Accelerating annual revenue growth of 16%
driven by strong ARR growth of 17%
Absolute Software Corporation (“Absolute” or the “Company”)
(TSX: ABST) (NASDAQ: ABST), a leader in Endpoint Resilience™
solutions, today announced its financial results for its second
quarter fiscal 2021 ended December 31, 2020. All dollar figures are
stated in U.S. dollars, unless otherwise indicated.
“As we all approach the one-year milestone in our remote working
and distance learning journeys, the massive market opportunity for
Absolute remains clear and in focus,” said Christy Wyatt, President
and Chief Executive Officer at Absolute Software. “Our strong
fiscal Q2 results reflect increased demand for the Absolute
Resilience platform, the only firmware-based solution across over
half a billion devices that enables customers to always know where
their endpoints are, take deep control and security actions on
those devices, and help their security controls repair
themselves.“
Second Quarter Fiscal 2021 (“Q2 F2021”) Financial
Highlights
- Total revenue in Q2 F2021 was $29.9 million, representing an
increase of 16% over Q2 F2020 revenue.
- Total ARR(1) at December 31, 2020 was $117.5 million,
representing an increase of 17% over the prior year. The Enterprise
& Government portions of Total ARR increased by 12% annually
over Q2 F2020 and represented 66% of Total ARR at December 31,
2020; the Education sector portion of Total ARR increased by 30%
annually over Q2 F2020 and represented 34% of Total ARR at December
31, 2020.
- Adjusted EBITDA(1) in Q2 F2021 was $8.0 million, or 27% of
revenue, up from $6.2 million, or 24% of revenue, in Q2 F2020.
- New Logo ARR(1)(2) was $1.5 million in Q2 F2021, compared to
$1.3 million in Q2 F2020.
- Net Dollar Retention(1)(3) from existing customers was 109% in
Q2 F2021, compared to 100% in Q2 F2020.
- Net income in Q2 F2021 was $1.9 million, compared to 2.7
million in Q2 F2020.
- Absolute paid a quarterly dividend of CAD$0.08 per common share
during Q2 F2021.
- Cash generated from operating activities in Q2 F2021 was $13.4
million, compared to $2.2 million in Q2 F2020.
(1)
Refer to the “Non-IFRS Measures and Key
Metrics” section of the Q2 F2021 MD&A for further discussion of
this measure.
(2)
Beginning in Q2 F2021, we have changed the
nomenclature of Total ARR from sales to new customers during a
period from “ARR from New Customers” to “New Logo ARR”. There has
been no change in the method by which this measure is
calculated.
(3)
Beginning in Q2 F2021, we have changed the
nomenclature of the percentage increase or decrease in Total ARR
from existing customers for a given period from “Net ARR Retention”
to “Net Dollar Retention” and changed the measurement period from
quarterly to annual, as we believe the annual metric is more
aligned with business performance measures and industry norms. The
measure calculated under the previously used methodology for Q2
F2020 was 104%.
Selected Quarterly Information
USD Millions, except per share data
Q2
YTD
F2021
F2020
Change
F2021
F2020
Change
Total annual recurring revenue
(“ARR”)
$
117.5
$
100.3
17
%
Revenue
Recurring revenue(1)
$
29.0
$
24.9
16
%
$
56.6
$
49.5
14
%
Other
$
0.9
$
0.9
(0
%)
$
1.8
$
1.9
(7
%)
Total
$
29.9
$
25.8
16
%
$
58.4
$
51.4
13
%
Net income
$
1.9
$
2.7
(30
)%
$
4.5
$
6.2
(27
%)
Per share (basic)
$
0.04
$
0.06
$
0.10
$
0.15
Per share (diluted)
$
0.04
$
0.06
$
0.09
$
0.14
As a percentage of revenue
6
%
11
%
8
%
12
%
Adjusted EBITDA(2)
$
8.0
$
6.2
30
%
$
16.2
$
13.2
23
%
As a percentage of revenue
27
%
24
%
28
%
26
%
Cash from operating activities
$
13.4
$
2.2
517
%
$
28.1
$
9.6
191
%
Dividends paid
$
3.0
$
2.5
20
%
$
5.6
$
5.0
11
%
Per share (CAD)
$
0.08
$
0.08
$
0.16
$
0.16
Cash, cash equivalents, and short-term
investments
$
132.0
$
38.6
242
%
Total assets
$
213.9
$
105.1
104
%
Deferred revenue
$
154.1
$
128.8
20
%
Common shares outstanding
49.2
42.3
16
%
Notes:
- Recurring revenue represents revenue derived from cloud
services and managed services, both of which are included as part
of Total ARR (as defined below). Other revenue represents revenue
derived from non-recurring professional services and ancillary
product lines, including consumer products. See the Q2 F2021
MD&A for full disclosure regarding these measures.
