Get a free quote now.
Addition of New Customers Drives Revenue Growth of 142% Quarter over Quarter and 126% Year over Year
EDMONTON, AB / August 22, 2019 / OneSoft Solutions Inc. (the “Company” or “OneSoft”) (TSXV:OSS)(OTCQB:OSSIF), a North American developer of cloud-based business solutions, is pleased to announce its financial results for the three and six months ended June 30, 2019 (“Q2 2019”). Please refer to the interim unaudited condensed Consolidated Financial Statements and Management’s Discussion and Analysis (“MD&A”) for the three and six months ended June 30, 2019 filed on SEDAR at www.sedar.com for more information.
Effective in 2018, the Company changed its financial year-end from February 28 to December 31. The information presented in this News Release is for the three and six months ended June 30, 2019 (the “current period”) and for May 31, 2018 (the “comparative period”).
Financial Summary for the Three and Six Months Ended June 30, 2019 and May 31, 2018
Highlights of Q2 2019
- The Company’s commercially contracted client list increased during the first half of 2019, from two clients as at December 31, 2018 to six clients as at June 30, 2019, and now includes one independent pipeline operator, four Fortune 500 companies, and one industry Super-major. These clients collectively operate approximately 51,000 miles of oil and gas pipeline infrastructure for which we anticipate data will be loaded into the Company’s Cognitive Integrity ManagementTM (“CIM”) software-as-a-service (“SaaS”) solution on a staged timing basis. For historical comparison and context, CIM associated revenue totalled approximately $1.3 million during the ten months ended December 2018 and was primarily derived from only two clients who collectively analyzed approximately 13,000 miles of pipeline data.
- On April 4, 2019, the Company announced an $8 million Bought Deal Financing (the “Financing”), with an over-allotment option for $1.2 million. The Company filed a Preliminary Short Form Prospectus in connection with the Financing on April 9, 2019, followed by a Final Short Form Prospectus on April 17, 2019. The Company closed the fully subscribed $9,200,000 Financing on April 25, 2019 and issued 11,500,000 common shares at $0.80 per share and 600,000 broker share purchase warrants exercisable at $1.00 and expiring April 25, 2020. Institutional investors subscribed for approximately 75% of the Financing.
- In accordance with the Company’s announced intentions regarding use of proceeds of the April 2019 Financing, management commenced progressing certain technology road-map and development plans, including conducting market research into new CIM companion products and identifying and hiring additional personnel to accelerate new product development sprints.
- Revenue for the current quarter increased by 142.4% from $292,783 for the 3-month period ended May 31, 2018 to $709,740 for the period ended June 30, 2019. The revenue increase was primarily due to increased usage of the Company’s software solutions by more clients in 2019.
- Cash at quarter end increased to $12,143,799, from $2,015,428 at December 31, 2018, significantly strengthening the Company’s balance sheet. The Company has no debt.
Subsequent to Quarter-End
- Subsequent to the quarter end, on July 22, 2019 the Company announced it had teamed up with Worley (formerly WorleyParsons) to conduct a pilot project with a U.S. based Fortune 500 electricity and natural gas supplier, who will trial OneBridge’s CIM software over several months.
- On July 22 and 23, 2019, the Company and Microsoft held a workshop entitled “Digital Transformation: Making Pipeline Failures a thing of the Past” at the Microsoft Training Center in Houston. The event was very well attended by staff from many pipeline companies and featured a CIM product presentation and demonstration by four clients that are actively using CIM. The workshop generated several sales leads for the Company.
OneSoft is focused on growing the revenue generated by CIM, its first commercial SaaS solution, and concurrently is pursuing development of new accretive solutions we believe will accelerate future revenue growth. CIM future revenue growth is dependent upon three factors: (a) the pace at which current clients load and process data for their pipelines; (b) customers’ schedules of pipeline inspection, which drives a variable element of revenue and (c) the pace of adoption of CIM by prospective new clients. We believe the positive user experience and validation of our solutions by our initial clients is now resonating positively within the U.S.A. marketplace, boosting confidence and encouraging wider industry acceptance of our innovative machine learning technologies and processes to replace legacy systems that serve the industry today.
As was disclosed in prior communiques, the Company intended to accelerate its R&D efforts beyond the evolution of CIM functionality, once client interest for participation and appropriate funding resources had been investigated and arranged. Following completion of the Financing in April 2019, the Company is now taking steps to ramp its R&D efforts to grow the revenue potential from current and prospective clients, develop new CIM accretive solutions and strengthen the Company’s machine learning and data sciences technological lead in the marketplace.
Evolution of CIM Solution to CIM Platform
To date, our processing of tens of thousands of miles of pipeline data from many operators and pipeline tool vendors involving more than 30 million features has trained our software with the learnings from it being incorporated as permanent knowledge in multiple iterations of our proprietary machine learning algorithms. We believe this work represents unique and unparalleled analysis capability, that even the largest of pipeline operators and industry inspection tool (“PIG”) vendors are not able to replicate as they individually have neither the access to such a diverse amount of data nor the specific data science capabilities to analyze it.
We intend to transform CIM from a solution to a CIM platform to which various new software modules can be integrated to address more functionality requirements of our clients. We believe this will allow us to monetize the ever-increasing cognitive learnings we are deriving from our continued analyses of pipeline data provided by our clients. This initiative may involve development of new probabilistic risk and advanced analytics models, in part designed to operate in accordance with current and future regulatory guidance requirements prescribed by the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), the U.S.A regulator of hazardous pipeline operations. Similar to prior product development sprints, we intend to follow “The Lean Start-up” software development model wherein client and prospect feedback drives functionality specifications and development priorities and minimally viable revenue generating products are developed and released to market as soon as is practical. Some of our clients who understand the benefits of transforming CIM to a platform have expressed potential interest in contributing collaborative user input and/or other resources to develop new algorithms and products to be part of the CIM platform.
