Farmers Edge Inc. (“Farmers Edge” or the “Company”) (TSX: FDGE), a pure-play digital agriculture company, reports its results for Q4 and the year ended December 31, 2022. All amounts are expressed in Canadian dollars. Certain key performing 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
- Following through on its announced plan in Q3 2022, management successfully implemented actions to stabilise operations, decrease cash burn, and create a strong foundation for the future.
- Adjusted free cash flow deficit was reduced by 56% in Q4 2022 on a year over year basis as the Company continues to execute its cost reduction program to deliver $20 million in annualized cost savings.
- Total subscribed acres were 9.8 million. New Digital Agronomy acres sold for the quarter ending December 31, 2022, were 0.2 million acres (YTD – 3.5 million acres, including 1.7 million non-paying PGP acres). In order to increase sales in the future, management has restructured the sales teams, hired new sales personnel, and is actively engaged in discussions with several potential enterprise partners.
- ARR at December 31, 2022 was $34.4 million and is lower than December 31, 2021 primarily due to discontinued low-value acres and non converted PGP acres. The most recent PGP conversions were at list prices.
“As a result of our cost-optimization efforts and efficient working capital management, our adjusted free cash flow deficit was reduced by over 50% in Q4 2022 on a year over year basis this quarter.” Vibhore Arora, Farmers Edge’s Chief Executive Officer, said. “We remain focused on improving profitability by growing our top-line through our industry-leading technology solutions and forging critical partnerships with growers and enterprise customers.”
OPERATING HIGHLIGHTS
|
in thousands, except per share amounts |
Three Months Ended |
|
Year Ended |
|
||||||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
||||
|
FINANCIAL PERFORMANCE for periods ended December 31 |
|
|
|
|
|
|
|
|
||||
|
Digital Ag and Fertility solutions revenues |
$ |
10,000 |
|
$ |
10,239 |
|
$ |
25,333 |
|
$ |
27,144 |
|
|
Add: channel partner subsidies |
|
— |
|
|
507 |
|
|
— |
|
|
2,923 |
|
|
Digital Ag and Fertility solutions subscriptions |
|
10,000 |
|
|
10,746 |
|
|
25,333 |
|
|
30,067 |
|
|
Business analytics solutions and Agronomic services |
|
432 |
|
|
1,507 |
|
|
1,757 |
|
|
4,707 |
|
|
Crop input sales |
|
157 |
|
|
1,062 |
|
|
5,681 |
|
|
1,398 |
|
|
Revenues (1) |
$ |
10,589 |
|
$ |
13,315 |
|
$ |
32,771 |
|
$ |
36,172 |
|
|
Operating expenses (2) |
|
(21,866 |
) |
$ |
(29,493 |
) |
|
(101,802 |
) |
$ |
(86,034 |
) |
|
Non-recurring items (3) |
|
3,452 |
|
|
480 |
|
|
9,332 |
|
|
(5,855 |
) |
|
Adjusted EBITDA (4) |
$ |
(7,825 |
) |
$ |
(15,698 |
) |
$ |
(59,699 |
) |
$ |
(55,717 |
) |
|
|
|
|
|
|
|
|
|
|
||||
|
Net loss (6) |
$ |
(20,058 |
) |
$ |
(19,735 |
) |
$ |
(86,883 |
) |
$ |
(66,351 |
) |
|
Loss per share – basic & diluted (5) |
$ |
(0.48 |
) |
$ |
(0.47 |
) |
$ |
(2.07 |
) |
$ |
(1.81 |
) |
|
|
|
|
|
|
|
|
|
|
||||
|
Adjusted Free Cash Flow (4) |
$ |
(6,425 |
) |
$ |
(14,475 |
) |
$ |
(64,156 |
) |
$ |
(75,640 |
) |
|
|
|
|
|
|
|
|
|
|
||||
|
|
December 31, 2022 |
|
December 31, 2021 |
|
|
|
|
|
||||
|
FINANCIAL POSITION as at date specified |
|
|
|
|
|
|
|
|
||||
|
Total assets |
$ |
87,018 |
|
$ |
135,783 |
|
|
|
|
|
||
|
Total liabilities |
$ |
66,529 |
|
$ |
31,749 |
|
|
|
|
|
||
|
Total equity |
$ |
20,489 |
|
$ |
104,034 |
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||||
|
|
December 31, 2022 |
|
September 30, 2022 |
|
|
|
|
|
||||
|
KEY PERFORMANCE INDICATORS AND OTHER FINANCIAL MEASURES as at date specified |
|
|
|
|
|
|
|
|
||||
|
Digital Agronomy Acres (6) |
|
9,773 |
|
|
11,790 |
|
|
|
|
|
||
|
Other Acres (6) |
|
— |
|
|
494 |
|
|
|
|
|
||
|
Total Subscribed Acres (6) |
|
9,773 |
|
|
12,284 |
|
|
|
|
|
||
|
Annual Recurring Revenue (ARR) (6) |
$ |
34,429 |
|
$ |