- Throughout this document, Adjusted EBITDA (as defined below) is
used as a profitability measure. Please refer to the “Non-IFRS
Measures and Key Metrics” section of the Q2 F2021 MD&A for
further discussion on this and other non-IFRS measures.
Q2 F2021 & Recent Business Highlights
Product and service highlights:
- In October, we launched a new Absolute Control® mobile app,
designed to help customers secure endpoint devices and protect
sensitive data while on the go. The user-friendly app extends the
power of the Absolute console, enabling IT and security teams to
easily locate lost or stolen devices, check the health of critical
endpoint security agents, and take swift action to lock a device if
it is determined to be at risk.
- In November, we announced new software inventory capabilities
and web usage analytics that provide IT and security teams with
advanced insights into software and web usage across their
distributed endpoint device fleets.
- We continued adding to our Application Persistence™ portfolio
of self-healing applications, including Netskope® Cloud Access
Security Broker (CASB), Next-Gen Secure Web Gateway (NG-SWG) and
Palo Alto Networks® GlobalProtect™ security platform, enabling them
to be monitored and autonomously repair themselves, so they remain
installed, healthy, and undeletable.
Business and organizational developments:
- In October, we completed a public offering of our common shares
(“Common Shares”) in the United States and Canada for gross
proceeds of approximately $69 million and a corresponding
cross-listing of the Common Shares on the Nasdaq Global Market
Exchange. Our Common Shares now trade on both the Toronto Stock
Exchange and Nasdaq under the symbol “ABST.”
- In October, Christy Wyatt, Absolute’s President and Chief
Executive Officer was named ‘New CEO of the Year’ by The Globe and
Mail's Report on Business magazine, based on her significant impact
on the Company and its strategy in less than three years of tenure
in her role.
- In November, Steven Gatoff joined Absolute as Chief Financial
Officer. Mr. Gatoff brings to Absolute over 25 years of financial
expertise and leadership, and a distinctive track record of driving
value creation for software companies. His responsibility includes
all global finance, accounting, financial reporting, audit, tax,
investor relations, and capital planning functions at
Absolute.
- In November, we announced Sound Physicians, a physician-led
operator of medical clinics across the U.S., relies on the Absolute
Resilience™ platform to secure remote endpoints that routinely
process and store sensitive patient data protected by the Health
Insurance Portability and Accountability Act (HIPAA).
- In December, we were awarded the Cyber Catalyst℠ designation by
Marsh & McLennan – who facilitates an independent evaluation of
over 90 solutions by leading cyber insurers. This designation is
significant as it emphasizes Absolute’s critical capabilities and
our ability to provide the highest level of protection against
today’s top cyber risks - and offers customers significant
discounts on cyber insurance when Absolute is deployed in their
environments.
- In December, we were notified by the FedRAMP Joint
Authorization Board that we have been prioritized to pursue a
Provisional Authority to Operate for the Absolute Resilience
platform. This enhances our opportunity to accelerate our growth in
the US federal market over the coming years – and demonstrates our
commitment to ensuring the highest levels of cloud security across
all government agencies.
