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Absolute Reports Fiscal 2019 Second Quarter Financial Results

BusinessWire - Mon Feb 4, 3:00PM CST

Absolute(TSX: ABT) ("Absolute" or the "Company"), the endpoint visibility and control company, today announced financial results for the three and six month periods ended December 31, 2018. All dollar figures are unaudited and stated in U.S. dollars, unless otherwise indicated.

"I am very pleased to have joined Absolute at such an exciting time for the company as well as in the broader endpoint security market," said Christy Wyatt, Chief Executive Officer at Absolute. "Endpoint resilience is an enterprise requirement that Absolute is uniquely positioned to address together with our strategic OEM partners. Our platform enables our unique resilience and intelligence capabilities that span across vendors and platforms to hundreds of millions of devices. These capabilities position us well for continued innovation to deliver against this critical customer need through focused execution."

Key Financial Metrics

-- Total revenue in Q2-F2019 was $24.4 million, representing a year-over-year increase of 5%. Year-to-date total revenue was $48.7 million, representing an increase of 5% over the prior year-to-date period.

-- Commercial recurring revenue in Q2-F2019 was $23.4 million, representing a year-over-year increase of 6%. Year-to-date commercial recurring revenue was $46.6 million, representing an increase of 6% over the prior year-to-date period.

-- The Annual Contract Value ("ACV") Base at December 31, 2018, was $95.3 million, representing an increase of 6% year-over-year and 2% sequentially.

-- The Enterprise(2) sector portion of the ACV Base increased 12% year-over-year and was up 3% sequentially. Enterprise customers represented 53% of the ACV Base at December 31, 2018.

-- The Government(2) sector portion of the ACV Base increased 17% year-over-year and was up 4% sequentially. Government customers represented 12% of the ACV Base at December 31, 2018.

-- The Education(2) sector portion of the ACV Base decreased 4% from the prior year and increased 1% sequentially. Education customers represented 35% of the ACV Base at December 31, 2018.

-- Net ACV Retention from existing Absolute customers was 101% during Q2-F2019, compared with 100% in Q2-F2018.

-- Incremental ACV from New Customers was $1.0 million in Q2-F2019 compared to $1.1 million in Q2-F2018.

-- Adjusted EBITDA in Q2-F2019 was $4.5 million, or 18% of revenue, compared with $2.4 million, or 10% of revenue, in Q2-F2018. Year-to-date Adjusted EBITDA was $8.6 million, or 18% of revenue, compared with $3.7 million, or 8% of revenue, in the prior year-to-date period.

-- Cash generated from operating activities in Q2-F2019 was $1.9 million compared with $3.2 million in Q2-F2018. Year-to-date cash from operating activities was $5.9 million compared with $5.3 million in the prior year-to-date period.

-- Absolute paid a quarterly dividend of CAD$0.08 per common share during Q2-F2019.

Products and Organizational Developments

-- In November 2018, Christy Wyatt was appointed as Chief Executive Officer, and subsequently joined the Board of Directors. Ms. Wyatt has a long history of scaling high-growth technology companies. Ms. Wyatt began her career as a software engineer and rose through the executive leadership ranks at a number of globally recognized technology companies. She has been named one of Inc. magazine's Top 50 Women Entrepreneurs in America, CEO of the Year by Information Security Global Excellence Awards, and one of Fierce Wireless's Most Influential Women in Wireless.

-- In December 2018, we executed a site license agreement with one of the largest K-12 school districts in the U.S. to enforce safe and secure desktop, laptop and tablet usage amongst its students and staff.

-- In December 2018, we completed Application Persistence for Dell Data Guardian and Dell Endpoint Security Suite Enterprise ("ESSE"), enabling Dell endpoint applications for data protection, advanced threat prevention and encryption to remain present and resilient. Application Persistence, which uses Absolute's patented Persistence technology, monitors the health of applications across a device ecosystem and remediates those that have been compromised.

-- In November 2018, we announced a new strategic partnership with VAIO Corporation to enhance endpoint security capabilities by integrating patented Absolute Persistence technology within the new VAIO Pro PA and VAIO A12 models. Together, VAIO and Absolute enable organizations to minimize risk and protect their data despite increasing mobility of remote workers and diminishing defense offered by the traditional network perimeter.

