Steady Growth and Improved Profitability Drive
Cash Flow of $14 Million USD
Absolute Software Corporation (Nasdaq: ABST) (TSX: ABST) (the
“Company”), the only provider of self-healing, intelligent security
solutions, today announced its financial results for its third
quarter fiscal 2023 ended March 31, 2023. All dollar figures are
stated in U.S. dollars, unless otherwise indicated.
THIRD QUARTER FISCAL 2023 (“Q3 F2023”) OVERVIEW
Key Financial Metrics
- Revenue was $58.8 million for Q3 F2023, an increase of 13%
compared to Q3 of fiscal year 2022 (“Q3 F2022”).
- Adjusted Revenue(1) was $59.2 million for Q3 F2023, an increase
of 9% compared to Q3 F2022.
- Net loss was $4.0 million for Q3 F2023, an improvement of 38%
compared to Q3 F2022.
- Adjusted EBITDA(1) was $15.3 million or 26% of Adjusted
Revenue(1) for Q3 F2023, an increase from $13.8 million or 25% of
Adjusted Revenue for Q3 F2022.
- Total ARR(2) on March 31, 2023, was $229.5 million, an increase
of 13% compared to Q3 F2022.
- Enterprise & Government Total ARR increased by 15%
year-over-year, representing 79% of Total ARR on March 31,
2023.
- Education Total ARR increased by 5% year-over-year,
representing 21% of Total ARR on March 31, 2023.
- New Logo ARR(2) was $4.2 million for Q3 F2023, an increase from
$3.2 million for Q3 F2022.
- Net Dollar Retention(2) was 105% for Q3 F2023, a decrease from
107% for Q3 F2022.
- Cash from operating activities was $14.3 million for Q3 F2023,
a decrease of 16% from $17.0 million for Q3 F2022.
- A quarterly dividend of CAD$0.08 per outstanding common share
was paid during Q3 F2023.
Notes:
(1)
Adjusted Revenue and Adjusted
EBITDA are non-IFRS measures. Refer to the “Use of non-IFRS
measures and key metrics” section of the Q3 F2023 MD&A for
further discussion of these measures and the “Results of
Operations” section of this MD&A for reconciliation to the
nearest IFRS measure.
(2)
Total ARR, New Logo ARR and Net
Dollar Retention are key metrics. Refer to the “Use of non-IFRS
measures and key metrics” section of the Q3 F2023 MD&A for
further discussion of these measures.
FINANCIAL HIGHLIGHTS
USD millions, except percentages, number of shares, and per
share amounts
Q3 F2023
Q3 F2022
Change
YTD F2023
YTD F2022
Change
Revenue
Cloud and subscription services
$
56.2
$
49.5
14%
$
162.4
$
137.5
18%
Managed professional services
1.1
1.0
10%
3.0
3.0
—%
Recurring revenue(1)
57.3
50.5
13%
165.4
140.5
18%
Other(1)
1.5
1.5
—%
4.1
4.3
(5%)
Total revenue
$
58.8
$
52.0
13%
$
169.5
$
144.8
17%
Adjusted Revenue(2)
$
59.2
$
54.5
9%
$
171.0
$
156.4
9%
Total annual recurring revenue
(“ARR”)(3)
$
229.5
$
202.9
13%
Net loss
$
(4.0)
$
(6.5)
(38%)
$
(20.5)
$
(19.1)
7%
Per share – basic
(0.08)
(0.13)
(0.39)
(0.38)
Per share – diluted
(0.08)
(0.13)
(0.39)
(0.38)
As a percentage of revenue
(7%)
(13%)
(12%)
(13%)
Adjusted EBITDA(2)
$
15.3
$
13.8
11%
$
39.6
$
40.4
(2%)
As a percentage of Adjusted Revenue
26%
25%
23%
26%
Cash from operating activities
$
14.3
$
17.0
(16%)
$
30.4
$
31.1
(2%)
Dividends paid
$
3.1
$
3.2
(3%)
$
9.4
$
9.5
(1%)
Per share (CAD)
0.08
0.08
0.24
0.24
As at
March 31, 2023
June 30, 2022
Change
Cash, cash equivalents, and short-term
investments
$
50.2
$
64.0
(22%)
Total assets
528.1
555.6
(5%)
Deferred revenue(4)
208.9
210.5
(1%)
Total non-current financial
liabilities(5)
262.6
271.4
(3%)
Common shares outstanding (millions)
53.1
51.1
4%
Notes:
(1)
Recurring revenue represents
revenue derived from cloud services, term-based subscription
licenses, maintenance services 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, Adjusted
EBITDA, and Adjusted EBITDA as a percentage of Adjusted Revenue are
non-IFRS measures. Refer to the “Use of non-IFRS measures and key
metrics” section of the Q3 F2023 MD&A for further discussion of
these measures and the “Results of Operations” section of the Q3
F2023 MD&A for reconciliation to the nearest IFRS measure.
