Absolute® (TSX: ABT), the new standard for endpoint visibility and control, today announced financial results for the three months ended September 30, 2017. All dollar figures are unaudited and stated in U.S. dollars, unless otherwise indicated.
“Our Q1 results were supported by strong growth in the North American enterprise segment, demonstrating the continuing success of our focused strategy and targeted investment and reflecting the value enterprise customers are realizing from our technology,” said Geoff Haydon, Chief Executive Officer, Absolute. “The Absolute 7 platform launch is particularly significant for this segment, featuring our new Absolute Reach offering, which empowers customers to customize and extend a definitive endpoint visibility and control capability across their entire endpoint populations. While these features were only deliverable for the last couple of weeks of the quarter, early reactions have been very positive from customers, prospects, and analysts."
Key Financial Metrics
Technology and Products
Summary of Key Financial Metrics
USD Millions, except per share data | Q1 | ||||||||||||||||
F2018 | F2017 | Change | |||||||||||||||
Revenue | |||||||||||||||||
Commercial recurring(1) | $ | 21.8 | $ | 20.8 | 5 | % | |||||||||||
Other | 1.2 | 1.7 | (27 | %) | |||||||||||||
Total | $ | 23.0 | $ | 22.5 | 2 | % | |||||||||||
Adjusted EBITDA(2) | $ | 1.3 | $ | 1.9 | (32 | %) | |||||||||||
As a percentage of revenue | 6 | % | 8 | % | |||||||||||||
Net (Loss) Income | $ | (0.1 | ) | (0.8 | ) | 82 | % | ||||||||||
Per share (basic) | $ | (0.00 | ) | $ | (0.02 | ) | |||||||||||
Per share (diluted) | $ | (0.00 | ) | $ | (0.02 | ) | |||||||||||
Cash from operating activities | $ | 2.1 | $ | 1.9 | 10 | % | |||||||||||
Dividends paid | $ | 2.5 | $ | 2.4 | 3 | % | |||||||||||
Per share (CAD) | $ | 0.08 | $ | 0.08 | |||||||||||||
Cash, equivalents and investments | $ | 32.8 | $ | 43.0 | (24 | %) | |||||||||||
Total assets | $ | 94.0 | $ | 101.7 | (8 | %) | |||||||||||
Deferred revenue | $ | 136.6 | $ | 135.2 | 1 | % | |||||||||||
Common shares outstanding | 39.9 | 39.0 | 2 | % | |||||||||||||
NOTES:
1. Commercial recurring revenue represents revenue
derived from term licenses and recurring managed services, both of which
are included as part of our Commercial ACV Base. Other revenue
represents revenue derived from professional services and ancillary
product lines, including consumer products.
2. Throughout this
press release, “Adjusted EBITDA” is used as a profitability measure.
Please refer to the “Non-IFRS Measures and Definitions” section of this
press release for further discussion on these measures.
Corporate Outlook
The company has revised its outlook for F2018 based on Q1 results and observed trends, including continued pipeline growth in the Enterprise vertical but recognizing longer sales cycles and weaker than expected performance in the public sector:
Quarterly Dividend
On October 20, 2017, the Company declared
a quarterly dividend of CAD$0.08 per share on its common shares, payable
in cash on November 27, 2017 to shareholders of record at the close of
business on November 6, 2017.
Quarterly Filings
Management’s Discussion and Analysis
(“MD&A”) and Interim Condensed Consolidated Financial Statements and the
notes thereto for the fiscal quarter ended September 30, 2017 can be
obtained today from Absolute’s corporate website at www.absolute.com.
The documents will also be available at www.sedar.com.
Notice of Conference Call
Absolute will hold a conference
call to discuss the Company’s Q1-F2018 results on Monday, November 13,
2017 at 5:00 p.m. ET. All interested parties can join the call by
dialing 647-427-7450, or 1-888-231-8191. Please dial-in 15 minutes prior
to the call to secure a line. The conference call will be archived for
replay until Monday, November 20, 2017 at midnight ET. To access the
archived conference call, please dial 416-849-0833 or 1-855-859-2056 and
enter the reservation code 9896039.
