TORONTO, March 3, 2021 /CNW/ - Optiva Inc. ("Optiva" or
"the Company") (TSX: OPT), a leading provider of mission-critical,
cloud-native revenue management software for the telecommunications
industry, today released its fourth quarter financial results for
the three-month and full-year period ended December 31, 2020.
"My priority in the first ninety days with Optiva is to listen
to our customers and employees. I have been reaching out by video
directly to both our current customers as well as employees to
understand their priorities, concerns and challenges with respect
to how we work together going forward. I have communicated to
customers that we are in a period of dynamic change taking place in
the telecom market, and we will work in partnership to solve for
their present and future business requirements as we collaborate on
their unique journey to the 5G cloud future," said John Giere, President and Chief Executive
Officer of Optiva. "My goal is to build Optiva as a customer and
employee focused organization that allows us to consistently
deliver high-quality innovative cloud-native products that will
ensure long-term growth and profitability. We have work ahead of us
to get there, and we have initiated actions already to drive
forward our operational excellence and financial performance.
I believe the telecom industry will continue to shift its
business model to the cloud and demand cloud-native products. Our
three-year product roadmap goal is to invest in delivering a robust
cloud-native product portfolio and offset legacy revenues with new
revenues generated by a cloud-agnostic product offering. Due to
individual issues that our customers face, including commercial,
technology, regulatory and security issues, the transition will
take place over a period of years. Optiva is well-positioned to
deliver innovative cloud-based BSS solutions that enable our
customers to expand their menu and velocity in terms of delivering
new revenue-generating services that are supported by their choice
of privately-hosted, subscription or SaaS operational models."
Business Highlights
- Optiva significantly augmented its leadership team with the
appointment of John Giere as
President and Chief Executive Officer of the Company. Mr. Giere
joins Optiva with more than 25 years of telecommunications industry
leadership, building customer relationships and delivering
innovative products to the market at companies including Openwave
Mobility, Alcatel-Lucent and Ericsson.
- Subsequent to quarter-end, Matthew
Halligan joined Optiva as Chief Technology Officer, which
further strengthens and complements amongst other things, Optiva's
continued efforts to build out its internal R&D team and
expertise. We have eliminated our reliance on related parties for
R&D expertise and now are in control of our own technology and
product development pipeline. Optiva management remains confident
that the internal team will be capable of a 100% increase in
engineering work-hour output while realizing up to 50% savings when
compared to the engineering work outsourced in the past.
- Strategic planning efforts during the quarter resulted in
well-defined objectives and key performance indicators for 2021, to
drive customer retention, deliver new product releases to secure
revenue stability, sustained profitability and build a robust
funnel of growth opportunities and subsequent new customer
wins.
- Optiva set up a financing committee to review and assess, among
other things, the Company's financing needs and the alternatives
available to satisfy those needs through one or more financing
transactions. This will help sustain operational momentum,
accelerate product development efforts and build up cash on the
balance sheet for acquisition discussions in future.
- Optiva is investing in building its salesforce as customer
retention, contract renewals, service enhancement and delivery
become a strategic focus. Optiva continued its marketing efforts,
and feedback from various events has produced a growing interest in
the Optiva cloud offering, which is reflected in the growing volume
of invitations to RFP's.
- Subsequent to year-end, Optiva announced that Tele2, a European
telecommunications group serving millions of customers, has
extended its partnership in Sweden
and the Baltics with the Company. The five year agreement includes
support services and updates for its Optiva Charging Engine, with
an upgrade option to Optiva's private-cloud offering, which enables
innovative new services and monetizing 5G. With support services,
Optiva will be helping Tele2 monetize its mobile customer base
across two locations and multiple deployments, and enabling Tele2
to achieve continued stability for its platform.
- Optiva also recently announced Mobily, a tier one telecom that
is one of the most advanced operators in the Middle East, has gone live with the Optiva
payment solution on Mobily private cloud. Mobily is recognized by
the telecom industry as one of the most innovative and advanced
operators in the region. It was the first operator worldwide to
launch the 4G services commercially. With its move to cloud, Mobily
continues its trajectory of innovation in the telecommunications
sector.
- Subsequent to the end of the year, Optiva announced that ESW
Capital, LLC ("ESW") and its affiliates agreed to (i) sell all of
its subordinate voting shares in Optiva in a private sale, and (ii)
terminate all of their related party agreements with Optiva, and
waive certain provisions of the warrants to acquire subordinate
voting shares held directly or indirectly by ESW. The sale is
expected to close on or around March 5,
2021. On closing, Optiva and ESW and certain other parties,
including other significant shareholders of the company, also
agreed to release each other from certain claims relating to Optiva
and to clarify their respective intellectual property rights.