- In December, we were named a Leader in the Winter 2021 Grid®
Report for Endpoint Management published by G2, a leading business
solutions review website. This marks the sixth consecutive quarter
Absolute has been identified as one of the top Endpoint Management
solution providers based on high levels of customer satisfaction
among G2’s verified users.
Partner and other highlights included:
- Absolute was added to the HealthTrust Group Purchasing
Organization offering that Lenovo and CDW sales teams are
leveraging in healthcare sector.
- Dell’s Blueprint for Success program, originally launched in Q1
with a focus on education, has now been expanded to cover state and
local governments and healthcare.
- Additional software bundles were launched with HP in North
America and EMEA, supporting consumers as well as WFH, remote
workers and BYOD users.
- Absolute increased partner engagement in Q2 via our new Partner
Program, which in turn led to increased activity in our channel
pipeline.
F2021 Financial Outlook
The Company is updating its previously disclosed financial
outlook for the full year fiscal 2021 as follows:
- The Company is raising its outlook on revenue from $116 million
to $118 million (representing 11% to 13% annual growth) to $117
million to $119 million (representing 12% to 14% annual
growth).
- The Company is raising the lower end of its outlook on Adjusted
EBITDA from 21% to 24% of revenue to 22% to 24% of revenue.
- The Company is also raising the lower end of its outlook on
cash from operating activities margin from 25% to 34% of revenue to
26% to 34% of revenue.
- The Company is maintaining its outlook for capital expenditures
and expect them to be between $3.0 million and $4.0 million.
The foregoing outlook and expectations constitute
forward-looking statements and financial outlook and are qualified
in their entirety by the “Forward-Looking Statements” cautionary
statement below.
Quarterly Dividend
On January 20, 2021, we declared a quarterly dividend of
CAD$0.08 per share on our Common Shares, payable in cash on
February 26, 2021 to shareholders of record at the close of
business on February 12, 2021.
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 December 31, 2020 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 has published on the Investor Relations section of its
website (www.absolute.com/company/investors/) an Q2 F2021 Earnings
Presentation and a dashboard of Selected Operating and Financial
Metrics.
Conference Call
Absolute Software will hold a conference call to discuss its Q2
F2021 financial results on Tuesday, February 9, 2021, at 5:00 p.m.
ET (2:00 p.m. PT) after the financial markets close.
The call will be accessible by dialing 647-427-7450 or
1-888-231-8191. A live audio webcast of the conference call will
also be available via the Absolute Investor Relations website.
The conference call will be archived for replay until Tuesday,
February 16, 2021. To access the archived conference call, please
dial 416-849-0833 or 1-855-859-2056 and enter the reservation code
4639198. An archived replay of the webcast will be available for 90
days.
Non-IFRS Measures and Key Metrics
Throughout this press release, the Company refers to a number of
measures and metrics that the Company believes are meaningful in
the assessment of the Company’s performance. Many of these metrics
are non-standard measures under International Financial Reporting
Standards (“IFRS”), do not have any standardized meaning under
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 more complete discussion
of these non-IFRS measures, please refer to the Q2 F2021
MD&A.
These measures and metrics, and their method of calculation or
reconciliation to IFRS measures, are as follows:
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 aggregate annual
recurring revenue of our subscriptions under contract and
generating revenue, measured by Annual Recurring Revenue (“ARR”),
as an indicator of our future recurring revenues. 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.
Total ARR is a key metric and measures the amount of annual
recurring revenue we will receive from our customers under contract
at a point in time, and therefore is an 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. As Total ARR is measured at a point
in time, there is no similar measure under IFRS against which it
can be reconciled.
Net Dollar Retention (previously “Net ARR 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. This metric provides insight into the
effectiveness of our activities to retain and expand the ARR of our
existing customers.
