Absolute Reports Fiscal 2018 Second Quarter Financial Results

World News: . []

Absolute (TSX: ABT), the endpoint visibility and control company, today announced financial results for the three and six months ended December 31, 2017. All dollar figures are unaudited and stated in U.S. dollars, unless otherwise indicated.

“Our Q2 results reflected sustained growth in enterprise demand, along with expanded operating margins, demonstrating that our investments in product development and our market focus are generating meaningful results,” said Errol Olsen, Chief Financial Officer at Absolute. “We are very pleased by the strong reception to the Absolute 7 platform, which contributed to upgrades and expansion in existing customer accounts, as well as growing interest from prospective buyers.”

“The opportunity to tackle one of the biggest challenges in enterprise security – the dark endpoint – is where Absolute truly stands apart,” said Steve Munford, Interim Chief Executive Officer at Absolute. “By combining Absolute’s compelling endpoint visibility and control platform, a robust partner ecosystem and an experienced leadership team, the Company is extremely well-positioned as a leader and visionary in the endpoint security market. The quick response to help our customers understand and address the vulnerabilities posed by Spectre and Meltdown is a perfect example of the power of Absolute’s technology and the expertise of our team.”

Key Financial Metrics

  • Commercial recurring revenue in Q2-F2018 increased 5% year-over-year to $22.1 million. Year-to-date commercial recurring revenue increased 5% over the prior year-to-date period to $43.8 million.
  • Total revenue in Q2-F2018 was $23.2 million, representing a year-over-year increase of 3%. Year-to-date total revenue was $46.2 million, representing an increase of 3% over the prior year-to-date period.
  • The Commercial Annual Contract Value (“ACV”) Base at December 31, 2017 was $89.6 million, an increase of 4% year-over-year and 1% sequentially.
  • The enterprise portion of the ACV Base increased 12% year-over-year and was up 3% sequentially. Enterprise customers represented 52% of the December 31, 2017 ACV Base, compared to 48% in the prior year. The public sector portion of the ACV Base decreased 3% year-over-year and was down 1% sequentially.
  • Net ACV Retention from existing Absolute customers was 100% during Q2-F2018, consistent with 100% in Q2-F2017.
  • Incremental ACV from New Customers was $1.1 million in Q2-F2018 compared to $2.1 million in Q2-F2017.
  • Adjusted EBITDA in Q2-F2018 was $2.4 million, or 10% of revenue, compared to $1.7 million, or 8% of revenue, in Q2-F2017. For the year-to-date period, Adjusted EBITDA was $3.7 million, or 8% of revenue, compared to $3.6 million, or 8% of revenue in the prior year period.
  • Cash from operating activities in Q2-F2018 was $3.2 million compared to negative $1.2 million in Q2-F2017. For the year-to-date period, cash generated from operating activities was $5.3 million compared to $0.7 million in the prior year period. The prior year figures are net of reorganization and income tax payments of $0.8 million and $4.9 million in the quarterly and year-to-date periods, respectively.
  • Absolute paid a quarterly dividend of CAD$0.08 per common share during Q2-F2018.

Products and Organizational Developments

  • In October 2017, Absolute announced the appointment of Dean Ćoza as Executive Vice President of Products. Most recently the Senior Vice President of Product Management at FireEye, Mr. Ćoza brings to Absolute a track record of scaling and accelerating adoption of a broad range of security products that address customers’ endpoint security challenges. With 20 years of product strategy experience, Mr. Ćoza will lead our product management, product marketing, and user experience organizations.
  • In September 2017, the Company released the new Absolute 7 platform. Adoption of the next-generation Absolute platform has been strong, driven by the introduction of the Absolute Reach feature, a breakthrough in the automation of endpoint security hygiene. Absolute Reach enables customers to accelerate incident response and vulnerability remediation by executing custom query and remediation scripts across their entire endpoint populations, including devices outside the corporate network. The power of these capabilities was demonstrated in January 2018 when Absolute provided its customers with query and remediation scripts for Meltdown and Spectre within days of the announcement of these vulnerabilities.