(3)
Total ARR is a key metric. Refer
to the “Use of non-IFRS measures and key metrics” section of the Q3
F2023 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.
Q3 F2023 Business Highlights
- Announced Federal Risk and Authorization Management Program
(FedRAMP) Ready designation for Absolute Secure Endpoint.
- Continued expanding our Application Resilience™ ecosystem of
more than 80 mission-critical applications; new additions included
eClinicalWorks, Forescout® SecureConnector, HCL BigFix, IMTLazarus,
Pixart® MDM, Plurilock™ CloudCodes™, UNOWHY™, and XM Cyber
HaXM.
- Exited Q3 with more than 14 million active endpoints, a four
percent increase year over year.
- Extended our ASUS OEM relationship to enable them as a global
distribution partner.
Q3 Industry Awareness
- Recognized in the Forrester Endpoint Security Landscape
Report.
- Featured in the Forrester TechTide Report for End-User
Computing, in the newly established category of “firmware-embedded
persistence.”
- Highlighted in the Forrester Best Practices Report for Securely
Offboarding Employees.
- Named a gold winner in the 2023 Cybersecurity Excellence
Awards, with Absolute Ransomware Response named as an
industry-leading Endpoint Security product.
- Named a Leader for the thirteenth consecutive quarter in the G2
Spring 2023 Grid® Report for Endpoint Management and for the third
consecutive quarter in the G2 Grid® Report for Zero Trust
Networking.
Quarterly Dividend
On April 19, 2023, we declared a quarterly dividend of CAD$0.08
per share on our common shares, payable in cash on May 24, 2023 to
shareholders of record at the close of business on May 11,
2023.
Acquisition by Crosspoint Capital Partners, L.P.
On May 10, 2023, the Company entered into an Arrangement
Agreement with funds affiliated with Crosspoint Capital Partners,
L.P. (“Crosspoint”), whereby Crosspoint has agreed to acquire all
of the issued and outstanding common shares (the "Common Shares")
of the Company (the “Acquisition”). Under the terms of the
Arrangement Agreement, Absolute shareholders will receive $11.50
per Common Share in cash on completion of the Acquisition,
corresponding to an enterprise value of approximately $870 million,
inclusive of the debt.
As previously declared, Absolute will be paying a dividend of
CAD$0.08 per share on its Common Shares, payable in cash on May 24,
2023 to shareholders of record at the close of business on May 11,
2023. As part of Arrangement Agreement, Absolute will suspend its
dividend going forward.
The Acquisition, which was approved unanimously by the Board is
subject to shareholder approval, court and regulatory approvals and
clearance, and other customary closing conditions. Subject to the
satisfaction of such conditions, the Acquisition is expected to be
completed during the second half of 2023. If the Arrangement
Agreement is terminated under certain conditions, either the
Company or Crosspoint is required to pay a termination fee; in the
case of the Company, the termination fee is $19.0 million, and in
the case of Crosspoint, the termination fee is $35.0 million.
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 March 31, 2023 can be obtained today from
Absolute’s corporate website at www.absolute.com. The documents
will also be available under Absolute’s SEDAR profile at
www.sedar.com and on EDGAR at www.sec.gov. Additionally, the
Company today will publish on the Investor Relations section of its
website (www.absolute.com/company/investors/) a Q3 F2023 Earnings
Presentation and a dashboard of Selected Operating and Financial
Metrics.
Conference Call
The company will not host a conference call to discuss Q3
financial results, previously scheduled for Monday, May 15, 2023 at
5:00 p.m. Eastern Time.
