Optiva Inc. Reports Second Quarter 2018 Financial Results

 - Strategic plan remains solidly on track -

TORONTO, May 9, 2018 /CNW/ - Optiva Inc. (TSX: OPT), an innovative software company that delivers mission-critical monetization and subscriber management solutions to leading communication service providers (CSPs) globally, reported results for its fiscal second quarter ended March 31, 2018. (All figures are in U.S. dollars unless otherwise stated.)

Second Quarter 2018 Financial Highlights

(Comparisons made between fiscal Q2FY2018 and fiscal Q2FY2017 results, unless otherwise noted)

• Revenue totaled $27.9 million compared to $34.4 million;
• Gross profit was $15.8 million (57% gross margin) compared to $20.1 million (59% gross margin);
• Recurring revenue was 81% of revenue, compared to 66%;
• Net loss was $10.2 million, or $0.04 loss per share compared to a net loss of $15.3 million, or $0.14 loss per share.

"In Q2, we continued to make important progress on our Strategic Plan," said Danielle Royston, CEO of Optiva. "We remain focused on driving improvements in Customer Success by investing in the delivery of our current projects and in R&D to advance our product offerings. We are executing on our restructuring plan, and we have made operational improvements with office closures, entity wind downs, and data center optimization. We remain on track and continue to make positive strides towards our Strategic Plan."

Second Quarter 2018 Business Highlights:

• Completed a data charging platform upgrade and expansion to position a Tier 1 CSP in Japan to meet their objective of supporting more than 35 million subscribers;
• Launched partnership with Google Cloud at the 2018 Mobile World Congress, becoming a Google Cloud Technology Partner and showcasing Optiva Charging Engine™ and Optiva Revenue Management Suite™;
• Transitioned out of 2 colocation data centres to Google Cloud Platform, creating a more scalable, secure, and cost-efficient cloud environment to support our customers; and
• Supported our effort to become a simpler, more efficient company via ongoing closure of 6 offices and 4 entities.

Please refer to the section regarding Forward-Looking Statements below which form an integral part of this release. These results, along with the annual audited consolidated financial statements and the Company's MD&A, are available on the Company's website at www.optiva.com and on SEDAR at www.sedar.com.

Conference Call

The Company will host a conference call tomorrow (May 10, 2018) to discuss its Q2 2018 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, May 10, 2018
Time: 8:30 a.m. Eastern time (5:30 a.m. Pacific time)
Dial-In Number: 1 [phone]
International: 1 [phone]
Conference ID#: 3989914

The webcast will be available for replay via Optiva's investor relations website (www.optiva.com) or https://bit.ly/2hlns3c.

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 until 12:00 midnight (EST) Thursday, May 17, 2018.

Toll-Free Replay Number: 1 [phone]
International Replay Number: 1 [phone]
Replay PIN: 3989914

Media Inquiries: [email protected]

About Optiva Inc.

Optiva Inc. monetizes today's digital world for communications service providers. Our portfolio of subscriber management software enables real-time billing, charging, policy management and user experience functionality that is mission-critical for our customers' growth and innovation. Available on-premise or in the cloud, Optiva™ solutions are designed to deliver the most impact for the best value. Our deep market knowledge and powerful analytical insights coupled with the Customer Success program ensure our customers have what they need to achieve their strategic business goals. Established in 1999, Optiva Inc. can be found on the Toronto Stock Exchange (TSX: OPT). For more information, please go to www.optiva.com.

Non-IFRS Measures

The Company reports "Recurring revenue," which is not a financial measure calculated and presented in accordance with International Financial Reporting Standards (IFRS), should not be considered in isolation or as a substitute to revenue. Recurring revenue includes revenue from support and maintenance agreements, long term service agreements, and term-based product licenses and software subscription.

Other companies (including competitors) may define recurring revenue differently. The Company presents recurring revenue because management believes this to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in Optiva's industry. Management uses this information internally for forecasting and budgeting. It may not be indicative of the historical operating results of Optiva nor is it intended to be predictive of potential future results.

