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Optiva Inc. Reports Third Quarter 2018 Financial Results

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Optiva Inc. Reports Third Quarter 2018 Financial Results

Canada NewsWire

 - Turnaround on track with industry-changing product innovation -

TORONTO, Aug. 8, 2018 /CNW/ - Optiva Inc. (TSX:OPT), an innovative software company that delivers mission-critical monetization and subscriber management solutions to leading communication service providers (CSPs) globally, reported results for its fiscal third quarter ended June 30, 2018. (All figures are in U.S. dollars unless otherwise stated.)

Third Quarter 2018 Financial Highlights

(Comparisons made between fiscal Q3FY2018 and fiscal Q3FY2017 results, unless otherwise noted)

  • Revenue totaled $32.0 million compared to $32.6 million;
  • Gross profit was $22.4 million (70% gross margin) compared to $18.6 million (57% gross margin);
  • Recurring revenue was 71% of revenue, compared to 67%;
  • Net loss was $3.5 million, or $0.68 loss per share compared to a net loss of $26.7 million, or $12.33 loss per share.

"In Q3, we continued our focus on the execution of our Strategic Plan," said Danielle Royston, CEO of Optiva. "The Customer Success program is progressing, with several, key project milestones delivered to customers. We have strengthened our focus on R&D, and we are delivering on our $100 million investment promise to revitalize our products. Most notably, we announced the availability of Optiva Charging Engine™ on KubernetesⓇ and Google CloudⓇ Spanner. While we have more challenges ahead of us, we are excited about the opportunity of bringing cloud to telcos and being regarded as the disruptive, innovative up-and-comer."

Business Highlights

Please refer to the section regarding Forward-Looking Statements below, which form an integral part of this release. These results, along with the annual audited consolidated financial statements and the Company's MD&A, are available on the Company's website at www.optiva.com and on SEDAR at www.sedar.com.

Conference Call

The Company will host a conference call tomorrow, August 9, 2018, to discuss its Q3 2018 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 9, 2018
Time: 8:30 a.m. Eastern time (5:30 a.m. Pacific time)
Dial-In Number: 1 (888) 231-8191
International: 1 (647) 427-7450
Conference ID#: 1878136

The webcast will be available for replay via Optiva's investor relations website (www.optiva.com) or https://bit.ly/2LnNp6l.

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 until 12:00 midnight (EST) Thursday, August 16, 2018.

Toll-Free Replay Number: 1 (855) 859-2056
International Replay Number: 1 (416) 849-0833
Replay PIN: 1878136

Media Inquiries: media@optiva.com

About Optiva Inc.

Optiva Inc. monetizes today's digital world for communications service providers. Our portfolio of subscriber management software enables real-time billing, charging, policy management and user experience functionality that is mission-critical for our customers' growth and innovation. Available on-premise or in the cloud, Optiva™ solutions are designed to deliver the most impact for the best value. Our deep market knowledge and powerful analytical insights coupled with the Customer Success program ensure our customers have what they need to achieve their strategic business goals. Established in 1999, Optiva Inc. can be found on the Toronto Stock Exchange (TSX:OPT). For more information, please go to www.optiva.com.

Non-IFRS Measures

The Company reports "Recurring revenue," which is not a financial measure calculated and presented in accordance with International Financial Reporting Standards (IFRS), should not be considered in isolation or as a substitute to revenue. Recurring revenue includes revenue from support and maintenance agreements, long term service agreements, and term-based product licenses and software subscription.

Other companies (including competitors) may define recurring revenue differently. The Company presents recurring revenue because management believes this to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in Optiva's industry. Management uses this information internally for forecasting and budgeting. It may not be indicative of the historical operating results of Optiva nor is it intended to be predictive of potential future results.