About Absolute Software
Absolute Software (NASDAQ: ABST) (TSX: ABST) is the only
provider of self-healing, intelligent security solutions. Embedded
in more than 600 million devices, Absolute is the only platform
offering a permanent digital connection that intelligently and
dynamically applies visibility, control and self-healing
capabilities to endpoints, applications, and network connections -
helping customers to strengthen cyber resilience against the
escalating threat of ransomware and malicious attacks. Trusted by
nearly 21,000 customers, G2 recognized Absolute as a Leader for the
thirteenth consecutive quarter in the Spring 2023 Grid® Report for
Endpoint Management and for the third consecutive quarter in the G2
Grid Report for Zero Trust Networking.
©2023 Absolute Software Corporation. All rights reserved.
ABSOLUTE, the ABSOLUTE logo, and NETMOTION are registered
trademarks of Absolute Software Corporation or its subsidiaries.
Other names or logos mentioned herein may be the trademarks of
Absolute or their respective owners. The absence of the symbols ™
and ® in proximity to each trademark, or at all, herein is not a
disclaimer of ownership of the related trademark.
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 International
Accounting Standards Board 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.
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.
Reconciliation of non-IFRS measures from IFRS measures are
presented below.
Adjusted Revenue
(USD millions)
Q3 F2023
Q3 F2022
YTD F2023
YTD F2022
Revenue
$
58.8
$
52.0
$
169.5
$
144.8
Adjustments:
Fair value adjustments relating to
acquired deferred revenue
0.4
2.5
1.5
11.6
Adjusted Revenue
$
59.2
$
54.5
$
171.0
$
156.4
Adjusted Gross Margin
(USD millions)
Q3 F2023
Q3 F2022
YTD F2023
YTD F2022
Gross margin
$
48.7
$
42.9
$
138.4
$
117.8
Adjustments:
Depreciation and amortization(1)
2.7
2.8
8.4
8.4
Share-based compensation
0.7
0.2
2.7
1.5
Fair value adjustments relating to
acquired deferred revenue
0.4
2.5
1.5
11.6
Adjusted Gross Margin
$
52.5
$
48.4
$
151.0
$
139.3
Adjusted Gross Margin %
89 %
89 %
88 %
89 %
Adjusted Operating Expenses
(USD millions)
Q3 F2023
Q3 F2022
YTD F2023
YTD F2022
Total Operating Expense
$
46.8
$
44.5
$
143.2
$
126.8
Adjustments:
Depreciation and amortization(1)
(3.3)
(3.3)
(10.0)
(10.6)
Share-based compensation
(3.0)
(4.3)
(15.8)
(11.1)
Fair value adjustments relating to
acquired deferred commission
—
0.3
0.1
1.6
Acquisition and integration costs
(1.3)
(1.7)
(3.8)
(6.6)
Litigation costs
(1.9)
(0.9)
(2.2)
(1.3)
Restructuring costs
(0.1)
—
(0.1)
—
Adjusted Operating Expense
$
37.2
$
34.6
$
111.4
$
98.8
(1)
Depreciation and amortization includes
depreciation of property and equipment, amortization of
right-of-use assets, and amortization of acquired intangible
assets.
Adjusted EBITDA
(USD millions)
Q3 F2023
Q3 F2022
YTD F2023
YTD F2022
Net loss
$
(4.0)
$
(6.5)
$
(20.5)
$
(19.1)
Adjustments:
Depreciation and amortization(1)
6.1
6.1
18.4
19.0
Share-based compensation
3.7
4.6
18.5
12.6
Interest income
(0.2)
—
(0.5)
—
Interest expense
7.7
5.1
21.0
15.4
Foreign exchange loss
0.1
0.3
0.1
0.5
Income tax recovery
(1.8)
(0.6)
(4.9)
(5.9)
Fair value adjustments relating to
acquired deferred revenue
0.4
2.5
1.5
11.6
Fair value adjustments relating to
acquired deferred commission
—
(0.3)
(0.1)
(1.6)
Acquisition and integration costs(2)
1.3
1.7
3.8
6.6
Litigation costs
1.9
0.9
2.2
1.3
Restructuring costs
0.1
—
0.1
—
Adjusted EBITDA
$
15.3
$
13.8
$
39.6
$
40.4
(1)
Depreciation and amortization includes
depreciation of property and equipment, amortization of
right-of-use assets, and amortization of acquired intangible
assets.
(2)
Costs for Q3 F2023 and YTD F2023 include
professional fees and other costs associated with the integration
of NetMotion. Costs for Q3 F2022 and YTD F2022 include professional
fees and other costs associated with the acquisition and
integration of NetMotion.