-- In December 2018, we completed a new GDPR Compliance report identifying sensitive GDPR endpoint data that automatically scans for identifiers from all 31 European Economic Area ("EEA") countries- providing last mile assurance for any lost or stolen devices, where proving absence of a breach is critical in the first 72 hours.

-- In November 2018, the Absolute Reach Library was expanded with new query and remediation scripts, bringing the total number of scripts available to 44 at December 31, 2018. These scripts enable customers to further automate their endpoint management, hygiene, and vulnerability remediation across every endpoint, on and off the corporate network. The new scripts include automated workflowsto conduct diagnostics across a fleet of endpoint devices, disable intrusive operating system processes, clear and restore tampered endpoint host files, reset administrative account passwords and modify administrative privileges.

-- During Q2-F2019, the Company's Board of Directors was reduced in size to six members.

Summary of Key Financial Metrics

-------------------------------------------------- -- -----------------     ------ ----- -- ----------------     ------ ----
USD Millions, except per share data                             Q2                                   YTD
                                                      ----------------------                ---------------------
                                                    F2019       F2018       Change        F2019      F2018       Change
-------------------------------------------------- ------      ------       ------       ------     ------       ------
Revenue
 Commercial recurring(3)                               $  23.4     $   22.1           6%     $ 46.6     $   43.8          6%
 Other                                                 $   1.0     $    1.1         (8%)     $  2.1     $    2.4        (9%)
 Total                                                 $  24.4     $   23.2           5%     $ 48.7     $   46.2          5%
Adjusted EBITDA(1)                                     $   4.5     $    2.4          88%     $  8.6     $    3.7        135%
 As a percentage of revenue                                18%          10%                     18%           8%
Net Income (Loss)                                      $   1.8     $  (0.3)         505%     $  3.0     $  (0.5)        613%
 Per share (basic)                                     $  0.04     $ (0.01)                  $ 0.07     $ (0.01)
 Per share (diluted)                                   $  0.04     $ (0.01)                  $ 0.07     $ (0.01)
Cash from operating activities                         $   1.9     $    3.2        (40%)     $  5.9     $    5.3         13%
Dividends paid                                         $   2.4     $    2.5         (3%)     $  4.9     $    5.0        (2%)
 Per share (CAD)                                       $  0.08     $   0.08           -      $ 0.16     $   0.16          -
Cash, cash equivalents, and short-term investments     $  34.2     $   33.4           2%
Total assets                                           $  90.2     $   92.3         (2%)
Deferred revenue                                       $ 131.7     $  136.3         (3%)
Common shares outstanding                                 40.6         40.1           1%
--------------------------------------------------       -----       ------        -----

Notes:

-- "Adjusted EBITDA" is used as a profitability measure. Please refer to the "Non-IFRS Measures" section of our Q2-F2019 MD&A for further discussion on this measure.

-- In Q1-F2019, we modified the allocation of some customer accounts between industry verticals, primarily the allocation of some quasi-governmental organizations from the Enterprise vertical to the Government vertical, which was previously included in the Public vertical. This reallocation was applied retrospectively, and has resulted in a revision to previously reported ACV Base and ACV Base growth figures for those verticals in historical periods. Please refer to the "Annual Contract Value Base" section of our Q2-F2019 MD&A.

-- Commercial recurring revenue represents revenue derived from Cloud Services (as defined in our Q2-F2019 MD&A) and recurring managed professional services, both of which are included as part of our ACV Base. Other revenue represents revenue derived from non-recurring professional services and ancillary product lines, including consumer products.

F2019 Corporate Outlook

The Company is updating its outlook for F2019 as follows:

-- The Company continues to expect revenue to be between $96.0 million and $99.0 million, representing 3% to 6% annual growth;

-- The Company is increasing its expectation for Adjusted EBITDA from between 14% and 17% of revenue to between 16% and 19% of revenue;

-- The Company continues to expect cash from operating activities to be between 10% and 14% of revenue; and

-- The Company continues to expect capital expenditures to be between $3.5 million and $4.0 million.

The foregoing expectations constitute forward-looking information and financial outlook and are qualified in their entirety by the cautionary statement below.

Quarterly Dividend

On January 21, 2019, the Company declared a quarterly dividend of CAD$0.08 per share on its common shares, payable in cash on February 27, 2019 to shareholders of record at the close of business on February 6, 2019.

