Absolute Software Reports First Quarter Fiscal 2023 Financial Results
Absolute Software Corporation (Nasdaq: ABST) reported its Q1 fiscal 2023 results, revealing revenue of $53.6 million, a 23% increase year-over-year. Adjusted Revenue surged 11% to $54.2 million. Despite a net loss of $9.5 million (up 25% from the previous year), cash flow from operations reached $15.2 million, a significant improvement. The Total ARR climbed to $215.7 million, marking a 15% annual growth. The company maintained its fiscal outlook steady and declared a quarterly dividend of CAD$0.08. Key product developments included partnerships enhancing security solutions.
- Revenue growth of 23% year-over-year, reaching $53.6 million.
- Adjusted Revenue up 11% to $54.2 million.
- Total ARR increased by 15% to $215.7 million.
- Strong cash flow from operations at $15.2 million.
- Quarterly dividend declared at CAD$0.08 per share.
- Net loss increased by 25% to $9.5 million.
- Adjusted EBITDA decreased by 10% to $11.5 million.
- New Logo ARR declined to $4.0 million from $4.7 million.
- Net Dollar Retention decreased to 108% from 109%.
Strong Cash Flow from Operations of
“In Q1, we delivered steady execution against our plan, and I am confident that we are well-positioned to meet the Rule of 40 for the full fiscal year,” said
FIRST QUARTER FISCAL 2023 (“Q1 F2023”) OVERVIEW
Key Financial Metrics
-
Revenue was
$53.6 million 23% compared to Q1 of fiscal year 2022 (“Q1 F2022”). -
Adjusted Revenue(1) was
$54.2 million 11% compared to Q1 F2022. -
Net loss was
$9.5 million 25% compared to Q1 F2022. -
Adjusted EBITDA(1) for Q1 F2023 was
$11.5 million 21% of Adjusted Revenue(1), a decrease from$12.8 million 26% of Adjusted Revenue for Q1 F2022. -
Total ARR(2) at
September 30, 2022 was$215.7 million 15% year over year. -
The Enterprise & Government portions of Total ARR increased by
18% over the prior year, and represented78% of Total ARR atSeptember 30, 2022 . -
The Education sector portion of Total ARR increased by
7% year over year, and represented22% of Total ARR atSeptember 30, 2022 . -
New Logo ARR(2) was
$4.0 million $4.7 million -
Net Dollar Retention(2) was
108% for Q1 F2023, a decrease compared to109% for Q1 F2022. -
Cash from operating activities was
$15.2 million $0.6 million -
A quarterly dividend of
CAD per outstanding common share was paid during Q1 F2023.$0.08
| Notes: | ||
(1) |
Adjusted Revenue, Adjusted EBITDA, and Adjusted EBITDA as percentage of Adjusted Revenue are non-IFRS measures. Refer to the “Use of non-IFRS measures and key metrics” section of the Q1 F23 MD&A for further discussion of these measures. |
|
(2) |
Adjusted Revenue and Adjusted EBITDA are non-IFRS measures. Refer to the “Use of non-IFRS measures and key metrics” section of the Q1 F23 MD&A for further discussion of these measures. |
|
FINANCIAL HIGHLIGHTS |
|||||||
USD millions, except percentages, number of shares, and per share amounts |
|||||||
|
Q1 F2023 |
|
Q1 F2022 |
|
Change |
||
Revenue |
|
|
|
|
|
||
Cloud and subscription services |
$ |
51.0 |
|
$ |
41.4 |
|
|
Managed professional services |
|
0.9 |
|
|
1.0 |
|
( |
Recurring revenue(1) |
$ |
51.9 |
|
$ |
42.4 |
|
|
Other(1) |
|
1.7 |
|
|
1.3 |
|
|
Total revenue |
$ |
53.6 |
|
$ |
43.7 |
|
|
|
|
|
|
|
|
||
Adjusted Revenue(2) |
$ |
54.2 |
|
$ |
49.0 |
|
|
|
|
|
|
|
|
||
Total annual recurring revenue (“ARR”)(3) |
$ |
215.7 |
|
$ |
187.4 |
|
|
|
|
|
|
|
|
||
Net loss |
$ |
(9.5) |
|
$ |
(7.6) |
|
|
Per share – basic |
|
(0.18) |
|
|
(0.15) |
|
|
Per share – diluted |
|
(0.18) |
|
|
(0.15) |
|
|
As a percentage of revenue |
|
( |
|
|
( |
|
|
|
|
|
|
|
|
||
Adjusted EBITDA(2) |
$ |
11.5 |
|
$ |
12.8 |
|
( |
As a percentage of Adjusted Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Cash from (used in) operating activities |
$ |
15.2 |
|
$ |
(0.6) |
|
( |
|
|
|
|
|
|
||
Dividends paid |
$ |
3.2 |
|
$ |
3.2 |
|
—% |
Per share (CAD) |
|
0.08 |
|
|
0.08 |
|
|
|
|
|
|
|
|
||
As at |
|
|
|
|
Change |
||
Cash, cash equivalents, and short-term investments |
$ |
67.6 |
|
$ |
64.0 |
|
|
Total assets |
|
544.9 |
|
|
555.6 |
|
( |
Deferred revenue(4) |
|
204.1 |
|
|
210.5 |
|
( |
Total non-current financial liabilities(5) |
|
270.1 |
|
|
271.4 |
|
—% |
Common shares outstanding (millions) |
|
52.2 |
|
|
51.1 |
|
|
| Notes: | ||
| (1) | Recurring revenue represents revenue derived from cloud services, term-based subscription licenses, and recurring managed professional services. Other revenue represents revenue derived from perpetual software licenses, non-recurring professional services and ancillary product lines, including consumer products. |
|
| (2) | Adjusted Revenue and Adjusted EBITDA are non-IFRS measures. Refer to the “Use of non-IFRS measures and key metrics” section of the Q1 F23 MD&A for further discussion of these measures. |
|
| (3) | Total ARR is a key metric. Refer to the “Use of non-IFRS measures and key metrics” section of the Q1 F23 MD&A for further discussion of this measure. |
|
| (4) | Deferred revenue includes current and non-current amounts. |
|
| (5) | Total non-current financial liabilities include non-current portion of lease liabilities and long-term debt. |
|
Q1 F2023 Business Highlights
Business and organizational developments:
- In July, we brought our entire company together in person for the first time in three years for Absolute’s annual Company and Sales Kickoff as well as our first Engineering Summit.
