Absolute Software Reports First Quarter Fiscal 2010 Results
Key Financial Metrics Q1-F2010 Q1-F2009 % change
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Sales Contracts reported(1.a) $19.2M $18.2M +5%
Sales Contracts in constant
dollars(1.b) $18.3M $18.2M +1%
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Cash from Operating Activities(1.a) $4.3M $9.1M -53%
Basic and diluted operating cash
per share(1.a)
Basic $0.09 $0.19 -50%
Diluted $0.09 $0.18 -50%
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Revenue $15.0M $12.1M +24%
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Net loss $(2.0M) $(2.2M) -7%
Loss per share (diluted) $(0.04) $(0.05) -20%
Q1-F2010 Highlights:
- Cash, cash equivalents & investments (including long-term) were
$73.9 million at September 30, 2009, up from $68.9 million at June
30, 2009
- Deferred revenue was $99.6 million at September 30, 2009, up from
$95.9 million at June 30, 2009
- Increased contracted subscription base by 13% to 4.3 million, from
3.8 million in Q1-F2009
- Expanded international operations with opening of a regional office
in Japan and launch of a Japanese offering
- Launched Computrace(R) LoJack(R) for Laptops for new Dell Inspiron
Mini Nickelodeon Edition notebook
- Launched Geofencing capabilities for mobile devices
- Announced Computrace support for Windows 7
"Results for the quarter were within the range of our expectations and despite the continued economic and currency headwinds we believe that we are on track to meet our fiscal 2010 guidance," said
Financial Review
Sales Contracts for Q1-F2010 were
Commercial sales were up 8% year-over-year in constant currency due primarily to strength in the education, government and healthcare markets, and offset in part by slower activity in the corporate market. Commercial sales to existing customers continued to show strength, generating sales of
Absolute deploys its services through a software-as-a-service ("SaaS") model. A feature of the SaaS model is its ability to generate significant operating cash flows. Absolute's cash from Operating Activities for Q1-F2010 totaled
"Global computer shipments are expected to grow 50% in the next four years meaning our addressable market opportunity is significant and growing; every computer sold worldwide is a potential customer," said
Revenue for Q1-F2010 was
The GAAP net loss in Q1-F2010 was
Absolute is in a strong financial position, with no debt and the financial resources necessary to fund its operating and capital requirements and to execute on its growth strategies. At
Guidance
Absolute previously issued F2010 financial guidance as follows:
- Sales Contracts of $80-86 million
- Cash from Operating Activities of $12-15 million
It is important to note that these targets were set assuming a U.S. dollar exchange rate of
Management's discussion and analysis (MD&A), consolidated financial statements and notes thereto for the first quarter 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 Software will hold a conference call to discuss the contents of this release on
A live audio Webcast of the conference call will be available at www.absolute.com and www.newswire.ca. 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 for 365 days at www.newswire.ca.
(1.a) Absolute refers to "Sales Contracts" (invoiced sales) as a revenue measure, "Cash from Operating Activities" as a profitability measure, and "Basic and Diluted Operating Cash per Share" (Cash from Operating Activities divided by the average shares outstanding for the period; diluted calculated using the treasury stock method) as an earnings per share measure. With the exception of Cash from Operating Activities, these are non-standard measures under Canadian Generally Accepted Accounting Principals. Absolute considers these measures to be key performance metrics as substantially all Sales Contracts in each quarter are deferred on the balance sheet, while the related costs are expensed in that same quarter. Refer to the Business Model section in our Management Discussion and Analysis for more details.
(1.b) Sales Contracts in constant currency refers to the Canadian dollar sales that would have been reported had the U.S. dollar exchange rate been unchanged from the rate in the prior year. With approximately 95% of Sales Contracts in U.S. dollars management believes this to be a more meaningful evaluation of the underlying performance of the business.
About Absolute
Absolute Software Corporation (TSX: ABT) is the leader in computer theft recovery, data protection and Secure Asset Tracking(R) solutions. Absolute Software provides organizations and consumers with solutions in the areas of regulatory compliance, data protection and theft recovery. The Company's Computrace(R) software is embedded in the firmware of computers by global leaders, including ASUS, Dell, Fujitsu, General Dynamics Itronix, HP, Lenovo, Motion, Panasonic and Toshiba. The Company has reselling partnerships with these OEMs and others, including Apple. For more information about Absolute Software and Computrace, visit www.absolute.com or http://blog.absolute.com/.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, a continuing, or increased need for data protection and theft recovery services in difficult economic times, the attainment of certain subscription targets and company performance, the increased adoption of the Company's data protection and theft deterrence products, the ability of the Company to achieve its $80-86 million Sales Contracts and $12-15 million Cash from Operating Activities FY 2010 targets, the ability of the Company to successfully execute on its growth strategies, including attracting new retail partners, the demand for its products continuing to increase, stable currency valuations and a sufficiently stable and healthy global economic and business environment, and other expectations, intentions and plans contained in this press release that are not historical fact. When used in this press release, the words "plan," "expect," "believe," and similar expressions generally identify forward-looking statements. These statements reflect Absolute'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 you should understand that Absolute cannot assure you that the forward-looking statements contained in this press release will be realized.
(C)2009 Absolute Software Corporation. All rights reserved. Computrace and Absolute are registered trademarks of Absolute Software Corporation. All other trademarks are property of their respective owners. Computrace U.S. patents No. 5,715,174, No. 5,764,892, No. 5,802,280, No. 5,896,497, No. 6,244,758, No. 6,269,392, No. 6,300,863, and No. 6,507,914. Canadian patents No. 2,284,806 and No. 2,205,370. U.K. patents No. EP793823 and No. GB2338101. German patent No. 695 125 34.6-08. Australian patent No. 699045.
