Optiva Inc. Reports Second Quarter 2019 Financial Results

TORONTO, May 8, 2019 /CNW/ - Optiva Inc. (TSX: OPT) (the "Company"), an innovative software provider of mission-critical, cloud-native, monetization solutions to leading communication service providers (CSPs) globally, released its financial results today for the quarter ended March 31, 2019.

Optiva Inc. Reports Second Quarter 2019 Financial Results (CNW Group/Optiva Inc.)

"In Q2, we focused on the execution of our Strategic Plan," said Danielle Royston, CEO of Optiva. "Our Customer Success program continues to improve with the new measurement coming in at 44%, up from 33%. Our planned R&D investment of $100 million resulted in our first customer choosing to upgrade and migrate their Optiva Charging Engine™ deployment to Google Cloud Platform. Finally, we continue to manage the business to cash flow break even so that we may invest in our bold vision to bring public cloud to telcos in 2019."

Second Quarter 2019 Financial Results

• Revenues declined by $3.0 million relative to the second quarter of fiscal 2018 due to a reduction in orders from customers, delay and loss of certain customers and lower third-party revenue.
  
  
• The Company's costs of revenue and operating expenses declined by $15.0 million relative to the second quarter of fiscal 2018 mainly due to lower cost of revenue, lower research and development costs, and lower general and administrative expenses.
  
  
• Second quarter 2019 research and development expenses included $2 million of investments in cloud innovation, which brings the total spent to date in fiscal 2019, to $5.2 million. In 2018, the Company invested $14.0 million in cloud innovation, bringing the total to $19.2 million so far. We expect to invest up to another $80.8 million in cloud innovation over the next two to three fiscal years.
   
  
• The net income for the quarter was at $0.5 million compared to a loss of $10.2 million last year mainly due to improved gross margin and a decrease in operating expenditures.
  
  
• The Company generated $1.1 million in cash from operating activities in the second quarter ended March 31, 2019.
  
  
• We continue to evaluate the legacy revenue base of the Company, and there is a potential risk that the run rate could be as low as $75m. The variable cost structure of the Company ensures we will remain cash flow break even to support the business.
  
  
• To accelerate the cloud opportunity, the Company is considering accessing additional sources of capital.

Business Highlights

• Customer Success Rate improved 11% from 33% for the measurement period of January through June 2018, to 44% for the measurement period of July through December 2018.
  
  
• The Company launches its Optiva Revenue Management Suite™, an end-to-end, best-of-suite BSS solution, on Google Cloud Platform (GCP).
  
  
• A pioneering connectivity and eSIM technology provider will upgrade their installation to Optiva Charging Engine™ on Google Cloud Platform with Google Cloud Spanner.
  
  
• A leading telco provider announced the new phase and commercial launch of its multi-play billing and charging transformation on Optiva Charging EngineTM.
  
  
• Optiva entered into an upgrade and multi-year support agreement with a leading telecom provider.

Conference Call

Optiva Inc. will hold an analyst call tomorrow, May 9, 2019, to discuss its Q2 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, May 9, 2019
Time: 8:30 a.m. Eastern Time 
Toll-free (Canada/US): 1-800-458-4121
International: 1-720-543-0206
Reference number: 2531956