-
In September, we hosted a Financial Analyst Day in
New York City to share an overview of Absolute’s market opportunities, business drivers, new product innovations, go-to-market strategy, and a financial update.
Product and service highlights:
- In Q1, we added Ivanti Neurons for Unified Endpoint Management and Trellix Endpoint Security to our Application Resilience™ ecosystem, enabling joint Absolute Resilience® customers to ensure they remain healthy and undeletable.
- In July, we were featured in Forrester’s “The Future of Endpoint Management” report for our unique firmware-embedded position and persistence-based approach to self-healing.
- In August, we announced new innovations to Absolute Secure Endpoint, including end user messaging enhancements, an expanded catalog of resilient applications, and access to deeper insights needed to optimize existing Web application investments.
-
In September, we were named an Overall Leader in the “2022 Leadership Compass: Zero Trust Network Access (ZTNA)” report, published by
KuppingerCole Analysts AG . - In September, we were named a Leader in the G2 Fall 2022 Grid® Report for Endpoint Management for the eleventh consecutive quarter, as well as a Leader in the Grid Report for Zero Trust Networking.
Partner and other highlights:
-
In Q1, we added
British Telecom to our growing ecosystem of carrier partners. - In Q1, we expanded distribution with Ingram Micro US to include Absolute Secure Access.
- In Q1, we drove increased partner interest as a result of our expanded channel team focused on enabling new security and solution focused Value-Added Resellers (VARs).
-
In September, we partnered with Insyde Software and
Qualcomm Technologies, Inc. to enable Absolute Persistence® technology on the Snapdragon® 8cx Gen 3 and Snapdragon 7c+ Gen 3 Compute Platforms.
F2023 Financial Outlook
The Company’s financial outlook for its 2023 fiscal year (
Quarterly Dividend
On
Quarterly Filings and Related Quarterly Financial Information
Management’s Discussion and Analysis (“MD&A”) and Consolidated Financial Statements and the notes thereto for the fiscal period ended
Conference Call
The conference call will be archived for replay until
About
©2022 Absolute ©2022
Use of non-IFRS measures and key metrics
Throughout this press release we refer to a number of measures and metrics which we believe are meaningful in the assessment of the Company’s performance. Many of these measures and metrics do not have any standardized meaning under International Financial Reporting Standards (“IFRS”) as issued by the
The purpose of these non-IFRS measures and key metrics is to provide supplemental information that may prove useful to readers who wish to consider the impact of certain non-cash or non-recurring items on the Company’s operating performance, and assist in comparison of our operating results over historical periods. Supplementing IFRS disclosures with non-IFRS measures outlined below provides management with an additional view of operational performance by excluding expenses that are not directly related to performance in any particular period. Management uses both IFRS and non-IFRS measures when planning, monitoring and evaluating the Company’s performance.
These measures and metrics are as follows:
Key Metrics
a) |
Total ARR, Net Dollar Retention, and New Logo ARR |
As the majority of our customer contracts are sold under prepaid multi-year term licenses, there is typically a significant lag between the timing of the invoice and the associated revenue recognition. As a result, we focus on the annualized recurring value of all active contracts, measured by ARR, as an indicator of our future recurring revenues. ARR includes multi-year and short-term subscriptions for cloud-based services, as well as managed professional services and professional services with terms greater than one year. Both multi-year contracts and contracts with terms less than one year are annualized by dividing the total committed contract value by the number of months in the subscription term and then multiplying by twelve. We believe that increases in the amount of New Logo ARR, and improvement in our Net Dollar Retention, will accelerate the growth of Total ARR and, in turn, our future revenues. We provide these metrics as they are used to manage the business. We believe there is no similar measure under IFRS to which these measures can be reconciled.
Total ARR is a key metric and measures the aggregate annualized recurring revenues of all active contracts at the end of a reporting period. This measure has historically been a good indicator of our future revenue streams. Total ARR will change over a period through the retention, attrition and expansion of existing customers and the acquisition of new customers.
