Optiva Inc. Reports Fourth Quarter 2019 Financial Results
Optiva Inc. Reports Fourth Quarter 2019 Financial Results
Canada NewsWire
TORONTO, Nov. 6, 2019
TORONTO, Nov. 6, 2019 /CNW/ - TORONTO, November 6, 2019 - Optiva Inc. (TSX:OPT), the leader in providing communications service providers (CSPs) worldwide with cloud-native revenue management software on the public cloud, released its financial results today for the quarter ended September 30, 2019.
Q4 Fiscal 2019 Highlights | Three Months Ended | Twelve Months Ended | |||
($ US Thousands, except per share information) | September 30, | September 30, | |||
(Unaudited) | 2019 | 2018 | 2019 | 2018 | |
Revenue | 23,124 | 27,298 | 100,353 | 121,627 | |
Net income (loss) | (963) | (14,369) | 3,123 | (92,592) | |
Earnings (loss) Per Share | $(0.18) | $(2.75) | $ 0.59 | $(17.69) | |
Cash generated from (used in) operating activities | 1,232 | (14,156) | 707 | (61,011) | |
Total cash, including restricted cash | 37,677 | 39,683 | 37,677 | 39,683 | |
"During the quarter, Customer Success showed continued improvement, reporting close to 50% and we remain committed to our plan to invest $100m to pivot our company toward the public cloud," said Danielle Royston, CEO of Optiva. "Our sales funnel continues to strengthen and we recently signed a new customer onto our SaaS platform. We continue to manage the business cash flow break even so we may invest in our exciting vision to bring telco to the cloud."
Fourth Quarter 2019 Financial Results
- Revenues decreased by $4.2 million relative to the fourth quarter of fiscal 2018, primarily due to the discontinuation of support and subscription sales to customers who had previously notified Optiva of their exit as well as fewer software implementations and hardware sales.
- Optiva's cost of revenue and operating expenses declined by $13.5 million relative to the fourth quarter of 2018 as a result of Optiva's ongoing focus on operational efficiencies, cost management and lower research and development expenses.
- Fourth quarter 2019 research and development expenses included $3.0 million of investments in cloud innovation, which brings the total spent in fiscal 2019, to $9.8 million. Since the beginning of 2018, Optiva has invested a total of $23.8 million in cloud innovation and will continue to spend up to another $76 million over the course of the next two to three years, as per its stated cloud-driven growth strategy.
- Net loss for the quarter decreased to $1.0 million compared to a net loss of $14.4 million during the corresponding period in 2018. The improvement in earnings was mainly due to lower operating expenses.
- Optiva generated $1.2 million in cash from operating activities in the fourth quarter of 2019, versus consuming $14.2 million of cash in the corresponding period in 2018.
- Continued focus and investments in cloud innovation remain at the forefront of the Company's growth strategy.
Business Highlights
- Subsequent to quarter-end, Vodafone Idea Ltd (VIL), India's leading telecom service provider initiated a pilot to deploy Optiva's Charging Engine BSS solution on VIL's universal cloud. The pilot to deploy Optiva Charging Engine BSS solution on the VIL's universal cloud is aligned with the focus of Vodafone Idea. The pilot design includes a two-step process — first on a Kubernetes enabled private cloud and then an option for a future, second step on a public cloud platform.
- New customer announced to utilize Optiva's BSS platform on the public cloud. The operator will leverage the platform to launch a new mobile virtual network operator service. The Optiva BSS platform, re-architected and made available on the public cloud, is Optiva's new entry into the Software-as-a-Service (SaaS) market. The multi-tenant BSS platform allows customers to focus on their business, not on deploying and managing enterprise software.
- Optiva announced it has been selected and has won a contract with a Tier 1 telecom operator in the Middle East to be its payment application provider. The application, which will be architected and deployed on the telecom's private cloud, will equip the operator with the scalability necessary to meet its market demands today and achieve continued growth long-term.
- Customer Success results for the period January - June have been completed with 49% of revenue reporting success with Optiva products and services.