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 leading the telco industry and its innovative customers around the world by offering next-generation software solutions to help them leverage today's digital technologies. Our portfolio of monetization products enables real-time billing, charging, policy management and user experience that are critical to our customers' growth and performance. When deployed in the cloud, Optiva™ solutions deliver the most impact for the best value. Our vision, market knowledge, analytical insights and unparalleled Customer Success Program ensure our customers are equipped to achieve their strategic business goals today and into the future. Established in 1999, Optiva Inc. can be found on the Toronto Stock Exchange (TSX: OPT). For more information, please go to 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 May 8, 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)
				March 31, 2019			September 30, 2018
Assets
Current assets:
	Cash and cash equivalents			$	33,794,182		$	36,174,863
	Trade accounts and other receivables			12,344,864			14,954,291
	Unbilled revenue			7,938,434			12,908,847
	Prepaid expenses			1,972,212			1,833,105
	Income taxes receivable			6,195,355			5,173,450
	Other assets			239,430			253,517
	Inventories			1,036,840			1,111,782
	Total current assets			63,521,317			72,409,855
Restricted cash				2,505,734			3,507,759
Long-term unbilled revenue				5,927,050			1,531,062
Property and equipment				161,574			541,861
Deferred income taxes				2,016,240			2,093,716
Investment tax credits				349,999			361,810
Intangible assets				15,705,368			18,044,530
Goodwill				32,271,078			32,271,078
Total assets				$	122,458,360		$	130,761,671
Liabilities and Shareholders' Deficit
Current liabilities:
	Trade payables			$	18,720,470		$	21,568,158
	Accrued liabilities			8,910,732			12,832,812
	Provisions			5,266,098			7,655,199
	Income taxes payable			543,562			500,489
	Deferred revenue			11,203,681			13,445,746
	Total current liabilities			44,644,543			56,002,404
Deferred revenue				1,236,017			1,512,863
Other liabilities				1,728,700			1,272,488
Pension and other long-term employment benefit plans				16,041,356			16,900,821
Provisions				5,257,088			5,662,009
Preferred shares				60,780,673			57,862,418
Series A Warrant				16,662,809			21,754,223
Deferred income taxes				120,000			120,000
Total liabilities				146,471,186			161,087,226
Shareholders' deficit:
	Share capital			250,123,804			248,680,325
	Standby Warrant			997,500			997,500
	Contributed surplus			12,491,291			13,386,978
	Deficit			(279,554,053)			(285,318,990)
	Accumulated other comprehensive loss			(8,071,368)			(8,071,368)
	Total shareholders' deficit			(24,012,826)			(30,325,555)
Total liabilities and shareholders' deficit				$	122,458,360		$	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				Six months ended
		March 31,				March 31,
		2019		2018		2019		2018
Revenue:
	Support and subscription	$	17,102,903	$	21,861,774	$	38,374,686	$	43,276,627
	Software licenses, services and other	7,839,349		6,032,735		14,184,328		19,018,318
		24,942,252		27,894,509		52,559,014		62,294,945
Cost of revenue		8,905,063		12,060,742		17,528,974		32,157,450
Gross profit		16,037,189		15,833,767		35,030,040		30,137,495
Operating expenses:
	Sales and marketing	3,585,689		2,334,535		6,293,197		5,841,366
	General and administrative	4,000,323		8,871,699		9,640,090		18,624,441
	Research and development	6,304,877		13,355,150		15,021,078		30,065,841
	Restructuring costs	1,085,628		2,263,207		1,681,591		49,230,545
		14,976,517		26,824,591		32,635,956		103,762,193
Income (loss) from operations		1,060,672		(10,990,824)		2,394,084		(73,624,698)
Foreign exchange gain (loss)		1,153,438		(241,413)		409,708		(861,573)
Finance income		59,058		111,304		147,187		154,202
Finance (cost) recovery		(1,218,079)		1,054,194		(57,660)		1,203,096
Income (loss) before income taxes		1,055,089		(10,066,739)		2,893,319		(73,128,973)
Income taxes (recovery):
	Current	569,659		202,107		1,797,543		1,576,745
	Deferred	6,923		(40,602)		78,896		(23,295)
		576,582		161,505		1,876,439		1,553,450
Total comprehensive income (loss)		$	478,507	$	(10,228,244)	$	1,016,880	$	(74,682,423)
Income (loss) per subordinate voting share:
	Basic	$	0.09	$	(1.95)	$	0.19	$	(14.27)
	Diluted	0.08		(1.95)		0.18		(14.27)
Weighted average number of subordinate voting shares:
	Basic	5,242,672		5,233,047		5,238,132		5,233,047
	Diluted	5,633,155		5,233,047		5,640,253		5,233,047

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,
				2019			2018	2019		2018
Cash provided by (used in):
Operating activities:
		Income (loss) for the period		$	478,507	$	(10,228,244)	$	1,016,880	$	(74,682,423)
		Adjustments for:
			Depreciation of property and equipment	15,889		786,808		125,350		2,304,505
			Amortization of intangible assets	1,163,170		2,336,506		2,301,783		4,630,322
			Finance income	(59,058)		(111,304)		(147,187)		(154,202)
			Finance costs (recovery)	1,218,079		(1,054,194)		57,660		(1,203,096)
			Pension	15,004		267,257		31,563		339,199
			Income tax expense	576,582		161,505		1,876,439		1,553,450
			Unrealized foreign exchange loss (gain)	(479,548)		184,892		(362,706)		67,913
			Share-based compensation	191,174		750,348		425,599		1,988,827
			Change in provisions	(485,867)		(15,105,017)		(2,794,022)		26,491,470
			Loss on disposal of property	251,308		–		292,316		110,632
			Change in non-cash operating working capital	(130,593)		9,531,567		(1,093,537)		11,546,864
				2,754,647		(12,479,876)		1,730,138		(27,006,539)
			Interest paid	(19,853)		(42,877)		(28,516)		(76,820)
			Interest received	51,496		111,288		138,623		157,290
			Income taxes paid	(1,733,880)		(505,570)		(2,705,020)		(2,777,230)
				1,052,410		(12,917,035)		(864,775)		(29,703,299)
Financing activities:
			Payment of dividends	–		(7,640,670)		(2,000,000)		(7,640,670)
				–		(7,640,670)		(2,000,000)		(7,640,670)
Investing activities:
			Purchase of property and equipment	–		(1,337)		–		(5,538)
			Purchase of intangible assets	–		–		–		(9,985)
			Decrease in restricted cash	520,384		899,087		1,002,025		886,672
				520,384		897,750		1,002,025		871,149
Effect of foreign exchange rate changes on
cash and cash equivalents				(137,878)		(183,118)		(517,931)		135,658
Increase (decrease) in cash and cash
equivalents				1,434,916		(19,843,073)		(2,380,681)		(36,337,162)
Cash and cash equivalents,
beginning of period				32,359,266		94,397,655		36,174,863		110,891,744
Cash and cash equivalents,
end of period				$	33,794,182	$	74,554,582	$	33,794,182	$	74,554,582

                                                                                                                                                                                   

SOURCE Optiva Inc.

Media Inquiries: Kristin Donelson, [email protected], T: [phone]; Investor Relations: Ali Mahdavi, [email protected]

Related Links

http://optiva.com/