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Magnet Forensics Announces 2022 First Quarter Results


Magnet Forensics Inc. (“Magnet Forensics” or the “Company”) (TSX: MAGT), developer of digital investigation solutions for more than 4,000 enterprises and public safety organizations, today announced its financial and operational results for the three months ended March 31, 2022 (“Q1 2022”). Financial references are in U.S. dollars unless otherwise indicated.

Q1 2022 Financial Highlights
(Comparison periods in each case are the three months ended March 31, 2021, unless otherwise stated)

  • Revenue of $19.8 million in Q1 2022, an increase of 35%
  • Gross Margin of 92% in Q1 2022, compared to 95% in Q1 2021
  • Net income (loss) of $(0.9) million in Q1 2022, compared to $2.8 million in Q1 2021
  • Adjusted EBITDA (1) of $2.4 million in Q1 2022, compared to $4.8 million in Q1 2021
  • Annual Recurring Revenue (2) (“ARR”) of $66.0 million as of March 31, 2022, an increase of 49% from the prior year
  1. Non-IFRS measure. See "Non-IFRS Measures" and the reconciliation to the most directly comparable IFRS measure included in this press release
  2. Key Performance Indicator. See "Key Performance Indicators"

“We continue to successfully win new customers and expand our offering to existing customers which drove growth of 49% in Annual Recurring Revenue,” said Adam Belsher, CEO of Magnet Forensics. “We are also delivering innovation for customers with product enhancements to our Magnet Digital Investigation Suite and the launch of Magnet IGNITE, which opens a new market category for us. In doing so, we are expanding our addressable market into new high growth areas of digital investigations for both the private and public sectors, including automation, analytics, cloud offerings, triaging, remote collection across multiple endpoints, memory analysis, and end-to-end workflow solutions for a broader base of technical and non-technical users. Our track record of consistent topline growth in a highly recurring revenue business model while investing in innovation continues to deliver profitable performance.”

Q1 2022 Highlights
(Comparison periods in each case are the three months ended March 31, 2021, unless otherwise stated)

  • Revenue of $19.8 million, an increase of 35% compared to $14.7 million, primarily due to a $3.8 million increase in software maintenance and support revenue as a result of growth within the Company’s customer base. The transition to a greater proportion of term license revenue compared to perpetual license revenue is part of the Company’s strategy to increase term license contracts. This transition to term-based products has increased the proportion of term license support as a percentage of total Software Maintenance and Support revenue to 50% as of March 31, 2022, compared to 29% at the same point in 2021. Total Recurring Revenue(1) was $17.3 million, representing 87% of total revenue.
  • Annual Recurring Revenue(2) grew to $66.0 million as of March 31, 2022, an increase of 49% compared to $44.2 million as of March 31, 2021. The increase was primarily due to higher Software maintenance and support revenue from growth in the user base and higher License - term revenue due to an overall increase in licenses sold, as well as an increase in new revenue from the Company’s expanded suite of products being sold into the customer base.
  • Gross Margin was 92%, compared to 95%. The change is primarily due to increased growth in Software License and Software Maintenance and Support Revenue, partially offset by the increased professional services which is lower margin revenue than licence or maintenance and support revenue.
  • Net Income (loss) was $(0.9) million, a decrease of $3.7 million compared to $2.8 million. The change is primarily due to increased investments in Research & Development and Sales & Marketing, including restricted share unit expenses for awards granted in 2021, as well as acquisition-related expenses.
  • Adjusted EBITDA1 was $2.4 million, a decrease of $2.4 million from the prior period, primarily due to investments mentioned above.
  • Cash of $117.1 million, compared to $118.1 million as of December 31, 2021, a change of $1 million.
  • The Company won new customers across each of its public safety and private enterprise markets, including Europe, Asia, and North America and multiple new Fortune 500 companies.
  • The Company acquired strategic intellectual property from Comae Technologies, a UAE-based cybersecurity firm that specializes in incident response and memory analysis. The acquisition will accelerate the Company’s development of memory analysis which plays a critical role in the recovery of critical evidence to understand what happened on devices involved in cyber incidents.
  • The Company’s approach of consistent and rapid innovation supported multiple software updates across its product portfolio, including launching Magnet AXIOM 6.0 and Magnet AXIOM Cyber 6.0 of its core products and product updates for the Magnet Digital Investigation Suite (MDIS) with new innovations of Magnet AUTOMATE and Magnet ATLAS, subsequent to the end of the quarter.
  • The Company announced the launch of Magnet IGNITE, subsequent to the quarter end. Magnet IGNITE is a cloud-based triage solution enabling businesses to perform rapid, remote scans of target endpoints for malicious and insider activity. By quickly gathering intelligence and assessing a potential ransomware attack or an insider’s exfiltration of intellectual property, Magnet IGNITE helps enterprises understand where and when they need to deploy full forensic analyses.
  • The Company launched Magnet AUTOMATE Enterprise, which synchronizes detection and incident response solutions to immediately trigger investigations, automates basic and repetitive tasks, and enables forensic analysts to simultaneously recover and process evidence from multiple endpoints. This approach reduces the time enterprises need to respond to and recover from cybersecurity incidents.
  • The Company announced a collaboration with NICE to digitally transform police case building and investigations to accelerate the pursuit of justice. The integration of NICE Investigate and Magnet REVIEW will enable police agencies to automatically merge digital forensic evidence from Magnet REVIEW with other digital evidence sources in NICE Investigate to streamline case building and investigations.
  • The Company was named a “Leader” in the IDC MarketScape: Worldwide Digital Forensics in Public Safety 2022 Vendor Assessment, subsequent to the quarter end. The study evaluates digital forensics providers in public safety based on current capabilities and long-term strategy. The report noted that Magnet Forensics “is the most advanced [digital forensics vendor] in terms of its cloud offerings.”
  • The Company hosted its annual user conference, the Magnet Summit 2022, in April which included in-person and virtual events attended by nearly 5,000 participants from around the world, the largest in the Company’s history
  1. Non-IFRS measure. See "Non-IFRS Measures" and the reconciliation to the most directly comparable IFRS measure included in this press release
  2. Key Performance Indicator. See "Key Performance Indicators"