Change in Fiscal Year End
As previously announced on December 12, 2018, Optiva is changing its fiscal year end from September 30 to December 31 to better align the Company's year-end reporting cycle with its business operations. The Company's transition to a December 31 year-end in fiscal 2019 will include five fiscal quarters.
Conference Call
Optiva Inc. will hold an analyst call on November 7, 2019, to discuss its Q4 2019 results. CEO Danielle Royston and Interim CFO Anin Basu will host the call starting at 8:30 a.m. Eastern time. A question and answer session will follow management's discussion.
Date: Thursday, November 7, 2019
Time: 8:30 a.m. Eastern Time
Toll-free (Canada/US): 1-888-220-8474
International: 1-720-452-9217
Reference number: 2936771
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. A replay of the call will be available via Optiva's website (www.optiva.com/investors/) Media Inquiries: [email protected]
About Optiva Inc.
Optiva Inc. is the leader in providing communication service providers (CSPs) worldwide with cloud-native revenue management software on the public cloud. Operators and MVNOs can integrate our best-of-breed charging engine into a BSS stack or deploy our fully managed, end-to-end, SaaS-based platform. Optiva solutions offer unmatched speed, scale, security and savings. Our market knowledge, analytical insights and unique Customer Success Program ensure telecoms are equipped to achieve their strategic business goals. Established in 1999, Optiva Inc. is on the Toronto Stock Exchange (TSX: OPT). For more information, visit www.optiva.com.
Caution Concerning Forward-Looking Statement
Certain statements in this document may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. When used in this document, such statements use such words as "may," "will," "expect," "continue," "believe," "plan," "intend," "would," "could," "should," "anticipate" and other similar terminology. These statements are forward-looking as they are based on our current expectations, as at November 7, 2019, about our business and the markets we operate in, and on various estimates and assumptions. Our actual results could materially differ from our expectations if known or unknown risks affect our business, or if our estimates or assumptions turn out to be inaccurate. As a result, there is no assurance that any forward-looking statements will materialize. Risks that could cause our results to differ materially from our current expectations are discussed in the Company's most recent Annual Information Form, both of which are available on SEDAR at www.sedar.com and on Optiva's website at www.optiva.com/investors/. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Optiva does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.
OPTIVA INC.
Condensed Consolidated Interim Statements of Financial Position
(Expressed in U.S. dollars)
(Unaudited)
September 30, | September 30, | ||||
2019 | 2018 | ||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 36,592,926 | $ | 36,174,863 | |
Trade accounts and other receivables | 10,684,310 | 14,954,291 | |||
Unbilled revenue | 7,688,534 | 12,908,847 | |||
Prepaid expenses | 1,865,394 | 1,833,105 | |||
Income taxes receivable | 4,697,622 | 5,173,450 | |||
Other assets | 201,996 | 253,517 | |||
Inventories | 748,314 | 1,111,782 | |||
Total current assets | 62,479,096 | 72,409,855 | |||
Restricted cash | 1,084,205 | 3,507,759 | |||
Long-term unbilled revenue | 4,635,765 | 1,531,062 | |||
Property and equipment | – | 541,861 | |||
Deferred income taxes | 1,910,935 | 2,093,716 | |||
Investment tax credits | 352,427 | 361,810 | |||
Intangible assets | 13,378,794 | 18,044,530 | |||
Goodwill | 32,271,078 | 32,271,078 | |||
Total assets | $ | 116,112,300 | $ | 130,761,671 | |
Liabilities and Shareholders' Deficit | |||||
Current liabilities: | |||||
Trade payables | $ | 10,146,718 | $ | 21,568,158 | |
Accrued liabilities | 11,420,207 | 12,832,812 | |||
Provisions | 4,531,044 | 7,655,199 | |||
Income taxes payable | 1,551,973 | 500,489 | |||
Deferred revenue | 10,383,490 | 13,445,746 | |||
Total current liabilities | 38,033,432 | 56,002,404 | |||
Deferred revenue | 852,373 | 1,512,863 | |||
Other liabilities | 2,317,200 | 1,272,488 | |||
Pension and other long-term employment benefit plans | 14,671,564 | 16,900,821 | |||
Provisions | 206,956 | 5,662,009 | |||
Preferred shares | 65,931,132 | 57,862,418 | |||
Series A Warrant | 15,274,241 | 21,754,223 | |||
Deferred income taxes | 120,000 | 120,000 | |||
Total liabilities | 137,406,898 | 161,087,226 | |||
Shareholders' deficit: | |||||
Share capital | 250,893,223 | 248,680,325 | |||
Standby Warrant | 997,500 | 997,500 | |||
Contributed surplus | 11,300,925 | 13,386,978 | |||
Deficit | (277,448,183) | (285,318,990) | |||
Accumulated other comprehensive loss | (7,038,063) | (8,071,368) | |||
Total shareholders' deficit | (21,294,598) | (30,325,555) | |||
Total liabilities and shareholders' deficit | $ | 116,112,300 | $ | 130,761,671 | |
OPTIVA INC.
