7 million for Q1 2023 (Q1 2022 – $5.7 million). This $1.0 million decrease resulted from lower subscribed acres. The revenue decline was limited due to better pricing and a significant number of Digital Agronomy acres in Q1 2022 were non-paying PGP and low value discontinued acres.
- Crop input sales represent e-commerce revenue of $1.6 million for Q1 2023 (Q1 2022 – $2.5 million). The $0.9 million decrease was due to a supply-demand mismatch caused by an oversupply of products. A new e-commerce platform was launched recently to improve customer service experience and drive sales growth.
- The Adjusted EBITDA loss for the three months ended March 31, 2023 was $14.7 million (2022 – $17.8 million loss). The improvement in Q1 2023 resulted primarily from cost savings initiatives.
- The Free Cash Flow deficiency for the three months ended March 31, 2023 was $15.9 million (2022 – deficiency of $22.1 million). This improvement reflects reduced capex spending and the impact of the cost reduction initiatives.
- The Net loss for the three months ended March 31, 2023, was $18.7 million (2022 – $22.2 million loss). This $3.5 million improvement resulted from management’s continuing focus on cost-saving initiatives.
Annual General Meeting of Shareholders
The Annual General Meeting of Shareholders of the Company will be held in a virtual-only format on Wednesday, May 31, 2023, at 10:00 a.m. Eastern Time. Further information and materials related to the Annual General Meeting of Shareholders will be posted on the Farmers Edge Investor Relations website at https://www.farmersedge.ca/investor-relations/shareholder-information/.
Conference Call Notice
Farmers Edge will hold a live audio webcast at 8:30 a.m. Eastern Time on Monday, May 15, 2023, to discuss the Company’s financial results and business highlights. All interested parties are invited to listen to the live audio webcast at https://www.gowebcasting.com/12522. Following the event, a replay of the webcast will be available on the Farmers Edge Investor Relations website.
Key Performance Indicators & Non-GAAP and Other Financial Measures
This press release makes reference to certain non-GAAP and other financial measures and key performance indicators (“KPIs”). These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We make reference to the following non-GAAP measures: “Adjusted EBITDA”, “Free Cash Flow” and “Adjusted Free Cash Flow”. This press release also makes reference to “Annual Recurring Revenue” or “ARR” and “Digital Agronomy Acres”, which are operating metrics used in our industry. These non-GAAP measures and KPIs are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors, and other interested parties frequently use non-GAAP measures in the evaluation of issuers. Our management also uses non-GAAP measures and KPIs in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation.
Adjusted EBITDA is the net loss before income tax expense, other income, finance costs, foreign exchange (gain) loss, depreciation and amortization after adjusting for the effects of any unusual non-recurring items. Adjusted EBITDA is a non-GAAP financial measure, and its more directly comparable financial measure that is disclosed in our interim Financial Statements is net loss. The Company’s management and Board use this measure to evaluate consolidated operating results. In addition, this measure is used to make operating decisions as it is an indicator of the performance of the business and how much cash is being used by the Company and assists in determining resource allocation decisions. This measure may not be comparable to similar measures presented by other companies. See reconciliation under “Results of Operations”.
Free Cash Flow is net loss, adjusted for other income excluding government subsidies and financial assistance, finance costs, foreign exchange (gain) loss, depreciation and amortization as set out in the Company’s consolidated statement of operations and comprehensive loss in the interim Financial Statements, stock-based compensation, net additions to property and equipment and intangible assets, repayment of right‑of‑use obligations, and any unusual non‑recurring items. Free Cash Flow is a non-GAAP financial measure, and its more directly comparable financial measure that is disclosed in our interim Financial Statements is net loss during the period. The Company’s management and Board use this measure to assess the availability of the Company’s cash. See reconciliation in “Results of Operations”.