Financial Outlook
The Company re-iterated its outlook for Revenue and Adjusted EBITDA for the year ending December 31, 2022, which are anticipated to be in the following ranges:

  • Revenues of $91.5 - $93.5 million, representing 30% - 33% growth over Fiscal 2021, with the contribution of growth across the four periods distributed similar to prior years, with Q4 and Q3 representing a greater contribution.
  • Adjusted EBITDA(1)of $13 - $15 million, representing margins of 14% - 16%.
  1. Non-IFRS measure. See "Non-IFRS Measures" and the reconciliation to the most directly comparable IFRS measure included in this press release

Notice of Conference Call
Magnet Forensics will host a conference call, today, Thursday, May 5, at 8:00 am Eastern Time to discuss its financial results. Mr. Adam Belsher, Chief Executive Officer, and Mr. Peter Vreeswyk, Chief Financial Officer, will jointly chair the call. All interested parties can join the call by dialling (873) 415-0272 or (877) 284-0335 with the conference identification of 8726066. Please dial in 15 minutes prior to the call to secure a line. A live audio webcast of the conference call will also be available from the events page of the investor relations section of Magnet Forensics’ website at

About Magnet Forensics
Founded in 2010, Magnet Forensics is a developer of digital investigation software that acquires, analyzes, reports on, and manages evidence from digital sources, including computers, mobile devices, IoT devices and cloud services. Magnet Forensics’ software is used by more than 4,000 public and private sector customers in over 100 countries and helps investigators fight crime, protect assets and guard national security.

Non-IFRS Financial Measures
This press release contains certain non-IFRS measures, specifically Adjusted EBITDA and Total Recurring Revenue. These measures are not recognized measures under IFRS and do not have standardized meanings 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 the Company’s results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. These non-IFRS measures are used to provide investors with supplemental measures of the Company’s operating performance and liquidity and thus highlight trends in its business that may not otherwise be apparent when relying solely on IFRS measures. The Company also believes that securities analysts, investors, and other interested parties frequently use non-IFRS measures in the evaluation of issuers. The Company’s management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management and executive compensation.

“Adjusted EBITDA” represents net income (loss) as a percentage of total revenue, respectively, adjusted to exclude depreciation and amortization, income tax expense (recovery), share-based compensation expense, foreign exchange loss (gain), interest expense (income), certain financing-related expenses, and certain acquisition-related expenses that are one-time or non-recurring in nature. The Company uses Adjusted EBITDA as a supplemental measure to review and assess operating performance, assess its ability to generate cash-based earnings, as well as provide a more complete understanding of factors and trends affecting the Company’s business that may not otherwise be apparent when relying solely on IFRS measures.