We believe that the new algorithms, predictive analytical models and other data science capabilities, when completed as envisioned, will increase the potential total addressable market (“TAM”) for the Company’s products. We believe that by integrating and correlating pipeline inline inspection ("ILI") data with other data sets (e.g., cathodic protection, types of pipeline steel, coatings, soil, etc.), we will be able to develop and market innovative new solutions that will use direct assessment analyses, risk management processes and other analytical and predictive functions that operators seek to maintain and improve their operational compliance with PHMSA regulations on a more efficient and effective basis.
Technology Development to Increase Revenue Potential and Competitive Moat
As noted in previous communiques, we believe that revenue from new functionality and solutions will be accretive to current CIM revenues, supporting our expectation that revenue metrics can be increased once new functionality and products are commercialized in the future.
Regarding technology, we believe that OneSoft’s “first mover” advantage in having developed and commercialized the first oil and gas pipeline integrity management solutions based on cloud computing, machine learning and data science has established a highly competitive go-to-market position. Potential competitors who might embark on development of similar CIM type functionality will likely face formidable obstacles to catch up to and displace OneSoft solutions, as such competitors will first need to assemble data science development teams, establish collaborative technology and sales relationships with companies like Microsoft and Worley, undertake significant efforts to get access to pipeline ILI data from pipeline operators, expend millions of dollars to develop their solutions, identify and engage private preview software users and then execute extensive product validation efforts, before their solutions will be purchased by clients.
We believe the enormity of replicating our technology and solutions may dissuade certain current industry vendors who provide legacy products from embarking on such an extensive project due to the very significant development costs and lengthy timeframe which would likely be required to replicate OneSoft’s intellectual property, from initial development to market validation by clients. Providing we continue to pursue cutting-edge R&D initiatives, we believe it will be very challenging for new entrants to catch up to OneSoft and deliver superior solutions, because of our significant head start regarding the technology, client and business advancements we have achieved.
Operational Expectations - Fiscal 2019 and Beyond
We believe that OneSoft is positioned as the machine learning technology leader within our markets today. The April 2019 Financing strengthened our balance sheet and provided the resources necessary to maintain and advance our technological lead. New personnel have been hired to augment the development and sales teams since closing of the April 2019 Financing, and efforts are ongoing to hire additional staff to further increase the Company’s capability to accelerate product development and business growth. Although we are not aware of any competing solutions today that rival CIM’s capabilities, or any potential competitors that are close to releasing a similar machine learning solution, we believe that the industry is becoming well aware of the benefits of these types of solutions and that our efforts to date have positioned the Company to evolve the CIM platform for future opportunities to support revenue growth.
New R&D sprints commenced in Fiscal 2019 are not expected to complete before year end, and recognition of revenue associated with these development sprints, if any, is not likely to occur until at least Fiscal 2020. The Company is well-positioned to pursue accelerated development, marketing and sales initiatives. Whereas the investment in new product development is expected to result in operational losses until such time as new products are commercialized and revenue-generating, we believe the Company’s strategies, business, technology and operational plans will ultimately result in increasing shareholder value through achievement of two key objectives - advancing our technological lead and competitive moat, and increasing market potential and revenues.
ON BEHALF OF THE BOARD OF DIRECTORS
ONESOFT SOLUTIONS INC.
For more information, please contact
This news release contains forward-looking statements relating to the future operations and profitability of the Company and other statements that are not historical facts. Forward-looking statements are often identified by terms such as “may”, “should”, “anticipate”, “expects”, “believe”, “will”, “intends”, “plans” and similar expressions. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Such forward-looking information is provided to deliver information about management's current expectations and plans relating to the future. Investors are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions.
In respect of the forward-looking information and statements the Company has placed reliance on certain assumptions that it believes are reasonable at this time, including expectations and assumptions concerning, among other things: interest and foreign exchange rates; planned synergies, capital efficiencies and cost-savings; applicable tax laws; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services; the efficacy of its software; our interpretation based on various industry information sources regarding the total miles of pipeline in the USA and globally, which segments are piggable; our understanding of metrics, activities and costs regarding evaluation, inspection and maintenance is in alignment with various industry information sources and costs of performing pipeline evaluation, inspection and maintenance in the USA are representative of those in the rest of the world, are reasonably accurate; the success of growth projects; future operating costs; that counterparties to material agreements will continue to perform in a timely manner; that there are no unforeseen events preventing the performance of contracts; and that there are no unforeseen material development or other costs related to current growth projects or current operations. Accordingly, readers should not place undue reliance on the forward-looking information contained in this press release. Since forward-looking information addresses future events and conditions, such information by its very nature involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to many factors and risks. These include but are not limited to the risks associated with the industries in which the Company operates in general such as: costs and expenses; interest rate and exchange rate fluctuations; competition; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws.
Readers are cautioned that the foregoing list of factors is not exhaustive. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release, and the Company undertakes no obligation to update publicly or to revise any of the included forward-looking statements, whether because of new information, future events or otherwise, except as expressly required by Canadian securities law.
This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities within the United States. The securities to be offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act or other laws.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
+1 111 000 111
+1 111 000 111
+1 111 000 111
+1 111 000 111