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07.08.2019 23:54:00
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Optiva Inc. Reports Third Quarter 2019 Financial Results
TORONTO, Aug. 7, 2019 /CNW/ - Optiva Inc. (TSX:OPT), 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 June 30, 2019.
Q3 Fiscal 2019 Highlights | Three Months Ended | Nine Months Ended | |||
($ US Thousands, except per share information) | Jun 30, | Jun 30, | |||
(Unaudited) | 2019 | 2018 | 2019 | 2018 | |
Revenue | 24,670 | 32,034 | 77,229 | 94,329 | |
Net income (loss) | 3,069 | (3,540) | 4,086 | (78,223) | |
Basic Earnings (loss) Per Share | $ 0.58 | $(0.68) | $ 0.78 | $(14.95) | |
Cash generated from (used in) operating activities | 340 | (17,153) | (525) | (46,856) | |
Total cash, including restricted cash | 36,876 | 58,193 | 36,876 | 58,193 | |
"In Q3 we continued to focus on our advancement to the cloud - continuing our investment in our products and working with customers to position them for adoption of the cloud," said Danielle Royston, CEO of Optiva. "We have started this period's review of Customer Success and anticipate this metric to continue on its upward trajectory. We continue to manage the business cash flow break even so we may invest in our exciting vision to bring telco to the cloud in 2019."
Third Quarter 2019 Financial Results
- Revenues were lower by $7.4 million relative to the third quarter of fiscal 2018, primarily due to the discontinuation of support to customers who had previously notified Optiva of their exit, and in some limited cases, a delay in renewal by existing customers, as well as fewer software implementations.
- Optiva's cost of revenue and operating expenses declined by $18.7 million relative to the third quarter of 2018 as a result of Optiva's ongoing focus on operational efficiencies, cost management and lower research and development expenses.
- Third quarter 2019 research and development expenses included $1.6 million of investments in cloud innovation, which brings the total spent to date in fiscal 2019, to $6.8 million. Since the beginning of 2018, Optiva has invested a total of $20.8 million in cloud innovation and will continue to spend up to another $80 million over the course of the next two to three years, as per its stated cloud-driven growth strategy.
- Optiva's research and development investments and efforts have resulted in higher efficiencies in project deployments and support and ultimately achieving better results in Customer Success metrics.
- Net income for the quarter increased to $3.1 million compared to a net loss of $3.5 million during the corresponding period in 2018. The significant improvement in earnings was mainly due to lower operating expenses.
- Optiva generated $0.3 million in cash from operating activities in the third quarter of 2019.
- Continued focus and investments in cloud innovation remain at the forefront of the Company's growth strategy.
Business Highlights
- Optiva completed a major BSS upgrade for a Tier 1 APAC telecommunications provider, which utilizes Optiva Charging Engine™, and is one of the world's largest operators with a base of more than 400 million subscribers.
- As part of building the cloud sales pipeline, Optiva has completed 15 TCO reviews with operators to show possible savings by moving to the cloud.
- Vodacom Tanzania expanded its partnership with Optiva for utilization of Optiva Charging Engine™ and Policy Control (PCRF). The multiyear agreement enables Vodacom Tanzania to upgrade its current platform and support and take another step toward leveraging Optiva's innovative cloud-native BSS architecture.
- Optiva hosted a summit on cloud migration at TM Forum Digital Transformation World and highlighted that telco public cloud usage is predicted to double in 2019, according to a recent research report by industry analyst firm Ovum, entitled "Understanding the Business Value Of Re-architecting Core Applications on the Public Cloud."
Conference Call
Optiva Inc. will hold an analyst call tomorrow, August 8, 2019, to discuss its Q3 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, August 8, 2019
Time: 8:30 a.m. Eastern Time
Toll-free (Canada/US): 1-888-204-4368
International: 1-720-543-0214
Reference number: 7726503
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/).