Summary of Key Financial Metrics

                           
USD Millions, except per share data       Q2         YTD    
      F2018     F2017     Change     F2018     F2017     Change
Revenue        

Commercial recurring(1)

$ 22.1 $ 21.1 5% $ 43.8 $ 41.9 5%
Other $ 1.1 $ 1.4 (16%) $ 2.4 $ 3.0 (22%)
Total $ 23.2 $ 22.5 3% $ 46.2 $ 44.9 3%
 

Adjusted EBITDA(2)

$ 2.4 $ 1.7 38% $ 3.7 $ 3.6 2%
As a percentage of revenue 10% 8% 8% 8%
 
Net (Loss) Income $ (0.3) $ (1.8) 81% $ (0.5) $ (2.6) 81%
Per share (basic) $ (0.01) $ (0.05) $ (0.01) $ (0.07)
Per share (diluted) $ (0.01) $ (0.05) $ (0.01) $ (0.07)
 
Cash from (used in) operating activities $ 3.2 $ (1.2) 369% $ 5.3 $ 0.7 659%
 
Dividends paid $ 2.5 $ 2.3 8% $ 5.0 $ 4.7 6%
Per share (CAD) $ 0.08 $ 0.08

-

$ 0.16 $ 0.16 -
 
Cash, equivalents, and short-term investments $ 33.4 $ 37.7 (11%)
Total assets $ 92.3 $ 98.6 (6%)
Deferred revenue $ 136.3 $ 133.7 2%
 

Common shares outstanding

      40.1     39.0     3%                  
 

1. Commercial recurring revenue represents revenue derived from term licenses and recurring managed services, both of which are included as part of our Commercial ACV Base. Other revenue represents revenue derived from professional services and ancillary product lines, including consumer products.

2. “Adjusted EBITDA” is used as a profitability measure. Please refer to the “Non-IFRS Measures” section of the Company’s December 31, 2017 MD&A for further discussion on this measure.

Corporate Outlook

The Company is updating its outlook for F2018:

  • The Company is adjusting its revenue forecast to $93.0 million to $95.0 million from $94.0 million to $96.0 million, reflecting reduced expectations of revenue from non-recurring services and non-core businesses.
  • The Company is adjusting its guidance for Adjusted EBITDA and cash from operating activities to reflect the impact of a stronger Canadian dollar on the Company’s cost base. Adjusted EBITDA is expected to be in the range of 8% to 10% of revenue compared to previous guidance of 9% to 11% of revenue. Cash from operating activities is expected to be in the range of 8% to 12% of revenue compared to previous guidance of 9% to 12% of revenue.
  • Expected capital expenditures remain unchanged at $3.0 million to $3.5 million.

Quarterly Dividend

On January 19, 2018, the Company declared a quarterly dividend of CAD$0.08 per share on its common shares, payable in cash on February 23, 2018 to shareholders of record at the close of business on February 2, 2018.

Quarterly Filings

Management’s Discussion and Analysis (“MD&A”) and Interim Condensed Consolidated Financial Statements and the notes thereto for the fiscal quarter and year to date period ended December 31, 2017 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 will hold a conference call to discuss the Company’s Q2-F2018 results on Tuesday, February 13, 2018 at 5:00 p.m. ET. All interested parties can join the call by dialing 647-427-7450 or 1-888-231-8191. Please dial-in 15 minutes prior to the call to secure a line. The conference call will be archived for replay until Tuesday, February 20, 2018 at midnight ET. To access the archived conference call, please dial 416-849-0833 or 1-855-859-2056 and enter the reservation code 5883485.

A live audio webcast of the conference call will be available at www.absolute.com and http://bit.ly/2rNIoP5. 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 on the Company’s website for 90 days.

Non-IFRS Measures and Definitions
Throughout this press release, the Company refers to a number of measures which the Company believes are meaningful in the assessment of the Company’s performance. All these metrics are non-standard measures under International Financial Reporting Standards (“IFRS”), and are unlikely to be comparable to similarly titled measures reported by other companies. Readers are cautioned that the disclosure of these items is meant to add to, and not replace, the discussion of financial results or cash flows from operations as determined in accordance with IFRS. For a discussion of the purpose of these non-IFRS measures, please refer to the Company’s December 31, 2017 MD&A on SEDAR at www.sedar.com.

These measures, as well as their method of calculation or reconciliation to IFRS measures, are as follows:

1) Commercial ACV Base, Net ACV Retention, and ACV from New Customers
As the majority of the Company’s customer contracts are sold under multi-year term licenses, there is a significant lag between the timing of the Billing and the associated revenue recognition. As a result, the Company focuses on the aggregate annualized value of its subscriptions under contract, measured by Annual Contract Value (“ACV”), as an indicator of its future revenues.