Forward-Looking Statements 

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. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Persons reading this news release are cautioned that such information may not be appropriate for other purposes. Such forward-looking statements include statements respecting revenue visibility for the Fiscal 2018; the impact of the challenging macro environment on the Company's revenue; the impact of our restructuring initiatives and ongoing cost management efforts on our results in  next year; as well as statements regarding Optiva's future plans, objectives or performance for the current period and subsequent periods and regarding the markets for our products. These statements reflect current assumptions and expectations regarding future events and operating performance and speak only as of the date of this document. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially. Such factors include, but are not limited to, assumptions respecting : (i) the conversion of sales pipeline into orders and orders into revenue based on the extent and timing of historical conversion; (ii)  the anticipated mix of the sale of products and services of the Company and associated margin being consistent with that realized in the past; (iii) the ability of Optiva to bring new products and services to market and to increase sales; (iv) the strength of the Company's product development pipeline; (v) the estimated size and growth prospects of the markets Optiva seeks to address; (vi) the Company's competitive position in those markets and its ability to take advantage of future opportunities in those markets; (vii) the benefits of the Company's products and services to be realized by its customers; (viii) the demand for the Company's products and services and the extent of deployment of the Company's products and services; (ix) the Company's financial condition and capital requirements; * the stability of general economic and market conditions; (xi) currency exchange rates and interest rates; (xii) capital markets continuing to provide the Company with access to capital. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: the failure of demand for Optiva's products to develop as anticipated, the failure to obtain customer orders or meet customer requirements, the inability of Optiva's products to perform as expected, the inability of Optiva to achieve anticipated cost savings in the time frames and to the extent anticipated, unanticipated negative impacts on customer service or product development as a result of costs savings implemented, a material adverse change in the affairs of Optiva, and the factors discussed under the "Risk Factors" section of Optiva's most recently filed AIF which is available on SEDAR at www.sedar.com and on Optiva's web-site at www.optiva.com. 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)
			March 31,		September 30,
			2018		2017
Assets
Current assets:
	Cash and cash equivalents		$	74,554,582	$	110,891,744
	Trade accounts and other receivables			28,093,482		26,329,505
	Unbilled revenue			15,854,655		17,928,405
	Prepaid expenses			2,284,610		2,205,887
	Income taxes receivable			5,346,866		4,329,580
	Other assets			1,405,549		–
	Inventories			771,639		1,101,929
	Total current assets			128,311,383		162,787,050
Restricted cash				3,666,951		4,553,623
Property and equipment				980,364		3,457,611
Deferred income taxes				2,358,368		2,328,129
Investment tax credits				361,950		374,387
Other assets				–		1,353,968
Intangible assets				20,749,360		25,505,620
Goodwill				32,271,078		32,271,078
Total assets			$	188,699,454	$	232,631,466
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
	Trade payables		$	9,877,397	$	11,229,091
	Accrued liabilities			23,736,438		16,853,190
	Provisions			45,373,852		18,653,817
	Income taxes payable			209,492		322,403
	Deferred revenue			20,898,168		15,572,620
	Total current liabilities			100,095,347		62,631,121
Deferred revenue				1,244,602		894,409
Other liabilities				996,037		807,390
Pension and other long-term employment benefit plans				18,225,829		17,886,630
Provisions				596,061		824,626
Preferred shares				57,018,016		59,670,913
Warrant				23,142,791		29,622,772
Deferred income taxes				120,000		120,000
Total liabilities				201,438,683		172,457,861
Shareholders' equity (deficit):
	Share capital			248,680,325		248,680,325
	Standby Warrant			997,500		997,500
	Treasury stock			(141,917)		(141,917)
	Contributed surplus			13,596,043		11,826,454
	Deficit			(267,409,757)		(192,727,334)
	Accumulated other comprehensive loss			(8,461,423)		(8,461,423)
	Total shareholders' equity (deficit)			(12,739,229)		60,173,605
Total liabilities and shareholders' equity			$	188,699,454	$	232,631,466

