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Absolute Reports Fiscal 2016 Fourth Quarter and Annual Results - Reports Continued Acceleration in Revenue Growth
Tuesday, August 23, 2016Company Profile | Follow Company
Absolute Reports Fiscal 2016 Fourth Quarter and Annual Results
Reports Continued Acceleration in Revenue Growth
Vancouver, BC, August 23, 2016--(T-Net)--Absolute® (TSX: ABT), a developer of persistent endpoint security and data risk management, today announced its financial results for the three months and full year ended June 30, 2016.
All dollar figures are unaudited and stated in U.S. dollars, unless otherwise indicated.
Q4-F2016 Overview
Key Financial Metrics
Technology and Products
F2016 Overview
Key Financial Metrics
Operations and Corporate
Technology and Products
“Fiscal 2016 was a breakthrough year for Absolute. Revenue and customer growth were propelled by aggressive product innovation, new go-to-market initiatives, and growing market demand from organizations seeking to protect critical data from external and insider threats,” stated Mr. Geoff Haydon, Chief Executive Officer, Absolute. “We finished Q4 strongly, reflected by a 7% increase in revenue and a 19% increase in billings, as larger enterprises took advantage of our innovative and entirely unique endpoint security and data risk management solutions. In fiscal 2017, we will continue to drive towards our long term objective of 20% revenue growth and 20% Adjusted EBITDA margins. This will involve accelerating investment in R&D, elevating the productivity of our global field investments, and expanding enterprise and third party ISV adoption of our Absolute Persistence-enabled endpoint security solutions.”
Q4-F2016 and F2016 Financial Review
Revenue
Total revenue in Q4-F2016 was $22.0 million, representing a 6% decrease from total revenue of $23.3 million in Q4-F2015, with the decrease being attributable to the divestiture of the Endpoint and Service Management segment on October 5, 2015.
Absolute DDS and Consumer revenue in Q4-F2016 was $22.0 million, compared to $20.5 million in Q4-F2015, representing a 7% year-over-year increase.
DDS segment revenue from recurring licenses was 97% in Q4-F2016 compared to 99% in Q4-F2015 and was 97% for F2016 compared to 98% in the prior year.
For F2016, total revenue was $88.8 million, representing a decrease of 5% compared to $93.6 million in the prior year. Absolute DDS and Consumer revenue for F2016 was $86.0 million, representing a 4% increase over $82.4 million in the prior year.
Annual Contract Value(1)
The DDS Commercial ACV Base increased by 3% in Q4-F2016 and increased by 5% in F2016.
For North America, the DDS ACV Base increased by 2% in Q4-F2016 and increased by 6% in F2016. Internationally, the DDS ACV Base increased by 6% in Q4-F2016 and decreased by 2% in F2016. At June 30, 2016 the DDS ACV Base was represented 89% by North American customers and 11% by international customers.
From a vertical perspective, the combined corporate and healthcare DDS ACV Base increased by 3% in Q4-F2016 and increased by 10% in F2016. The combined education and government DDS ACV Base increased by 2% in Q4-F2016 and increased by 1% in F2016. At June 30, 2016 the DDS ACV Base was represented 47% by corporate and healthcare customers and 53% by education and government customers.
Net ACV Retention(1) from existing DDS commercial customers was 100% in both Q4-F2016 and full-year F2016.
Incremental ACV from new DDS commercial customers in Q4-F2016 was $1.8 million and was $4.3 million for F2016. Corporate and healthcare customers represented more than $1 million of the Q4-F2016 new customer ACV and $2.6 million of the F2016 new customer ACV.
Billings(4)
Absolute DDS and Consumer Billings were $30.1 million in Q4-F2016, representing a 19% increase compared to $25.4 million in Q4-F2015. For F2016, Absolute DDS and Consumer Billings were $88.6 million, down 1% from $89.4 million in the prior year. Billings to commercial customers represented 97% of Q4-F2016 total Billings and 96% of F2016 total Billings.
Adjusted Operating Expenses(3)
Adjusted Operating Expenses for Q4-F2016 were $20.1 million, which represented a decrease of 5% compared to $21.2 million in Q4-F2015. The year-over-year decrease reflected foreign exchange-related savings on Canadian-based activities, lower sales consulting expenses, and a $0.5 million positive adjustment to recorded estimates of Canadian Scientific Research and Experimental Development Investment Tax Credits.
For F2016, Adjusted Operating Expenses were $77.7 million compared to $76.5 million in the prior year, representing a 2% increase. Total headcount was 445 at June 30, 2016 compared to 444 at June 30, 2015.
Adjusted EBITDA(2) & Net Income
Absolute generated Adjusted EBITDA of $1.9 million in Q4-F2016 and $11.1 million in F2016, down from $2.1 million and $17.1 million in the respective prior year periods. Adjusted EBITDA represented 9% of Q4-F2016 revenue and 12% of F2016 revenue compared to 10% and 18% for the comparable prior year periods. F2016 adjusted EBITDA includes a positive contribution of $1.0 million from the divestiture of Absolute Manage and Service.