Commercial ACV Base measures the amount of recurring annual revenue Absolute will receive from its commercial customers under contract at a point in time, and therefore is an indicator of the Company’s future revenue streams. Net ACV Retention measures the percentage increase or decrease in the Commercial ACV Base at the end of a period for the customers that comprised the Commercial ACV Base at the beginning of the same period. This metric provides insight into the effectiveness of Absolute’s customer retention and expansion functions. ACV from New Customers measures the addition to the Commercial ACV base from sales to new commercial customers during the quarter.

We believe that increases in the amount of ACV from New Customers, and improvement in the Company’s Net ACV Retention, will grow our Commercial ACV Base and, in turn, our future revenues.

2) Adjusted EBITDA
Management believes that analyzing operating results exclusive of significant non-cash items or items not controllable in the period provides a useful measure of the Company’s performance. The term Adjusted EBITDA refers to earnings before deducting interest and investment gains (losses), income taxes, amortization of acquired intangible assets and property and equipment, foreign exchange gain or loss, share-based compensation, and restructuring and reorganization charges and post-retirement benefits. The items excluded in the determination of Adjusted EBITDA are share-based compensation, amortization of acquired intangibles, amortization of property and equipment, and restructuring and reorganization charges and certain post-retirement benefits.

3) Adjusted Operating Expenses
A number of significant non-cash or non-recurring expenses are reported in the Company’s Cost of Revenue and Operating Expenses. Management believes that analyzing these expenses exclusive of these non-cash or non-recurring items provides a useful measure of the cash invested in the operations of its business. The items excluded in the determination of Adjusted Operating Expenses are share-based compensation, amortization of acquired intangible assets, amortization of property and equipment, and restructuring and reorganization charges and certain post-retirement benefits. For a description of the reasons these items are adjusted, please refer to the “Non-IFRS Measures” section of the December 31, 2017 MD&A.

About Absolute
Absolute set the new standard for endpoint visibility and control with self-healing endpoint security and always-connected IT asset management to protect devices, data, applications and users — on and off the network. Bridging the gap between security and IT operations, only Absolute gives enterprises visibility they can act on to protect every endpoint, remediate vulnerabilities, and ensure compliance in the face of insider and external threats. Absolute’s patented Persistence technology is already embedded in the firmware of more than one billion PC and mobile devices and trusted by over 15,000 customers worldwide. For the latest information, visit www.absolute.com and follow us at @absolutecorp.

Forward-Looking Statements

This press release contains forward-looking statements and financial outlook that involve risks and uncertainties. These forward-looking statements and financial outlook relate to, among other things, the expected performance, functionality and availability of the Company’s services and products, and other expectations, intentions and plans contained in this press release that are not historical facts. When used in this press release, the words "plan," "expect," "believe," and similar expressions generally identify forward-looking statements. These statements reflect the Company’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 readers of the press release should understand that Absolute cannot assure them that the forward-looking statements and financial outlook contained in this press release will be realized. Furthermore, the forward-looking statements and financial outlook contained in this press release are made as at the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements and financial outlook, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

©2018 Absolute Software Corporation. All rights reserved. Absolute and Persistence are registered trademarks of Absolute Software Corporation. For patent information, visit www.absolute.com/patents. The Toronto Stock Exchange has neither approved nor disapproved of the information contained in this news release.

 

ABSOLUTE SOFTWARE CORPORATION
Consolidated Statements of Financial Position
(Expressed in United States dollars) (Unaudited)

 
     

December 31, 2017

      June 30, 2017
 
ASSETS
CURRENT
Cash and cash equivalents

$

33,067,480

$ 32,511,093
Short-term investments 367,790 366,789
Trade and other receivables 14,240,222 19,460,872
Income taxes receivable 251,015 83,487
Prepaid expenses and other   2,123,416           2,419,881  
50,049,923 54,842,122
PROPERTY AND EQUIPMENT 5,552,462 6,304,152
DEFERRED INCOME TAX ASSETS 22,353,804 22,286,804
INTANGIBLE ASSETS AND GOODWILL   14,308,763           14,894,518  
$ 92,264,952         $ 98,327,596  
 
LIABILITIES
CURRENT
Trade and other payables $ 11,856,321 $ 13,079,456
Income taxes payable 323,303 -
Accrued warranty 360,000 570,000
Deferred revenue – current   71,540,962           72,361,648  
84,080,586 86,011,104
DEFERRED REVENUE   64,800,692           66,040,653  
148,881,278 152,051,757
 
CONTINGENCIES
SHAREHOLDERS’ DEFICIENCY
Share capital 67,182,623 64,875,130
Equity reserve 36,571,727 36,254,893
Treasury shares (499,443 ) (499,443 )
Deficit   (159,871,233 )         (154,354,741 )
  (56,616,326 )         (53,724,161 )
$ 92,264,952         $ 98,327,596  
 