OPTIVA INC.
Condensed Consolidated Interim Statements of Comprehensive Loss
(Expressed in U.S. dollars, except per share and share amounts)
(Unaudited)
					Three months ended				Six months ended
					March 31,				March 31,
					2018		2017		2018		2017
Revenue:
		Software, services and other		$	6,032,735	$	13,464,121	$	19,018,318	$	27,468,225
		Support and subscription			21,861,774		20,900,514		43,276,627		44,106,616
					27,894,509		34,364,635		62,294,945		71,574,841
Cost of revenue					12,060,742		14,199,295		32,157,450		30,330,824
Gross profit					15,833,767		20,165,340		30,137,495		41,244,017
Operating expenses:
		Sales and marketing			2,334,535		5,421,303		5,841,366		10,456,440
		General and administrative			8,871,699		7,726,710		18,624,441		15,448,655
		Research and development			13,355,150		9,337,205		30,065,841		18,487,518
		Restructuring costs			2,263,207		3,875,173		49,230,545		4,080,474
					26,824,591		26,360,391		103,762,193		48,473,087
Loss from operations					(10,990,824)		(6,195,051)		(73,624,698)		(7,229,070)
Foreign exchange loss					(241,413)		(1,078,585)		(861,573)		(665,869)
Other (expense) income					–		1,749,072		–		(1,450,928)
Finance income					111,304		45,278		154,202		230,205
Finance (cost) recovery					1,054,194		(8,693,398)		1,203,096		(9,381,845)
Loss before income taxes					(10,066,739)		(14,172,684)		(73,128,973)		(18,497,507)
Income taxes (recovery):
		Current			202,107		1,379,996		1,576,745		3,398,646
		Deferred			(40,602)		(289,375)		(23,295)		(278,405)
					161,505		1,090,621		1,553,450		3,120,241
Net Loss and comprehensive loss				$	(10,228,244)	$	(15,263,305)	$	(74,682,423)	$	(21,617,748)
Loss per subordinate voting share:
		Basic		$	(0.04)	$	(0.14)	$	(0.29)	$	(0.20)
		Diluted			(0.04)		(0.14)		(0.29)		(0.20)
Weighted average number of
	subordinate voting shares:
		Basic			261,652,353		108,338,825		261,652,353		108,297,726
		Diluted			261,652,353		108,338,825		261,652,353		108,297,726

OPTIVA INC.
Condensed Consolidated Interim Statements of Cash Flows
(Expressed in U.S. dollars)
(Unaudited)
					Three months ended				Six months ended
					March 31,				March 31,
					2018		2017		2018		2017
Cash provided by (used in):
Operating activities:
	Loss for the period			$	(10,228,244)	$	(15,263,305)	$	(74,682,423)	$	(21,617,748)
	Adjustments for:
		Depreciation of property and equipment			786,808		802,290		2,304,505		1,581,754
		Amortization of intangible assets			2,336,506		2,173,365		4,630,322		4,434,541
		Finance income			(111,304)		(45,278)		(154,202)		(230,205)
		Finance costs			(1,054,194)		8,693,398		(1,203,096)		9,381,845
		Pension			267,257		826,729		339,199		(42,672)
		Income tax expense			161,505		1,090,621		1,553,450		3,120,241
		Unrealized foreign exchange loss (gain)			184,892		209,596		67,913		1,396,611
		Share-based compensation			750,348		(682,951)		1,988,827		(738,927)
		Change in provisions			(15,105,017)		(2,781,453)		26,491,470		(11,654,874)
		Loss on disposal of property			–		–		110,632		–
		Change in non-cash operating working capital			9,531,567		(5,391,204)		11,546,864		(530,052)
					(12,479,876)		(10,368,192)		(27,006,539)		(14,899,486)
		Interest paid			(42,877)		(62,413)		(76,820)		(166,502)
		Interest received			111,288		26,391		157,290		212,197
		Income taxes paid			(505,570)		(1,669,346)		(2,777,230)		(4,243,774)
					(12,917,035)		(12,073,560)		(29,703,299)		(19,097,565)
Financing activities:
		Proceeds from exercise of stock options			–		201,690		–		201,690
		Interest paid on loans and borrowings			–		(1,245,961)		–		(2,330,904)
		Repayment of loans and borrowings			–		(52,000,000)		–		(52,750,000)
		Payment of dividends			(7,640,670)		–		(7,640,670)		–
		Issue of preferred shares and
			warrant net of transaction costs		–		79,861,542		–		79,861,542
					(7,640,670)		26,817,271		(7,640,670)		24,982,328
Investing activities:
		Purchase of property and equipment			(1,337)		(18,809)		(5,538)		(309,154)
		Purchase of intangible assets			–		–		(9,985)		–
		Decrease in restricted cash			899,087		195,642		886,672		1,055,759
					897,750		176,833		871,149		746,605
Effect of foreign exchange rate changes on
	cash and cash equivalents				(183,118)		291,287		135,658		(443,928)
Increase (decrease) in cash and cash
	equivalents				(19,843,073)		15,211,831		(36,337,162)		6,187,440
Cash and cash equivalents,
	beginning of period				94,397,655		28,056,119		110,891,744		37,080,510
Cash and cash equivalents,
	end of period			$	74,554,582	$	43,267,950	$	74,554,582	$	43,267,950

SOURCE Optiva Inc.

Media Inquiries: Kristin Donelson, T: 905-625-2190, [email protected]; Investor Relations: Lana Pisarenko, NATIONAL | Equicom, T: 416-586-1947, [email protected]