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)
June 30, | September 30, | ||||
2019 | 2018 | ||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 35,493,340 | $ | 36,174,863 | |
Trade accounts and other receivables | 12,939,583 | 14,954,291 | |||
Unbilled revenue | 8,909,774 | 12,908,847 | |||
Prepaid expenses | 2,398,930 | 1,833,105 | |||
Income taxes receivable | 6,144,676 | 5,173,450 | |||
Other assets | 222,053 | 253,517 | |||
Inventories | 841,237 | 1,111,782 | |||
Total current assets | 66,949,593 | 72,409,855 | |||
Restricted cash | 1,382,617 | 3,507,759 | |||
Long-term unbilled revenue | 5,889,708 | 1,531,062 | |||
Property and equipment | 128,815 | 541,861 | |||
Deferred income taxes | 2,035,358 | 2,093,716 | |||
Investment tax credits | 356,628 | 361,810 | |||
Intangible assets | 14,541,991 | 18,044,530 | |||
Goodwill | 32,271,078 | 32,271,078 | |||
Total assets | $ | 123,555,788 | $ | 130,761,671 | |
Liabilities and Shareholders' Deficit | |||||
Current liabilities: | |||||
Trade payables | $ | 15,522,395 | $ | 21,568,158 | |
Accrued liabilities | 8,217,413 | 12,832,812 | |||
Provisions | 4,068,159 | 7,655,199 | |||
Income taxes payable | 587,755 | 500,489 | |||
Deferred revenue | 12,384,251 | 13,445,746 | |||
Total current liabilities | 40,779,973 | 56,002,404 | |||
Deferred revenue | 808,690 | 1,512,863 | |||
Other liabilities | 2,238,658 | 1,272,488 | |||
Pension and other long-term employment benefit plans | 16,176,279 | 16,900,821 | |||
Provisions | 5,283,969 | 5,662,009 | |||
Preferred shares | 63,321,826 | 57,862,418 | |||
Series A Warrant | 16,199,953 | 21,754,223 | |||
Deferred income taxes | 120,000 | 120,000 | |||
Total liabilities | 144,929,348 | 161,087,226 | |||
Shareholders' deficit: | |||||
Share capital | 250,893,223 | 248,680,325 | |||
Standby Warrant | 997,500 | 997,500 | |||
Contributed surplus | 11,292,451 | 13,386,978 | |||
Deficit | (276,485,366) | (285,318,990) | |||
Accumulated other comprehensive loss | (8,071,368) | (8,071,368) | |||
Total shareholders' deficit | (21,373,560) | (30,325,555) | |||
Total liabilities and shareholders' deficit | $ | 123,555,788 | $ | 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 | Nine months ended | |||||||||
June 30, | June 30, | |||||||||
2019 | 2018 | 2019 | 2018 | |||||||
Revenue: | ||||||||||
Support and subscription | $ | 17,905,010 | $ | 21,676,078 | $ | 56,279,696 | $ | 64,952,705 | ||
Software licenses, services and other | 6,765,005 | 10,358,089 | 20,949,333 | 29,376,407 | ||||||
24,670,015 | 32,034,167 | 94,329,112 | ||||||||
77,229,029 | ||||||||||
Cost of revenue | 8,093,255 | 9,676,473 | 25,622,229 | 41,833,923 | ||||||
Gross profit | 16,576,760 | 22,357,694 | 51,606,800 | 52,495,189 | ||||||
Operating expenses: | ||||||||||
Sales and marketing | 2,276,621 | 3,116,201 | 8,569,818 | 8,957,567 | ||||||
General and administrative | 4,538,587 | 5,928,544 | 14,178,677 | 24,552,985 | ||||||
Research and development | 3,810,322 | 17,344,922 | 18,831,400 | 47,410,763 | ||||||
Restructuring costs | 209,366 | 1,552,824 | 1,890,957 | 50,783,369 | ||||||
10,834,896 | 27,942,491 | 43,470,852 | 131,704,684 | |||||||
Income (loss) from operations | 5,741,864 | (5,584,797) | 8,135,948 | (79,209,495) | ||||||
Foreign exchange gain | 97,210 | 2,518,468 | 506,918 | 1,656,895 | ||||||
Finance income | 212,883 | 116,665 | 360,070 | 270,867 | ||||||
Finance (cost) recovery | (2,184,689) | 1,149,825 | (2,242,349) | 2,352,921 | ||||||
Income (loss) before income taxes | 3,867,268 | (1,799,839) | 6,760,587 | (74,928,812) | ||||||
Income taxes (recovery): | ||||||||||
Current | 824,223 | 1,726,038 | 2,621,766 | 3,302,783 | ||||||
Deferred | (25,642) | 14,234 | 53,254 | (9,061) | ||||||
798,581 | 1,740,272 | 2,675,020 | 3,293,722 | |||||||
Total comprehensive income (loss) | $ | 3,068,687 | $ | (3,540,111) | $ | 4,085,567 | $ | (78,222,534) | ||
Income (loss) per subordinate voting share: | ||||||||||
Basic | $ | 0.58 | $ | (0.68) | $ | 0.78 | $ | (14.95) | ||
Diluted | 0.54 | (0.68) | 0.72 | (14.95) | ||||||
Weighted average number of | ||||||||||
Basic | 5,305,386 | 5,233,047 | 5,257,696 | 5,233,047 | ||||||
Diluted | 5,635,914 | 5,233,047 | 5,637,786 | 5,233,047 | ||||||
OPTIVA INC.
