Computer Modelling Group Announces First Quarter Results and Quarterly Dividend

CALGARY, Alberta, Aug. 06, 2025 (GLOBE NEWSWIRE) -- Computer Modelling Group Ltd. (“CMG Group” or the “Company”) announces its financial results for the three months ended June 30, 2025, and the approval by its Board of Directors (the “Board”) of the payment of a cash dividend of $0.01 per Common Share for the first quarter ended June 30, 2025. FIRST QUARTER 2026 CONSOLIDATED HIGHLIGHTS Select financial highlights Total revenue decreased by 3% (15% Organic decline(1) and 12% growth from acquisitions) to $29.6 million; Recurring revenue(2) increased by 7% (6% Organic decline and 13% growth from acquisitions) to $20.9 million; Adjusted EBITDA(1) decreased by 26% to $7.1 million; Adjusted EBITDA Margin(1) was 24%, compared to 31% in the comparative period; Earnings per share was $0.04, a 20% decrease; Free Cash Flow(1) decreased by 22% to $4.5 million; Free Cash flow per share decreased to $0.05 from $0.07. OVERVIEW Market uncertainty, in energy and energy transition, continues to impact the business by extending sales cycles, lengthening procurement processes, and slowing the pace of closing new opportunities. The impact of the organic recurring revenue decline in reservoir and production solutions in the fourth quarter carried over, leading to a similar organic recurring revenue decline this quarter when compared to the prior year. This decline partially offset strong recurring revenue growth from acquisitions. Adjusted EBITDA and Free Cash Flow decreased during the quarter primarily due to the organic decline in recurring revenue and lower professional services revenue. In the second quarter, we expect a mid-single-digit decline in recurring revenue compared to Q1, the impact of which is also expected to be felt in Adjusted EBITDA. This is due to a contract for our reservoir and production solutions that was not renewed. As a result, Adjusted EBITDA for the year (excluding SeisWare and any future acquisitions) may be lower than Fiscal 2025. Despite the headwind, higher revenue and margin in the second half of the year compared to the first half of the year, is expected to be driven by seasonal contract renewals, revenue recognition timing, and continued strong performance in our seismic solutions. Q1 2026 Dividend To reinforce the durability of our business, we continue to pursue disciplined acquisitions that expand our capabilities and enhance our ability to navigate market volatility. To support this strategy and retain capital for future acquisitions, the quarterly dividend was reduced to $0.01/share. The dividend of $0.01/share will be paid on September 15, 2025, to shareholders of record at the close of business on September 5, 2025. All dividends paid by Computer Modelling Group Ltd. to holders of Common Shares in the capital of the Company will be treated as eligible dividends within the meaning of such term in section 89(1) of the Income Tax Act (Canada), unless otherwise indicated. SUMMARY OF FINANCIAL PERFORMANCE   Three months ended June 30,   ($ thousands, except per share data) 2025 2024 % change   Annuity/maintenance licenses 20,334 19,335 5%   Annuity license fee 518 178 191%   Recurring revenue(1) (2) 20,852 19,513 7%   Perpetual licenses 378 2,110 (82%)   Total software license revenue 21,230 21,623 (2%)   Professional services 8,403 8,900 (6%)   Total revenue 29,633 30,523 (3%)   Cost of revenue 5,958 6,192 (4%)   Operating expenses         Sales & marketing 4,610 4,931 (7%)   Research and development 8,033 8,245 (3%)   General & administrative 5,739 5,489 5%   Operating expenses 18,382 18,665 (2%)   Operating profit 5,293 5,666 (7%)   Netincome 3,309 3,964 (17%)   Adjusted EBITDA (1) 7,074 9,526 (26%)   AdjustedEBITDAMargin(1) 24% 31% (7%)             Earnings per share – basic & diluted 0.04 0.05 (20%)   Funds flow from operations per share - basic 0.07 0.08 (13%)   Free Cash Flow per share – basic (1) 0.05 0.07 (29%)   (1)  Non-IFRS financial measures are defined in the “Non-IFRS Financial Measures and Reconciliation of Non-IFRS Measures” section. (2)  