FY23 Preliminary Full Year Results Announcement

Results announcement

30 May 2023





Results for announcement to the market
Name of issuer Black Pearl Group Limited
Reporting Period 12 months to 31 March 2023
Previous Reporting Period 12 months to 31 March 2022
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$1,431 97%
Total Revenue $1,611 79%
Net profit/(loss) from
continuing operations
$(7,171) 65%
Total net profit/(loss) $(7,274) 67%
Interim/Final Dividend
Amount per Quoted Equity
Security
Black Pearl Group does not propose to pay a dividend for the
year ended 31 March 2023
Imputed amount per Quoted
Equity Security
Not Applicable
Record Date Not Applicable
Dividend Payment Date Not Applicable
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$(0.070020) $0.021469
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer to Black Pearl Group - FY23 Financial Commentary
Authority for this announcement
Name of person authorised
to make this announcement
Karen Cargill
Contact person for this
announcement
Karen Cargill
Contact phone number 021 135 5183
Contact email address karen.cargill@blackpearlmail.com
Date of release through MAP 30/05/2023

Unaudited financial statements accompany this announcement.

---

Total Subscription Revenue increased by 97%
Gross Profit Increased by 264%
Total Operating Costs $7.9m
85% increase in Net Assets
496% increase in customer base
Black Pearl Group Limited (“BPG” or “Company”) is pleased to announce its
unaudited preliminary results for the year ended 31 March 2023 (“FY23”).
The 2023 financial year was underpinned by purposeful investments in acquisition,
technology, and a public listing, all paving the way for the Company's accelerated
path to profitability.
Unaudited Financial Results Summary
The FY23 financial statements of BPG are still in the process of being audited,
however BPG is not aware of any likely qualifications. The Company is not
proposing to pay any dividends for the year ended 31 March 2023.
Key financial highlights:
Revenue
BPG recorded $1.4m in recurring revenue for FY23, representing a 97% growth in
recurring revenue compared to FY22. However, it is worth noting that this growth
only includes five months of NewOldStamp (NOS) revenue following its acquisition
on November 1, 2022. The remaining increase was due to the growing demand for
the Black Pearl Mail service. Total Revenue includes government R&D grants and
amortisation of NOS customer contracts purchased.
A clear path
to profitability
1 - Black Pearl Group - FY23 Financial Commentary

Revenue Model
BPG's product offerings follow a monthly recurring billing model, generating regular
and predictable revenue. As the customer base grows through new sign-ups, each
additional subscriber contributes to the overall revenue. This continuous growth is
not limited to one-time purchases but compounds over time.
Recurring revenue models focus on future revenue, while Profit and Loss statements
only capture historical revenue without accounting for projected revenue resulting
from past expenses. Consequently, the Profit and Loss statement does not account
for BPG's projected revenue resulting from past expenses.
Total customers increased by 496%, with 55% located in USA. This offers future
growth potential via cross-sale opportunities of BPG’s new product, Pearl Diver,
which was released to the USA market in March 2023.
Gross Profit
Gross Profit increased by 264%, illustrating the Company‘s strong focus on
profitability. One of the factors contributing to this growth is BPG’s ability to scale
infrastructure at negligible incremental expense. This has been made possible from
previous years investment in creating a highly scalable operational framework.
Expenditure
BPG's decision to raise its operating expenditure delivered the FY23 business plan
and created a direct path to profitability. FY23 expenditure included $1.1m of one-
off costs associated with the acquisition of NOS and the direct listing on the NZX, as
well as R&D to create the new Pearl Diver product (see Investment).
BPG’s cost base has been intentionally structured to be flexible in nature, providing
additional levers for reaching profitability. After accounting for one-time costs, 31%
of the FY23 cost base remains variable in nature.
Balance Sheet
BPG’s balance sheet reflects the investment made in the NOS technology, customer
base and organic website traffic.
The promissory note and warrants entered into with Crown BP Holdings, LLC
immediately prior to listing, has been amended post-year end 31 March 2023. The
note is now an unsecured obligation of BPG, the two due dates for repayment of
the note have been extended by 12 months each and there is a conditional
agreement for the note to be converted to ordinary shares in BPG at a conversion
rate of NZ$1.02 per share.
2 - Black Pearl Group - FY23 Financial Commentary