Forward-Looking Statements
This press release contains certain forward-looking statements
and forward-looking information, as defined under applicable U.S.
and Canadian securities laws (collectively, “forward-looking
statements”), which relate to future events or Absolute’s future
business, operations, and financial performance and condition.
Forward-looking statements normally contain words like “will”,
“intend”, “anticipate”, “could”, “should”, “may”, “might”,
“expect”, “estimate”, “forecast”, “plan”, “potential”, “project”,
“assume”, “contemplate”, “believe”, “shall”, “scheduled”, and
similar terms and, within this press release, include, without
limitation: any statements (express or implied) respecting:
Absolute’s future plans, strategies, and objectives, including
plans, strategies, and objectives arising out of the COVID-19
pandemic or related to the NetMotion acquisition; projected
revenues, expenses, margins, and profitability; future trends,
opportunities, challenges, and growth in Absolute’s industry; the
impacts of the COVID-19 pandemic on Absolute’s business,
operations, prospects, and financial results (including, without
limitation, greater/continued remote working and/or distance
learning); the increase in volume and range of data breaches and
cyber threats; the anticipated operational, financial, and
competitive benefits, and synergies of the NetMotion acquisition;
Absolute’s ability to grow revenue by selling to new customers and
increasing subscriptions with existing customers; Absolute’s
ability to renew customers’ subscriptions; Absolute’s ability to
maintain and enhance its competitive advantages within its industry
and in certain markets; Absolute’s ability to remain compatible
with existing and new PC and other device operating systems; the
maintenance and development of Absolute’s PC OEM and other channel
partner networks; existing and new product functionality and
suitability; Absolute’s product and research and development
strategies and plans; Absolute’s business development strategies
and plans; Absolute’s privacy and data security controls; the
seasonality of future revenues and expenses; Absolute’s ability to
meet its commitments under and remain in compliance with its the
credit agreement with Benefit Street Partners LLC and its
affiliates; the future availability of working capital and any
required financing; the suspension of our dividend; the addition
and retention of key personnel; increases to brand awareness and
market penetration; future corporate, asset, or technology
acquisitions; strategies respecting intellectual property
protection and licensing; active and potential future litigation or
product liability; future fluctuations in applicable tax rates,
foreign exchange rates, and/or interest rates; the future
availability of tax credits; Absolute’s foreign operations;
expenses, regulatory obligations, and/or legal exposures as a
result of its SEC registration and Nasdaq listing; changes and
planned changes to accounting policies and standards and their
respective impact on Absolute’s financial reporting; Absolute’s
environmental, social, and governance initiatives; macroeconomic
uncertainty, including inflationary pressures and risks of economic
recession; foreign exchange fluctuations macroeconomic uncertainty,
including inflationary pressures and risks of economic recession;
foreign exchange fluctuations; the continued effectiveness of
Absolute’s accounting policies and internal controls over financial
reporting; other aspects of Absolute’s strategies, operations or
operating results; the proposed timing and completion of the
Acquisition; approval of the Acquisition by two-thirds of the votes
by shareholders of the Company at a special meeting of the
securityholders of the Company; the satisfaction of the conditions
precedent to the Acquisition; timing, receipt and anticipated
effects of court and other approvals; the delisting from the TSX
and NASDAQ; and the closing of the Acquisition and other statements
that are not statements of historical facts. Forward-looking
statements are provided for the purpose of presenting information
about management’s current expectations and plans relating to the
future and to allow investors and others to get a better
understanding of Absolute’s anticipated financial position, results
of operations, and operating environment. Readers are cautioned
that such information may not be appropriate for other
purposes.
