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ARR, Number of Clients, Consolidated Net Dollar Retention Rate and Logo Retention Rate

ARR² was approximately $45.9 million as at September 30, 2024, with core enterprise client ARR² of approximately $39.4 million.

ARR² was broken down as follows over the last five quarters:

Total Number of Clients³ was 847 as at September 30, 2024, compared to 987 as at September 30, 2023.

Number of Clients³ broken down as follows over the last five quarters:

Consolidated Net Dollar Retention Rate⁴ for the quarter was 82%, compared to 88% during the same period in 2023, lower primarily due to an increase in overall Enterprise Client churn, offset by cross-sell and multi-product opportunities within the existing Enterprise Client base.

Logo Retention Rate⁵ was 73% as at September 30, 2024 compared to 87% for the comparable period in 2023. The lower Logo Retention Rate⁵ is primarily attributable to the loss of smaller enterprise client logos within the portfolio of customers. Despite the decrease in Number of Clients³, the relative contribution to ARR² of new clients is, on average, larger than that of lost clients.

 

Financial Results for the Three and Nine Months Ended September 30, 2024:

Conference Call Notification

The Company will hold a conference call to provide a business update on Thursday, November 7, 2024, at 8:30 a.m. ET hosted by:

• Nolan Bederman, Executive Chairman

• Michael Held, CEO

• Lee Dabberdt, CFO

A question-and-answer session will follow the business update.

This live call is also being webcast and can be accessed by going to:

https://events.q4inc.com/attendee/604155768

An archived telephone replay of the call will be available for two weeks by dialing 1.800.770.2030 or 1.609. 800.9909 and entering access code 1042138.

Non-IFRS Measures, Non-IFRS Ratios and Key Performance Indicators

LifeSpeak supplements its results of operations determined in accordance with IFRS with certain non-IFRS financial measures, non-IFRS ratios and key performance indicators that the Company believes are useful to investors, lenders and others in assessing its performance and which highlight trends its core business that may not otherwise be apparent when relying solely on IFRS measures. LifeSpeak management also uses non-IFRS measures, non-IFRS ratios and key performance indicators for purposes of comparison to prior periods, to prepare annual operating budgets, for the development of future projections and earnings growth prospects, to measure the profitability of ongoing operations and in analyzing our financial condition, business performance and trends. As such, these measures and indicators are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations from management's perspective, including how it evaluates its financial performance and how it manages its capital structure. LifeSpeak also believes that securities analysts, investors and other interested parties frequently use these non-IFRS measures, non-IFRS ratios and key performance indicators in the evaluation of issuers. These non-IFRS measures, non-IFRS ratios and key performance indicators are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and may include or exclude certain items as compared to similar IFRS measures, and such measures may not be comparable to similarly-titled measures reported by other companies. Accordingly, these measures and indicators should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS.

Non-IFRS Measures, Non-IFRS Ratios and Reconciliation of Non-IFRS Measures

The Company uses non-IFRS measures, including "EBITDA", "Adjusted EBITDA", "Adjusted Net Loss", and the non-IFRS ratios, including "Adjusted loss per share – basic", "Adjusted loss per share – diluted" and "Adjusted EBITDA Margin". This press release also makes reference to "Annual Recurring Revenue" or "ARR", "Net Dollar Retention Rate", "Number of Clients" and "Logo Retention Rate", which are key performance indicators used in our industry.

EBITDA and Adjusted EBITDA

"EBITDA" is defined as net loss before income tax recovery, finance expenses, net and amortization and depreciation.

"Adjusted EBITDA" is defined as EBITDA before acquisition and other costs, share based compensation, foreign exchange loss (gain), impairment, changes in fair value of contingent consideration, synergies realized and additional one-time items. These non-cash and/or non-recurring costs are independent events and incurred over several financial periods.

"Adjusted EBITDA Margin" is calculated as Adjusted EBITDA divided by revenue for the relevant period.

Adjusted Net Loss / Adjusted Earnings (Loss)

"Adjusted Net Loss" is defined as net loss before other costs, share based compensation, foreign exchange loss (gain), impairment, changes in fair value of contingent consideration, synergies realized and additional one-time items. These non-cash and/or non-recurring costs are independent events and incurred over several financial periods.

"Adjusted loss per share – basic" is defined as Adjusted Net Loss divided by the weighted average number of shares outstanding – basic for the relevant period.

"Adjusted loss per share – diluted" is defined as Adjusted Net Loss divided by the weighted average number of shares outstanding – diluted for the relevant period.

Key Performance Indicators

Annual Recurring Revenue

"Annual Recurring Revenue" or "ARR" is equal to the annualized value of contracted recurring revenue from all clients of our platform at the date being measured. Contracted recurring revenue is revenue generated from clients who are, as of the date being measured, party to contracts with LifeSpeak. Such revenue is annualized by: (i) in the case where a contract was in existence for the entire month, multiplying recognized revenue in the calendar month of the date measured by 12; and (ii) in the case where a contract was entered into mid-month, extrapolating recognized revenue at the date measured for the entire calendar month, and then multiplying by 12. Contract lengths typically range from one to three years and, based on our past experience, the vast majority of clients renew their contracts upon expiry. ARR is mainly comprised of revenue from enterprise and embedded solutions and includes revenue from small business and ancillary services (comprised of portals, kits and events purchased by our existing clients or distributed through our channel partners). ARR provides a consolidated measure by which we can monitor the longer-term trends in our business.

"Embedded solutions client and other ARR" is ARR at a particular date attributable to our embedded solutions clients and ARR associated with clients who are not of sufficient size to be considered enterprise clients.