Included in the number is a reduction of $0.15 million for the three months ended June 30, 2025, ($0.09 million for the three months June 30, 2024), attributed to the amortization of a deferred revenue fair value reduction recognized on acquisition. NON-IFRS FINANCIAL MEASURES AND RECONCILIATION OF NON-IFRS MEASURES Free Cash Flow Reconciliation to Funds Flow from Operations Free Cash Flow is a non-IFRS financial measure that is calculated as funds flow from operations less capital expenditures and repayment of lease liabilities. Free Cash Flow per share is calculated by dividing Free Cash Flow by the number of weighted average outstanding shares during the period. Management believes that this measure provides useful supplemental information about operating performance and liquidity, as it represents cash generated during the period, regardless of the timing of collection of receivables and payment of payables, which may reduce comparability between periods. Management uses Free Cash Flow and Free Cash Flow per share to help measure the capacity of the Company to pay dividends and invest in business growth opportunities.                                           Fiscal 2024 Fiscal 2025 Fiscal 2026 ($ thousands, unless otherwise stated) Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Funds flow from operations 11,491 8,477 10,367 6,515 7,101 9,937 8,227 5,524 Capital expenditures (51) (459) (95) (93) (236) (432) (661) (542) Repayment of lease liabilities (412) (728) (803) (743) (769) (689) (549) (526) Free Cash Flow 11,028 7,290 9,469 5,679 6,096 8,816 7,017 4,456 Weighted average shares – basic (thousands) 80,834 81,067 81,314 81,476 81,887 82,753 83,064 83,090 Free Cash Flow per share - basic 0.14 0.09 0.12 0.07 0.07 0.11 0.08 0.05 Funds flow from operations per share- basic 0.14 0.10 0.13 0.08 0.09 0.12 0.10 0.07 Free Cash Flow decreased by 22% for the three months ended June 30, 2025 from the same period of the previous fiscal year. This decrease is primarily due to lower funds flow from operations. Adjusted EBITDA and Adjusted EBITDA Margin Adjusted EBITDA and Adjusted EBITDA Margin refers to net income before adjusting for depreciation and amortization expense, interest income, income and other taxes, stock-based compensation, restructuring charges, foreign exchange gains and losses, repayment of lease obligations, asset impairments, acquisition related costs and other expenses directly related to business combinations, including compensation expenses and gains or losses on contingent consideration. Adjusted EBITDA should not be construed as an alternative to operating income, net income or liquidity as determined by IFRS. The Company believes that Adjusted EBITDA and Adjusted EBITDA Margin are useful supplemental measures as they provide an indication of the results generated by the Company’s main business activities prior to consideration of how those activities are amortized, financed or taxed. In addition, management has determined that Adjusted EBITDA and Adjusted EBITDA Margin is a more accurate measurement of the Company’s operating performance and our ability to generate earnings as compared to EBITDA and EBITDA Margin.     ThreemonthsendedJune 30, ($ thousands) 2025 2024 Net income (loss) 3,309 3,964 Add (deduct):     Depreciation and amortization 2,415 1,883 Acquisition costs 36 188 Stock-based compensation 177 2,906 Gain/(Loss) on contingent consideration - (199) Deferred revenue amortization on acquisition fair value reduction 150 89 Income/(Loss) and other tax expense 917 2,488 Interest (income)/loss (314) (878) Foreign exchange loss/(gain) 911 (172) Repayment of lease liabilities (526) (743) Adjusted EBITDA (1) 7,074 9,526 Adjusted EBITDA Margin(1) 24% 31% (1)   This is a non-IFRS financial measure. Refer to definition of the measures above. Adjusted EBITDA decreased by 26% during the three months ended June 30, 2025, compared to the same period of the previous year of which 2% was growth from acquisitions, offset by an Organic decline of 28%, primarily attributable to lower revenue in the quarter partially offset by lower expenses. Organic