43,039 |
|
|
|
|
|
||
|
(1) Revenues include $0.5 million and $2.9 million subsidies revenues related to commercial partner agreements for the three months and year ended December 31, 2021, respectively. There was no similar item in the three months and year ended December 31, 2022. |
|
(2) 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 Financial Statements. |
|
(3) Non-recurring items in Q4 2022 include restructuring expenses of $0.2 million, legal and consulting fees of $2.4 million and a signing bonus of $0.9 million for the new CEO ($0.5 million in Q4 2021 related to legal and consulting fees). Non-recurring items in the year ended December 31, 2022 also include additional restructuring expenses of $1.4 million and legal and consulting fees of $4.5 million (2021 – $0.5 million related to costs incurred to become a public company and legal and consulting fees of $1.3 million offset by a satellite imagery settlement gain of $8.2 million). |
|
(4) Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures used throughout this 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 Financial Statements to which Adjusted EBITDA and Adjusted Free Cash Flow relates, is in the “Results of Operations” section of this MD&A. |
|
(5) Dilutive securities have been excluded from the calculation of diluted loss per share because including them would be anti-dilutive. The loss per share – basic and diluted for the periods ended December 31, 2021, and 2022 have been retrospectively adjusted to reflect the consolidation of common shares on a 7:1 basis, which occurred at the time of the IPO. |
|
(6) Digital Agronomy Acres, Other Acres, Total Subscribed Acres and ARR are supplementary financial measures used throughout this 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. |
- Revenues for the three months and year ended December 31, 2022 (excluding partner subsidies in 2021) were slightly lower than the comparable periods in 2021. Sales in 2022 for both periods had no subsidies. Lower digital agronomy revenues were due to the lower digital agronomy acres during the year. This was partially offset by a higher revenue per acre as most of the lost acres were non-paying PGP or low-value discontinued acres. Lower fertility revenue in Q1 2022 of $1.0 million due to a higher soil test completion rate in Q4 2021 also impacted the year-to-date results. In Q4 2022, crop input e-commerce sales were lower due to a supply-demand mismatch caused by weaker market demand and an oversupply of products. Management expects e-commerce sales to start to rebound in Q1 2023 and plans to enhance its retail marketplace by broadening its offerings through a new platform.
- The Adjusted EBITDA loss for the fourth quarter of 2022 was $7.8 million (2021 – $15.7 million) and $59.7 million for the year ended December 31, 2022 (2021 – $55.7 million). The positive improvement in Q4 2022 was primarily the result of cost savings initiatives.
- Adjusted Free Cash Flow deficiency was $6.4 million in the fourth quarter of 2022 (2021 – deficiency of $14.5 million) and a deficiency of $64.2 million for year ended December 31, 2022 (2021- deficiency of $75.6 million). This improvement reflects better working capital management and the impact of the cost reduction initiatives.
- The Net loss was $20.0 million for the fourth quarter of 2022 (2021 – $19.7 million loss) and included a non-cash impairment charge related to the e-commerce operations and other non-recurring items of $9.7 million (Q4 2021 – $0.5 million). This improvement of $8.9 million, after unusual items mainly as a result of the restructuring of the business, is an important first step and primarily due to the company’s cost saving initiatives. For the year ended December 31, 2022, the loss was $86.9 million and included the impairment loss noted above and non-recurring items of $15.5 million (2021 – gain on non-recurring items of $5.9 million).