Investment
In FY23, BPG invested in three core areas to accelerate the Company's path to
profitability.
Listing on the NZX: BPG’s direct listing on the NZX generated one-off costs
pertaining to compliance, legal, accounting, and capital raising.
The Company opted to invest in listing on NZX to support its data and acquisition
strategies and ensure better access to capital as and when required.
BPG’s recent private placement on 26th of May, 2023 was approximately 80%
subscribed in under 72hrs of the announcement – which would have been difficult
to achieve as a private company in the current global economy.
Acquisition: BPG’s primary drivers in purchasing NOS was its 1 million plus organic
website visits, access to world-class and affordable offshore talent, and a
noteworthy customer base with associated recurring revenue.
This investment has created the opportunity to cross-sell and upsell BPG’s product
portfolio to over 1 million site organic visitors (see Pearl Diver) while successfully
scaling up the Company’s operations to enable 24/7 global coverage across
development, marketing, customer support, and sales.
Data - Pearl Engine: The Pearl Engine is BPG’s proprietary data technology platform.
Since listing BPG gained improved access to new data sets to enable the rapid
creation of new features and products. BPG’s latest service, Pearl Diver, is a direct
result of accessing unique data streams and leveraging over a decade of
experience in data and digital engagement.
Summary
The unaudited result was in line with the Board’s expectations for the year-end and
sees BPG continue to deliver on its drive to profitability in FY24.
Please also refer to the attached Black Pearl Group - FY23 Financial Statements and
Black Pearl Group - Financial Results Announcement for the detailed results.
3 - Black Pearl Group - FY23 Financial Commentary

Outlook – a clear path to profitability
BPG's Listing Document outlined the Company's strategic initiatives that are
driving its path to profitability. A key component of this strategy involved the
continual augmentation of data streams within the Pearl Engine, enabling the
development of novel services. These services serve as catalysts for acquiring new
customers while also providing avenues for cross-selling to the existing customer
base.
By adopting this approach, BPG was able to swiftly deploy Pearl Diver
to the market.
Blackpearl Diver
Pearl Diver is a SaaS product that shows businesses the individuals that are
visiting their website, including the visitor's name, contact numbers, email
addresses, physical addresses, job information, and more.
Key contributors to the success of Pearl Diver include:
The ability to sell directly to the existing customer base (3,800) across all Services
The ability to upsell directly to inbound traffic on the NOS (1m+ annually) and
BPM (140k+ annually) websites
Higher Annual Recurring Revenue (ARR) per customer than existing products
(minimum of approx. 10x greater than the NOS service)
Access to new markets and distribution through partner networks
4 - Black Pearl Group - FY23 Financial Commentary

The compounding nature of the higher-value Pearl Diver service has a positive
impact on BPG’s growth trajectory.
Throughout March, Pearl Diver was released to the US market in a staged
approach, during which the BPG secured over 50 orders from both existing
and new customers.
In May, new sales have generated $282,942.00 in net new ARR (in addition to
already recurring ARR), with an immediate provisioning queue of new
customers worth $56,331.00 ARR.
Diagram 1: Shows compounding nature of Pearl Diver revenue and resulting
ARR based on various potential customer acquisition rates.
5 - Black Pearl Group - FY23 Financial Commentary

Chief Financial Officer Comment
“For technology companies, ‘profit is the new growth’. Over the FY23 financial
year, there was a seismic shift in how technology companies were valued -
with a premium being placed on profitability. BPG worked hard over FY23 to
not only get ahead of this trend but to ideally position itself to capitalize on it.
Given the stability of the Company’s servicing costs, the availability of
affordable and flexible resources, and the rapid growth of BPG’s data
services the Board expresses strong confidence in BPG's favourable
positioning to achieve substantial results in FY24 and beyond.”
- Karen Cargill - Chief Financial Officer, Black Pearl Group Limited.
For and on behalf of the Board,
Karen Cargill
Chief Financial Officer
For further information, please contact:
karen.cargill@blackpearlmail.com | +64 21 135 5183
About Black Pearl Group
Blackpearl Group is a data technology company, relentlessly focused on
unlocking the potential of data for small and medium-sized businesses.
We build, acquire, and market cutting-edge, cloud-based services that
empower businesses to make data-driven decisions, drive productivity,
and generate demand.
Our suite of tools and applications are designed to help businesses of all
sizes harness get trenchancy over their data, facilitating better decisions
and unlocking new revenue opportunities.
6 - Black Pearl Group - FY23 Financial Commentary

Better
growth,
together.

---

Year ended
31 March 2023
Year ended
31 March 2022
$$
Subscription revenue1,430,746 726,526
 
Cost of sales 
Reseller commissions(40,770)(35,205)
Personnel expenses(234,060)(142,777)
Hosting and server costs(382,151)(331,787)
Merchant bank fees (73,036)(24,371)
Gross profit700,729 192,386 
 
Other revenue179,888 172,667 
Personnel expenses(3,590,928)(2,564,780)
Operating expenses(2,597,690)(1,731,071)
Administrative expenses(1,729,969)(604,373)
Net finance costs(132,540)(28,138)
Loss before income tax(7,170,510)(4,563,309)
 
Net income tax credit(160) 215,910 
 
Loss for the year attributable to owners of the parent(7,170,670)(4,347,399)
Exchange differences on translation of foreign operations(103,726)(1,780)
 
Total comprehensive loss for the year(7,274,396)(4,349,179)
Earnings per share
- Basic loss for the year attributable to owners
(0.22)(220.34)
- Diluted loss for the year attributable to owners
(0.22)(220.34)
1 - Consolidated Statement of Comprehensive Income for the year ended 31 March 2023
Unaudited Financial Statements.
Other comprehensive income (not subsequently reclassified through profit or loss)
Black Pearl Group Limited
Consolidated Statement of Comprehensive Income for the year ended 31 March 2023