 

ABSOLUTE SOFTWARE CORPORATION
Consolidated Statements of Operations and Comprehensive (Loss) Income
Three and six months ended December 31, 2017 and 2016
(Expressed in United States dollars) (Unaudited)

 
     

Three months ended
December 31,

   

Six months ended
December 31,

  2017         2016         2017         2016  
           
 
REVENUE $ 23,212,319 $ 22,450,143 $ 46,210,009 $ 44,935,007
 
COST OF REVENUE   3,652,728         3,955,548         7,215,495         7,462,092  
 
GROSS MARGIN 19,559,591 18,494,595 38,994,514 37,472,915
 
OPERATING EXPENSES
Sales and marketing 10,058,197 11,056,328 20,448,778 22,414,917
Research and development 4,915,532 4,897,163 10,331,785 9,253,788
General and administration 3,000,526 3,464,838 6,123,976 6,425,475
Share-based compensation   375,641         1,219,924         1,203,000         2,217,475  
  18,349,896         20,638,253         38,107,539         40,331,655  
 
OPERATING INCOME (LOSS) 1,209,695 (2,143,658 ) 886,975 (2,838,740 )
 
OTHER (EXPENSE) INCOME
Interest income, net 14,299 5,647 20,632 47,586
Foreign exchange loss   (24,216 )       (49,735 )       (110,246 )       (29,245 )
  (9,917 )       (44,088 )       (89,614 )       18,341  
 
NET INCOME (LOSS) BEFORE INCOME TAXES 1,199,778 (2,187,746 ) 797,361 (2,820,399 )
 
INCOME TAX (EXPENSE) RECOVERY   (1,549,000 )       345,000         (1,291,000 )       188,000  
 
NET LOSS AND COMPREHENSIVE LOSS $ (349,222 )     $ (1,842,746 )     $ (493,639 )     $ (2,632,399 )
 
BASIC AND DILUTED LOSS PER SHARE $ (0.01 )     $ (0.05 )     $ (0.01 )     $ (0.07 )
 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC   39,993,620         39,019,022         39,888,593         38,992,040  
 
 

ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statement of Changes in Shareholders’ Deficiency
(Expressed in United States dollars) (Unaudited)

                     
Share Capital

Number of
Common
shares

    Amount     Equity reserve    

Treasury
Shares

    Deficit     Total
   
BALANCE, JUNE 30, 2016 38,881,307 $ 58,607,382 $ 36,732,175 $ - $ (139,049,869 ) $ (43,710,312 )
Shares issued on options exercised 225,925 1,290,359 (430,275 ) - - 860,084
Shares issued under Employee Share Purchase Plan 42,126 190,610 - - - 190,610
Shares issued under Phantom Share Unit Plan 6,844 46,851 (46,851 ) - - -
Shares repurchased and cancelled under the Normal Course Issuer Bid (132,400 ) (195,522 ) - - (416,520 ) (612,042 )
Shares committed to be repurchased under the Normal Course Issuer Bid - (218,116 ) - - (486,702 ) (704,818 )
Treasury shares repurchased under the Normal Course Issuer Bid - - - (666,546 ) - (666,546 )
Share-based compensation - - 2,217,475 - - 2,217,475
Dividends paid - - - - (4,748,878 ) (4,748,878 )
Net loss and total comprehensive loss -         -         -         -         (2,632,399 )       (2,632,399 )
BALANCE, DECEMBER 31, 2016 39,023,802       $ 59,721,564       $ 38,472,524       $ (666,546 )     $ (147,334,368 )     $ (49,806,826 )
Shares issued on options exercised 435,913 2,749,422 (882,920 ) - - 1,866,502
Shares issued under Employee Share Purchase Plan 42,329 170,867 - - - 170,867
Shares issued under Phantom Share Unit Plan 320,301 2,234,355 (2,234,355 ) - - -
Shares issued under Performance and Restricted Share Unit plan 7,104 35,132 (35,132 ) - - -
Shares repurchased and cancelled under the Normal Course Issuer Bid (147,700 ) (36,210 ) - - 26,375 (9,835 )
Treasury shares repurchased under the Normal Course Issuer Bid - - - 167,103 - 167,103
Share-based compensation - - 934,776 - - 934,776
Dividends paid - - - - (4,727,972 ) (4,727,972 )
Net loss and total comprehensive loss -         -         -         -         (2,318,776 )       (2,318,776 )
BALANCE, JUNE 30, 2017 39,681,749       $ 64,875,130       $ 36,254,893       $ (499,443 )     $ (154,354,741 )     $ (53,724,161 )
Shares issued on options exercised 261,125 1,727,195 (380,068 ) - - 1,347,127
Shares issued under Employee Share Purchase Plan 47,616 198,875 - - - 198,875
Shares issued under Phantom Share Unit Plan 37,846 218,604 (218,604 ) - - -
Shares issued under Performance and Restricted Share Unit plan 29,443 162,819 (162,819 ) - - -
Share-based compensation - - 1,078,325 - - 1,078,325
Dividends paid - - - - (5,022,853 ) (5,022,853 )
Net loss and total comprehensive loss -         -         -         -         (493,639 )       (493,639 )
BALANCE, DECEMBER 31, 2017 40,057,779       $ 67,182,623       $ 36,571,727       $ (499,443 )     $ (159,871,233 )     $ (56,616,326 )
 