Net Dollar Retention is a key metric and measures the percentage increase or decrease in Total ARR at the end of a year for customers that comprised Total ARR at the beginning of the year We believe this metric provides useful insight into the effectiveness of our activities to retain and expand the ARR of our existing customers.
New Logo ARR is a key metric and measures the addition to Total ARR from sales to new customers during a period. We believe this metric provides useful insight into the effectiveness of our efforts to secure revenue from new customers.
Non-IFRS Measures
a) |
Adjusted Revenue |
Adjusted Revenue is a non-IFRS measure that we define as revenue, excluding fair value adjustments relating to acquired deferred revenue. In connection with the acquisition of NetMotion, NetMotion’s deferred revenue was written down to its fair value at the acquisition date. As a result, related revenue in the post-acquisition period does not reflect the full amount of revenue that would otherwise be recognized. We believe excluding fair value adjustments relating to deferred revenue provides a useful measure of the Company’s performance as it allows for comparability across future periods, where revenue recognized would reflect the transaction price, without acquisition-related fair value adjustments.
b) |
Adjusted Gross Margin and Gross Margin % |
Adjusted Gross Margin is defined as gross margin, adjusted for depreciation and amortization, share-based compensation expense, fair value adjustments relating to acquired deferred revenue, acquisition and integration costs, and non-recurring items. Adjusted Gross Margin % is defined as Adjusted Gross Margin as a percentage of Adjusted Revenue.
c) |
Adjusted Operating Expenses |
Adjusted Operating Expenses is defined as sales and marketing expense, research and development expense, and general and administrative expense, excluding depreciation and amortization, share-based compensation expense, fair value adjustments relating to acquired deferred commission expense, restructuring or reorganization charges and post-retirement benefits, acquisition and integration costs, litigation costs, impairment losses, and non-recurring items.
d) |
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) |
Adjusted EBITDA is a non-IFRS measure that we define as net income before interest income or expense, income taxes, depreciation and amortization, foreign exchange gains or losses, share-based compensation expense, fair value adjustments relating to acquired deferred revenue, fair value adjustments relating to acquired deferred commission expense, restructuring or reorganization charges and post-retirement benefits, acquisition and integration costs, litigation costs, impairment losses, and non-recurring items.
We believe Adjusted EBITDA provides a useful measure of the Company’s performance, as it helps illustrate underlying trends in our business that could otherwise be masked by the effect of the income or expenses that are not indicative of the core operating performance of our business.
Adjusted EBITDA has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of other IFRS financial measures. Some of the limitations of Adjusted EBITDA are that it excludes recurring expenses for interest payments, does not reflect the dilution that results from share-based compensation, and does not reflect the cost to replace amortized property and equipment and right-of-use assets. Further, it may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure.
Reconciliation of non-IFRS measures from IFRS measures are presented below.
Adjusted Revenue |
|||||
(USD millions) |
Q1 F2023 |
|
Q1 F2022 |
||
Revenue |
$ |
53.6 |
|
$ |
43.7 |
Adjustments: |
|
|
|
||
Fair value adjustments relating to acquired deferred revenue |
|
0.6 |
|
|
5.3 |
Adjusted Revenue |
$ |
54.2 |
|
$ |
49.0 |
Adjusted Gross Margin |
|||||
(USD millions) |
Q1 F2023 |
|
Q1 F2022 |
||
Gross margin |
$ |
43.3 |
|
$ |
35.2 |
Adjustments: |
|
|
|
||
Depreciation and amortization(1) |
|
2.8 |
|
|
2.8 |
Share-based compensation |
|
1.0 |
|
|
0.6 |
Fair value adjustments relating to acquired deferred revenue |
|
0.6 |
|
|
5.3 |
Adjusted Gross Margin |
$ |
47.7 |
|
$ |
43.9 |
Adjusted Gross Margin % |
|
88 % |
|
|
90 % |
Adjusted Operating Expenses |
|||||
(USD millions) |
Q1 F2023 |
|
Q1 F2022 |
||
Total Operating Expense |
$ |
49.2 |
|
$ |
40.1 |
Adjustments: |
|
|
|
||
Depreciation and amortization(1) |
|
(3.5) |
|
|
(3.6) |
Share-based compensation |
|
(8.3) |
|
|
(2.7) |
Fair value adjustments relating to acquired deferred commission |
|
0.1 |
|
|
0.7 |
Acquisition and integration costs |
|
(1.3) |
|
|
(3.4) |
Adjusted Operating Expense |
$ |
36.2 |
|
$ |
31.1 |
| (1) |
Depreciation and amortization includes depreciation of property and equipment, amortization of right-of-use
|
Adjusted EBITDA |
|||||
|
Q1 F2023 |
|
Q1 F2022 |
||
Net loss |
$ |
(9.5) |
|
$ |
(7.6) |
Adjustments: |
|
|
|
||
Depreciation and amortization(1) |
|
6.2 |
|
|
6.4 |
Share-based compensation |
|
9.3 |
|
|
3.3 |
Interest income |
|
(0.2) |
|
|
— |
Interest expense |
|
6.2 |
|
|
5.1 |
Foreign exchange loss |
|
0.1 |
|
|
— |
Income tax recovery |
|
(2.4) |
|
|
(2.4) |
Fair value adjustments relating to acquired deferred revenue |
|
0.6 |
|
|
5.3 |
Fair value adjustments relating to acquired deferred commission |
|
(0.1) |
|
|
(0.7) |
Acquisition and integration costs |
|
1.3 |
|
|
3.4 |
Adjusted EBITDA |
$ |
11.5 |
|
$ |
12.8 |
(1) |
Depreciation and amortization includes depreciation of property and equipment, amortization of right-of-use
|
Forward-Looking Statements|
This press release contains certain forward-looking statements and forward-looking information, as defined under applicable securities laws, including, without limitation, the