Quarterly Filings

Management's Discussion and Analysis ("MD&A") and Interim Condensed Consolidated Financial Statements and the notes thereto for Q2-F2019 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-F2019 results on Monday, February 4, 2019, at 5:00 p.m. ET. All interested parties can join the call by dialing 647-427-7450 or 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 Monday, February 11, 2019, at midnight ET.To access the archived conference call, please dial 416-849-0833 or 1-855-859-2056 and enter the reservation code 7889928.

A live audio webcast of the conference call will be available at www.absolute.com and https://bit.ly/2RDIhBq. 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 that the Company believes are meaningful in the assessment of the Company's performance. All these metrics are nonstandard 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 Q2-F2019 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) ACV Base, Net ACV Retention and ACV from New CustomersAs the majority of the Company's customer contracts are sold under multiyear 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, as an indicator of its future revenues.

The 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 made up 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 EBITDAManagement believes that analyzing operating results exclusive of significant noncash 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 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 intangibles, amortization of property and equipment, and restructuring and reorganization charges and certain post-retirement benefits.

3) Adjusted Operating ExpensesA number of significant noncash or nonrecurring expenses are reported in the Company's Cost of Revenue and Operating Expenses.Management believes that analyzing these expenses exclusive of these noncash or nonrecurring 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 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 Q2-F2019 MD&A.

About Absolute

Absolute empowers more than 12,000 customers worldwide to protect devices, data, applications and users against theft or attack--both on and off the corporate network. With the industry's only tamper-proof endpoint visibility and control solution, Absolute allows IT to enforce asset management, security hygiene, and data compliance for today's remote digital workforces. Patented Absolute Persistence(TM) is embedded in the firmware of Dell, HP, Lenovo, and 24 other manufacturers' devices for vendor-agnostic coverage, tamper-proof resilience, and ease of deployment. See how it works atwww.absolute.comand follow us at@absolutecorp.

(C)2019 Absolute Software Corporation. All rights reserved. Absolute and Persistence are registered trademarks of Absolute Software Corporation. Other names or logos mentioned herein may be trademarks of Absolute or their respective owners. 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.

Forward-Looking Statements

This press release contains certain forward-looking statements and forward-looking information (collectively, "forward-looking statements") which relate to future events or Absolute's future business, operations, and financial performance and condition. Forward-looking statements normally contain words like "will", "intend", "anticipate", "could", "should", "may", "might", "expect", "estimate", "forecast", "plan", "potential", "project", "assume", "contemplate", "believe", "shall", "scheduled", and similar terms and, within this press release, include, without limitation, the information under the heading "F2019 Corporate Outlook" and any statements (express or implied) respecting: Absolute's future plans, strategies, and objectives; projected growth, revenues, margins, Adjusted EBITDA, profitability, expenses, cash from operating activities, capital expenditures, and earnings; existing and new product functionality and suitability; and Absolute's product and research and development strategies and plans. Forward-looking statements, including the F2019 Corporate Outlook, are provided for the purpose of presenting information about management's current expectations and plans relating to the future and allowing investors and others to get a better understanding of our anticipated financial position, results of operations, and operating environment. Readers are cautioned that such information may not be appropriate for other purposes.

Forward-looking statements are not guarantees of future performance, actions, or developments and are based on expectations, assumptions and other factors that management currently believes are relevant, reasonable, and appropriate in the circumstances. The material expectations, assumptions, and other factors used in developing the forward-looking statements set out herein include or relate to the following, without limitation: Absolute will be able to successfully execute its plans, strategies, and objectives; Absolute will be able to successfully manage cash flow, operating expenses, interest expenses, capital expenditures, and working capital and credit, liquidity, and market risks; Absolute will be able to leverage its past investments to support growth and increase profitability; Absolute will maintain and enhance its competitive advantages within its industry and certain markets; Absolute will keep pace with or outpace the growth, direction, and technological advancement in its industry; Absolute will be able to maintain and develop its partner and reseller network; Absolute's current and future OEM partners (if any) will continue to provide embedded firmware and distribution and resale support; Absolute's existing and new products will function as intended and will be suitable for the intended end users; Absolute will be able to design, develop, and release new products, features, and services and enhance its existing products and services; Absolute will be able to protect against the improper disclosure of data we may process, store, and/or manage; Absolute's revenues will not become subject to increased seasonality; future financing will be available to Absolute on favourable terms when and if required; Absolute will be in a financial position to buy back some of its shares and/or issue dividends in the future; fluctuations in applicable tax rates, foreign exchange rates, and interest rates will not have a material impact on Absolute; certain tax credits will remain or become available to Absolute; Absolute will be able to attract and retain key personnel; Absolute will be successful in its brand awareness and other marketing initiatives; Absolute will be able to successfully integrate businesses, intellectual property, products, personnel, and/or technologies that it may acquire (if any); Absolute will be able to maintain and enhance its intellectual property portfolio; Absolute's protection of its intellectual property is sufficient and its technology does not and will not materially infringe third party intellectual property rights; Absolute will be able to obtain any necessary third party licenses on favourable terms; Absolute will not become involved in material litigation; Absolute will not face any material unexpected costs related to product liability or warranties; foreign jurisdictions will not impose unexpected risks; and Absolute will maintain or enhance its accounting policies and standards and internal controls and over financial reporting.