The following table reconciles net income to Adjusted EBITDA for the three months ended March 31, 2022 and March 31, 2021:




Three Months Ended March 31,




Net income (loss)



Depreciation and amortization(1)



Income tax expense (recovery)



Share-based compensation(2)



Foreign exchange loss(3)



Interest expense



Financing-related expenses(4)



Acquisition-related expenses(5)



Adjusted EBITDA



Adjusted EBITDA margin



Net income (loss) margin (6)




  1. Depreciation and amortization expenses are primarily related to right-of-use assets and property and equipment. Depreciation and amortization expense for the three months ending March 31, 2022 and 2021 includes recognized depreciation expense on right-of-use assets of $201, and $219, respectively. For the three months ended March 31 ,2022 and 2021, interest expense related to lease liabilities was $86, and $91, respectively.
  2. These expenses represent non-cash expenses recognized in connection with the issuance of share-based compensation to our employees and directors.
  3. These losses relate to foreign exchange translation on financial assets and liabilities.
  4. These expenses include certain professional, legal, consulting and accounting fees, certain employee compensation, and listing fees that are specific to financing activities including the IPO, and the Base Shelf Prospectus and public filings, and credit facility agreements, and are considered non-recurring and not indicative of continuing operations.
  5. These expenses relate to post-combination compensation of such acquired businesses which represent a portion of the consideration paid that is contingent upon ongoing employment and performance criteria being achieved, including share-based compensation. Additionally, these expenses include certain professional, legal, consulting, accounting, advisory, and other fees relating to acquisitions that are one time, or non-recurring in nature.
  6. Calculated as net income expressed as a percentage of revenue.

“Total Recurring Revenue” represents the total revenue recognized during the period from contract elements that are recurring in nature and includes revenues recognized as “License – term” and “Software maintenance and support” under term license contracts (“Term License Contracts”) and revenue recognized as “Software maintenance and support” from term subscriptions for software maintenance and support (“Software Maintenance and Support”) purchased by customers under perpetual licenses (“Perpetual Licenses”). The Company believes that Total Recurring Revenue is an indicator of business expansion and provides management with visibility into its ability to generate predictable cash flows.

Term License Contracts and subscriptions for Software Maintenance and Support must be renewed upon expiry, permit customers to terminate their contracts for convenience and do not contain penalty provisions in the event of early termination, though customers that terminate early are not entitled to refund of amounts paid under the contract. The Company facilitates customer renewals generally through automatic delivery of renewal notifications sent in advance of the renewal dates, followed by a personal contact from a member of the Company’s sales team. Based on the Company’s past experience, early terminations by customers have not been material and a significant majority of customers renew their contracts upon expiry.

The following table presents Revenue and Total Recurring Revenue for the three months ended March 31, 2022 and March 31, 2021:


Three Months Ended March 31,




Product Type



License - term



License - perpetual



Software Licenses Total



Software maintenance and support- term



Software maintenance and support- perpetual



Software maintenance and support Total



Professional services



Total Revenue






License - perpetual



Professional services



Total Recurring Revenue



Key Performance Indicators
The Company monitors a number of performance indicators to help it evaluate its business, measure its performance, identify trends affecting its business and formulate strategic plans. Each of these key performance indicators utilizes revenue from contract elements that are recurring in nature, which include Term License contracts and subscriptions for Software Maintenance and Support and excludes non-recurring Perpetual License fees and training and implementation fees.

“Annual Recurring Revenue” is defined as the annualized value of contracted recurring revenue from all customers that have contracts for the Company’s products and services as at the date being measured. The Company calculates Annual Recurring Revenue by dividing the contracted recurring revenue of each customer contract in effect as at the measurement date by the term of the contract, expressed in years. The Company’s calculation of Annual Recurring Revenue assumes that active customers will renew their contracts with it at the time of renewal. Based on the Company’s past experience, a significant majority of customers renew their contracts upon expiry. In addition, while subscription agreements may be subject to price increases on renewal, the Company does not assume price increases on subscription agreements when calculating Annual Recurring Revenue. The Company believes that Annual Recurring Revenue is an indicator of business expansion and provides visibility into its ability to generate predictable future cash flows.

Forward-Looking Information
This press release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking information”) within the meaning of applicable securities laws. Forward-looking information includes or may relate to the Company’s financial outlook for Fiscal 2022 (including revenues, net income and Adjusted EBITDA) and anticipated events or results and may include information regarding its financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding the Company’s expectations of future results, performance, achievements, prospects or opportunities or the markets in which we operate is forward-looking information.