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(Expressed in U.S. dollars, except per share and share amounts)
(Unaudited)
Three months ended | Twelve months ended | ||||||||
September 30, | September 30, | ||||||||
2019 | 2018 | 2019 | 2018 | ||||||
Revenue: | |||||||||
Support and subscription | $ | 16,595,067 | $ | 19,794,586 | $ | 72,874,763 | $ | 84,747,291 | |
Software licenses, services and other | 6,528,991 | 7,503,006 | 27,478,324 | 36,879,413 | |||||
23,124,058 | 27,297,592 | 100,353,087 | 121,626,704 | ||||||
Cost of revenue | 8,065,009 | 8,877,689 | 33,687,238 | 50,711,612 | |||||
Gross profit | 15,059,049 | 18,419,903 | 66,665,849 | 70,915,092 | |||||
Operating expenses: | |||||||||
Sales and marketing | 2,256,818 | 2,374,202 | 10,826,636 | 11,331,769 | |||||
General and administrative | 4,646,796 | 6,523,349 | 18,825,473 | 31,076,334 | |||||
Research and development | 8,155,351 | 14,104,345 | 26,986,751 | 61,515,108 | |||||
Restructuring costs (recovery) | (3,709,732) | 991,769 | (1,818,775) | 51,775,138 | |||||
11,349,233 | 23,993,665 | 54,820,085 | 155,698,349 | ||||||
Income (loss) from operations | 3,709,816 | (5,573,762) | 11,845,764 | (84,783,257) | |||||
Foreign exchange gain (loss) | (384,747) | (1,974,718) | 122,171 | (317,823) | |||||
Finance income | 119,245 | 252,851 | 479,315 | 523,718 | |||||
Finance costs | (1,795,206) | (4,924,931) | (4,037,555) | (2,572,010) | |||||
Income (loss) before income taxes | 1,649,108 | (12,220,560) | 8,409,695 | (87,149,372) | |||||
Income taxes (recovery): | |||||||||
Current | 2,565,101 | 2,089,097 | 5,186,867 | 5,391,880 | |||||
Deferred | 46,824 | 59,465 | 100,078 | 50,404 | |||||
2,611,925 | 2,148,562 | 5,286,945 | 5,442,284 | ||||||
Net income (loss) | $ | (962,817) | $ | (14,369,122) | $ | 3,122,750 | $ | (92,591,656) | |
Other comprehensive income: | |||||||||
Items that will not be reclassified | |||||||||
to net income: | |||||||||
Actuarial gain on pension and | |||||||||
non-pension post-employment | |||||||||
benefit plans, net of income | |||||||||
tax expense of nil | 1,033,305 | 390,055 | 1,033,305 | 390,055 | |||||
Total comprehensive income (loss) | $ | 70,488 | $ | (13,979,067) | $ | 4,156,055 | $ | (92,201,601) | |
Income (loss) per subordinate voting share: | |||||||||
Basic | $ | (0.18) | $ | (2.75) | $ | 0.59 | $ | (17.69) | |
Diluted | (0.18) | (2.75) | 0.55 | (17.69) | |||||
Weighted average number of | |||||||||
subordinate voting shares: | |||||||||
Basic | 5,315,757 | 5,233,047 | 5,271,889 | 5,233,047 | |||||
Diluted | 5,315,757 | 5,233,047 | 5,642,069 | 5,233,047 | |||||
OPTIVA INC.