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, ARR and market risks; Absolute will be able to leverage its past, current, and planned investments to support growth and increase profitability; Absolute will be able to successfully manage the impacts of COVID-19 on its business, operations, prospects, and financial results; there will continue to be a trend toward mobile computing and remote working and/or distance learning, in the short, medium, and/or long-term, and resulting demand for Absolute’s solutions; Absolute will be able to successfully integrate NetMotion’s operations and realize the expected benefits to Absolute and synergies from the acquisition; Absolute will transition the NetMotion customer agreements to recurring cloud subscriptions; the Absolute-NetMotion combined company’s financial profile will align with Absolute’s forecasts; Absolute will be able to implement its plans, forecasts, and other expectations with respect to the NetMotion acquisition and realize expected synergies; Absolute will be able to grow revenue by selling to new customers and increasing subscriptions with existing customers at or above the rates currently anticipated; Absolute will be able to renew customers’ subscriptions efficiently and cost effectively; 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 adapt its technology to be compatible with changes to existing and new PC and other device operating systems; Absolute will be able to maintain and develop its PC OEM and other channel partner networks; Absolute’s current and future (if any) PC OEM partners will continue to permit embedding of its firmware technology and/or provide distribution and resale support; Absolute’s business development strategies and plans (including, without limitation, enhanced data intelligence, Application Persistence™, and APaaS (as defined below)) will be successful as currently expected; Absolute will be able to maintain or grow its sales to education customers; 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 obtain FedRAMP (as defined below) certification and achieve greater penetration into government markets; Absolute will be able to protect against the improper disclosure of data it may process, store, and/or manage; Absolute’s revenues will not become subject to increased seasonality; Absolute will meet its commitments under and remain in compliance with its Term Loan Facility; future financing will be available to Absolute on favourable terms, if and when required; Absolute will be in a financial position to 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; Absolute will be able to maintain and enhance its intellectual property portfolio; Absolute’s protection of its intellectual property is and will be 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 or subject to material adverse judgments, damages awards, or regulatory sanctions; Absolute will be able to successfully manage the additional expenses, regulatory obligations, and legal exposures resulting from its
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, including the following risks (as more particularly described and referred to in the “Risk and Uncertainties” section of Absolute’s Q1 F2023 MD&A: that Absolute may not be able to accurately predict its rate of growth and profitability; ARR provides no assurance that actual events will meet the Company’s or management’s expectations; Absolute’s dependence on PC OEMs for embedding its firmware technology; Absolute’s reliance on its PC OEM and other distribution, resale, and other channels; risks related to the COVID-19 pandemic and its impact on Absolute; that Absolute may not be able to successfully integrate NetMotion’s operations; that Absolute may be unable implement its plans, forecasts, and other expectations for the NetMotion acquisition as anticipated, or at all, to realize the expected synergies from the NetMotion acquisition; that the Absolute-NetMotion combined company will not have the projected financial profile and will not experience the expected financial benefits and synergies; that the NetMotion acquisition and integration will disrupt Absolute’s business; that Absolute may be unable to attract new customers or maintain its existing customer base or grow or upgrade the services provided to these customers; that customers may not renew or expand their existing commercial relationship with Absolute; that Absolute may be unable to adapt its technology to be compatible with new operating systems; that Absolute’s business development activities will not advance and deliver the benefits as currently anticipated; that changing buying patterns in the education vertical may adversely impact Absolute’s business; that changing contracting or fiscal policies of government organization may adversely affect Absolute’s business and operations; that changes in macroeconomic conditions may harm our growth strategies and business prospects; that Absolute will not achieve FedRAMP certification, on the timeline currently expected or at all, which may hinder its ability to achieve greater penetration into government markets; risks relating to the evolving nature of the market for Absolute’s products; that Absolute’s software services may contain errors, vulnerabilities, or defects; that Absolute could suffer security breaches impacting the data that Absolute processes and otherwise handles; other risks associated with data security, privacy controls, and hacking; that Absolute’s reputation may be damaged, and its financial results negatively affected, if its internal networks, systems, or data are perceived to have been compromised; that customers may expose Absolute to potential violations of applicable privacy laws; that Absolute’s focus on larger enterprise customers could result in greater costs, less favourable commercial terms, and other adverse impacts to Absolute; risks associated with any failure by Absolute to successfully promote and protect its brands; risks associated with cyclical business impacts on Absolute; Absolute may fail to meet its commitments under or remain in compliance with its Term Loan Facility, which could allow the lenders to accelerate the repayment of the debt or seek other remedies under the Term Loan Facility; future financing that may be required may not be available on favourable terms; risks associated with the competition Absolute faces within its industry; that industry data and projections are inaccurate and unreliable; that Absolute’s research and development efforts may not be successful; risks resulting from interruptions or delays from third-party hosting facilities; that Absolute’s business may suffer if it cannot continue to protect its intellectual property rights; that Absolute may be unable to obtain patent or other proprietary or statutory protection for new or improved technologies or products; risks related to Absolute’s technology incorporating certain “open source” software; that Absolute may be unable to maintain technology licenses from third parties; risks related to fluctuating foreign exchange rates; that the price of Absolute’s common shares may be subject to wide fluctuations; risks related to Absolute’s
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.