A live audio webcast of the conference call will be available at www.absolute.com and http://bit.ly/2yObYq9. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. An archived replay of the webcast will be available on the Company’s website for 90 days.
Non-IFRS Measures and Definitions
Throughout this press
release, the Company refers to a number of measures which the Company
believes are meaningful in the assessment of the Company’s performance.
All these metrics are non-standard measures under International
Financial Reporting Standards (“IFRS”), and are unlikely to be
comparable to similarly titled measures reported by other companies.
Readers are cautioned that the disclosure of these items is meant to add
to, and not replace, the discussion of financial results or cash flows
from operations as determined in accordance with IFRS. For a discussion
of the purpose of these non-IFRS measures, please refer to the Company’s
September 30, 2017 MD&A on SEDAR at www.SEDAR.com.
These measures, as well as their method of calculation or reconciliation to IFRS measures, are as follows:
1) Commercial ACV Base, Net ACV Retention, and ACV from New Customers
As
the majority of the Company’s customer contracts are sold under
multi-year term licenses, there is a significant lag between the timing
of the Billing and the associated revenue recognition. As a result, the
Company focuses on the aggregate annualized value of its subscriptions
under contract, measured by Annual Contract Value (“ACV”), as an
indicator of its future revenues.
Commercial ACV Base measures the amount of recurring annual revenue Absolute will receive from its commercial customers under contract at a point in time, and therefore is an indicator of the Company’s future revenue streams. Net ACV Retention measures the percentage increase or decrease in the Commercial ACV Base at the end of a period for the customers that comprised the Commercial ACV Base at the beginning of the same period. This metric provides insight into the effectiveness of Absolute’s customer retention and expansion functions. ACV from New Customers measures the addition to the Commercial ACV base from sales to new commercial DDS customers during the quarter.
We believe that increases in the amount of ACV from New Customers, and improvement in the Company’s Net ACV Retention, will grow our Commercial ACV Base and, in turn, our future revenues.
2) Adjusted EBITDA
Management believes that analyzing
operating results exclusive of significant non-cash items or items not
controllable in the period provides a useful measure of the Company’s
performance. The term Adjusted EBITDA refers to earnings before
deducting interest and investment gains (losses), income taxes,
amortization of acquired intangible assets and property and equipment,
foreign exchange gain or loss, share-based compensation, and
restructuring and reorganization charges and post-retirement benefits.
The items excluded in the determination of Adjusted EBITDA are
share-based compensation, amortization of acquired intangibles,
amortization of property and equipment, and restructuring and
reorganization charges and certain post-retirement benefits.
3) Adjusted Operating Expenses
A number of significant
non-cash or non-recurring expenses are reported in the Company’s Cost of
Revenue and Operating Expenses. Management believes that analyzing these
expenses exclusive of these non-cash or non-recurring items provides a
useful measure of the cash invested in the operations of its
business. The items excluded in the determination of Adjusted Operating
Expenses are share-based compensation, amortization of acquired
intangible assets, amortization of property and equipment, and
restructuring and reorganization charges and certain post-retirement
benefits. For a description of the reasons these items are adjusted,
please refer to the “Non-IFRS Measures” section of the September 30,
2017 MD&A.
About Absolute
Absolute is the new standard for endpoint
visibility and control, delivering self-healing endpoint security and
always-connected IT asset management to protect devices, data,
applications and users — on and off the network. Bridging the gap
between security and IT operations, only Absolute gives enterprises
visibility they can act on to protect every endpoint, remediate
vulnerabilities, and ensure compliance in the face of insider and
external threats. Absolute’s patented Persistence technology is already
embedded in the firmware of more than one billion PC and mobile devices
and trusted by over 15,000 customers worldwide.