New Logo ARR (previously “ARR from New Customers”) is a key
metric and measures the addition to Total ARR from sales to new
customers during a period.
b) Adjusted Operating Expenses
A number of significant non-cash expenses are reported in our
Cost of Revenue and Operating Expenses. In addition, restructuring
and reorganization charges and post-retirement benefits are also
reported in Operating Expenses. Management defines “Adjusted
Operating Expenses” as IFRS Cost of Revenue, Sales and Marketing,
Research and Development, and General and Administration expenses
adjusted for these items, as we believe that analyzing these
expenses exclusive of these items provides a useful measure of the
cash invested in operating the ongoing business. The non-cash items
include share-based compensation, amortization of intangible
assets, and depreciation of property and equipment and amortization
of right of use assets.
Specifically, management adjusts for the following items in
computing its Adjusted Operating Expenses:
1) Share-based compensation: Our compensation strategy includes
the use of share-based awards to attract and retain key employees,
executives and directors. It is principally aimed at aligning their
interests with those of our shareholders and at long-term employee
retention, rather than to motivate or reward operational
performance for any particular period. Thus, share-based
compensation expense varies for reasons that are generally
unrelated to operational decisions and performance in any
particular period.
2) Amortization of Intangible Assets: We believe that
amortization of intangible assets is not necessarily reflective of
current period operational activities. In particular, the
amortization of acquired technologies and customer relationships
relates to items arising from pre-acquisition activities. These are
costs that are determined at the time of an acquisition or when
other intangible assets are acquired. While it is continually
reviewed for potential impairment, amortization of the cost is a
static expense, one that is typically not affected by operations
during any particular period.
3) Depreciation of Property and Equipment and Amortization of
Right of Use Assets: We believe that depreciation / amortization of
property and equipment and right of use assets is not necessarily
reflective of current period operational activities. In particular,
the costs associated with these assets relate to operational
decisions made in prior periods. Depreciation / amortization of
these costs is a static expense, one that is typically not affected
by operations during any particular period.
4) Restructuring or Reorganization Charges and Post-Retirement
Benefits: We believe that costs incurred in certain significant
post-retirement benefits afforded to executives upon departure from
the Company, are not necessarily reflective of current period
operational activities. In particular, these items relate to
decisions which will impact future operating periods. The magnitude
of these expenses is typically determined by contractual law,
common law, or by statute, and is unaffected by operations and
performance in any particular period.
5) Non-recurring Items: We believe that costs that are
non-recurring, unusual or non-operating in nature, such as
non-recurring, unusual or non-operating tax, legal, restructuring
and other one-time corporate expenses, are not necessarily
reflective of current period operational activities.
The following table provides a reconciliation of our Net Income
to Adjusted EBITDA:
Three months ended December
31,
Six months ended December
31,
(in millions)
2021
2020
2021
2020
Net income
$
1.9
$
2.7
$
4.5
$
6.2
Adjustments
Depreciation of property and
equipment(1)
0.8
0.8
1.7
1.7
Amortization of right of use assets(2)
0.6
0.4
1.1
0.8
Non-recurring Items
1.0
-
1.0
-
Share-based compensation(3)
2.6
1.1
5.1
2.2
Finance income, net(4)
(0.0
)
(0.1
)
(0.0
)
(0.3
)
Interest on lease liability(5)
0.1
0.1
0.3
0.3
Foreign exchange loss(6)
0.3
0.1
0.5
0.0
Income tax expense(7)
0.7
1.1
2.0
2.3
Adjusted EBITDA
$
8.0
$
6.2
$
16.2
$
13.2
Notes:
(1)
Depreciation of property and equipment per
the Statement of Cash Flows.
(2)
Amortization of right of use assets per
the Statement of Cash Flows.
(3)
Share-based compensation per the Statement
of Operations.
(4)
Finance income, net per the Statement of
Operations.
(5)
Interest on lease liability per the
Statement of Operations.
(6)
Foreign exchange loss per the Statement of
Operations.
