Optiva Inc. Reports Fourth Quarter 2019 Financial Results

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.

Media Inquiries: Kristin Donelson, T: 905-625-2190, [email protected]; Investor Relations: Ali Mahdavi, [email protected]

Related Links

http://optiva.com/