Condensed Consolidated Interim Statements of Cash Flows
(Expressed in U.S. dollars)
(Unaudited)
Twelve months ended | Twelve months ended | |||||||||
September 30, | September 30, | |||||||||
2019 | 2018 | 2019 | 2018 | |||||||
Cash provided by (used in): | ||||||||||
Operating activities: | ||||||||||
Income (loss) for the period | $ | (962,817) | $ | (14,369,122) | $ | 3,122,750 | $ | (92,591,656) | ||
Adjustments for: | ||||||||||
Depreciation of property and equipment | 8,271 | 176,169 | 166,698 | 2,505,018 | ||||||
Amortization of intangible assets | 1,200,761 | 1,330,559 | 4,665,736 | 7,487,034 | ||||||
Finance income | (119,245) | (252,851) | (479,315) | (523,718) | ||||||
Finance costs (recovery) | 1,795,206 | 4,924,931 | 4,037,555 | 2,572,010 | ||||||
Pension | (211,122) | 5,584 | (164,555) | (595,754) | ||||||
Income tax expense | 2,611,925 | 2,148,562 | 5,286,945 | 5,442,284 | ||||||
Unrealized foreign exchange loss (gain) | 227,392 | 2,374,860 | (528,510) | 3,073,740 | ||||||
Share-based compensation | 450,154 | 482,849 | 1,538,558 | 2,776,008 | ||||||
Change in provisions | (4,614,128) | (11,443,067) | (8,579,208) | (6,161,235) | ||||||
Loss on disposal of property and equipment | 15,391 | 4,815 | 307,707 | 421,610 | ||||||
Change in non-cash operating working capital | 624,852 | 1,749,060 | (5,655,864) | 20,708,948 | ||||||
1,026,640 | (12,867,651) | 3,718,497 | (54,885,711) | |||||||
Interest paid | (17,281) | (76,573) | (64,789) | (185,333) | ||||||
Interest received | 55,813 | 294,018 | 247,985 | 512,379 | ||||||
Income taxes recovery (paid) | 166,375 | (1,505,677) | (3,194,711) | (6,452,848) | ||||||
1,231,547 | (14,155,883) | 706,982 | (61,011,513) | |||||||
Financing activities: | ||||||||||
Payment of dividends | – | (2,000,000) | (2,000,000) | (11,640,670) | ||||||
(2,000,000) | (2,000,000) | (11,640,670) | ||||||||
Investing activities: | ||||||||||
Purchase of property and equipment | 67,456 | – | 67,456 | (5,538) | ||||||
Purchase of intangible assets | – | – | – | (9,985) | ||||||
Decrease in restricted cash | 298,412 | 70,375 | 2,423,554 | 1,045,864 | ||||||
365,868 | 70,375 | 2,491,010 | 1,030,341 | |||||||
Effect of foreign exchange rate changes on | ||||||||||
cash and cash equivalents | (497,829) | (2,354,467) | (779,929) | (3,095,039) | ||||||
Increase (decrease) in cash and cash | ||||||||||
equivalents | 1,099,586 | (18,439,975) | 418,063 | (74,716,881) | ||||||
Cash and cash equivalents, | ||||||||||
beginning of period | 35,493,340 | 54,614,838 | 36,174,863 | 110,891,744 | ||||||
Cash and cash equivalents, | ||||||||||
end of period | $ | 36,592,926 | $ | 36,174,863 | $ | 36,592,926 | $ | 36,174,863 | ||
SOURCE Optiva Inc.
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