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)
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 prioritization by the United States Federal Risk and
Authorization Management Program (“FedRAMP”) 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; 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 (if any other
than NetMotion); 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 SEC
registration and Nasdaq listing; Absolute will not face any
material unexpected costs related to product liability or
warranties; foreign jurisdictions will not impose unexpected risks;
Absolute’s environmental, social, and governance initiatives will
deliver positive outcomes; economic and market conditions, as well
as macroeconomic uncertainty (including, without limitation, as
affected by the COVID-19 pandemic) will not impose unexpected risks
or challenges; Absolute will maintain or enhance its accounting
policies and standards and internal controls over financial
reporting; risks that a condition to closing of the Acquisition may
not be satisfied; risks that the requisite securityholder approval,
court or other applicable approvals for the Acquisition may not be
obtained or be obtained subject to conditions that are not
anticipated; the effect of the announcement of the proposed
Acquisition on the ability of Absolute to retain and hire key
personnel and maintain business relationships with customers,
suppliers and others with whom they each do business, or on
Absolute’s operating results; the market price of common stock and
business generally; potential legal proceedings relating to the
proposed Acquisition and the outcome of any such legal proceeding;
the inherent risks, costs and uncertainties associated with
transitioning the business successfully and risks of not achieving
all or any of the anticipated benefits of the Acquisition, or the
risk that the anticipated benefits of the Acquisition may not be
fully realized or take longer to realize than expected; the
occurrence of any event, change or other circumstances that could
give rise to the termination of the Arrangement Agreement; the risk
that the Acquisition will not be consummated within the expected
time period, or at all; competitive changes in the marketplace
including, but not limited to, the pace of growth or adoption rates
of applicable products or technologies; downturns in the business
cycle; and worldwide economic and political disruptions as a result
of current events.
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 Q2 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 SEC registration and Nasdaq listing; that Absolute is
reliant on its key personnel; that Absolute may be subject to
litigation or other dispute resolution from time-to-time; that
Absolute may become subject to material adverse judgments, damages
awards, or regulatory sanctions; risks related to Absolute’s
foreign operations; that Absolute may be unable to successfully
manage and/or integrate any future acquisitions; risks related to
Absolute’s amortization of revenue over the term of its customer
subscriptions including future ARR impact indicating future
potential annualized revenue impact; risks related to Absolute’s
reliance on its reseller and other partners for billings; income
tax related risks; that Absolute may not currently have or maintain
adequate insurance coverages for the risks associated with its
business; that Absolute may become subject to product liability
claims; risks related to Absolute’s reliance on copyrights,
trademarks, trade secrets, and confidentiality procedures and
similar contractual provisions; risks related to economic and
political uncertainty; and Absolute will not be able to maintain or
enhance its accounting policies and standards and internal controls
over financial reporting.. Additional material risks and
uncertainties applicable to the forward-looking statements herein
