Total revenues for the first nine months increased to $4.56 million
VANCOUVER, BC – November 23, 2022 – HS GovTech Solutions Inc. (the “Company” or “HS GovTech”) (CSE:HS) (OTC:HDSLF) (Frankfurt:38H) a leading provider of SaaS applications for government, announced its financial results for the three and nine months ended September 30, 2022. All financial figures contained herein are expressed in U.S. dollars (“USD”) unless otherwise noted.
Q3 2022 Highlights
- For the nine months ended September 30, 2022, total revenues are up 14% over the same period last year, at $4.56 million, compared to $4.00 million.
- For the same period, Subscription revenues showed sustained momentum through Q3, at $3.19 million, compared to $2.80.
- Professional services revenue in the first nine months was $1.37 million, up 13% from $1.21 million for the same period last year.
- Professional services revenues were $0.15 million in Q3, compared to $0.85 million in Q3-21. Some fluctuation in professional services revenue is expected due to the timing of implementation deliverables in source contracts and is not indicative of a slowdown or change in future revenue growth.
- Annual Recurring Revenue (“ARR”) under contract increased to $6.02 million at September 30, 2022, compared to $4.16 million at December 31, 2021.
Chief Executive Officer, Silas Garrison, discussed the financial results.
“As with Q2, Q3 shows consistent momentum, which we expect to continue through the remainder of 2022 and beyond. Subscription revenues are growing steadily, and we expect growth to continue as new contracts come online. Our business development team continues building momentum, and we are seeing our customer market continue to increase their software evaluation and purchase activity post pandemic. As part of this, the Company has submitted a significant number of RFP responses this quarter, and are currently in the final stages of an award decision for many of them. With our traditional success rate in RFPs, we are optimistic regarding the outcomes of those current procurement processes.
Each new win also brings about additional professional services revenue. While professional services revenues were lower in Q3 than in Q2, our implementation teams continue to work through deliverables that have revenue milestones associated with them as well as gearing up for new customer onboarding. Professional services revenue schedules are often weighted more heavily at the beginning and at the end of an implementation. Q3 is largely representative of this as there are multiple large deployments going live, or kicking off, in Q4 and Q1-23.
Additionally, in recent weeks, we have also onboarded a growing number of agencies to the HSPay platform, putting HSPay in a position to increasingly contribute to revenue as we continue through 2023. This is significant as this represents new revenue and product expansion within existing customers. We repeatedly see requests for information from other agencies in the same region, and also agencies that keep expanding their product usage.
We continue to invest significant time and resources into enhancements for our platform which provide a better experience for our customers, improve the efficiency of our implementation process, and add functionality that meets the growing needs of the agencies which employ our technology. An illustration of these efforts improving efficiency is the shortening time between contract execution and go-live. We are seeing average time to go-live continue to shorten quarter over quarter. In Q3 we achieved go-live on a large-scale implementation in a record 60 days from contract execution. The entire organization continues to work to deliver more efficiently, and quickly, to deliver an ever growing volume of agencies.
The sustained presence and success we are seeing in the customer market is a direct reflection of the work the HS GovTech team does to deliver a flexible, powerful solution, and of the relationships our teams build with each customer. I am continually proud to be part of this company as we deliver real solutions to the needs of our customers.”
ARR is a non-IFRS measure that provides an indication of the subscription revenue from customers that is expected from continued usage per the term of contract signed, and as such management believes ARR to be a meaningful measure for assessment of Company performance. Key assumptions related to ARR figures are from continued usage of the services over the life of the agreement, with the calculation based on the annual average of subscription revenues over the life of the agreement.
EBITDA is a non-IFRS measure that is used as a measure of profit and loss. Management believes EBITDA provides a meaningful measure for assessment of Company performance as it removes non-cash and non-operating expenses such as financing costs. EBITDA is defined and calculated as net loss adjusted to remove interest, taxes, depreciation and amortization.
HS GovTech Solutions Inc.
HS GovTechTM is an industry leading software as a service company serving the state, provincial and local government market across the United States and Canada. HS GovTech’sTM cutting edge platforms currently provide inspection, information, communication and data management systems that enable government agencies to operate more efficiently. HS GovTech’sTM cloud and mobile based platforms are currently deployed in over 800 state and local government organizations across North America. HS GovTechTM currently offers the only fully integrated inspection, administration and analytics product suite across all platforms in North America. HS GovTechTM also delivers its government grade technologies to private businesses through its My Health DepartmentTM platform, enabling citizens and private businesses to gain visibility and predictability into their own organizations and move from a reactive to a proactive operational status. As HS GovTechTM continues to deliver focused service and innovative solutions to government organizations, the Company entered the FinTech space through its HSPayTM offering which serves as a payment platform that streamlines the intake of government revenue. Further, HS GovTech’s GovCallTM platform offers one of the only teleconferencing and video collaboration platforms tailored exclusively for government agencies.
This release may contain forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur. Although HS GovTechTM believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward looking statements. HS GovTechTM expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
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