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Farmers Edge Reports Third Quarter 2021 Results

WINNIPEG, Manitoba–(BUSINESS WIRE)–$FDGE–Farmers Edge Inc. (“Farmers Edge” or the “Company”) (TSX: FDGE), a pure-play digital agriculture company reported its financial results for the three months and nine months ended September 30, 2021. All amounts are expressed in Canadian dollars. Certain metrics are non-IFRS measures or key performance indicators. See “Non-IFRS Financial Measures and Key Performance Indicators” below.

Business Highlights

  • New Subscribed acres added for the three and nine months ended September 30, 2021 were 1.0 million and 4.3 million acres, respectively. All new acres sold to the end of the third quarter were Digital Agronomy acres and include 2.9 million new Progressive Grower Program (“PGP”) acres. Fourth quarter sales continue to be strong, with another 2.2 million acres sold in October 2021, including 1.4 million Digital Agronomy acres and 0.8 million Smart Claim acres in Brazil, which will be included in other acres.
  • The Company has a robust pipeline for new acres, including 42 new channel partners and the retail network associated with the newly acquired CommoditAg, LLC. With these relationships, the Company’s goal is to exceed its 2021 acre growth in 2022.
  • Other acres were down 2.1 million acres in the quarter, and 3.6 million acres for the nine months ended September 30, 2021, as the Company completed the program to discontinue low value non-platform acres. These acres generated annual revenues of about $0.5 million. Other acres at September 30, 2021 represent Smart Claim insurance acres.
  • Conversions of acres from the 2020 Elite Grower program are progressing with approximately 60% targeted to be converted this year and approximately 50% converted to date. The proportion of 2020 Elite Grower program acres converting to a higher value fertility product has been strong, with over 60% of the converted acres moving into higher revenue products and contributing to additional revenue for the fourth quarter and beyond.
  • ARR of $64.7 million increased by $11.2 million (21%) since December 31, 2020, attributable tonew acres, the addition of carbon offset revenue, and upsells to fertility products. The growth in ARR was partially offset by the impact of foreign exchange and revenue attributable to 3.3 million Digital Agronomy acres that were discontinued, including approximately 1.4 million 2020 Elite Grower program acres not converted.
  • The Company retained 91% of its recurring revenue related to paid Digital Agronomy subscriptions in North America for the twelve months ending September 30, 2021. High recurring revenue retention relative to acre retention of 80% reflects favourable shifts in product mix to higher revenue generating acres and partially offsets the impact of contracts not renewed after their four-year term.
  • Acres booked on the Company’s Smart Carbon program are now over 2.7 million acres in Canada, exceeding our 2021 goal of 2.5 million acres. Sales of carbon offsets generated from the 2021 program are estimated to be between $13 to $16 million, which will be reported as the offsets are serialized and sold, primarily in the first half of 2022.

“We are seeing strong demand for our higher value fertility products this quarter,” said Wade Barnes, Chief Executive Officer and founder of Farmers Edge. “The number of growers adding our Smart Carbon program alongside a higher tier fertility subscription has also been extremely positive and creates an enhanced revenue stream for the Company that we didn’t have a year ago. We’ve been working diligently on bringing new, sustainable solutions to agriculture and our carbon initiatives are expected to be a strong contributor to our revenues over the coming years.”

Financial Highlights

in thousands, except per share amounts

Three Months Ended

 

Nine Months ended

 

 

2021

 

 

2020

 

 

 

2021

 

 

2020

 

FINANCIAL PERFORMANCE for periods ended September 30

 

 

 

 

 

 

 

 

 

 

 

 

Revenues (1)

$

6,824

 

$

10,334

 

$

22,857

 

$

26,760

 

Operating expenses (2,5)

$

23,147

 

$

22,524

 

$

56,541

 

$

69,135

 

EBITDA (3,5)

$

(16,323

)

$

(12,190

)

$

(33,684

)

$

(42,375

)

Net loss (5)

$

(19,359

)

$

(19,857

)

$

(46,616

)

$

(67,555

)

Loss per share – basic & diluted (4,5)

$

(0.46

)

$

(2.01

)

$

(1.33

)

$

(6.85

)

Free Cash Flow (3)

$

(17,266

)

$

(11,253

)

$

(36,797

)

$

(47,176

)

 

 

September 30,

 

December 31,

 

 

 

2021

 

 

 

2020

 

 

FINANCIAL POSITION as at date specified

 

 

 

 

Total assets

$

147,505

 

 

$

79,484

 

 

Total liabilities

$

24,525

 

 

$

370,887

 

 

Total equity (deficiency)

$

122,980

 

 

$

(291,403

)

 

 

 

September 30,

June 30, 2021

December 31,

 

 

 

2021

 

 

 

2020

 

 

KEY PERFORMANCE INDICATORS as at date specified

 

 

 

 

 

 

 

 

 

 

Digital Agronomy Acres (6)

 

19,260

 

 

19,173

 

 

18,256

 

Other Acres (6)

 

1,501

 

 

3,597

 

 

5,101

 

 

Total Subscribed Acres (6)

 

20,761

 

 

22,770

 

 

23,357

 

 

Annual Recurring Revenue (ARR) (6)

$

64,694

 

$

62,380

 

$

53,421

 

 

(1) Revenues include subsidies and commercial contract revenue related to commercial partner agreements for the three and nine-month periods ending September 30, 2021 of $400 (2020 – $3,404)and $2,416 (2020 – $4,869)respectively. Starting in 2021, the Company began marketing new acres under the Progressive Grower Program. Its remaining commercial contract and subsidy arrangements expire on December 31, 2021.

