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Absolute Software Reports Year End Fiscal 2007 Loss
Tuesday, August 14, 2007
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Absolute Software Reports Year End Fiscal 2007 Results
http://www.absolute.com
Vancouver, BC, August 14, 2007--(T-Net)--Absolute Software (TSX: ABT), a leading provider of firmware-based, patented Computer Theft Recovery, Data Protection and Secure Asset Tracking(TM) solutions, announced its financial results for the quarter and year ended June 30, 2007. All dollar amounts are in Canadian dollars unless otherwise stated.
Operational highlights:
- Increased sales contracts by 94% to $16.2 million for Q4-F2007 and by 110% to $47.3 million for the fiscal year
- Increased cash from operations by 254% to $4.5 million for Q4-F2007 and by 302% to $16.9 million for the fiscal year
- Grew subscriptions under contract at June 30, 2007, to approximately 1.6 million, up from 1.2 million at March 31, 2007, and 700,000 at June 30, 2006
- Launched consumer bundle programs with Dell and Gateway
- Increased embedded BIOS partnerships to eight PC OEMs with addition of Panasonic, Motion Computing and Toshiba, and expanded BIOS embedded support with HP and Lenovo to consumer laptops
- Obtained BIOS support in certain Gateway and Dell desktop computers - the first PC OEMs to begin providing desktop BIOS support
- Established an alliance with American Megatrends Inc. ("AMI") to provide Extensible Firmware Interface ("EFI") support for Computrace, which is expected to provide a streamlined approach for PC OEMs to embed Computrace in the emerging EFI firmware standard
- Launched Computrace(R)One in Europe and opened an office in the UK to support expansion into the European market
"Fiscal 2007 was a breakthrough year for Absolute both financially and operationally, validating our vision and our Software-as-a-Service business model," said John Livingston, Chairman and CEO of Absolute. "During the year, we generated record sales contracts and free cash flow, expanded the number and scope of our embedded partnerships, launched bundling programs with Dell and Gateway, and built a platform for international growth. Based on the trajectory of our business and the average selling price for the year, we are increasing our subscriber target to four million, up from three million, by June 30, 2009."
"The global demand for mobile devices and applications is rapidly increasing, and along with it so too is the risk and compliance requirements to manage and secure these devices and the data they contain. Corporations, educators, government agencies and individuals are looking for enhanced levels of security to protect the growing value of their data and devices, and our embedded position with eight of the top PC manufacturers has us uniquely positioned to address their needs. With an embedded support footprint estimated at over 35 million computers shipping worldwide in calendar 2007 and 'attach' rates of approximately 4% of total laptops shipped in the U.S., we believe that we remain at the early stages of our growth potential and that significant expansion opportunities exist globally in all our target markets," added Mr. Livingston.
Financial Review
Sales contracts (a non-standard GAAP measure(x)) for Q4-F2007 were $16.2 million, increasing 94% from Q4-F2006. Sales contracts for the twelve months ended June 30, 2007, were $47.3 million, up 110% from the same period last year. The current year's growth is a result of the general market trend toward protecting laptops and the data stored on them from loss and theft, combined with the Company's execution of its growth strategies, which includes garnering embedded BIOS support from eight of the world's leading PC OEMs and the expansion of marketing programs with those PC OEMs. It is also a result of the recurring nature of our Software-as-a-Service business model which resulted in 52% of fiscal 2007 sales being generated from existing customers.
For fiscal 2007, Absolute sold 1.1 million new and renewal subscriptions to its security and asset tracking services, with an average term of 30 months and an average selling price of $43.89, compared to 404,000, 32 months and $55.71, respectively, in fiscal 2006. The average price decreased from traditional levels due to the volume pricing for the Dell bundle program launched in Q3-F2007.
Q4-F2007 revenue of $6.3 million increased 88% from $3.4 million in Q4-F2006. For fiscal 2007, revenue was $20.1 million, up 72% from last year. As a lagging indicator, the increase in revenue is a result of sales contract growth over the last three years. Substantially all of the revenue from Q4-F2007 sales contracts is included in deferred revenue on the balance sheet at June 30, 2007, which climbed to $54.2 million at year end, compared to $27.0 million at June 30, 2006.
Total operating expenses have increased to generate and support the sales contract and subscriber base growth, and to fund investment in business and technology development. For Q4-F2007, total operating expenses of $8.0 million increased 66% over Q4-F2006. For fiscal 2007, total operating expenses increased 61% to $26.4 million. Since sales contracts grew at a faster rate, the ratio of operating expenses to sales contracts improved to 56% for fiscal 2007 compared to 73% in fiscal 2006. Management believes this performance highlights the leverage inherent in the Company's business model.