ABSOLUTE SOFTWARE CORPORATION
Consolidated Balance Sheets
(Expressed in Canadian dollars) (Unaudited)
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As At
September 30, June 30,
2009 2009
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ASSETS
CURRENT
Cash and cash equivalents $ 48,167,419 $ 56,078,004
Short-term investments 1,572,973 8,743,861
Accounts receivable, net of allowance for
doubtful accounts of $1,846,000 (2009 -
$2,387,000) 11,750,674 15,570,780
Prepaid expenses and other 999,769 974,564
Current portion of deferred contract costs 3,709,740 3,609,944
Current portion of future income tax
assets 11,401,121 10,646,521
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77,601,696 95,623,674
INVESTMENTS 24,184,865 4,076,211
DEFERRED CONTRACT COSTS 3,833,090 3,765,717
PROPERTY AND EQUIPMENT 2,612,558 2,644,275
FUTURE INCOME TAX ASSETS 11,866,473 11,081,073
INTANGIBLE ASSET 95,831 127,775
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$ 120,194,513 $ 117,318,725
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LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 4,547,802 $ 6,775,466
Income tax payable $ 3,035,000 $ 1,575,000
Current portion of accrued warranty 5,508,798 5,288,520
Current portion of deferred revenue, net 48,688,514 46,577,880
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61,780,114 60,216,866
ACCRUED WARRANTY 6,212,048 5,963,650
DEFERRED REVENUE, NET 50,939,843 49,278,726
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118,932,005 115,459,242
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SHAREHOLDERS' EQUITY
Share capital and other equity 43,205,993 41,988,977
Contributed surplus 27,044,642 26,822,975
Deficit (68,988,127) (66,952,469)
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1,262,508 1,859,483
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$ 120,194,513 $ 117,318,725
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ABSOLUTE SOFTWARE CORPORATION
Consolidated Statements of Loss and Comprehensive Loss
Three months ended September 30, 2009 and 2008
(Expressed in Canadian dollars) (Unaudited)
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2009 2008
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REVENUE $ 15,047,060 $ 12,109,048
COST OF GOODS SOLD 3,754,413 3,323,685
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GROSS MARGIN 11,292,647 8,785,363
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EXPENSES
Sales and marketing 8,169,768 6,924,218
Research and development 1,629,108 1,702,988
General and administration 1,916,999 1,719,761
Investment tax credits (250,000) -
Stock-based compensation 586,461 1,560,327
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12,052,336 11,907,294
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OPERATING LOSS (759,689) (3,121,931)
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OTHER INCOME (EXPENSE)
Interest and bank charges 157,707 452,143
Foreign exchange gain (loss) (1,399,246) 916,148
Unrealized gain (loss) on investment 135,570 (424,089)
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(1,105,969) 944,202
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LOSS FOR PERIOD BEFORE INCOME TAXES (1,865,658) (2,177,729)
INCOME TAX EXPENSE (170,000) -
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NET LOSS AND COMPREHENSIVE LOSS FOR THE
PERIOD (2,035,658) (2,177,729)
DEFICIT, BEGINNING OF PERIOD (66,952,469) (56,752,618)
DEFICIT, END OF PERIOD $ (68,988,127) $ (58,930,347)
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BASIC AND DILUTED LOSS PER SHARE $ (0.04) $ (0.05)
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WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING, BASIC AND DILUTED 45,920,705 47,949,560
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ABSOLUTE SOFTWARE CORPORATION
Consolidated Statements of Cash Flows
Three months ended September 30, 2009 and 2008
(Expressed in Canadian dollars) (Unaudited)
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2009 2008
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OPERATING ACTIVITIES
Net loss for the period $ (2,035,658) $ (2,177,729)
Items not involving cash
Amortization of property and equipment 302,638 229,808
Stock-based compensation 586,461 1,560,327
Amortization of intangible asset 31,944 31,943
Future income taxes (1,540,000) -
Unrealized loss (gain) on investment (135,570) 424,089
Change in non-cash operating working
capital
Accounts receivable 3,820,106 5,815,815
Prepaid expenses and other (25,205) 82,987
Deferred contract costs (167,169) (223,249)
Accounts payable and accrued liabilities (2,227,664) (276,785)
Income tax payable 1,460,000 -
Accrued warranty 468,676 859,958
Deferred revenue 3,771,752 2,765,572
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CASH FROM OPERATING ACTIVITIES 4,310,311 9,092,736
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INVESTING ACTIVITIES
Property and equipment purchased (270,922) (705,899)
Proceeds from maturities of short term
investments 7,306,458 1,570,571
Purchases of short term investments - (704,876)
Purchases of investments (20,108,654) (2,438,554)
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CASH USED IN INVESTING ACTIVITIES (13,073,118) (2,278,758)
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FINANCING ACTIVITIES
Issuance of common shares 852,222 893,661
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CASH FROM FINANCING ACTIVITIES 852,222 893,661
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NET CASH (OUTFLOW) INFLOW (7,910,585) 7,707,639
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 56,078,004 46,460,299
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CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 48,167,419 $ 54,167,938
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%SEDAR: 00013849E
For further information: John Livingston, Chief Executive Officer ([email protected]) or Phone: (604) 730-9851; Rob Chase, Chief Financial Officer ([email protected]) or Phone: (604) 730-9851; Dave Mason, Investor Relations ([email protected]) or Phone: (416) 815-0700 x237; Website: http://www.absolute.com
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