Condensed Consolidated Statements of Financial Position (Unaudited)
(Expressed in thousands of |
|||||
|
|
|
|
||
Assets |
|
|
|
||
Current assets: |
|
|
|
||
Cash and cash equivalents |
$ |
67,249 |
|
$ |
63,669 |
Short-term investments |
|
360 |
|
|
360 |
Trade and other receivables |
|
36,593 |
|
|
52,722 |
Income tax receivable |
|
1,428 |
|
|
1,029 |
Prepaid expenses and other |
|
9,195 |
|
|
9,086 |
Contract acquisition assets – current |
|
9,646 |
|
|
9,518 |
|
|
124,471 |
|
|
136,384 |
Property and equipment |
|
5,166 |
|
|
5,195 |
Right-of-use assets |
|
8,923 |
|
|
9,456 |
Deferred income tax assets |
|
45,307 |
|
|
39,428 |
Contract acquisition assets |
|
6,570 |
|
|
6,213 |
Intangible assets |
|
113,096 |
|
|
117,537 |
|
|
240,755 |
|
|
240,755 |
Other assets |
|
650 |
|
|
650 |
|
$ |
544,938 |
|
$ |
555,618 |
|
|
|
|
||
Liabilities |
|
|
|
||
Current liabilities: |
|
|
|
||
Trade and other payables |
$ |
36,502 |
|
$ |
32,544 |
Derivative liabilities |
|
1,822 |
|
|
83 |
Income tax payable |
|
1,949 |
|
|
2,143 |
Lease liabilities – current |
|
4,147 |
|
|
4,069 |
Long-term debt – current |
|
1,614 |
|
|
1,632 |
Deferred revenue – current |
|
131,396 |
|
|
133,852 |
|
|
177,430 |
|
|
174,323 |
Lease liabilities |
|
6,234 |
|
|
7,210 |
Long-term debt |
|
263,837 |
|
|
264,230 |
Deferred revenue |
|
72,672 |
|
|
76,619 |
Deferred income tax liability |
|
29,104 |
|
|
30,037 |
|
|
549,277 |
|
|
552,419 |
Shareholders’ (Deficiency) Equity |
|
|
|
||
Share capital |
|
171,628 |
|
|
160,951 |
Equity reserve |
|
46,920 |
|
|
51,333 |
|
|
(264) |
|
|
(264) |
Accumulated other comprehensive loss |
|
(1,359) |
|
|
(207) |
Deficit |
|
(221,264) |
|
|
(208,614) |
|
|
(4,339) |
|
|
3,199 |
|
$ |
544,938 |
|
$ |
555,618 |
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(Expressed in thousands of |
|||||
|
Three months ended |
||||
|
|
2022 |
|
|
2021 |
Revenue |
$ |
53,564 |
|
$ |
43,749 |
Cost of revenue |
|
10,292 |
|
|
8,515 |
Gross margin |
|
43,272 |
|
|
35,234 |
|
|
|
|
||
Operating expenses |
|
|
|
||
Sales and marketing |
|
22,809 |
|
|
20,563 |
Research and development |
|
13,644 |
|
|
10,273 |
General and administration |
|
12,710 |
|
|
9,252 |
|
|
49,163 |
|
|
40,088 |
|
|
|
|
||
Operating loss |
|
(5,891) |
|
|
(4,854) |
|
|
|
|
||
Other (expense) income |
|
|
|
||
Interest income |
|
248 |
|
|
1 |
Interest expense |
|
(6,194) |
|
|
(5,146) |
Foreign exchange (loss) gain |
|
(57) |
|
|
14 |
|
|
(6,003) |
|
|
(5,131) |
|
|
|
|
||
Net loss before income taxes |
|
(11,894) |
|
|
(9,985) |
|
|
|
|
||
Income tax recovery |
|
2,408 |
|
|
2,417 |
Net loss |
$ |
(9,486) |
|
$ |
(7,568) |
|
|
|
|
||
Items that may be reclassified subsequently to profit or loss: |
|
|
|
||
Unrealized loss on derivatives, net of tax |
|
(1,152) |
|
|
(355) |
Foreign currency translation |
$ |
— |
|
$ |
(51) |
Total comprehensive loss |
$ |
(10,638) |
|
$ |
(7,974) |
|
|
|
|
||
Basic net loss per common share |
$ |
(0.18) |
|
$ |
(0.15) |
Diluted net loss per common share |
$ |
(0.18) |
|
$ |
(0.15) |
|
|
|
|
||
Weighted average number of common shares outstanding |
|
|
|
||
Basic |
|
51,420,514 |
|
|
49,672,518 |
Diluted |
|
51,420,514 |
|
|
49,672,518 |
Condensed Consolidated Statements of Changes in Shareholders’ (Deficiency) Equity (Unaudited)
(Expressed in thousands of |
|||||||||||||||||||
|
Share Capital |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Number of Common shares |
|
Amount |
|
Equity reserve |
|
shares |
|
Accumulated Other Comprehensive |
|
Deficit |
|
Total |
||||||
Balance, |
49,573,829 |
|
$ |
151,521 |
|
$ |
46,489 |
|
$ |
(264) |
|
$ |
188 |
|
$ |
(171,492) |
|
$ |
26,442 |
Shares issued on stock option exercise |
21,050 |
|
|
143 |
|
|
(21) |
|
|
— |
|
|
— |
|
|
— |
|
|
122 |
Shares issued under Employee Stock Ownership Plan ("ESOP") |
42,164 |
|
|
438 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
438 |