 

ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of Cash Flows
Three and six months ended December 31, 2017 and 2016
(Expressed in United States dollars) (Unaudited)

         

Three months ended
December 31,

   

Six months ended
December 31,

        2017         2016         2017         2016  
       
OPERATING ACTIVITIES
Net loss $ (349,222 ) $ (1,842,746 ) $ (493,639 ) $ (2,632,399 )
Items not involving cash
Amortization of property and equipment 793,455 717,321 1,540,151 1,399,769
Amortization of acquired intangible assets 11,250 34,333 47,500 84,409
Amortization of intangible assets – contract costs and brand 2,294,491 2,237,148 4,562,765 4,485,758
Share-based compensation 338,035 1,215,437 1,003,112 2,212,988
Deferred income taxes 925,000 226,000 (67,000 ) 107,000
Amortization of investment premium - 513,236 - 466,885
Change in non-cash working capital
Trade and other receivables 737,414 (1,453,667 ) 5,220,650 7,326,171
Income taxes receivable 88,281 554,603 155,775 123,567
Prepaid expenses and other 479,158 (2,158,577 ) 296,465 (4,032,572 )
Intangible assets – contract costs and brand additions (1,990,064 ) 1,463,039 (4,024,510 ) (203,268 )
Trade and other payables 90,409 (1,212,616 ) (713,974 ) (4,423,874 )
Accrued warranty 10,000 - (210,000 ) 30,000
Deferred revenue   (232,958 )       (1,480,486 )       (2,060,647 )       (4,251,459 )
 
CASH FROM (USED IN) OPERATING ACTIVITIES 3,195,249 (1,186,975 ) 5,256,648 692,975
INVESTING ACTIVITIES
Purchase of property and equipment (348,902 ) (1,041,818 ) (1,265,290 ) (3,082,984 )
Income taxes paid on disposal of business unit - - - (2,623,890 )
Proceeds from investments   -         23,355,000         -         23,355,000  
 
CASH (USED IN) FROM INVESTING ACTIVITIES (348,902 ) 22,313,182 (1,265,290 ) 17,648,126
FINANCING ACTIVITIES
Repurchase of common shares for cancellation - (612,040 ) - (612,040 )
Dividends paid (2,506,999 ) (2,316,379 ) (5,022,852 ) (4,748,878 )
Purchase of treasury shares - - - -
Issuance of common shares   331,525         451,026         1,603,820         973,048  
 
CASH USED IN FINANCING ACTIVITIES (2,175,474 ) (2,477,393 ) (3,419,032 ) (4,387,870 )
 
FOREIGN EXCHANGE EFFECT ON CASH   (5,900 )       (45,866 )       (15,939 )       19,986  
 
INCREASE IN CASH AND CASH EQUIVALENTS 664,973 18,602,948 556,387 13,973,217
 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   32,402,507         18,463,121         32,511,093         23,092,852  
 
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 33,067,480       $ 37,066,069       $ 33,067,480       $ 37,066,069  
 

More news and information about Absolute

Published By:

Business Wire: 21:00 GMT Tuesday 13th February 2018

Published: .

Search for other references to "absolute" on SPi News


Previous StoryNext Story

SPi News is published by Sector Publishing Intelligence Ltd.
© Sector Publishing Intelligence Ltd 2018. [Admin Only]
 
Sector Publishing Intelligence Ltd.
Ground Floor Offices, Little Keep Gate, Barrack Road, Dorchester, Dorset DT1 1AH
Registered in England and Wales number 0751938.
 
Privacy Policy | Terms and Conditions | Contact Us
 

Advertising on SPi News: Information For Advertisers