Although management believes that the forward-looking statements herein are reasonable, actual results could be substantially different due to the risks and uncertainties associated with and inherent to Absolute's business, as more particularly described in the "Risk Factors" sections of Absolute's most recently filed Management's Discussion and Analysis and Annual Information Form, both of which are available at www.absolute.com and under Absolute's profile on www.sedar.com. Additional material risks and uncertainties applicable to the forward-looking statements herein include, without limitation, unforeseen events, developments, or factors causing any of the aforesaid expectations, assumptions, and other factors ultimately being inaccurate or irrelevant. Many of these factors are beyond the control of Absolute.

All forward-looking statements included in this press release are expressly qualified in their entirety by these cautionary statements. The forward-looking statements contained in this press release are made as at the date hereof and Absolute undertakes no obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by applicable securities laws.

ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of Financial Position
(Expressed in United States dollars) (Unaudited)
-------------------------------------------------------------------------------------------
                                                          December 31, 2018        June 30, 2018
                                                       ---------------------- ----------------------
ASSETS
CURRENT
   Cash and cash equivalents                                $   33,838,701         $   33,956,988
   Short-term investments                                          372,316                372,316
   Trade and other receivables                                  11,277,046             17,302,871
   Income tax receivable                                           338,294                345,228
   Prepaid expenses and other                                    2,235,465              2,455,977
   Contract acquisition assets - current            6,940,422              6,810,142
                                                              ------------           ------------
                                                                55,002,244             61,243,522
PROPERTY AND EQUIPMENT                                           5,161,887              5,962,829
DEFERRED INCOME TAX ASSETS                                      23,610,605             23,318,605
CONTRACT ACQUISITION ASSETS                                      5,370,862              5,405,987
GOODWILL                                                         1,100,000              1,100,000
                                                              ------------           ------------
                                                            $   90,245,598         $   97,030,943
                                                       ------ ------------    ------ ------------
LIABILITIES
CURRENT
   Trade and other payables                                 $   13,682,691         $   13,676,397
   Income taxes payable                                             24,100                407,226
   Accrued warranty                                                190,000                270,000
   Deferred revenue - current                      74,329,344             75,325,574
                                                              ------------           ------------
                                                                88,226,135             89,679,197
DEFERRED REVENUE                                                57,326,556             63,861,112
                                                              ------------           ------------
                                                               145,552,691            153,540,309
CONTINGENCIES
SHAREHOLDERS' DEFICIENCY
   Share capital                                                70,725,845             68,362,445
   Equity reserve                                               37,701,562             36,972,197
   Treasury shares                                                (359,973 )             (359,973 )
   Deficit                                                    (163,374,527 )         (161,484,035 )
                                                              ------------ -         ------------ -
                                                               (55,307,093 )          (56,509,366 )
                                                              ------------ -         ------------ -
                                                            $   90,245,598         $   97,030,943
                                                       ------ ------------    ------ ------------
ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of Operations and
Comprehensive Income (Loss)
Three and six months ended December 31, 2018 and 2017
(Expressed in United States dollars) (Unaudited)
---------------------------------------------------------------------------------------------------------------------------
                                                                       Three months ended                       Six months ended
                                                                          December 31,                            December 31,
                                                             --------------------------------        --------------------------------
                                                                    2018                2017                2018                2017
                                                                 ----------          ----------          ----------          ----------
REVENUE                                                        $ 24,446,301        $ 23,212,319        $ 48,749,866        $ 46,210,009
COST OF REVENUE                                                   3,179,779           3,652,728           6,468,183           7,215,495
                                                                 ----------          ----------          ----------          ----------
GROSS MARGIN                                                     21,266,522          19,559,591          42,281,683          38,994,514
OPERATING EXPENSES
  Sales and marketing                                             9,103,064          10,058,197          18,728,264          20,448,778