Shares issued under Performance and Restricted Share Unit plan ("PRSU") |
183,528 |
|
|
1,496 |
|
|
(1,686) |
|
|
— |
|
|
— |
|
|
— |
|
|
(190) |
Share-based compensation |
— |
|
|
— |
|
|
3,937 |
|
|
— |
|
|
— |
|
|
— |
|
|
3,937 |
Cash dividends |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3,150) |
|
|
(3,150) |
Unrealized loss on derivatives, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(355) |
|
|
— |
|
|
(355) |
Tax deduction on share issuance costs |
— |
|
|
(68) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(68) |
Tax deduction on share based compensation |
— |
|
|
— |
|
|
(2,014) |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,014) |
Foreign currency translation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(51) |
|
|
— |
|
|
(51) |
Net loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7,568) |
|
|
(7,568) |
Balance, |
49,820,571 |
|
$ |
153,530 |
|
$ |
46,705 |
|
$ |
(264) |
|
$ |
(218) |
|
$ |
(182,210) |
|
$ |
17,543 |
Shares issued on stock option exercise |
232,652 |
|
|
1,429 |
|
|
(177) |
|
|
— |
|
|
— |
|
|
— |
|
|
1,252 |
Shares issued under ESOP |
52,533 |
|
|
415 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
415 |
Shares issued under PRSU |
1,006,013 |
|
|
5,945 |
|
|
(8,992) |
|
|
— |
|
|
— |
|
|
— |
|
|
(3,047) |
Share-based compensation |
— |
|
|
— |
|
|
13,618 |
|
|
— |
|
|
— |
|
|
— |
|
|
13,618 |
Cash dividends |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(9,487) |
|
|
(9,487) |
Unrealized gain on derivatives, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
144 |
|
|
— |
|
|
144 |
Tax deduction on share issuance costs |
— |
|
|
(368) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(368) |
Tax deduction on share based compensation |
— |
|
|
— |
|
|
179 |
|
|
— |
|
|
— |
|
|
— |
|
|
179 |
Foreign currency translation |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(133) |
|
|
— |
|
|
(133) |
Net loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(16,917) |
|
|
(16,917) |
Balance, |
51,111,769 |
|
$ |
160,951 |
|
$ |
51,333 |
|
$ |
(264) |
|
$ |
(207) |
|
$ |
(208,614) |
|
$ |
3,199 |
Shares issued under PRSU and Omnibus Equity Incentive Plan |
1,134,707 |
|
|
10,749 |
|
|
(12,696) |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,947) |
Share-based compensation |
— |
|
|
— |
|
|
7,808 |
|
|
— |
|
|
— |
|
|
— |
|
|
7,808 |
Cash dividends |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3,164) |
|
|
(3,164) |
Unrealized loss on derivatives, net |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,152) |
|
|
— |
|
|
(1,152) |
Tax deduction on share issuance costs |
— |
|
|
(72) |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(72) |
Tax deduction on share based compensation |
— |
|
|
— |
|
|
475 |
|
|
— |
|
|
— |
|
|
— |
|
|
475 |
Net loss |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(9,486) |
|
|
(9,486) |
Balance, |
52,246,476 |
|
$ |
171,628 |
|
$ |
46,920 |
|
$ |
(264) |
|
$ |
(1,359) |
|
$ |
(221,264) |
|
$ |
(4,339) |
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Expressed in thousands of |
|||||
|
Three months ended |
||||
|
2022 |
|
2021 |
||
Cash from (used in): |
|
|
|
||
Operating activities: |
|
|
|
||
Net loss |
$ |
(9,486) |
|
$ |
(7,568) |
Items not involving cash: |
|
|
|
||
Depreciation of property and equipment |
|
757 |
|
|
877 |
Amortization of right-of-use assets |
|
959 |
|
|
954 |
Amortization of intangible assets |
|
4,441 |
|
|
4,591 |
Amortization of contract acquisition assets |
|
2,911 |
|
|
3,507 |
Share-based compensation |
|
9,316 |
|
|
3,296 |
Current and deferred income taxes |
|
(5,937) |
|
|
(3,259) |
Interest expense |
|
6,032 |
|
|
5,081 |
Unrealized foreign exchange gain |
|
(182) |
|
|
(91) |
Changes in non-cash operating working capital: |
|
|
|
||
Trade and other receivables |
|
16,129 |
|
|
2,391 |
Income tax receivable |
|
(399) |
|
|
(337) |
Prepaid expenses and other |