Forward-Looking Statements 

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. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Persons reading this news release are cautioned that such information may not be appropriate for other purposes. Such forward-looking statements include statements respecting revenue visibility for the Fiscal 2018; the impact of the challenging macro environment on the Company's revenue; the impact of our restructuring initiatives and ongoing cost management efforts on our results in  next year; as well as statements regarding Optiva's future plans, objectives or performance for the current period and subsequent periods and regarding the markets for our products. These statements reflect current assumptions and expectations regarding future events and operating performance and speak only as of the date of this document. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially. Such factors include, but are not limited to, assumptions respecting : (i) the conversion of sales pipeline into orders and orders into revenue based on the extent and timing of historical conversion; (ii)  the anticipated mix of the sale of products and services of the Company and associated margin being consistent with that realized in the past; (iii) the ability of Optiva to bring new products and services to market and to increase sales; (iv) the strength of the Company's product development pipeline; (v) the estimated size and growth prospects of the markets Optiva seeks to address; (vi) the Company's competitive position in those markets and its ability to take advantage of future opportunities in those markets; (vii) the benefits of the Company's products and services to be realized by its customers; (viii) the demand for the Company's products and services and the extent of deployment of the Company's products and services; (ix) the Company's financial condition and capital requirements; * the stability of general economic and market conditions; (xi) currency exchange rates and interest rates; (xii) capital markets continuing to provide the Company with access to capital. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: the failure of demand for Optiva's products to develop as anticipated, the failure to obtain customer orders or meet customer requirements, the inability of Optiva's products to perform as expected, the inability of Optiva to achieve anticipated cost savings in the time frames and to the extent anticipated, unanticipated negative impacts on customer service or product development as a result of costs savings implemented, a material adverse change in the affairs of Optiva, and the factors discussed under the "Risk Factors" section of Optiva's most recently filed AIF which is available on SEDAR at www.sedar.com and on Optiva's web-site at www.optiva.com. 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,



2018


2017






Assets










Current assets:






Cash and cash equivalents

$

54,614,838

$

110,891,744


Trade accounts and other receivables 


21,231,568


26,329,505


Unbilled revenue


15,613,837


17,928,405


Prepaid expenses


1,876,281


2,205,887


Income taxes receivable


5,573,290


4,329,580


Other assets


394,030



Inventories 


1,095,363


1,101,929


Total current assets 


100,399,207


162,787,050






Restricted cash 


3,578,134


4,553,623

Property and equipment


728,948


3,457,611

Deferred income taxes 


2,215,686


2,328,129

Investment tax credits


355,274


374,387

Other assets



1,353,968

Intangible assets


19,389,379


25,505,620

Goodwill


32,271,078


32,271,078

Total assets

$

158,937,706

$

232,631,466






Liabilities and Shareholders' Equity (Deficit)










Current liabilities:






Trade payables 

$

13,010,838

$

11,229,091


Accrued liabilities 


22,868,028


16,853,190


Provisions 


24,179,144


18,653,817


Income taxes payable 


195,677


322,403


Deferred revenue


18,236,192


15,572,620


Total current liabilities 


78,489,879


62,631,121






Deferred revenue 


1,041,922


894,409

Other liabilities 


1,290,155


807,390

Pension and other long-term employment benefit plans


17,285,292


17,886,630

Provisions


581,131


824,626

Preferred shares 


57,433,340


59,670,913

Series A Warrant


19,439,944


29,622,772

Deferred income taxes


120,000


120,000

Total liabilities


175,681,663


172,457,861

Shareholders' equity (deficit):






Share capital  


248,680,325


248,680,325


Standby Warrant 


997,500


997,500


Treasury stock 


(141,917)


(141,917)


Contributed surplus 


13,131,426


11,826,454


Deficit  


(270,949,868)


(192,727,334)


Accumulated other comprehensive loss 


(8,461,423)


(8,461,423)


Total shareholders' equity (deficit)  


(16,743,957)


60,173,605






Total liabilities and shareholders' equity

$

158,937,706

$

232,631,466

 

OPTIVA INC.

Condensed Consolidated Interim Statements of Comprehensive Loss

(Expressed in U.S. dollars, except per share and share amounts)

(Unaudited)



Three months ended

Nine months ended


June 30,

June 30,


2018

2017

2018

2017










Revenue:











Software, services and other

$

10,358,089

$

12,387,266

$

29,376,407

$

39,855,491



Support and subscription 


21,676,078


20,189,307


64,952,705


64,295,923



32,034,167


32,576,573


94,329,112


104,151,414










Cost of revenue


9,676,473


13,964,206


41,833,923


44,295,030










Gross profit 


22,357,694


18,612,367


52,495,189


59,856,384










Operating expenses:











Sales and marketing 


3,116,201


4,384,291


8,957,567


13,947,590



General and administrative


5,928,544


10,742,398


24,552,985


27,084,194



Research and development 


17,344,922


10,622,543


47,410,763


29,110,061



Restructuring costs


1,552,824


14,278,115


50,783,369


18,358,589



27,942,491


40,027,347


131,704,684


88,500,434










Loss from operations 


(5,584,797)


(21,414,980)


(79,209,495)


(28,644,050)










Foreign exchange gain (loss)


2,518,468


(2,449,022)


1,656,895


(3,114,891)

Other expense              





(1,450,928)

Finance income


116,665



270,867


230,205

Finance recovery (cost) 


1,149,825


(1,530,806)


2,352,921


(10,912,651)










Loss before income taxes


(1,799,839)


(25,394,808)


(74,928,812)


(43,892,315)










Income tax expense (recovery):











Current 


1,726,038


1,463,390


3,302,783


4,862,036



Deferred 


14,234


(109,199)


(9,061)


(387,604)



1,740,272


1,354,191


3,293,722


4,474,432










Net Loss and comprehensive loss

$

(3,540,111)

$

(26,748,999)

$

(78,222,534)

$

(48,366,747)










Loss per subordinate voting share*:











Basic

$

(0.68)

$

(12.32)

$

(14.95)

$

(22.32)



Diluted


(0.68)


(12.32)


(14.95)


(22.32)



















Weighted average number of










subordinate voting shares*:











Basic


5,233,047


2,170,338


5,233,047


2,167,422



Diluted


5,233,047


2,170,338


5,233,047


2,167,422




















* Note – During the quarter ended June 30, 2018 the Company completed the Share Consolidation. All share and per share numbers, options, restricted and performance share units and deferred share units, including comparatives, have been adjusted to reflect the effect of the Share Consolidation.

 

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,



2018


2017


2018


2017










Cash provided by (used in):


















Operating activities:










Loss for the period 

$

(3,540,111)

$

(26,748,999)

$

(78,222,534)

$

(48,366,747)


Adjustments for:











Depreciation of property and equipment


24,344


658,921


2,328,849


2,240,675



Amortization of intangible assets


1,526,153


2,221,673


6,156,475


6,656,214



Finance income 


(116,665)



(270,867)


(230,205)



Finance costs


(1,149,825)


1,530,806


(2,352,921)


10,912,651



Pension


(940,537)


1,497,408


(601,338)


1,454,736



Income tax expense


1,740,272


1,354,191


3,293,722


4,474,432



Unrealized foreign exchange loss (gain)


630,967


(875,970)


698,880


520,641



Share-based compensation


304,332


666,937


2,293,159


(71,990)



Change in provisions


(21,209,638)


9,268,033


5,281,832


(2,386,841)



Loss on disposal of property and equipment


306,163



416,795




Change in non-cash operating working capital


7,413,024


13,517,929


18,959,888


12,987,877



(15,011,521)


3,090,929


(42,018,060)


(11,808,557)



Interest paid


(31,940)


(42,745)


(108,760)


(209,247)



Interest received


61,071


48,718


218,361


260,915



Income taxes paid


(2,169,941)


(2,138,455)


(4,947,171)


(6,382,229)



(17,152,331)


958,447


(46,855,630)


(18,139,118)










Financing activities:











Proceeds from exercise of stock options



846



202,536



Interest paid on loans and borrowings





(2,330,904)



Repayment of loans and borrowings





(52,750,000)



Payment of dividends


(2,000,000)



(9,640,670)




Issue of preferred shares and












warrant net of transaction costs





79,861,542



(2,000,000)


846


(9,640,670)


24,983,174










Investing activities:











Purchase of property and equipment 




(5,538)


(309,154)



Purchase of intangible assets




(9,985)




Decrease in restricted cash


88,817


(793,969)


975,489


261,790



88,817


(793,969)


959,966


(47,364)










Effect of foreign exchange rate changes on










cash and cash equivalents


(876,230)


1,242,266


(740,572)


798,338










Increase (decrease) in cash and cash










equivalents


(19,939,744)


1,407,590


(56,276,906)


7,595,030










Cash and cash equivalents,










beginning of period


74,554,582


43,267,950


110,891,744


37,080,510










Cash and cash equivalents,










end of period

$

54,614,838

$

44,675,540

$

54,614,838

$

44,675,540

 

SOURCE Optiva Inc.

View original content: http://www.newswire.ca/en/releases/archive/August2018/08/c2922.html

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