include, without limitation, unforeseen events, developments, or
factors causing any of the aforesaid expectations, assumptions, and
other factors ultimately being inaccurate or irrelevant. Many of
these factors are beyond the control of Absolute.
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.
ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of
Financial Position
(Unaudited)
(Expressed in thousands of United
States dollars, except number of shares)
March 31, 2023
June 30, 2022
Assets
Current assets:
Cash and cash equivalents
$
49,846
$
63,669
Short-term investments
360
360
Trade and other receivables
43,282
52,722
Income tax receivable
405
1,029
Prepaid expenses and other
8,748
9,086
Contract acquisition assets – current
11,697
9,518
114,338
136,384
Property and equipment
4,352
5,195
Right-of-use assets
7,041
9,456
Deferred income tax assets
51,685
39,428
Contract acquisition assets
5,037
6,213
Intangible assets
104,214
117,537
Goodwill
240,755
240,755
Other assets
650
650
$
528,072
$
555,618
Liabilities
Current liabilities:
Trade and other payables
$
32,955
$
32,544
Derivative liabilities
401
83
Income tax payable
2,267
2,143
Lease liabilities – current
4,088
4,069
Long-term debt – current
1,538
1,632
Deferred revenue – current
135,193
133,852
176,442
174,323
Lease liabilities
4,341
7,210
Long-term debt
258,229
264,230
Deferred revenue
73,660
76,619
Deferred income tax liability
27,239
30,037
539,911
552,419
Shareholders’ (Deficiency)
Equity
Share capital
179,708
160,951
Equity reserve
47,637
51,333
Treasury shares
(264)
(264)
Accumulated other comprehensive loss
(459)
(207)
Deficit
(238,461)
(208,614)
(11,839)
3,199
$
528,072
$
555,618
ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of
Operations and Comprehensive Loss
(Unaudited)
(Expressed in thousands of United
States dollars, except number of shares and per share
amounts)
Three months ended
March 31,
Nine months ended March
31,
2023
2022
2023
2022
Revenue
$
58,771
$
51,985
$
169,530
$
144,784
Cost of revenue
10,119
9,098
31,110
27,026
Gross margin
48,652
42,887
138,420
117,758
Operating expenses
Sales and marketing
23,114
19,277
68,653
59,838
Research and development
12,949
12,434
40,352
33,949
General and administration
10,817
12,848
34,186
33,124
46,880
44,559
143,191
126,911
Operating income (loss)
1,772
(1,672)
(4,771)
(9,153)
Other (expense) income
Interest income
166
2
552
3
Interest expense
(7,652)
(5,085)
(20,979)
(15,443)
Foreign exchange (loss) gain
(88)
(326)
(122)
(478)
(7,574)
(5,409)
(20,549)
(15,918)
Net loss before income taxes
(5,802)
(7,081)
(25,320)
(25,071)
Income tax recovery
1,831
624
4,864
5,923
Net loss
$
(3,971)
$
(6,457)
$
(20,456)
$
(19,148)
Items that may be reclassified
subsequently to profit or loss:
Unrealized gain (loss) on derivatives, net
of tax
290
108
(252)
(203)
Foreign currency translation
—
(45)
—
(63)
Total comprehensive loss
$
(3,681)
$
(6,394)
$
(20,708)
$
(19,414)
Basic net loss per common share
$
(0.08)
$
(0.13)
$
(0.39)
$
(0.38)
Diluted net loss per common share
$
(0.08)
$
(0.13)
$
(0.39)
$
(0.38)
Weighted average number of common shares
outstanding
Basic
52,795,073
50,727,764
52,162,768
50,153,476
Diluted
52,795,073
50,727,764
52,162,768
50,153,476
ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of
Changes in Shareholders’ (Deficiency) Equity
(Unaudited)
(Expressed in thousands of United
States dollars, except number of shares)
Share Capital
Number of
Common
shares
Amount
Equity
reserve
Treasury
shares
Accumulated
Other
Comprehensive
Income
Deficit
Total
Balance, June 30, 2021
49,573,829
$
151,521
$
46,489
$
(264)
$
188
$
(171,492)
$
26,442
Shares issued on stock option exercise
273,398
1,572
(194)
—
—
—
1,378
Shares issued under Employee Stock
Ownership Plan ("ESOP")
94,697
853
—
—
—
—
853
Shares issued under Performance and
Restricted Share Unit plan ("PRSU")
1,096,408
6,785
(9,783)
—
—
—
(2,998)
Share-based compensation
—
—
13,836
—
—