(7)
Income tax expense per the Statement of
Operations.
About Absolute Software
Absolute Software is a leader in Endpoint Resilience solutions
and the industry’s only undeletable defense platform embedded in
over a half-billion devices. Enabling a permanent digital tether
between the endpoint and the enterprise who distributed it,
Absolute provides IT and Security organizations with complete
connectivity, visibility, and control, whether a device is on or
off the corporate network, and empowers them with Self-Healing
Endpoint™ security to ensure mission-critical apps remain healthy
and deliver intended value.
©2021 Absolute Software Corporation. All rights reserved.
ABSOLUTE and the ABSOLUTE logo are registered trademarks of
Absolute Software Corporation in the United States and/or other
countries. 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.
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 U.S. Private
Securities Litigation Reform Act of 1995 (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, the information under the heading
“F2021 Financial Outlook”, statements regarding Absolute’s market
opportunity and ability to accelerate growth, and 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; the impacts of the
COVID-19 pandemic (including, without limitation, greater/continued
remote working and/or distance learning) on Absolute’s business,
operations, prospects, and financial results; projected growth,
revenues, margins, Adjusted EBITDA, profitability, expenses, cash
from operating activities, capital expenditures, and earnings;
existing and new product functionality and suitability; PC OEM and
other partner activities and initiatives; and expectations for the
size of the IT security industry, including as a result of
COVID-19. Forward-looking statements, including the F2021 Financial
Outlook, are provided as of the date hereof for the purpose of
presenting information about management’s current expectations and
plans relating to the future and allowing investors and others to
get a better understanding of our 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, and market
risks; Absolute will be able to leverage its past, current, and
planned investments to support growth and increase profitability;
there will continue to be a trend toward greater/continued remote
working and/or distance learning, in the short, medium, and/or
long-term, and a resulting market shift in the demand for endpoint
security and Absolute’s solutions; 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 more efficiently and cost effectively; the size of
the IT security industry will be in line with industry experts’ and
Absolute’s expectations; 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; industry data and
projections are accurate and reliable; Absolute will be able to
adapt its technology to be compatible with changes to existing, and
new, operating systems such as Microsoft Windows; Absolute will be
able to maintain and develop its PC OEM and other partner networks;
Absolute’s current and future (if any) PC OEM partners will
continue to provide embedded firmware and distribution and resale
support; 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 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 use the proceeds of the October 2020 public equity offering as
intended; 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 (if any); Absolute will be able to maintain and enhance its
intellectual property portfolio; Absolute’s protection of its
intellectual property 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 be able to
successfully manage the additional expenses, regulatory
obligations, and legal exposures resulting from its recent SEC
registration and Nasdaq listing; Absolute will not become involved
in material litigation; Absolute will not face any material
unexpected costs related to product liability or warranties;
foreign jurisdictions will not impose unexpected risks; Absolute
will maintain or enhance its accounting policies and standards and
internal controls over financial reporting; and economic and market
conditions (including, without limitation, as affected by the
COVID-19 pandemic) will not impose unexpected risks or
challenges.