The Company reported a net loss of $2.4 million, or $0.10 per share, in Q4-F2007, compared to a net loss of $1.3 million, or $0.06 per share, in Q4-F2006. Net loss for fiscal 2007 was $5.9 million, or $0.26 per share, compared to $3.9 million, or $0.18 per share last year. Increased losses are generally expected during periods of accelerated sales growth as the related revenue is recorded on the balance sheet while most of the related costs are expensed in the period.
In Q4-F2007, Absolute generated cash from operations of $4.5 million (basic cash per share of $0.19), a 254% increase from $1.3 million (basic cash per share of $0.06), generated in Q4-F2006. In fiscal 2007, Absolute generated cash from operations of $16.9 million (basic cash per share of $0.75), a 302% increase from $4.2 million (basic cash per share of $0.20) generated in fiscal 2006. Basic cash per share is not a standard term under GAAP, and is calculated by dividing the GAAP measures of cash from operations by the basic weighted average number of common shares outstanding.
"In fiscal 2007 we generated significant free cash flow while undertaking the investment in our business to ensure that we have the infrastructure and resources in place to support current and future growth," said Rob Chase, CFO of Absolute. "Our 'cash margin' (cash from operations as a percent of sales contracts) increased to 36% in fiscal 2007, up from 19% last year, and exceeded our guidance range of 30-35%. In fiscal 2008 we will again target cash margins in a range of 30-35% as we focus on prudent investment to support our growth potential."
Absolute is in a strong financial position with the necessary resources to fund its operating and capital requirements and to execute on its growth strategies. At June 30, 2007, the Company held cash, cash equivalents and short-term investments of $34.9 million, up from $16.7 million at June 30, 2006.
The management discussion and analysis, consolidated financial statements and notes thereto for the fourth quarter and year-end financial results 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 Software will hold a conference call to discuss the contents of this release on August 14, 2007, at 7:00AM PST/10:00AM EST. The dial-in numbers for participants are 416-644-3415 or 1-800-732-9303. A taped replay will be available until August 21, 2007, by calling 416-640-1917 or 1-877-289-8525 and entering the replay PIN number: 21241256 followed by the number sign.
A live audio webcast will be available at www.absolute.com and www.newswire.ca. The webcast will be archived for 365 days at the Company's website and at www.newswire.ca.
About Absolute
Absolute Software Corporation (TSX: ABT - News) is the leader in Computer Theft Recovery, Data Protection and Secure Asset Tracking(TM) solutions. Absolute Software provides organizations and consumers with solutions in the areas of regulatory compliance, data protection and theft recovery. The Company's Computrace(R) software is embedded in the BIOS of computers by global leaders, including Dell, Fujitsu, Gateway, HP, Lenovo, Motion, Panasonic and Toshiba, and the Company has reselling partnerships with these OEMs and others, including Apple. For more information about Absolute Software and Computrace, visit www.absolute.com.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, the expected raised awareness of our services and products due to security-related and other trends, the attainment of certain subscriber thresholds, the adoption by PC OEMs of certain technological standards that may be complementary to our success, the ability of the Company to successfully build support for the EFI firmware standard, the consummation of further bundling arrangements, the ability of the Company to successfully execute on its growth strategies including international expansion, the demand for our mobile devices and applications and our products continuing to increase, and other expectations, intentions and plans contained in this press release that are not historical fact. When used in this press release, the words "plan," "expect," "believe," and similar expressions generally identify forward-looking statements. These statements reflect our current expectations. They are subject to a number of risks and uncertainties, including, but not limited to, changes in technology and general market conditions. In light of the many risks and uncertainties you should understand that we cannot assure you that the forward-looking statements contained in this press release will be realized.
(C)2007 Absolute Software Corporation. All rights reserved. Computrace and Absolute are registered trademarks of Absolute Software Corporation. All other trademarks are property of their respective owners. Computrace U.S. patents No. 5,715,174, No. 5,764,892, No. 5,802,280, No. 5,896,497, No. 6,244,758, No. 6,269,392, No. 6,300,863, and No. 6,507,914. Canadian patents No. 2,284,806 and No. 2,205,370. U.K. patents No. EP793823 and No. GB2338101. German patent No. 695 125 34.6-08. Australian patent No. 699045.
For further information
John Livingston, Chief Executive Officer, (jliving@absolute.com), or Phone: (604) 730-9851
Rob Chase, Chief Financial Officer, (rchase@absolute.com), or Phone: (604) 730-9851
Dave Mason, Investor Relations, (dmason@equicomgroup.com) or Phone: (416) 815-0700 x237
Website: http://www.absolute.com
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