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 Thursday, March 16, 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/12484. 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”, “Other Acres” and “Subscribed 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 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 from 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 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 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 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 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 |
|
Year Ended |
|
Change |
|
||||||||||
|
for the periods ended December 31 |
2022 |
|
2021 |
|
|
|
2022 |
|
2021 |
|
|
|
||||||
|
Digital Agronomy operations |
$ |
(6,405 |
) |
$ |
(15,698 |
) |
$ |
9,293 |
|
$ |
(57,985 |
) |
$ |
(55,717 |
) |
$ |
(2,268 |
) |
|
E-commerce operations |
|
(1,420 |
) |
|
— |
|
|
(1,420 |
) |
|
(1,714 |
) |
|
— |
|
|
(1,714 |
) |
|
Adjusted EBITDA (1) |
|
(7,825 |
) |
|
(15,698 |
) |
|
7,873 |
|
|
(59,699 |
) |
|
(55,717 |
) |
|
(3,982 |
) |
|
Foreign exchange (gain) loss |
|
(59 |
) |
|
98 |
|
|
(157 |
) |
|
535 |
|
|
(2,497 |
) |
|
3,032 |
|
|
Depreciation of property and equipment |
|
2,019 |
|
|
2,876 |
|
|
(857 |
) |
|
9,561 |
|
|
10,545 |
|
|
(984 |
) |
|
Amortization of intangible assets |
|
1,917 |
|
|
2,192 |
|
|
(275 |
) |
|
7,349 |
|
|
7,869 |
|
|
(520 |
) |
|
Finance costs |
|
974 |
|
|
121 |
|
|
853 |
|
|
1,714 |
|
|
7,707 |
|
|
(5,993 |
) |
|
Other income |
|
(2,260 |
) |
|
(1,730 |
) |
|
(530 |
) |
|
(7,496 |
) |
|
(7,135 |
) |
|
(361 |
) |
|
Impairment |
|
6,189 |
|
|
— |
|
|
6,189 |
|
|
6,189 |
|
|
— |
|
|
6,189 |
|
|
Non-recurring items (2) |
|
3,452 |
|
|
480 |
|
|
2,972 |
|
|
9,332 |
|
|
(5,855 |
) |
|
15,187 |
|
|
Net loss |
$ |
(20,057 |
) |
$ |
(19,735 |
) |
$ |
(322 |
) |
$ |
(86,883 |
) |
$ |
(66,351 |
) |
$ |
(20,532 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Digital Agronomy operations |
$ |
(19,872 |
) |
$ |
(19,197 |
) |
$ |
(675 |
) |
$ |
(84,825 |
) |
$ |
(65,485 |
) |
$ |
(19,340 |
) |
|
E-commerce operations |
|
(185 |
) |
|
(538 |
) |
|
353 |
|
|
(2,058 |
) |
|
(866 |
) |
|
(1,192 |
) |
|
Total net loss |
$ |
(20,057 |
) |
$ |
(19,735 |
) |
$ |
(322 |
) |
$ |
(86,883 |
) |
$ |
(66,351 |
) |
$ |
(20,532 |
) |
|
(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 Financial Statements to which Adjusted EBITDA relates. |
|
(2) Non-recurring items in Q4 2022 include restructuring expenses of $0.2 million, legal and consulting fees of $2.4 million and a signing bonus of $0.9 million for the new CEO ($0.5 million in Q4 2021 related to legal and consulting fees). Non-recurring items in the year ended December 31, 2022 also include additional restructuring expenses of $1.4 million and legal and consulting fees of $4.5 million (2021 – $0.5 million related to costs incurred to become a public company and legal and consulting fees of $1.3 million offset by a satellite imagery settlement gain of $8.2 million). |
Free Cash Flow
|
in thousands |
Three Months Ended |
|
Change |
|
Year Ended |
|
Change |
|
||||||||||
|
for the periods ended December 31 |
2022 |
|
2021 |
|
|
|
2022 |
|
2021 |
|
|
|
||||||
|
Net loss |
$ |
(20,057 |
) |
$ |
(19,735 |
) |
$ |
(322 |
) |
$ |
(86,883 |
) |
$ |
(66,351 |
) |
$ |
(20,532 |
) |
|
Foreign exchange (gain) loss |
|
(59 |
) |
|
98 |
|
|
(157 |
) |
|
535 |
|
|
(2,497 |
) |
|
3,032 |
|
|