  Research and development                                        4,466,077           4,915,532           9,492,483          10,331,785
  General and administration                                      4,096,060           3,000,526           7,207,063           6,123,976
  Share-based compensation                                        1,189,284             375,641           2,508,809           1,203,000
                                                                 ----------          ----------          ----------          ----------
                                                                 18,854,485          18,349,896          37,936,619          38,107,539
                                                                 ----------          ----------          ----------          ----------
OPERATING INCOME                                                  2,412,037           1,209,695           4,345,064             886,975
OTHER (EXPENSE) INCOME
  Interest income, net                                               71,646              14,299             147,328              20,632
  Foreign exchange loss                                             (74,725 )           (24,216 )          (113,763 )          (110,246 )
                                                                 ---------- ---      ---------- ---      ---------- ---      ---------- ---
                                                                     (3,079 )            (9,917 )            33,565             (89,614 )
                                                                 ---------- ---      ---------- ---      ----------          ---------- ---
NET INCOME BEFORE INCOME TAXES                                    2,408,958           1,199,778           4,378,629             797,361
INCOME TAX EXPENSE                                                 (646,000 )        (1,549,000 )        (1,352,000 )        (1,291,000 )
                                                                 ---------- ---      ---------- ---      ---------- ---      ---------- ---
NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)              $  1,762,958        $   (349,222 )      $  3,026,629        $   (493,639 )
                                                             --- ----------      --- ---------- ---  --- ----------      --- ---------- ---
BASIC AND DILUTED INCOME (LOSS) PER SHARE                      $       0.04        $      (0.01 )      $       0.07        $      (0.01 )
                                                             --- ----------      --- ---------- ---  --- ----------      --- ---------- ---
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC      40,483,250          39,993,620          40,394,608          39,888,593
                                                                 ----------          ----------          ----------          ----------
ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statement of Changes in Shareholders'
Deficiency
(Expressed in United States dollars) (Unaudited)
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Share Capital
                                                                     ------------------------------------
                                                                         Number of          Amount           Equity reserve         Treasury             Deficit                Total
                                                                          Common                                                     Shares
                                                                          shares
                                                                     --------------   ----------------    ------------------    --------------    ------------------    -----------------
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 )
                                                                     ----------       --- ----------      ---- ----------       --- -------- ---  --- ------------ ---  --- ----------- ---
Shares issued on options exercised                                       73,625              491,979             (188,438 )             -                   -                   303,541
Shares issued under Employee Share Purchase Plan                         51,861              241,839                -                   -                   -                   241,839
Shares issued under Phantom Share Unit Plan                              12,966               79,182              (79,182 )             -                   -                     -
Shares issued under Performance and Restricted Share Unit plan           77,800              440,003             (588,655 )          139,470                -                    (9,182 )
Shares repurchased and cancelled under the Normal Course Issuer Bid     (49,800 )            (73,181 )              -                   -                   -                  (245,423 )
Share-based compensation                                                  -                    -                1,256,745               -                   -                 1,256,745
Dividends paid                                                            -                    -                    -                   -               (5,045,052 )         (5,045,052 )
Net income and total comprehensive income                                 -                    -                    -                   -                3,604,492            3,604,492
                                                                     ----------           ----------           ----------           --------          ------------          -----------
BALANCE, JUNE 30, 2018                                               40,224,231         $ 68,362,445         $ 36,972,197         $ (359,973 )      $ (161,484,035 )      $ (56,509,366 )
                                                                     ----------       --- ----------      ---- ----------       --- -------- ---  --- ------------ ---  --- ----------- ---
Shares issued on options exercised                                      145,475              974,560             (240,190 )             -                   -                   734,370
Shares issued under Employee Share Purchase Plan                         45,616              202,653                -                   -                   -                   202,653
Shares issued under Phantom Share Unit Plan                               7,872               43,646              (43,646 )             -                   -                     -