—
13,836
Cash dividends
—
—
—
—
—
(9,528)
(9,528)
Unrealized loss on derivatives, net
—
—
—
—
(203)
—
(203)
Tax deduction on share issuance costs
—
(73)
—
—
—
—
(73)
Tax deduction on share based
compensation
—
—
(2,441)
—
—
—
(2,441)
Foreign currency translation
—
—
—
—
(63)
—
(63)
Net loss
—
—
—
—
—
(19,148)
(19,148)
Balance, March 31, 2022
51,038,332
$
160,658
$
47,907
$
(264)
$
(78)
$
(200,168)
$
8,055
Balance, June 30, 2022
51,111,769
$
160,951
$
51,333
$
(264)
$
(207)
$
(208,614)
$
3,199
Shares issued under PRSU and Omnibus
Equity Incentive Plan
2,008,397
18,973
(22,577)
—
—
—
(3,604)
Share-based compensation
—
—
18,626
—
—
—
18,626
Cash dividends
—
—
—
—
—
(9,391)
(9,391)
Unrealized loss on derivatives, net
—
—
—
—
(252)
—
(252)
Tax deduction on share issuance costs
—
(216)
—
—
—
—
(216)
Tax deduction on share based
compensation
—
—
255
—
—
—
255
Net loss
—
—
—
—
—
(20,456)
(20,456)
Balance, March 31, 2023
53,120,166
$
179,708
$
47,637
$
(264)
$
(459)
$
(238,461)
$
(11,839)
ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
(Expressed in thousands of United
States dollars)
Three months ended March
31,
Nine months ended March
31,
2023
2022
2023
2022
Cash from (used in):
Operating activities:
Net loss
$
(3,971)
$
(6,457)
$
(20,456)
$
(19,148)
Items not involving cash:
Depreciation of property and equipment
770
847
2,259
2,575
Amortization of right-of-use assets
916
825
2,841
2,764
Amortization of intangible assets
4,441
4,441
13,323
13,623
Amortization of contract acquisition
assets
2,914
3,641
9,592
11,155
Share-based compensation
3,699
4,553
18,453
12,579
Current and deferred income taxes
(4,898)
(1,275)
(14,969)
(8,503)
Interest expense
7,580
4,999
20,753
15,197
Unrealized foreign exchange loss
69
163
60
65
Changes in non-cash operating working
capital:
Trade and other receivables
927
1,673
9,440
(3,548)
Income tax receivable
895
22
624
(341)
Prepaid expenses and other
909
(1,976)
339
(3,155)
Contract acquisition assets
(2,726)
(3,304)
(10,595)
(11,887)
Trade and other payables
942
2,311
239
925
Income tax payable
1,443
109
123
180
Deferred revenue
417
6,474
(1,618)
18,657
Cash from operating activities
14,327
17,046
30,408
31,138
Investing activities:
Purchase of property and equipment
(329)
(247)
(1,285)
(869)
Acquisition of NetMotion
—
(309)
—
(342,008)
Cash used in investing activities
(329)
(556)
(1,285)
(342,877)
Financing activities:
Dividends paid
(3,109)
(3,153)
(9,391)
(9,528)
Proceeds from exercise of stock options
and ESOP
—
415
—
1,793
Tax remittances on share-based
compensation
(1,402)
—
(3,386)
(354)
Payment of lease liabilities
(1,153)
(864)
(3,333)
(2,874)
Proceeds from long-term debt
—
—
—
269,500
Transaction costs on long-term debt
—
—
—
(1,957)
Principal repayment of long-term debt
(675)
(688)
(7,037)
(2,063)
Interest payment on long-term debt
(7,212)
(4,617)
(19,517)
(14,042)
Cash (used in) from financing
activities
(13,551)
(8,907)
(42,664)
240,475
Foreign exchange effect on cash
(91)
(104)
(282)
(187)
Increase (decrease) in cash and cash
equivalents
356
7,479
(13,823)
(71,451)
Cash and cash equivalents, beginning of
period
49,490
61,236
63,669
140,166
Cash and cash equivalents, end of
period
$
49,846
$
68,715
$
49,846
$
68,715
Selected Operating & Financial
Metrics | Q3 F2023
USD Thousands, except per share data
Q3 F2023
Q2 F2023
Q1 F2023
F2022
Q4 F2022
Q3 F2022
Q2 F2022
ARR
Total ARR
229,544
225,049
215,741
209,546
209,546
202,890
195,577
yoy growth*
13.1%
15.1%
15.1%
16.0%
16.0%
15.7%
15.4%
New Logo ARR
4,187
4,143
4,032
14,485
2,846
3,244
3,663
yoy growth*
29.1%
13.1%
(14.8%)
33.5%
(13.7%)
5.3%
76.2%
Net Dollar Retention
105%
107%
108%
108%
108%
107%
107%
# of Active Endpoints
14,152
13,888
14,129
13,615
13,615
13,565
13,336
yoy growth
4.3%
4.1%
13.0%
17.6%
17.6%
17.2%
16.3%
TOTAL ARR BY VERTICAL
Enterprise & Government
182,393
177,414
169,097
162,957
162,957
158,068
150,632
yoy growth*
15.4%
17.8%
17.5%
17.3%
17.3%
18.5%