Condensed Consolidated Interim Statements of Cash Flows
(Expressed in U.S. dollars)
(Unaudited)
Three months ended | Nine months ended | |||||||||
June 30, | June 30, | |||||||||
2019 | 2018 | 2019 | 2018 | |||||||
Cash provided by (used in): | ||||||||||
Operating activities: | ||||||||||
Income (loss) for the period | $ | 3,068,687 | $ | (3,540,111) | $ | 4,085,567 | $ | (78,222,534) | ||
Adjustments for: | ||||||||||
Depreciation of property and equipment | 33,077 | 24,344 | 158,427 | 2,328,849 | ||||||
Amortization of intangible assets | 1,163,192 | 1,526,153 | 3,464,975 | 6,156,475 | ||||||
Finance income | (212,883) | (116,665) | (360,070) | (270,867) | ||||||
Finance costs (recovery) | 2,184,689 | (1,149,825) | 2,242,349 | (2,352,921) | ||||||
Pension | 15,004 | (940,537) | 46,567 | (601,338) | ||||||
Income tax expense | 798,581 | 1,740,272 | 2,675,020 | 3,293,722 | ||||||
Unrealized foreign exchange loss (gain) | (393,196) | 630,967 | (755,902) | 698,880 | ||||||
Share-based compensation | 662,805 | 304,332 | 1,088,404 | 2,293,159 | ||||||
Change in provisions | (1,171,058) | (21,209,638) | (3,965,080) | 5,281,832 | ||||||
Loss on disposal of property and equipment | – | 306,163 | 292,316 | 416,795 | ||||||
Change in non-cash operating working capital | (5,187,179) | 7,413,024 | (6,280,716) | 18,959,888 | ||||||
961,719 | (15,011,521) | 2,691,857 | (42,018,060) | |||||||
Interest paid | (18,992) | (31,940) | (47,508) | (108,760) | ||||||
Interest received | 53,549 | 61,071 | 192,172 | 218,361 | ||||||
Income taxes paid | (656,066) | (2,169,941) | (3,361,086) | (4,947,171) | ||||||
340,210 | (17,152,331) | (524,565) | (46,855,630) | |||||||
Financing activities: | ||||||||||
Payment of dividends – | – | (2,000,000) | (2,000,000) | (9,640,670) | ||||||
(2,000,000) | (2,000,000) | (9,640,670) | ||||||||
Investing activities: | ||||||||||
Purchase of property and equipment | – | – | – | (5,538) | ||||||
Purchase of intangible assets | – | – | – | (9,985) | ||||||
Decrease in restricted cash | 1,123,117 | 88,817 | 2,125,142 | 975,489 | ||||||
1,123,117 | 88,817 | 2,125,142 | 959,966 | |||||||
Effect of foreign exchange rate changes on | ||||||||||
cash and cash equivalents | 235,831 | (876,230) | (282,100) | (740,572) | ||||||
Increase (decrease) in cash and cash | ||||||||||
equivalents | 1,699,158 | (19,939,744) | (681,523) | (56,276,906) | ||||||
Cash and cash equivalents, | ||||||||||
beginning of period | 33,794,182 | 74,554,582 | 36,174,863 | 110,891,744 | ||||||
Cash and cash equivalents, | $ | $ | $ | $ | ||||||
end of period | 35,493,340 | 54,614,838 | 35,493,340 | 54,614,838 | ||||||
SOURCE Optiva Inc.
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