Adjusted Free Cash Flow is net loss, adjusted for other income excluding government subsidies and financial assistance, finance costs, foreign exchange (gain) loss, depreciation and amortization as set out in the Company’s consolidated statement of operations and comprehensive loss in the interim Financial Statements, stock-based compensation, net additions to property and equipment and intangible assets, repayment of right‑of‑use obligations, any unusual non‑recurring items and changes in non-cash working capital. Adjusted Free Cash Flow is a non-GAAP financial measure, and its more directly comparable financial measure that is disclosed in our interim Financial Statements is net loss during the period. The Company’s management and Board use this measure to assess the availability of the Company’s cash. See reconciliation in “Results of Operations”.
Adjusted Free Cash Flow is useful as a performance measure to analyze the cash used in operations before the seasonal impact of changes in working capital items or other unusual items.
|
Adjusted EBITDA and Net Loss |
|||||||||
|
in thousands |
Three Months Ended |
|
Change |
|
|||||
|
for the periods ended March 31 |
2023 |
|
2022 |
|
|
|
|||
|
Digital Agronomy operations |
$ |
(13,969 |
) |
$ |
(17,356 |
) |
$ |
3,387 |
|
|
E-commerce operations |
|
(703 |
) |
|
(478 |
) |
|
(225 |
) |
|
Adjusted EBITDA (1) |
|
(14,672 |
) |
|
(17,834 |
) |
|
3,162 |
|
|
Foreign exchange loss |
|
90 |
|
|
334 |
|
|
(244 |
) |
|
Depreciation of property and equipment |
|
1,806 |
|
|
2,433 |
|
|
(627 |
) |
|
Amortization of intangible assets |
|
1,482 |
|
|
1,612 |
|
|
(130 |
) |
|
Finance costs |
|
1,083 |
|
|
153 |
|
|
930 |
|
|
Other income |
|
(1,049 |
) |
|
(1,970 |
) |
|
921 |
|
|
Non-recurring items (2) |
|
608 |
|
|
1,786 |
|
|
(1,178 |
) |
|
Net loss |
$ |
(18,692 |
) |
$ |
(22,182 |
) |
$ |
3,490 |
|
|
|
|
|
|
|
|
|
|||
|
Digital Agronomy operations |
$ |
(17,966 |
) |
$ |
(21,733 |
) |
$ |
3,767 |
|
|
E-commerce operations |
|
(726 |
) |
|
(449 |
) |
|
(277 |
) |
|
Total net loss |
$ |
(18,692 |
) |
$ |
(22,182 |
) |
$ |
3,490 |
|
|
(1) Adjusted EBITDA is a non-GAAP financial measure. See “Key Performance Indicators and Non-GAAP and Other Financial Measures” for more information on each non-GAAP financial measure. This table provides a quantitative reconciliation of Adjusted EBITDA to Net loss, the most directly comparable IFRS financial measure disclosed in our interim Financial Statements to which Adjusted EBITDA relates. (2) Non-recurring items include restructuring expenses of $0.2 million and legal and consulting fees of $0.4 million in Q1 2023 compared to $1.0 million and $0.8 million, respectively, in Q1 2022. |
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|
Free Cash Flow |
|||||||||
|
in thousands |
Three Months Ended |
|
Change |
|
|||||
|
for the periods ended March 31 |
2023 |
|
2022 |
|
|
|
|||
|
Net loss |
$ |
(18,692 |
) |
$ |
(22,182 |
) |
$ |
3,490 |
|
|
Foreign exchange loss |
|
90 |
|
|
334 |
|
|
(244 |
) |
|
Depreciation of property and equipment |
|
1,806 |
|
|
2,433 |
|
|
(627 |
) |
|
Amortization of intangible assets |
|
1,482 |
|
|
1,612 |
|
|
(130 |
) |
|
Finance costs |
|
1,083 |
|
|
153 |
|
|
930 |
|
|
Other income excluding government subsidies and financial assistance |
|
(681 |
) |
|
(414 |
) |
|
(267 |
) |
|
Stock-based compensation |
|
292 |
|
|
921 |
|
|
(629 |
) |
|
Additions to property and equipment (net of proceeds) |
|
56 |
|
|
(4,607 |
) |
|
4,663 |
|
|
Additions to intangible assets (net of proceeds) |
|
(1,272 |
) |
|
(1,213 |
) |
|
(59 |
) |
|
Repayment of right-of-use obligations |
|
(675 |
) |
|
(902 |
) |
|
227 |
|
|
Non-recurring items (1) |
|
608 |
|
|
1,786 |
|
|
(1,178 |
) |
|
Free Cash Flow (2) |
$ |
(15,903 |
) |
$ |
(22,079 |
) |
$ |
6,176 |
|
|
|
|
|
|
|
|
|
|||
|
Changes in non-cash working capital |