Forward-Looking Statements
This press release contains forward-looking statements and financial outlook that involve risks and uncertainties. These forward-looking statements and financial outlook relate to, among other things, the expected performance, functionality and availability of the Company’s services and products, and other expectations, intentions and plans contained in this press release that are not historical facts. When used in this press release, the words "plan," "expect," "believe," and similar expressions generally identify forward-looking statements. These statements reflect the Company’s current expectations. They are subject to a number of risks and uncertainties, including, but not limited to, changes in technology and general market conditions. In light of the many risks and uncertainties readers of the press release should understand that Absolute cannot assure them that the forward-looking statements and financial outlook contained in this press release will be realized. Furthermore, the forward-looking statements and financial outlook contained in this press release are made as at the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements and financial outlook, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
©2017 Absolute Software Corporation. All rights reserved. Absolute and Persistence are registered trademarks of Absolute Software Corporation. For patent information, visit www.absolute.com/patents. The Toronto Stock Exchange has neither approved nor disapproved of the information contained in this news release.
ABSOLUTE SOFTWARE CORPORATION Consolidated Statements of Financial Position (Expressed in United States dollars) (Unaudited) |
||||||||||||
September 30, 2017 | June 30, 2017 | |||||||||||
ASSETS | ||||||||||||
CURRENT | ||||||||||||
Cash and cash equivalents | $ | 32,402,507 | $ | 32,511,093 | ||||||||
Short-term investments | 367,098 | 366,789 | ||||||||||
Trade and other receivables | 14,977,636 | 19,460,872 | ||||||||||
Income tax receivable | 15,993 | 83,487 | ||||||||||
Prepaid expenses and other | 2,602,574 | 2,419,881 | ||||||||||
50,365,808 | 54,842,122 | |||||||||||
PROPERTY AND EQUIPMENT | 5,706,843 | 6,304,152 | ||||||||||
DEFERRED INCOME TAX ASSETS | 23,278,804 | 22,286,804 | ||||||||||
INTANGIBLE ASSETS AND GOODWILL | 14,624,440 | 14,894,518 | ||||||||||
$ | 93,975,895 | $ | 98,327,596 | |||||||||
LIABILITIES | ||||||||||||
CURRENT | ||||||||||||
Trade and other payables | $ | 11,469,940 | $ | 13,079,456 | ||||||||
Accrued warranty | 350,000 | 570,000 | ||||||||||
Deferred revenue – current | 71,315,407 | 72,361,648 | ||||||||||
83,135,347 | 86,011,104 | |||||||||||
DEFERRED REVENUE | 65,259,205 | 66,040,653 | ||||||||||
148,394,552 | 152,051,757 | |||||||||||
CONTINGENCIES | ||||||||||||
SHAREHOLDERS’ DEFICIENCY | ||||||||||||
Share capital | 66,493,973 | 64,875,130 | ||||||||||
Equity reserve | 36,601,824 | 36,254,893 | ||||||||||
Treasury shares | (499,443 | ) | (499,443 | ) | ||||||||
Deficit | (157,015,011 | ) | (154,354,741 | ) | ||||||||
(54,418,657 | ) | (53,724,161 | ) | |||||||||
$ | 93,975,895 | $ | 98,327,596 | |||||||||
ABSOLUTE SOFTWARE CORPORATION Consolidated Statements of Operations and Comprehensive (Loss) Income Three months ended September 30, 2017 and 2016 (Expressed in United States dollars) (Unaudited) |
||||||||||||
2017 | 2016 | |||||||||||
REVENUE | $ | 22,997,690 | $ | 22,484,864 | ||||||||