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 in the “Risk and Uncertainties” section
of Absolute’s Q2 F2021 Management’s Discussion and Analysis, which
is available at www.absolute.com and under Absolute’s SEDAR profile
at www.sedar.com and on EDGAR at www.sec.gov): risks related to the
COVID-19 pandemic and its impact on Absolute; that Absolute may not
be able to accurately predict its rate of growth and profitability;
that Absolute’s estimates of market opportunity and market and
revenue growth may be inaccurate or Absolute may fail to grow at
its estimated rates; that Absolute may need or elect to use the
proceeds of the recent public equity offering other than as
currently intended and disclosed; Absolute’s dependence for sales
on PC OEM partners and other distribution channels; that Absolute
is heavily dependent on its ability to maintain its embedded
firmware with its current PC OEM partners; risks related to
economic and political uncertainty; that Absolute may be unable to
attract new customers or its existing 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 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; 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 third-party data that Absolute stores and
the other risks associated with data security 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 if the
customer does not comply with such laws; that continued sales
growth may cause operating challenges for Absolute; 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; that Absolute’s
business may be impacted by business cycles; risks associated with
the competition Absolute faces within its industry; 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 “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
dispute resolution from time-to-time; risks related to Absolute’s
foreign operations; that Absolute may be unable to successfully
manage and integrate acquisitions (or may be unable to successfully
complete dispositions) of companies, businesses, products or
technologies; risks related to Absolute’s amortization of revenue
over the term of its customer subscriptions; risks related to
Absolute’s reliance on its reseller and other partners for
billings; income tax related risks; Absolute may become subject to
product liability claims; and risks related to Absolute’s reliance
on copyrights, trademarks, trade secrets, and confidentiality
procedures and similar contractual provisions. 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
(Expressed in United States dollars
unless otherwise noted) (Unaudited)
Notes
December 31, 2020
June 30, 2020
ASSETS
CURRENT
Cash and cash equivalents
(Note 12)
$
131,624,219
$
29,727,498
Short-term investments
(Note 3)
359,832
17,350,152
Trade and other receivables
(Note 4)
22,287,648
28,990,235
Income tax receivable
545,291
111,769
Prepaid expenses and other
5,276,540
2,541,183
Contract acquisition assets – current
(Note 5)
8,323,010
7,501,339
168,416,540
86,222,176
PROPERTY AND EQUIPMENT
4,435,336
5,563,327
RIGHT OF USE ASSETS
(Note 6)
11,359,960
9,181,927
DEFERRED INCOME TAX ASSETS
(Note 11)
22,357,305
22,278,745
CONTRACT ACQUISITION ASSETS
(Note 5)
6,274,576
5,842,845
GOODWILL
1,100,000
1,100,000
$
213,943,717
$
130,189,020
LIABILITIES
CURRENT
Trade and other payables
(Note 7)
$
21,736,334
$
20,129,253
Income tax payable
22,777
382,041
Lease liabilities – current
(Note 8)
2,532,627
1,724,730
Deferred revenue – current
(Note 10(b))
86,028,052
80,843,795
110,319,790
103,079,819
LEASE LIABILITIES
(Note 8)
10,433,103
8,411,101