"Enterprise client ARR" is ARR at a particular date attributable to enterprise clients.

Net Dollar Retention Rate

"Net Dollar Retention Rate" for a period is defined by considering a cohort of clients at the beginning of the period, and dividing the ARR from enterprise and embedded solutions attributable to that cohort at the end of the period, by the ARR from enterprise and embedded solutions attributable to that cohort at the beginning of the period. Net Dollar Retention Rate provides a consolidated measure by which we can monitor the percentage of recurring ARR retained from existing clients.

Number of Clients

"Number of Clients" is defined as the number of clients at the end of any particular period as the number of enterprise clients and clients of our embedded solutions for which the term of services has not ended, or with which the Company is negotiating contract renewal and which meet a minimum revenue threshold.

Logo Retention Rate

"Logo Retention Rate" for a period is defined by considering a cohort of clients at the beginning of the period, and dividing the Number of Clients from that cohort at the end of the period, by the Number of Clients from that cohort at the beginning of the period. Logo Retention Rate provides a consolidated measure by which the Company can monitor the percentage of contracted clients retained every year.

About LifeSpeak Inc.

Celebrating 20 years of supporting wellbeing, LifeSpeak Inc. is the leading provider of mental, physical, and family wellbeing solutions for employers, health plans, and other organizations across the globe. With a suite of digital solutions, LifeSpeak enables organizations to deliver best-in-class content and human expertise at scale, catering to individuals throughout their wellbeing journeys. The LifeSpeak Inc. portfolio of solutions spans every pillar of wellbeing, including LifeSpeak Mental Health & Resilience, Wellbeats Wellness, Torchlight Parenting & Caregiving, ALAViDA Substance Use, and LIFT session Fitness. Insights from LifeSpeak Inc.'s digital and data-driven solutions empower organizations and individuals to take impactful action to strengthen wellbeing and maximize workplace performance. To learn more, follow LifeSpeak Inc. on LinkedIn, or visit http://www.LifeSpeak.com.

Forward-Looking Information

This press release may contain "forward-looking information" within the meaning of applicable Canadian securities laws. Forward-looking information may relate to the Company's future business, financial outlook and anticipated events or results and may include information regarding the Company's financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, and the Company's plans and objectives. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects" or "does not expect", "is expected", "an opportunity exists", "budget", "scheduled", "estimates", "outlook", "forecasts", "projection", "prospects", "potential", "strategy", "intends", "anticipates", "does not anticipate", "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", "will", "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Particularly, information regarding the Company's expectations of future results, revenue growth, ARR, EBITDA, adjusted EBITDA margin, adjusted EBITDA, adjusted Net Loss, adjusted Earnings (Loss), Number of Clients, Net Dollar Retention Rate, Logo Retention Rate, performance, synergies, achievements, prospects, industry trends, advancement of its strategy and acceleration of its growth, amortization, contribution of new clients to ARR, the amortization schedule and loan repayments, the among of senior indebtedness remaining, or opportunities, including for cross-selling, the markets in which the Company operates, and the Company's plan to remedy of its breach of covenants under its credit arrangements and relationship with its lenders is forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding possible future events or circumstances.

This forward-looking information are based on opinions, estimates, plans and assumptions in light of the Company's experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company currently believes are appropriate and reasonable in the circumstances. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates, plans and assumptions will prove to be correct. These opinions, estimates, plans and assumptions include, but are not limited to, the following: the Company's ability to build its market share and enter new geographies; the total available market for its products; the Company's ability to retain key personnel; the Company's ability to maintain and expand geographic scope; the Company's ability to execute on its expansion plans; the Company's ability to continue investing in infrastructure to support its growth and brand recognition; the Company's ability to maintain its existing client base; the Company's ability to continue maintaining and enhancing its technological infrastructure and functionality of its platform; to the Company's ability to obtain financing on acceptable terms; the Company's ability to meet its amortization schedule in the future; decisions made by the Company's lenders; the Company's ability to effectively integrate its acquisitions; the Company's ability to generate sufficient cash to deleverage, the impact of competition; the changes and trends in the Company's industry or the global economy; and changes in laws, rules, regulations, and global standards.

The risks and uncertainties that may affect forward-looking statements include, among others: performance of the market sectors that the Company serves; general market performance including capital market conditions and availability and cost of credit; foreign currency and exchange risk; impact of factors such as increased pricing pressure and possible margin compression; the regulatory and tax environment; the Company's ability to negotiate with its lenders; that expected cost and revenue synergies are not realized within the expected timeframe or at all; that revenue, ARR, EBITDA margin and cash flow expectations are not met for any number of reasons; political, labour or supplier disruptions; that our clients face recessionary pressures, and other risks detailed from time to time in the Company's filings with Canadian provincial securities regulators, including the risk factors which are described in greater detail under "Risk Factors" in the Company's most recently available annual information form. Although the Company has attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not currently known to the Company or that the Company currently believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information.

Accordingly, prospective investors should not place undue reliance on forward-looking information. The forward-looking information contained in this press release represents the Company's expectations as of the date of this press release (or as the date it is otherwise stated to be made) and is subject to change after such date. However, the Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable Canadian securities laws.

All of the forward-looking information contained in this press release is expressly qualified by the foregoing cautionary statements. Prospective investors should read this entire press release and consult their own professional advisors to ascertain and assess the income tax, legal, risk factors and other aspects of an investment in the Company.

 

SOURCE LifeSpeak Inc.

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