|
(109) |
|
|
(931) |
Contract acquisition assets |
|
(3,396) |
|
|
(4,183) |
Trade and other payables |
|
739 |
|
|
(8,454) |
Income tax payable |
|
(194) |
|
|
74 |
Deferred revenue |
|
(6,402) |
|
|
3,415 |
Cash from (used in) operating activities |
|
15,179 |
|
|
(637) |
|
|
|
|
||
Investing activities: |
|
|
|
||
Purchase of property and equipment |
|
(811) |
|
|
(198) |
Acquisition of NetMotion |
|
— |
|
|
(341,699) |
Cash used in investing activities |
|
(811) |
|
|
(341,897) |
|
|
|
|
||
Financing activities: |
|
|
|
||
Dividends paid |
|
(3,164) |
|
|
(3,150) |
Proceeds from exercise of stock options and ESOP |
|
— |
|
|
122 |
Tax remittances on share based compensation |
|
(37) |
|
|
(190) |
Payment of lease liabilities |
|
(1,066) |
|
|
(963) |
Proceeds from long-term debt |
|
— |
|
|
269,500 |
Transaction costs on long-term debt |
|
— |
|
|
(1,957) |
Principal repayment of long-term debt |
|
(688) |
|
|
(688) |
Interest payment on long-term debt |
|
(5,740) |
|
|
(4,692) |
Cash (used in) from financing activities |
|
(10,695) |
|
|
257,982 |
|
|
|
|
||
Foreign exchange effect on cash |
|
(93) |
|
|
(105) |
Increase (decrease) in cash and cash equivalents |
|
3,580 |
|
|
(84,657) |
Cash and cash equivalents, beginning of period |
|
63,669 |
|
|
140,166 |
Cash and cash equivalents, end of period |
$ |
67,249 |
|
$ |
55,509 |
Selected Operating & Financial Metrics | Q1 F2023 |
|||||||
USD Thousands, except per share data |
|||||||
|
Q1 F2023 |
|
F2022 |
Q4 F2022 |
Q3 F2022 |
Q2 F2022 |
Q1 F2022 |
ARR |
|
|
|
|
|
|
|
Total ARR |
215,741 |
|
209,546 |
209,546 |
202,890 |
195,577 |
187,445 |
yoy growth * |
|
|
|
|
|
|
|
New Logo ARR |
4,032 |
|
14,485 |
2,846 |
3,244 |
3,663 |
4,732 |
yoy growth * |
( |
|
|
( |
|
|
|
Net Dollar Retention |
|
|
|
|
|
|
|
# of Active Endpoints |
14,129 |
|
13,615 |
13,615 |
13,565 |
13,336 |
12,506 |
yoy growth |
|
|
|
|
|
|
|
TOTAL ARR BY VERTICAL |
|
|
|
|
|
|
|
Enterprise & Government |
169,097 |
|
162,957 |
162,957 |
158,068 |
150,632 |
143,877 |
yoy growth * |
|
|
|
|
|
|
|
Education |
46,644 |
|
46,589 |
46,589 |
44,822 |
44,945 |
43,569 |
yoy growth * |
|
|
|
|
|
|
|
TOTAL ARR BY GEOGRAPHY |
|
|
|
|
|
|
|
|
167,163 |
|
163,791 |
163,791 |
159,220 |
155,334 |
150,916 |
yoy growth * |
|
|
|
|
|
|
|
International |
48,578 |
|
45,755 |
45,755 |
43,670 |
40,243 |
36,530 |
yoy growth * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE |
|
|
|
|
|
|
|
Total Adjusted Revenue |
54,205 |
|
210,431 |
54,001 |
54,477 |
52,939 |
49,014 |
yoy growth * |
10.6 % |
|
15.4 % |
12.7 % |
17.7 % |
16.7 % |
14.7 % |
Total Revenue |
53,564 |
|
197,311 |
52,527 |
51,985 |
49,050 |
43,749 |
yoy growth |
|
|
|
|
|
|
|
Recurring Revenue |
51,918 |
|
191,555 |
51,025 |
50,505 |
47,642 |
42,383 |
% of revenue |
|
|
|
|
|
|
|
yoy growth |
|
|
|
|
|
|
|
Cloud Services |
50,984 |
|
187,552 |
50,033 |
49,503 |
46,639 |
41,377 |
yoy growth |
|
|
|
|
|
|
|
Managed Services |
934 |
|
4,003 |
992 |
1,002 |
1,003 |
1,006 |
yoy growth |
( |
|
( |
( |
( |
( |
( |
Other Revenue |
1,646 |
|
5,756 |
1,502 |
1,480 |
1,408 |
1,366 |
% of revenue |
|
|
|
|
|
|
|
yoy growth |
|
|
|
|
|
|
|
Software License |
74 |
|
746 |
203 |
173 |
194 |
176 |
yoy growth |
( |
|
|
|
|
|
|
Other |
1,572 |
|
5,010 |
1,299 |
1,307 |
1,214 |
1,190 |
yoy growth |
32.1 % |
|
34.1 % |
38.2 % |
36.5 % |
30.1 % |
31.5 % |
|
|
|
|
|
|
|
|
OTHER METRICS |
|
|
|
|
|
|
|
Adj. Gross Margin (non-IFRS) |
47,709 |
|
187,005 |
47,668 |
48,385 |
47,045 |
43,908 |
Margin % ** |
|
|
|
|
|
|
|
Adj. EBITDA (non-IFRS) |
11,473 |
|
55,791 |
15,420 |
13,785 |
13,785 |
12,801 |
Margin % ** |
|
|
|
|
|
|
|
Adj. EPS (non-IFRS) |
0.06 |
|
0.41 |
0.08 |
0.10 |
0.13 |
0.09 |
Weighted avg # of shares outstanding - basic |
51,421 |
|
50,381 |
51,067 |
50,728 |
50,073 |
49,673 |
Weighted avg # of shares outstanding - diluted *** |
53,764 |
|
53,063 |
53,192 |
52,556 |