In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects", "is expected", "an opportunity exists", "budget", "scheduled", "estimates", "outlook", "forecasts", "projection", "prospects", "strategy", "intends", "anticipates", "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or, "will", "occur" or "be achieved", and similar words or the negative of these terms and similar terminology. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's current expectations, estimates and projections regarding future events or circumstances.

Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that we considered appropriate and reasonable as of the date such statements are made, and is subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in the “Summary of Factors Affecting our Performance” section of the Company’s MD&A for the three months ended December 31, 2021 and in the “Risk Factors” sections of the Company’s Annual Information Form dated March 9, 2022, which are available under the Company’s profile on SEDAR at Certain assumptions in respect of, among other things, the Company’s ability to build its market share; retain existing customers and attract new customers; 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 growth strategies; the Company’s ability to maintain and protect its intellectual property rights and proprietary information; the Company’s ability to prevent unauthorized access to or disclosure, loss, destruction or modification of data, through cybersecurity breaches or computer viruses disrupting the functionality of the Company’s products; the Company’s ability to obtain additional financing and maintain existing financing on acceptable terms; currency exchange and interest rates; the impact of competition; changes and trends in the Company’s industry and the global economy, including the impact of the ongoing COVID-19 pandemic; and changes in laws, rules, regulations, and global standards, are material factors made in preparing forward-looking information and management's expectations.

If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The opinions, estimates or assumptions referred to above are described in greater detail in the "Summary of Factors Affecting our Performance" section of the Company’s MD&A for the three months ended March 31, 2022 and should be considered carefully by prospective investors.

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 presently known to the Company or that the Company presently 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. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this press represents the Company’s expectations as of the date of hereof (or as of the date they are 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 securities laws.

All of the forward-looking information contained in this release is expressly qualified by the foregoing cautionary statements.

Magnet Forensics Inc.
Condensed Consolidated Interim Statements of Financial Position
Expressed in thousands of US Dollars (Unaudited)
As at March 31, 2022 and December 31, 2021



March 31, 2022

December 31, 2021 




Current assets








Accounts receivable





Prepaid expenses and other assets





Income taxes receivable










Non-current assets



Property and equipment





Right-of-use assets





Contract acquisition costs





Acquired intangible assets










Deferred tax assets





Total assets











Current liabilities



Accounts payable and accrued liabilities





Deferred revenue





Government loan payable





Lease liabilities










Non-current liabilities



Deferred revenue





Government loan payable





Acquisition-related payables





Lease liabilities





Total liabilities








Shareholders’ equity



Share capital





Contributed surplus





Retained earnings (deficit)





Total shareholders’ equity (deficiency)





Total liabilities and equity






Magnet Forensics Inc.
Condensed Consolidated Interim Statements of Income and Comprehensive Income
Expressed in thousands of US Dollars, except per share figures (Unaudited)
Three months ended March 31, 2022 and 2021


Three months ended March 31,














Cost of sales





Gross profit











Sales and marketing





Research and development





General and administrative










Income (loss) before the undernoted items and income taxes








Interest expense





Foreign exchange loss





Income (loss) before income taxes








Income tax expense (recovery):





















Net income (loss) and comprehensive income (loss)








Earnings (loss) per share



Basic (1)





Diluted (1)





  1. After giving effect to the amalgamation completed as part of the Pre-Closing Reorganization, including a conversion of the Company’s pre-closing common shares on a one-to-three basis.

Magnet Forensics Inc.
Condensed Consolidated Interim Statement of Cash Flows
Expressed in thousands of US Dollars (Unaudited)
Three months ended March 31, 2022 and 2021


Three months ended March 31,







Cash provided by (used in):






Cash flows from operating activities:



Net income (loss)





Adjustments for:



Income tax expense (recovery)





Depreciation of property and equipment





Amortization of intangible assets





Interest expense on lease liabilities





Other interest income





Depreciation of right-of-use assets





Share-based compensation expense





Unrealized foreign exchange loss





Other non-cash interest





Changes in operating assets and liabilities





Interest received





Income taxes paid





Net cash from (used in) operating activities






Cash flows from investing activities:



Purchase of property and equipment





Acquisition of business





Net cash used investing activities






Cash flows from financing activities:



Repayments of government loan payable





Stock options exercised





Interest paid on lease liabilities





Principal lease payments





Net cash used in financing activities








Decrease in cash





Cash, beginning of period





Cash, end of period







For further information:
Neil Desai
Tel: 226-243-6337

Source: Magnet Forensics

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