16.5%
Education
47,151
47,635
46,644
46,589
46,589
44,822
44,945
yoy growth*
5.2%
6.0%
7.1%
11.7%
11.7%
6.9%
11.9%
TOTAL ARR BY GEOGRAPHY
North America
175,427
172,890
167,163
163,791
163,791
159,220
155,334
yoy growth*
10.2%
11.3%
10.8%
9.8%
9.8%
9.5%
9.4%
International
54,117
52,159
48,578
45,755
45,755
43,670
40,243
yoy growth*
23.9%
29.6%
33.0%
45.0%
45.0%
46.1%
46.8%
REVENUE
Total Adjusted Revenue
59,158
57,695
54,205
210,431
54,001
54,477
52,939
yoy growth*
8.6 %
9.0 %
10.6 %
15.4 %
12.7 %
17.7 %
16.7 %
Total Revenue
58,771
57,194
53,564
197,311
52,527
51,985
49,050
yoy growth
13.1%
16.6%
22.4%
63.4%
65.3%
69.6%
64.3%
Recurring Revenue
57,280
56,203
51,918
191,555
51,025
50,505
47,642
% of revenue
97.5%
98.3%
96.9%
97.1%
97.1%
97.2%
97.1%
yoy growth
13.4%
18.0%
22.5%
63.7%
65.5%
70.1%
64.7%
Cloud Services
56,238
55,223
50,984
187,552
50,033
49,503
46,639
yoy growth
13.6%
18.4%
23.2%
66.8%
67.8%
73.2%
68.6%
Managed Services
1,042
980
934
4,003
992
1,002
1,003
yoy growth
4.0%
(2.3%)
(7.2%)
(13.1%)
(3.2%)
(10.3%)
(20.1%)
Other Revenue
1,491
991
1,646
5,756
1,502
1,480
1,408
% of revenue
2.6%
1.7%
3.1%
2.9%
2.9%
2.8%
2.9%
yoy growth
0.8%
(29.6%)
20.5%
54.1%
59.9%
54.5%
50.9%
Software License
69
113
74
746
203
173
194
yoy growth
(60.1%)
(41.8%)
(58.0%)
100.0%
100.0%
100.0%
100.0%
Other
1,422
878
1,572
5,010
1,299
1,307
1,214
yoy growth
8.8 %
(27.7) %
32.1 %
34.1 %
38.2 %
36.5 %
30.1 %
OTHER METRICS
Adj. Gross Margin (non-IFRS)
52,506
50,796
47,709
187,005
47,668
48,385
47,045
Margin % **
88.8%
88.0%
88.0%
88.9%
88.3%
88.8%
88.9%
Adj. EBITDA (non-IFRS)
15,290
12,810
11,473
55,791
15,420
13,785
13,785
Margin % **
25.8%
22.2%
21.2%
26.5%
28.6%
25.3%
26.0%
Adj. EPS (non-IFRS)
0.11
0.05
0.06
0.41
0.08
0.10
0.13
Weighted avg # of shares outstanding -
basic
52,795
52,408
51,421
50,381
51,067
50,728
50,073
Weighted avg # of shares outstanding -
diluted ***
55,248
54,645
53,764
53,063
53,192
52,556
53,008
Cash From Operating Activities
14,327
904
15,179
39,792
8,653
17,046
14,731
yoy growth
(16.0%)
(93.9%)
(2482.9%)
(15.0%)
(24.4%)
134.3%
9.9%
Cash, cash equivalents, and short-term
investments
50,206
49,850
67,609
64,029
64,029
69,075
61,596
yoy growth
(27.3%)
(19.1%)
21.0%
(54.4%)
(54.4%)
(48.0%)
(53.3%)
Total Deferred Revenue
208,853
208,438
204,068
210,471
210,471
194,326
187,852
yoy growth
7.5%
11.0%
13.9%
31.4%
31.4%
24.0%
21.9%
* Year over year growth for ARR metrics
and Total Adjusted Revenue for F2022 is calculated compared to an
as-if combined basis for F2021. ** 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
Q3 F2023
Q3 F2022
Diluted loss per share
$
(0.08)
$
(0.13)
Adjustments:
Depreciation and amortization(1)
0.11
0.12
Share-based compensation
0.07
0.09
Foreign exchange loss
—
0.01
Fair value adjustments relating to
acquired deferred revenue
0.01
0.05
Fair value adjustments relating to
acquired deferred commission
—
(0.01)
Acquisition and integration costs
0.02
0.03
Litigation costs
0.03
0.02
Income tax effects related to non-GAAP
adjustments(2)
(0.05)
(0.08)
Adjusted EPS
$
0.11
$
0.10
(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 27%.
Diluted weighted average number of Common Shares outstanding for
Adjusted EPS for Q3 F2023 and Q3 F2022 is presented below.
Q3 F2023
Q3 F2022
Basic weighted average number of common
shares outstanding
52,795,073
50,727,764
Effect of dilutive securities:
Stock Option
134,505
69,136
PSU
972,674
720,945
RSU
1,345,781
1,037,798
Diluted weighted average number of common
shares outstanding(1)
55,248,033
52,555,643
(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.
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Investor Relations Joo-Hun Kim IR@absolute.com
212-868-6760
Media Relations Becki Levine press@absolute.com
858-524-9443
Absolute Software (NASDAQ:ABST)
Graphique Historique de l'Action
De Mar 2024 à Avr 2024
Absolute Software (NASDAQ:ABST)
Graphique Historique de l'Action
De Avr 2023 à Avr 2024