Shares issued under Performance and Restricted Share Unit plan          210,903            1,142,541           (1,142,541 )             -                   -                     -
Share-based compensation                                                  -                    -                2,155,742               -                   -                 2,155,742
Dividends paid                                                            -                    -                    -                   -               (4,917,121 )         (4,917,121 )
Net income and total comprehensive income                                 -                    -                    -                   -                3,026,629            3,026,629
                                                                     ----------           ----------           ----------           --------          ------------          -----------
BALANCE, DECEMBER 31, 2018                                           40,634,097         $ 70,725,845         $ 37,701,562         $ (359,973 )      $ (163,374,527 )      $ (55,307,093 )
                                                                     ----------       --- ----------      ---- ----------       --- -------- ---  --- ------------ ---  --- ----------- ---
ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of Cash Flows
Three and six months ended December 31, 2018 and 2017
(Expressed in United States dollars) (Unaudited)
----------------------------------------------------------------------------------------------------------------
                                                            Three months ended                       Six months ended
                                                               December 31,                            December 31,
                                                  --------------------------------        --------------------------------
                                                         2018                2017                2018                2017
                                                      ----------          ----------          ----------          ----------
OPERATING ACTIVITIES
Net income (loss)                                   $  1,762,958        $   (349,222 )      $  3,026,629        $   (493,639 )
 Items not involving cash
   Amortization of property and equipment                884,013             793,455           1,770,459           1,540,151
   Amortization of intangible assets                       -                  11,250               -                  47,500
   Amortization of contract acquisition assets         2,296,762           2,294,491           4,524,565           4,562,765
   Share-based compensation                            1,189,284             338,035           2,508,809           1,003,112
   Deferred income taxes                                (207,000 )           925,000            (292,000 )           (67,000 )
Change in non-cash working capital
   Trade and other receivables                           922,692             737,414           6,025,825           5,220,650
   Income tax receivable                                 (40,105 )            88,281               6,934             155,775
   Prepaid expenses and other                            249,902             479,158             220,512             296,465
   Contract acquisition assets incurred               (2,944,771 )        (1,990,064 )        (4,619,720 )        (4,024,510 )
   Trade and other payables                            2,273,672              90,409             737,630            (713,974 )
   Income tax payable                                    (15,262 )             -                (383,126 )             -
   Accrued warranty                                      (10,000 )            10,000             (80,000 )          (210,000 )
   Deferred revenue                                   (4,435,474 )          (232,958 )        (7,530,786 )        (2,060,647 )
                                                      ---------- ---      ---------- ---      ---------- ---      ---------- ---
CASH FROM OPERATING ACTIVITIES                         1,926,671           3,195,249           5,915,731           5,256,648
INVESTING ACTIVITIES
 Purchase of property and equipment                     (459,705 )          (348,902 )        (1,880,572 )        (1,265,290 )
                                                      ---------- ---      ---------- ---      ---------- ---      ---------- ---
CASH USED IN INVESTING ACTIVITIES                       (459,705 )          (348,902 )        (1,880,572 )        (1,265,290 )
FINANCING ACTIVITIES
 Dividends paid                                       (2,443,723 )        (2,506,999 )        (4,917,121 )        (5,022,852 )
 Issuance of common shares                               676,724             331,525             871,179           1,603,820
                                                      ----------          ----------          ----------          ----------
CASH USED IN FINANCING ACTIVITIES                     (1,766,999 )        (2,175,474 )        (4,045,942 )        (3,419,032 )
FOREIGN EXCHANGE EFFECT ON CASH                         (104,485 )            (5,900 )          (107,504 )           (15,939 )
                                                      ---------- ---      ---------- ---      ---------- ---      ---------- ---
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS        (404,518 )           664,973            (118,287 )           556,387
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD        34,243,219          32,402,507          33,956,988          32,511,093
                                                      ----------          ----------          ----------          ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD            $ 33,838,701        $ 33,067,480        $ 33,838,701        $ 33,067,480
                                                  --- ----------      --- ----------      --- ----------      --- ----------

https://cts.businesswire.com/ct/CT?id=bwnews&sty=20190204005708r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: https://www.businesswire.com/news/home/20190204005708/en/

SOURCE: Absolute

Media RelationsJill Rosenthal, InkHouseabsolute@inkhouse.com 781.966.4167Investor RelationsJoo-Hun KimMKR Groupjoohunkim@mkrir.com 212.868.6760

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