Growth/ Organic Decline Organic growth and organic decline are not a standardized financial measures and might not be comparable to measures disclosed by other issuers. The Company measures Organic growth/ organic decline on a quarterly and year-to-date basis at the revenue and Adjusted EBITDA levels and includes revenue and Adjusted EBITDA under CMG Group’s ownership for a year or longer, beginning from the first full quarter of CMG Group’s ownership in the current and comparative period(s). For example, BHV was acquired on September 25, 2023 (Q2 2024). September 25, 2024, marked one full year of ownership under CMG Group and on October 1, 2024 (Q3 2025), which is the first full quarter under CMG Group’s ownership in the current and comparative period, started being tracked under Organic growth. Any revenue and Adjusted EBITDA generated by BHV prior to October 1, 2024, would not be included in Organic growth/ organic decline. Sharp was acquired on November 12, 2025 (Q3 2025) and will start contributing to Organic growth/ organic decline on January 1, 2026 (Q4 2026). For further clarity, current statements include Organic growth/ organic decline from the following: CMG and BHV revenue and Adjusted EBITDA. Recurring Revenue Recurring revenue represents the revenue recognized during the period from contracts that are recurring in nature and includes revenue recognized as “Annuity/maintenance licenses” and “Annuity license fee”. We believe that Recurring revenue is an indicator of business expansion and provides management with visibility into our ability to generate predictable cash flows. The table under “Revenue” heading reconciles Recurring revenue to total revenue for the periods indicated. REVENUE   Three months ended June 30,   2025 2024 % change ($ thousands)       Annuity/maintenance licenses 20,334 19,335 5% Annuity license fee 518 178 191% Recurring revenue(1) (2) 20,852 19,513 7% Perpetual licenses 378 2,110 (82%) Total software license revenue 21,230 21,623 (2%) Professional services 8,403 8,900 (6%) Total revenue 29,633 30,523 (3%) (1)   This is a non-IFRS financial measure. (2)   Included in the number is a reduction of $0.2 million for the three months ended June 30, 2025, ($0.1 million for the three months ended June 30, 2024), attributed to the amortization of a deferred revenue fair value reduction recognized on acquisition. Condensed Consolidated Statements of Financial Position UNAUDITED (thousands of Canadian $) June 30, 2025 March 31, 2025 Assets     Current assets:     Cash 44,026 43,884 Restricted cash 369 362 Trade and other receivables 29,308 41,457 Prepaid expenses 3,121 2,572 Prepaid income taxes 2,262 1,641   79,086 89,916 Intangible assets 59,484 59,955 Right-of-use assets 27,655 28,443 Property and equipment 10,305 10,157 Goodwill 15,958 15,814 Deferred tax asset 274 471 Total assets 192,762 204,756 Liabilities and shareholders’ equity     Current liabilities:     Trade payables and accrued liabilities 16,078 18,452 Income taxes payable 2,189 2,667 Acquisition holdback payable 1,405 188 Acquisition earnout payable 3,682 3,864 Deferred revenue (note 4) 33,136 40,276 Lease liabilities (note 5) 2,319 2,278 Government loan 321 310   59,130 68,035 Lease liabilities (note 5) 34,233 34,668 Government loan 1,283 1,319 Other long-term liabilities 599 1,725 Deferred tax liabilities 13,024 13,102 Total liabilities 108,269 118,849 Shareholders’ equity:     Share capital 95,104 94,849 Contributed surplus 15,630 15,460 Cumulative translation adjustment 3,313 4,326 Deficit (29,554) (28,728) Total shareholders’ equity 84,493 85,907 Total liabilities and shareholders' equity 192,762 204,756 Condensed ConsolidatedStatementsofOperationsandComprehensive Income Three months ended June 30, UNAUDITED (thousands of Canadian $ except per share amounts) 2025 2024       Revenue (note 6) 29,633 30,523 Cost of revenue 5,958 6,192 Gross profit 23,675 24,331       Operating expenses     Sales and marketing 4,610 4,931 Research and development (note 7) 8,033 8,245 General and administrative 5,739 5,489   18,382 18,665 Operating profit 5,293 5,666       Finance