As at 31 March 2023As at March 2022
$
$
Assets
 
Current assets
 
Cash and cash equivalents1,759,268  900,588 
Trade and other receivables301,599  221,047 
Income tax receivable3,846  219,756 
Prepayments69,828  37,168 
Total current assets 2,134,541  1,378,559 
 
Non-current assets
 
Property, plant and equipment21,596  25,007 
Goodwill2,602,471 -   
Intangible assets1,659,872 333,231 
Total non-current assets 4,283,939  358,238 
Total assets 6,418,480  1,736,797 
 
Liabilities
 
Current liabilities 
Trade and other payables511,008  242,883 
Employee entitlements195,313  151,936 
Current contingent
consideration
576,941  -   
Current loans and borrowings1,291,790  27,888 
Contract liabilities481,401  6,128 
Total current liabilities 3,056,453  428,835 
 
Non-current liabilities
 
Non-current contingent consideration481,919  -   
Non-current loans and borrowings1,093,907  339,974 
Total non-current liabilities 1,575,826  339,974 
Total liabilities 4,632,279  768,809 
Equity
 
Share capital 28,500,382  22,012,727 
Retained earnings (30,021,979) (22,672,146)
Share based payment reserve 2,687,853  1,419,248 
Shareholder warrants reserve 515,511  -   
Foreign currency translation reserve 104,433  208,159 
Equity attributable to the owners 1,786,200  967,988 
 
Total liabilities and equity 6,418,480  1,736,797 
Black Pearl Group Limited
Consolidated Statement of Financial Position as at 31 March 2023
2 - Consolidated Statement of Financial Position as at 31 March 2023
Unaudited Financial Statements.

Share
capital
Retained
earnings
Share based
payment reserve
Share warrants
reserve
Foreign currency
translation reserve
Total
$$$$$$
Balance at 31 March 202222,012,727(22,672,146)1,419,248-208,159967,988
Loss for the year-(7,170,670)---(7,170,670)
Issue of share capital6,082,758-(608,545)--5,474,213
Distribution to owners to extinguish pre-dividend loan179,163(179,163)----
Share based payments608,545-759,056--1,367,601
Equity classified contingent consideration--1,118,094--1,118,094
Transaction costs arising on share issue(382,811)----(382,811)
Share warrants issue---515,511-515,511
Translation differences of foreign operations----(103,726)(103,726)
Balance at 31 March 202328,500,382(30,021,979)2,687,853515,511104,4331,786,200
Balance at 31 March 202120,597,057(18,324,747)1,251,421-209,9393,733,670
Loss for the year-(4,347,399)---(4,347,399)
Issue of share capital1,415,670----1,415,670
Employee share based payments--167,827--167,827
Translation differences of foreign operations----(1,780)(1,780)
Balance at 31 March 202222,012,727(22,672,146)1,419,248-208,159967,988
Black Pearl Group Limited
Consolidated Statement of Changes in Equity for the year ended 31 March 2023
3 - Consolidated Statement of Changes in Equity for the year ended 31 March 2023
Unaudited Financial Statements.

Year ended
31 March 2023
Year ended
31 March 2022
$
$
Cash flows from operating activities 
Cash receipts from customers1,688,631714,261
Cash paid to resellers for their commission(85,505)(4,369)
Cash paid to suppliers and employees(7,150,291)(4,909,742)
Receipt of government grants180,244141,292
GST payments(33,273)4,691
US Federal taxes paid(178)(46,714)
NZ Income tax refund215,910305,178
Interest Paid-(89)
Net cash used in operating activities (5,184,462)(3,795,492)
 
Cash flows from investing activities 
Purchase of property, plant and equipment(12,344)(11,705)
Acquisition of Newold Stamp(783,608)-  
Acquisition and development of intangible assets(207,974)-  
Proceeds on disposal of property, plant and equipment-  975
Interest received2,822100
Net cash used in investing activities (1,001,104)(10,630)
 
Cash flows from financing activities 
Payment of principal portion of lease liabilities-  (16,889)
Cash receipts from sublease payments-  5,742
Repayment of loans and borrowings(5,200)-  
Proceeds from borrowings2,400,000-  
Direct costs incurred in issuing equity(291,112)-  
Cash receipts from issue of share capital4,991,3301,415,670
Net cash from financing activities 7,095,0181,404,523
 
Net increase/(decrease) in cash and cash equivalents909,453(2,401,599)
 
Opening cash and cash equivalents at beginning of the year900,5883,303,958
Effect of exchange rate fluctuations on cash held(50,773)(1,771)
 
Cash and cash equivalents at year end1,759,268900,588
Black Pearl Group Limited
Consolidated Statement of Cash Flows for the year ended 31 March 2023
4 - Consolidated Statement of Cash Flows for the year ended 31 March 2023
Unaudited Financial Statements.

Better
growth,
together.