 

(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 as set out on the Company’s Statements of Operations and Comprehensive Loss in its Financial Statements.

 

(3) EBITDA and Free Cash Flow are non-IFRS measures. See “Non-IFRS Measures and Key Performance Indicators”.

 

(4) Due to net losses incurred, potentially 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 ending September 30, 2020 have been retrospectively adjusted to reflect the consolidation of common shares on a 7:1 basis, which occurred at the time of the IPO.

 

(5) The satellite imagery settlement gain of $8.2 million in the second quarter of 2021 is included in the results for the nine months ended September 30, 2021.

 

(6) See Non-IFRS measures and Key Performance Indicators”. These are unaudited.

  • Revenues for the three and nine months ended September 30, 2021, (after adjusting for partner subsidies and commercial contract revenues from commercial partner agreements), were lower than the comparative periods of 2020 by $0.5 million and $1.5 million, respectively. Lower revenues year-to-date also reflect variances in the timing of fertility revenue recognized in the first half of 2020 compared to 2021, the impact of contracts not renewed in 2021, and the strengthening of the Canadian dollar this period relative to the U.S. dollar for the same period in 2020. The Company expects fourth quarter Digital Agronomy revenues in 2021 to be approximately 33% higher than those reported in the same quarter of 2020, subject to favourable soil sampling conditions over the balance of the year.
  • The EBITDA loss for the third quarter of 2021 was $16.3 million (2020 – $12.2 million) and $33.7 million (2020 – $42.4 million) for the nine-month period. The EBITDA loss reflects lower revenue in the current quarter. Improved EBITDA of $8.7 million for the year-to-date period reflects the $8.2 million settlement gain the company recorded in the second quarter of 2021.
  • Free Cash Flow deployed to fund operating expense and capital expenditures was $17.3 million (2020 – $11.3 million) in the third quarter and $36.8 million (2020 – $47.2 million) for the nine- month period. Year-to-date Free Cash Flow improved by $10.4 million, reflecting improved EBITDA for the period, lower capital spending, including lower capitalized development costs, and was offset in part by a $5.8 million reduction in government subsidies. Higher government grant income in the prior year reflects the benefits of certain refundable Scientific Research and Development credits received in the third quarter of 2020, together with additional grants and funding received in 2020 related to COVID-19.
  • The EBITDA loss and Free Cash Flow deployed for the fourth quarter of 2021 are expected to be between $5 to $10 million, which is better than the same quarter of 2020 after adjusting for partner subsidies, commercial contract revenues and government grants received last year. Improved EBITDA and Free Cash Flow expected for the fourth quarter is due mainly to improved Digital Agronomy revenues compared to the same quarter of 2020.
  • The Net Loss of $19.4 million in the third quarter of 2021 was comparable to the Net Loss reported in the same quarter of the prior year. For the nine months ended September 30, 2021, the Net Loss improved by $20.9 million (31%), due to improved EBITDA over the same period and lower finance and interest costs.

Conference Call Notice

Farmers Edge will hold a live audio webcast at 8:30 a.m. Eastern Time on Friday, November 12, 2021 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/11528. Following the event, a replay of the webcast will be available on the Farmers Edge Investor Relations website.

Non-IFRS Measures and Key Performance Indicators

This press release makes reference to certain non-IFRS 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-IFRS measures: “EBITDA” and “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-IFRS 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-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS 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. Definitions of these non-IFRS measures and KPIs, as well as a reconciliation of the non-IFRS measures to their most directly comparable measures calculated in accordance with IFRS, can be found under the heading “Key Performance Indicators and Non IFRS measures” in the Company’s management discussion and analysis filed today, November 11, 2021, which is available on the Company’s website (www.farmersedge.ca/investor-relations/) and on SEDAR (www.sedar.com).

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, please visit www.farmersedge.ca and 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 Annual Information Form dated

March 29, 2021 and under the “Risk Factors” section in the Company’s management discussion and analysis filed today, November 11, 2021, 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

For further information:

Farmers Edge Investor Relations:

InvestorRelations@FarmersEdge.ca
(204) 992-7019

Farmers Edge Media Relations:

Richard Berman

Richard@VerbFactory.com
(647) 294-8372

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