income (note 8) 314 1,050 Finance costs (note 8) (1,381) (463) Change in fair value of contingent consideration - 199 Profit before income and other taxes 4,226 6,452 Income and other taxes (note 9) 917 2,488       Net income for the period 3,309 3,964       Other comprehensive income:     Foreign currency translation adjustment (1,013) 899 Other comprehensive income/(loss) (1,013) 899 Total comprehensive income 2,296 4,863       Net income per share – basic (note10(d)) 0.04 0.05 Net income per share – diluted (note 10(d)) 0.04 0.05 Dividend per share 0.05 0.05 Condensed ConsolidatedStatementsofCashFlows Three months ended June 30, UNAUDITED (thousands of Canadian $) 2025 2024       Operating activities     Net income 3,309 3,964 Adjustments for:     Depreciation and amortization of property, equipment, right- of use assets 1,062 1,218 Amortization of intangible assets 1,354 665 Deferred income tax expense (recovery) (383) (653) Stock-based compensation (note 10(c)) 149 1,892 Foreign exchange and other non-cash items 33 (571) Funds flow from operations 5,524 6,515 Movement in non-cash working capital:     Trade and other receivables 12,149 13,811 Trade payables and accrued liabilities (2,267) (3,331) Prepaid expenses and other assets (549) 34 Income taxes receivable (payable) (968) 1,424 Deferred revenue (7,290) (10,230) Change in non-cash working capital 1,075 1,708 Net cash provided by (used in) operating activities 6,599 8,223       Financing activities     Repayment of government loan (80) - Proceeds from issuance of common shares 212 2,249 Repayment of lease liabilities (note 5) (526) (743) Dividends paid (4,135) (4,076) Net cash used in financing activities (4,529) (2,570)       Investing activities     Property and equipment additions (542) (93) Net cash used in investing activities (542) (93)       Increase (decrease) in cash 1,528 5,560 Effect of foreign exchange on cash (1,386) 449 Cash, beginning of period 43,884 63,083 Cash, end of period 44,026 69,092       Supplementary cash flow information     Interest received (note 8) 314 878 Interest paid (notes 5 and 8) 470 463 Income taxes paid 1,779 1,496 CORPORATE PROFILE CMG Group (TSX:CMG) is a global software and consulting company that combines science and technology with deep industry expertise to solve complex subsurface and surface challenges for the new energy industry around the world. The Company is headquartered in Calgary, AB, with offices in Houston, Oslo, Stavanger, Kaiserslautern, Oxford, Dubai, Bogota, Rio de Janeiro, Bengaluru, and Kuala Lumpur. For more information, please visit www.cmgl.ca.  QUARTERLY FILINGS AND RELATED QUARTERLY FINANCIAL INFORMATION Management’s Discussion and Analysis (“MD&A”) and condensed consolidated interim financial statements and the notes thereto for the three months ended June 30, 2025, can be obtained from our website www.cmgl.ca. The documents will also be available under CMG Group’s SEDAR profile www.sedarplus.ca. Cautionary Note Regarding Forward-Looking Statements This press release contains "forward-looking statements". Forward-looking statements can be identified by words such as: "anticipate", "intend", "plan", "goal", "seek", "believe", "project", "estimate", "expect", "strategy", "future", "likely", "may", "should", "will", and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding the benefits of the acquired technology, the ongoing development thereof; and the ability of data analytics to improve efficiency, cut costs and reduce risks. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements are detailed in the companies’ public filings. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. Except as required by applicable securities laws, we undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise. For further information, please contact: Pramod Jain Chief Executive Officer (403) 531-1300 [email protected] or Sandra Balic Vice President, Finance (403) 531-1300 [email protected] For investor inquiries, please contact: Kim MacEachern Director, Investor Relations [email protected] For media inquiries, please contact: [email protected]