|
723 |
|
|
5,752 |
|
|
(5,029 |
) |
|
|
|
|
|
|
|
|
|||
|
Adjusted Free Cash Flow (2) |
$ |
(15,180 |
) |
$ |
(16,327 |
) |
$ |
1,147 |
|
|
(1) Non-recurring items include restructuring expenses of $0.2 million and legal and consulting fees of $0.4 million in Q1 2023 compared to $1.0 million and $0.8 million in Q1 2022, respectively. (2) Free Cash Flow and Adjusted Free Cash Flow are non-GAAP financial measures. See “Key Performance Indicators and non-GAAP and Other Financial Measures”. This table provides a quantitative reconciliation of Free Cash Flow and Adjusted Free Cash Flow to Net Loss during the period, the most directly comparable IFRS financial measure disclosed in our interim Financial Statements to which Free Cash Flow and Adjusted Free Cash Flow relates. |
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About Farmers Edge
Farmers Edge is an agriculture technology company with a broad portfolio of proprietary technological solutions, spanning hardware, software, and services. Powered by a unique combination of connected field sensors, artificial intelligence, big data analytics, and agronomic expertise, the Company’s digital platform turns data into actions and intelligent insights and delivers value to growers and all stakeholders in the agricultural ecosystem. Farmers Edge technologies accelerate digital transformation on the farm and beyond, protecting our global resources, supporting sustainable food production for a rapidly growing population and helping growers and businesses reach their growth and sustainability goals.
For more information on Farmers Edge, please visit www.farmersedge.ca. Additional information relating to the company, including all public filings, is available on SEDAR (www.sedar.com)
Forward-Looking Information
This press release may contain forward-looking information within the meaning of applicable securities legislation. Such information includes, but is not limited to, statements related to the Company’s anticipated results and future cost savings and its future business prospects, partnerships, and opportunities, including the planned further expansion into the carbon credit market, and the anticipated benefits therefrom. Words such as “expect,”, “anticipate”, “intend,”, “may,”, “will”, “estimate” and variations of such words and similar expressions are intended to identify such forward-looking information. This information is based on the Company’s reasonable assumptions and beliefs in light of the information currently available to it and the statements are made as of the date of this press release. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results and events to differ materially from those that are disclosed in or implied by such forward-looking information. Such assumptions, risks and uncertainties include, but are not limited to, the factors discussed under “Forward-Looking Information” and “Risk Factors” in the Company’s most recent Annual Information Form and under the “Risk and Uncertainties” section in the Company’s management discussion and analysis filed today, May 11, 2023, each of which are available on the Company’s website (www.farmersedge.ca/investor-relations/) and on SEDAR (www.sedar.com). The Company cautions that the list of risk factors and uncertainties is not exhaustive and other factors could also adversely affect the Company’s results. Readers are urged to consider the risks, uncertainties and assumptions associated with these statements carefully in evaluating the forward-looking information and are cautioned not to place undue reliance on such information. The Company does not undertake any obligation to update such forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
Contacts
Farmers Edge Investor Relations:
InvestorRelations@FarmersEdge.ca
(204) 992-7019
Farmers Edge Media Relations:
Media@FarmersEdge.ca