53,008 |
52,883 |
Cash From Operating Activities |
15,179 |
|
39,792 |
8,653 |
17,046 |
14,731 |
(637) |
yoy growth |
( |
|
( |
( |
|
|
( |
Cash, cash equivalents, and short- term investments |
67,609 |
|
64,029 |
64,029 |
69,075 |
61,596 |
55,869 |
yoy growth |
|
|
( |
( |
( |
( |
( |
Total Deferred Revenue |
204,068 |
|
210,471 |
210,471 |
194,326 |
187,852 |
179,086 |
yoy growth |
|
|
|
|
|
|
|
* Year over year growth for ARR metrics and Total Adjusted Revenue for F22 is calculated compared to an as-if combined basis for F21. |
|||||||
** Margin % is calculated as a percentage of Adjusted Revenue. |
|||||||
*** Diluted weighted average number of common shares outstanding includes the dilutive effects of stock options, PSUs, and RSUs, for the purposes of determining Adjusted EPS. The amount may differ from diluted weighted average number of common shares outstanding disclosed in the Company’s financial statements, which excludes such dilutive securities when their effects are antidilutive. |
|||||||
We define Non-IFRS earnings per share ("Adjusted EPS") as diluted earnings (loss) per share adjusted for foreign exchange gain or loss, depreciation and amortization, share-based compensation expense, fair value adjustments relating to acquired deferred revenue, fair value adjustments relating to acquired deferred commission, restructuring or reorganization charges and post-retirement benefits, acquisition and integration costs, litigation costs, impairment losses, non-recurring items, and income tax effects related to the non-GAAP adjustments.
Adjusted EPS is not a standardized financial measure under IFRS and therefore it may not be comparable to similar measures presented by other issuers. We believe this metric provides useful information to investors and others in understanding and evaluating our operating results as it helps illustrate underlying trends in our business that could otherwise be masked by the effect of the income or expenses that are not indicative of the core operating performance of our business.
Adjusted EPS (Non-IFRS) Reconciliation
|
Q1 F2023 |
|
Diluted loss per share |
$ |
(0.18) |
Adjustments: |
|
|
Depreciation and amortization(1) |
|
0.11 |
Share-based compensation |
|
0.17 |
Fair value adjustments relating to acquired deferred revenue |
|
0.01 |
Acquisition and integration costs |
|
0.03 |
Income tax effects related to non-GAAP adjustments(2) |
|
(0.08) |
Adjusted EPS |
$ |
0.06 |
(1) |
Depreciation and amortization includes depreciation of property and equipment, amortization of right-of-use assets, and amortization of acquired intangible assets. |
|
| (2) | Income tax effects related to non-GAAP adjustments is calculated based on the Company’s statutory tax rate of |
Diluted weighted average number of Common Shares outstanding for Adjusted EPS is presented below.
|
Q1 F2023 |
Basic weighted average number of common shares outstanding |
51,420,514 |
Effect of dilutive securities: |
|
Stock Option |
135,713 |
PSU |
1,080,367 |
RSU |
1,127,379 |
Diluted weighted average number of common shares outstanding(1) |
53,763,973 |
(1) |
Diluted weighted average number of common shares outstanding for Adjusted EPS may differ from diluted weighted average number of common shares outstanding disclosed in the Company’s financial statements, which excludes the impact of dilutive securities when their effects are antidilutive. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20221108006144/en/
Investor Relations
IR@absolute.com
212-868-6760
Media Relations
press@absolute.com
858-524-9443
Source:
FAQ
What were Absolute Software's revenue results for Q1 fiscal 2023?
How much net loss did Absolute Software incur in Q1 fiscal 2023?
What is the Total ARR for Absolute Software as of September 30, 2022?
What is the outlook for Absolute Software’s fiscal year 2023?
What quarterly dividend did Absolute Software declare?