DEFERRED REVENUE
(Note 10(b))
68,060,788
61,759,629
188,813,681
173,250,549
SHAREHOLDERS’ EQUITY
(DEFICIENCY)
Share capital
(Note 9(b))
147,976,213
81,890,311
Equity reserve
41,127,123
38,523,835
Treasury shares
(263,840
)
(263,840
)
Accumulated other comprehensive income
590,038
—
Deficit
(164,299,498
)
(163,211,835
)
25,130,036
(43,061,529
)
$
213,943,717
$
130,189,020
ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of
Operations and Comprehensive Income
Three and six months ended December 31,
2020 and 2019
(Expressed in United States dollars
unless otherwise noted) (Unaudited)
Three months ended
December 31,
Six months ended
December 31,
Notes
2020
2019
2020
2019
REVENUE
$
29,857,255
$
25,797,614
$
58,352,812
$
51,450,103
COST OF REVENUE
3,355,200
3,022,265
6,470,607
6,255,632
GROSS MARGIN
26,502,055
22,775,349
51,885,205
45,194,471
OPERATING EXPENSES
Sales and marketing
10,190,776
9,521,739
20,274,315
19,040,524
Research and development
5,824,261
4,185,723
10,885,955
7,925,309
General and administration
4,855,655
4,111,620
8,298,684
7,436,477
Share-based compensation
(Note 9(h))
2,553,776
1,070,385
5,146,781
2,237,186
23,424,468
18,889,467
44,605,735
36,639,496
OPERATING INCOME
3,077,587
3,885,882
7,276,470
8,554,975
OTHER EXPENSE
Finance income, net
3,429
128,605
25,365
240,746
Interest expense – lease liabilities
(142,685
)
(126,727
)
(281,334
)
(257,928
)
Foreign exchange loss
(299,711
)
(40,426
)
(485,938
)
(53,245
)
(438,967
)
(38,548
)
(741,907
)
(70,427
)
NET INCOME BEFORE INCOME TAXES
2,638,620
3,847,334
6,534,563
8,484,548
INCOME TAX EXPENSE
(Note 11)
(736,000
)
(1,137,000
)
(2,030,000
)
(2,323,000
)
NET INCOME
1,902,620
2,710,334
4,504,563
6,161,548
UNREALIZED GAIN ON DERIVATIVES, NET OF
TAX
559,811
—
590,038
—
COMPREHENSIVE INCOME
$
2,462,431
$
2,710,334
$
5,094,601
$
6,161,548
BASIC INCOME PER SHARE
$
0.04
$
0.06
$
0.10
$
0.15
DILUTED INCOME PER SHARE
$
0.04
$
0.06
$
0.09
$
0.14
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING,
BASIC
48,982,816
41,722,849
45,801,889
41,723,856
DILUTED
52,246,460
43,859,350
49,065,830
43,848,893
ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of
Changes in Shareholders’ Equity (Deficiency)
(Expressed in United States dollars
unless otherwise noted) (Unaudited)
Share Capital
Number of
Common
shares
Amount
Equity
reserve
Treasury
shares
Accumulated
Other
Comprehensive
Income
Deficit
Total
BALANCE, JUNE 30, 2019
41,645,552
$
76,778,014
$
36,744,933
$
(359,973
)
$
—
$
(163,778,642
)
$
(50,615,668
)
Shares issued on options exercised
135,862
912,602
(161,710
)
—
—
—
750,892
Shares issued under Employee Share
Purchase Plan (“ESPP”)
35,963
180,842
—
—
—
—
180,842
Shares issued under Performance and
Restricted Share Unit plan (“RSU”)
483,927
2,395,678
(2,493,580
)
96,133
—
—
(1,769
)
Share-based compensation
—
—
2,032,226
—
—
—
2,032,226
Dividends paid
—
—
—
—
—
(5,021,806
)
(5,021,806
)
Net income and total comprehensive
income
—
—
—
—
—
6,161,548
6,161,548
BALANCE, DECEMBER 31, 2019
42,301,304
80,267,136
36,121,869
(263,840
)
—
(162,638,900
)
(46,513,735
)
Shares issued on options exercised
150,406
1,149,183
(254,527
)
—
—
—
894,656
Shares issued under ESPP
36,060
188,230
—
—
—
—
188,230
Shares issued under RSU
56,425
301,671
(301,671
)
—
—
—
—
Shares repurchased and cancelled
(8,700
)
(15,909
)
—
—
—
(32,919
)
(48,828
)
Share-based compensation
—
—
2,958,164
—
—
—
2,958,164
Dividends paid
—
—
—
—
—
(5,013,177
)
(5,013,177
)
Net income and total comprehensive
income
—
—
—
—
—
4,473,161
4,473,161
BALANCE, JUNE 30, 2020
42,535,495