COST OF REVENUE | 3,562,767 | 3,506,544 | ||||||||||
GROSS MARGIN | 19,434,923 | 18,978,320 | ||||||||||
OPERATING EXPENSES | ||||||||||||
Sales and marketing | 10,390,581 | 11,358,589 | ||||||||||
Research and development | 5,416,253 | 4,356,625 | ||||||||||
General and administration | 3,123,450 | 2,960,637 | ||||||||||
Share-based compensation | 827,359 | 997,551 | ||||||||||
19,757,643 | 19,673,402 | |||||||||||
OPERATING LOSS | (322,720 | ) | (695,082 | ) | ||||||||
OTHER (EXPENSE) INCOME | ||||||||||||
Interest income, net | 6,333 | 41,939 | ||||||||||
Foreign exchange (loss) gain | (86,030 | ) | 20,490 | |||||||||
(79,697 | ) | 62,429 | ||||||||||
NET LOSS BEFORE INCOME TAXES | (402,417 | ) | (632,653 | ) | ||||||||
INCOME TAX RECOVERY (EXPENSE) | 258,000 | (157,000 | ) | |||||||||
NET LOSS AND TOTAL COMPREHENSIVE LOSS | $ | (144,417 | ) | $ | (789,653 | ) | ||||||
BASIC AND DILUTED LOSS PER SHARE | $ | (0.00 | ) | $ | (0.02 | ) | ||||||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC | 39,783,566 | 38,972,290 | ||||||||||
ABSOLUTE SOFTWARE CORPORATION Condensed Consolidated Statement of Changes in Shareholders’ Deficiency (Expressed in United States dollars) (Unaudited) |
|||||||||||||||||||||||||||||||||||
Share Capital | |||||||||||||||||||||||||||||||||||
Number |
Amount |
Equity reserve |
Treasury |
Deficit | Total | ||||||||||||||||||||||||||||||
BALANCE, JUNE 30, 2016 | 38,881,307 | $ | 58,607,382 | $ | 36,732,175 | $ | - | $ | (139,049,869 | ) | $ | (43,710,312 | ) | ||||||||||||||||||||||
Shares issued on options exercised | 107,875 | 637,933 | (224,390 | ) | - | - | 413,543 | ||||||||||||||||||||||||||||
Shares issued under Employee Share Purchase Plan | 42,126 | 190,610 | - | - | - | 190,610 | |||||||||||||||||||||||||||||
Shares issued under Phantom Share Unit Plan | 6,844 | 42,364 | (42,364 | ) | - | - | - | ||||||||||||||||||||||||||||
Share-based compensation | - | - | 997,551 | - | - | 997,551 | |||||||||||||||||||||||||||||
Dividends paid | - | - | - | - | (2,432,499 | ) | (2,432,499 | ) | |||||||||||||||||||||||||||
Net loss and total comprehensive loss | - | - | - | - | (789,653 | ) | (789,653 | ) | |||||||||||||||||||||||||||
BALANCE, SEPTEMBER 30, 2016 | 39,038,152 | $ | 59,478,289 | $ | 37,462,972 | $ | - | $ | (142,272,021 | ) | $ | (45,330,760 | ) | ||||||||||||||||||||||
Shares issued on options exercised | 553,963 | 3,401,848 | (1,088,805 | ) | - | - | 2,313,042 | ||||||||||||||||||||||||||||
Shares issued under Employee Share Purchase Plan | 42,329 | 170,867 | - | - | - | 170,867 | |||||||||||||||||||||||||||||
Shares issued under Phantom Share Unit plan | 320,301 | 2,238,842 | (2,238,842 | ) | - | - | - | ||||||||||||||||||||||||||||
Shares issued under Performance and Restricted Share Unit plan | 7,104 | 35,132 | (35,132 | ) | - | - | - | ||||||||||||||||||||||||||||
Shares repurchased and cancelled under the Normal Course Issuer Bid | (280,100 | ) | (449,848 | ) | - | - | (876,847 | ) | (1,326,694 | ) | |||||||||||||||||||||||||
Treasury shares repurchased under the Normal Course Issuer Bid | - | - | - | (499,443 | ) | - | (499,443 | ) | |||||||||||||||||||||||||||
Share-based compensation expense | - | - | 2,154,700 | - | - | 2,154,700 | |||||||||||||||||||||||||||||
Dividends paid | - | - | - | - | (7,044,351 | ) | (7,044,351 | ) | |||||||||||||||||||||||||||
Net loss and total comprehensive loss | - | - | - | - | (4,161,522 | ) | (4,161,522 | ) | |||||||||||||||||||||||||||