The Company recorded a net loss of $1.2 million, or $0.03 per basic share, in Q4-F2016, compared to a net loss of $0.7 million, or $0.02 per basic share, in Q4-F2015. For F2016 the Company recorded net income of $9.7 million, or $0.24 per basic share, compared to $4.6 million, or $0.10 per basic share, in the prior year.
F2017 Corporate Outlook
Based on its success of delivering targeted product enhancements that directly contributed to sales results in F2016, the Company intends to expand its research and development capabilities to accelerate delivery of new DDS features and functions that are in demand in key vertical markets. These research and development initiatives, combined with the Company's restructured and strengthened go-to-market capabilities, will support the Company's objective of delivering on its long term growth and profitability objectives.
Revenue
The Company expects total revenue of $92.0 million to $94.6 million, representing 7% to 10% annual DDS segment revenue growth. Revenue is expected to grow at an accelerating rate as we move through the year, driven by increasing new customer acquisition and continuing sales productivity improvements.
Adjusted EBITDA
The Company expects Adjusted EBITDA margins of 5% to 8%, reflecting relatively stable spending across most departments and increased investment in its research and development capacity.
Investment in research and development will accelerate product innovation, as well as the migration of all product offerings to Absolute's next-generation service platform. This will facilitate greater scalability and operating efficiency, support the rapid deployment of new services across Absolute's customer base and liberate resources currently required to support two platforms.
Cash from Operations
The Company expects cash from operations, prior to payments for income taxes and restructuring charges, as a percentage of revenue to be 8% to 12%, reflecting a double-digit year-over-year increase in Billings. Capital expenditures are expected to be between $3.9 million and $4.4 million, with the spending largely related to upgrades and expansion of the Company's hosted data centres, office expansion and ongoing hardware refresh cycles.
Quarterly Dividend
On July 20, 2016, Absolute declared a quarterly dividend of CAD$0.08 per share on the Company's common shares. The dividend is payable in cash on August 26, 2016 to shareholders of record at the close of business on August 5, 2016.
Quarterly Filings
Management's discussion and analysis (“MD&A”) and consolidated financial statements and the notes thereto for the year ended June 30, 2016 can be obtained today from Absolute's corporate website at www.absolute.com. The documents will also be available atwww.sedar.com.
Non-IFRS Measures and Definitions
Throughout this press release, we refer to a number of measures which we believe are meaningful in the assessment of the Company's performance. All these metrics are non-standard measures under International Financial Reporting Standards (“IFRS”), and are unlikely to be comparable to similarly titled measures reported by other companies. Readers are cautioned that the disclosure of these items is meant to add to, and not replace, the discussion of financial results or cash flows from operations as determined in accordance with IFRS. For a discussion of the purpose of these non-IFRS measures, please refer to the Company's Fiscal F2016 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:
About Absolute
Absolute Software Corporation (TSX: ABT) is the industry standard in persistent endpoint security and data risk management solutions. Persistence® technology from Absolute provides organizations with visibility and control over all of their devices, regardless of user or location. If an Absolute client is removed from an endpoint, it will automatically reinstall so IT can secure each device and the sensitive data it contains. No other technology can do this. Persistence technology is embedded in the firmware of computers, netbooks, tablets and smartphones by global leaders, including Acer, ASUS, Dell, Fujitsu, HP, Lenovo, Microsoft, Panasonic, Samsung, and Toshiba, and the Company has reselling partnerships with these OEMs and others, including Apple. For more information about Absolute, visitwww.absolute.com.
Forward-Looking Statements
This press release contains forward-looking statements and financial outlook that involve risks and uncertainties. These forward-looking statements and financial outlook relate to, among other things, the expected performance, functionality and availability of our services and products, and other expectations, intentions and plans contained in this press release that are not historical facts. When used in this press release, the words "plan," "expect," "believe," and similar expressions generally identify forward-looking statements. These statements reflect 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 and financial outlook contained in this press release will be realized. Furthermore, the forward-looking statements and financial outlook contained in this press release are made as at the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements or financial outlook, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
©2016 Absolute Software Corporation. All rights reserved. Absolute and Persistence are registered trademarks of Absolute Software Corporation. For patent information, visit www.absolute.com/patents. The Toronto Stock Exchange has neither approved nor disapproved of the information contained in this news release.
For more information, please contact:
Public Relations:
Becky Obbema, Interprose
becky.obbema@interprosepr.com or 1 408 778 2024
Investor Relations:
Kristen Dickson, NATIONAL Equicom
kdickson@national.ca or 1 416 848 1429
ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of Financial Position
(Expressed in United States dollars) (Unaudited)
ABSOLUTE SOFTWARE CORPORATION
Consolidated Statements of Operations and Comprehensive Income
Three months and year ended June 30, 2016 and 2015
(Expressed in United States dollars) (Unaudited)
ABSOLUTE SOFTWARE CORPORATION
Consolidated Statements of Changes in Shareholders' Deficiency
(Expressed in United States dollars) (Unaudited)
ABSOLUTE SOFTWARE CORPORATION
Consolidated Statements of Cash Flows
Three months and year ended June 30, 2016 and 2015
(Expressed in United States dollars) (Unaudited)
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