81,890,311
38,523,835
(263,840
)
—
(163,211,835
)
(43,061,529
)
Shares issued for cash (Note 9(b))
6,272,727
68,999,997
—
—
—
—
68,999,997
Share issuance cost
—
(5,120,793
)
—
—
—
—
(5,120,793
)
Shares issued on options exercised
75,244
557,956
(106,708
)
—
—
—
451,248
Shares issued under Employee Stock
Ownership Plan
30,508
165,662
—
—
—
—
165,662
Shares issued under RSU
263,725
1,483,080
(1,483,080
)
—
—
—
—
Share-based compensation
—
—
4,193,076
—
—
—
4,193,076
Dividends paid
—
—
—
—
—
(5,592,226
)
(5,592,226
)
Net income and total comprehensive
income
—
—
—
—
590,038
4,504,563
5,094,601
BALANCE, DECEMBER 31, 2020
49,177,699
$
147,976,213
$
41,127,123
$
(263,840
)
$
590,038
$
(164,299,498
)
$
25,130,036
ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of
Financial Position
(Expressed in United States dollars
unless otherwise noted) (Unaudited)
Three months ended
December 31,
Six months ended
December 31,
Notes
2020
2019
2020
2019
OPERATING ACTIVITIES
Net income
$
1,902,620
$
2,710,334
$
4,504,563
$
6,161,548
Items not involving cash
Depreciation of property and equipment
811,436
846,050
1,677,649
1,671,194
Amortization of right of use assets
(Note 6)
606,691
413,336
1,096,502
826,673
Amortization of contract acquisition
assets
(Note 5)
2,632,390
2,103,603
5,172,455
4,352,898
Share-based compensation
(Note 9(h))
2,553,776
1,070,385
5,146,781
2,237,186
Deferred income taxes
(Note 11)
(594,560
)
(108,615
)
(78,560
)
(476,396
)
Interest
272,932
(100,165
)
244,269
(199,272
)
Unrealized foreign exchange loss
325,119
65,631
481,683
56,840
Change in non-cash working capital
Trade and other receivables
1,657,214
(555,165
)
6,702,588
5,962,202
Income tax receivable
(409,634
)
84,406
(433,522
)
599,146
Prepaid expenses and other
(1,205,136
)
808,900
(2,735,357
)
1,162,717
Contract acquisition assets incurred
(Note 5)
(3,586,236
)
(1,669,443
)
(6,425,857
)
(3,092,689
)
Trade and other payables
3,017,263
(1,251,078
)
1,753,183
(3,813,540
)
Income tax payable
(135,115
)
21,932
(359,264
)
35,592
Accrued warranty
(83,409
)
(290,085
)
(115,000
)
(210,585
)
Deferred revenue
5,644,921
(1,976,458
)
11,485,416
(5,622,269
)
CASH FROM OPERATING ACTIVITIES
13,410,272
2,173,568
28,117,529
9,651,245
INVESTING ACTIVITIES
Purchase of property and equipment
(147,523
)
(713,409
)
(1,093,394
)
(2,362,562
)
Proceeds from maturities of short-term
investments
6,594,202
16,410,000
17,027,384
23,280,000
Purchase of short-term investments
—
(13,796,274
)
—
(25,581,776
)
CASH FROM (USED IN) INVESTING
ACTIVITIES
6,446,679
1,900,317
15,933,990
(4,664,338
)
FINANCING ACTIVITIES
Dividends paid
(Note 9(g))
(3,011,850
)
(2,512,563
)
(5,592,226
)
(5,021,806
)
Issuance of common shares
(Note 9(b))
69,325,213
905,135
69,701,544
1,056,261
Cost of common share issuance
(5,120,793
)
—
(5,120,793
)
—
Payment of lease liabilities
(Note 8)
(746,693
)
(417,862
)
(1,207,653
)
(827,727
)
CASH FROM (USED IN) FINANCING
ACTIVITIES
60,445,877
(2,025,290
)
57,780,872
(4,793,272
)
FOREIGN EXCHANGE EFFECT ON CASH
25,561
78,181
64,330
67,250
INCREASE IN CASH AND CASH EQUIVALENTS
80,328,389
2,126,776
101,896,721
260,885
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD
51,295,830
16,824,648
29,727,498
18,690,539
CASH AND CASH EQUIVALENTS, END OF
PERIOD
$
131,624,219
$
18,951,424
$
131,624,219
$
18,951,424
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210209006179/en/
Media Relations Becki Levine press@absolute.com
858-524-9443 Investor Relations Joo-Hun Kim IR@absolute.com
212-868-6760
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