BALANCE, JUNE 30, 2017 | 39,681,749 | $ | 64,875,130 | $ | 36,254,893 | $ | (499,443 | ) | $ | (154,354,741 | ) | $ | (53,724,161 | ) | |||||||||||||||||||||
Shares issued on options exercised | 206,375 | 1,365,891 | (264,069 | ) | - | - | 1,101,822 | ||||||||||||||||||||||||||||
Shares issued under Employee Share Purchase Plan | 47,616 | 198,875 | - | - | - | 198,875 | |||||||||||||||||||||||||||||
Shares issued under Phantom Share Unit Plan | 9,358 | 54,077 | (54,077 | ) | - | - | - | ||||||||||||||||||||||||||||
Share-based compensation | - | - | 665,077 | - | - | 665,077 | |||||||||||||||||||||||||||||
Dividends paid | - | - | - | - | (2,515,853 | ) | (2,515,853 | ) | |||||||||||||||||||||||||||
Net loss and total comprehensive loss | - | - | - | - | (144,417 | ) | (144,417 | ) | |||||||||||||||||||||||||||
BALANCE, SEPTEMBER 30, 2017 | 39,945,098 | $ | 66,493,973 | $ | 36,601,824 | $ | (499,443 | ) | $ | (157,015,011 | ) | $ | (54,418,657 | ) | |||||||||||||||||||||
ABSOLUTE SOFTWARE CORPORATION Condensed Consolidated Statements of Cash Flows Three and nine months ended September 30, 2017 and 2016 (Expressed in United States dollars) (Unaudited) |
||||||||||||
2017 | 2016 | |||||||||||
OPERATING ACTIVITIES | ||||||||||||
Net loss | $ | (144,417 | ) | $ | (789,653 | ) | ||||||
Items not involving cash | ||||||||||||
Amortization of property and equipment | 746,696 | 682,448 | ||||||||||
Amortization of acquired intangible assets | 36,250 | 50,076 | ||||||||||
Amortization of intangible assets – contract costs and brand | 2,268,274 | 2,248,610 | ||||||||||
Share-based compensation | 665,077 | 997,551 | ||||||||||
Deferred income taxes | (992,000 | ) | (119,000 | ) | ||||||||
Non-cash interest and amortization
of investment premium |
- | (46,351 | ) | |||||||||
Change in non-cash working capital | ||||||||||||
Trade and other receivables | 4,483,236 | 8,779,838 | ||||||||||
Prepaid expenses and other | (182,693 | ) | (431,036 | ) | ||||||||
Intangible assets – contract costs and brand additions | (2,034,446 | ) | (1,873,995 | ) | ||||||||
Trade and other payables | (804,383 | ) | (1,666,307 | ) | ||||||||
Income taxes payable | 67,494 | (3,211,258 | ) | |||||||||
Accrued warranty | (220,000 | ) | 30,000 | |||||||||
Deferred revenue | (1,827,689 | ) | (2,770,973 | ) | ||||||||
CASH FROM OPERATING ACTIVITIES | 2,061,399 | 1,879,950 | ||||||||||
INVESTING ACTIVITIES | ||||||||||||
Purchase of property and equipment | (916,388 | ) | (2,041,166 | ) | ||||||||
Income taxes paid on disposal of business unit | - | (2,623,890 | ) | |||||||||
CASH USED IN INVESTING ACTIVITIES | (916,388 | ) | (4,665,056 | ) | ||||||||
FINANCING ACTIVITIES | ||||||||||||
Dividends paid | (2,515,853 | ) | (2,432,499 | ) | ||||||||
Issuance of common shares | 1,272,295 | 522,022 | ||||||||||
CASH USED IN FINANCING ACTIVITIES | (1,243,558 | ) | (1,910,477 | ) | ||||||||
FOREIGN EXCHANGE EFFECT ON CASH | (10,039 | ) | 65,852 | |||||||||
DECREASE IN CASH AND CASH EQUIVALENTS | (108,586 | ) | (4,629,731 | ) | ||||||||
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD |
32,511,093 | 23,092,852 | ||||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 32,402,507 | $ | 18,463,121 | ||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20171113006192/en/
Media Relations
InkHouse
Darah Patton, 317-695-5630
[email protected]
or
Investor
Relations
MKR Group
Joo-Hun Kim, 212-868-6760
[email protected]