Depreciation of property and equipment |
|
2,019 |
|
|
2,876 |
|
|
(857 |
) |
|
9,561 |
|
|
10,545 |
|
|
(984 |
) |
|
Amortization of intangible assets |
|
1,917 |
|
|
2,192 |
|
|
(275 |
) |
|
7,349 |
|
|
7,869 |
|
|
(520 |
) |
|
Finance costs |
|
974 |
|
|
121 |
|
|
853 |
|
|
1,714 |
|
|
7,707 |
|
|
(5,993 |
) |
|
Other income excluding government subsidies and financial assistance |
|
(1,568 |
) |
|
(304 |
) |
|
(1,264 |
) |
|
(3,335 |
) |
|
(749 |
) |
|
(2,586 |
) |
|
Impairment loss |
|
6,189 |
|
|
— |
|
|
6,189 |
|
|
6,189 |
|
|
— |
|
|
6,189 |
|
|
Long-term incentive plan |
|
51 |
|
|
— |
|
|
51 |
|
|
51 |
|
|
— |
|
|
51 |
|
|
Stock-based and senior executive compensation |
|
(1,721 |
) |
|
1,011 |
|
|
(2,732 |
) |
|
(1,075 |
) |
|
3,627 |
|
|
(4,702 |
) |
|
Additions to property and equipment (net of proceeds) |
|
777 |
|
|
(1,583 |
) |
|
2,360 |
|
|
(5,658 |
) |
|
(7,607 |
) |
|
1,949 |
|
|
Additions to intangible assets (net of proceeds) |
|
(1,216 |
) |
|
(1,321 |
) |
|
105 |
|
|
(4,710 |
) |
|
(4,201 |
) |
|
(509 |
) |
|
Repayment of right-of-use obligations |
|
(549 |
) |
|
(728 |
) |
|
179 |
|
|
(3,249 |
) |
|
(2,982 |
) |
|
(267 |
) |
|
Non-recurring items (1) |
|
3,452 |
|
|
480 |
|
|
2,972 |
|
|
9,332 |
|
|
(5,855 |
) |
|
15,187 |
|
|
Free Cash Flow (2) |
$ |
(9,791 |
) |
$ |
(16,893 |
) |
$ |
7,102 |
|
$ |
(70,179 |
) |
$ |
(60,494 |
) |
$ |
(9,685 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Changes in non-cash working capital |
|
3,366 |
|
|
2,418 |
|
|
948 |
|
|
6,023 |
|
|
(15,146 |
) |
|
21,169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Adjusted Free Cash Flow (2) |
$ |
(6,425 |
) |
$ |
(14,475 |
) |
$ |
8,050 |
|
$ |
(64,156 |
) |
$ |
(75,640 |
) |
$ |
11,484 |
|
|
(1) Non-recurring items in Q4 2022 include restructuring expenses of $0.2 million, legal and consulting fees of $2.4 million and a signing bonus of $0.9 million for the new CEO ($0.5 million in Q4 2021 related to legal and consulting fees). Non-recurring items in the year ended December 31, 2022 also include additional restructuring expenses of $1.4 million and legal and consulting fees of $4.5 million (2021 – $0.5 million related to costs incurred to become a public company and legal and consulting fees of $1.3 million offset by a satellite imagery settlement gain of $8.2 million). |
|
(2) Adjusted Free Cash Flow is a non-GAAP financial measure. See “Key Performance Indicators and non-GAAP and Other Financial Measures”. This table provides a quantitative reconciliation of Adjusted Free Cash Flow to net loss during the period, the most directly comparable IFRS financial measure disclosed in our Financial Statements to which Adjusted Free Cash Flow relates. |
About Farmers Edge
Farmers Edge is leading the next agricultural revolution with the industry’s broadest portfolio of proprietary technological innovations, 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, delivering value to all stakeholders of the agricultural ecosystem. Farmers Edge disruptive technologies accelerate digital transformation on the farm and beyond, protecting our global resources and ensuring sustainable food production for a rapidly growing population.
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 Factors” section in the Company’s management discussion and analysis filed today, March 14, 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.
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