Optiva also announced its intention to complete a subsequent
offering of subordinate voting shares and that it had received
non-binding indications of interest to participate of up to
$17 million. The transaction is
expected to enhance the protection of Optiva's intellectual
property, reduce expenditures on legal and professional fees
relating to shareholder disputes going forward and lower risk of
dilution to existing shareholders through the shortening of the
term of the outstanding warrants held by ESW.
Fourth Quarter 2020 Financial Results Highlights
|
|
|
|
|
Q4 Fiscal 2020
Highlights
|
Three Months
Ended
|
|
Twelve
Months
Ended
|
Fifteen
Months
Ended
|
($ US Thousands,
except per share information)
|
December
31,
|
|
December
31,
|
(Unaudited)
|
2020
|
2019
|
|
2020
|
2019
|
Revenue
|
18,142
|
20,530
|
|
75,916
|
120,883
|
Net income
(loss)
|
1,670
|
(16,874)
|
|
(41,520)
|
(13,751)
|
Earnings (loss) Per
Share
|
$ 0.31
|
$(3.17)
|
|
$(7.81)
|
$(2.60)
|
Adjusted
EBITDA
|
$ 5,661
|
$ 7,395
|
|
$ 20,756
|
$ 33,544
|
Cash used in
operating activities
|
(2,621)
|
(2,966)
|
|
(7,900)
|
(2,259)
|
Total cash, including
restricted cash
|
18,290
|
32,699
|
|
18,290
|
32,699
|
- Revenues decreased by $2.4
million relative to the corresponding quarter of 2019,
primarily due to the discontinuation of software, support and
subscription sales to customers who had previously notified Optiva
of their exit.
- Optiva's cost of revenue and operating expenses decreased by
$4.5 million relative to the same
period in 2019, which resulted in gross margin increasing to 75%
when compared to the 72% achieved during the same period in
2019.
- General and administrative expenses increased to $6.2 million when compared to $3.8 million during the same period in 2019. The
increase in the quarter was mainly due to an increase in legal and
advisory costs related to the activities of the special committee
of the board of directors, slightly offset by lower stock-based
compensation due to decrease in share price on the director stock
units ("DSUs"). Excluding amortization, legal costs and stock-based
compensation, G&A costs increased from $2.0 million to $4.1
million when compared to the same period in 2019.
- Earnings before interest, taxes, depreciation and amortization
("EBITDA")[1] for the fourth quarter of 2020 was
$4.6 million compared to $2.9 million during the same period in 2019.
Adjusted EBITDA[1] ("Adjusted EBITDA") for the fourth
quarter of 2020 amounted to $5.7
million, as compared to $7.4
million during the same period in 2019.
- Net income for the fourth quarter amounted to $1.7 million compared to net loss of $16.9 million during the corresponding period in
2019. The shift from net loss to net income is mainly attributable
to lower research and development costs and lower sales and
marketing costs, slightly offset by higher general and
administrative costs.
- Optiva continues to focus on further expanding its in-house
R&D team and did not place any orders with R&D outsource
firm DevFactory, a related party of Optiva, in the fourth quarter
ended December 31, 2020. During the
fourth quarter, the Company increased the R&D staff by 25% and
now has a fully functional and self-sufficient R&D team.
- Optiva consumed $2.6 million in
cash from operating activities in the fourth quarter of 2020,
versus consuming $2.9 million of cash
in the corresponding period in 2019. The Company ended the fourth
quarter with a cash balance of $18.3
million.
[1] EBITDA and
Adjusted EBITDA are a non-IFRS measure. This measure is defined in
the "Non-IFRS Financial Measures" section of this news
release.
|
Non-IFRS Measures
EBITDA" and "Adjusted EBITDA", are not financial measures
calculated and presented in accordance with International Financial
Reporting Standards (IFRS), and should not be considered in
isolation or as a substitute to net income (loss), operating income
or any other financial measures of performance calculated and
presented in accordance with IFRS, or as an alternative to cash
flow from operating activities as a measure of liquidity. The
Company defines EBITDA as net income (loss) excluding amounts for
depreciation and amortization, other income, finance costs, finance
income, income tax expense (recovery), foreign exchange gain (loss)
and share-based compensation. The Company defines "Adjusted EBITDA"
as EBITDA (as defined above), excluding restructuring costs,
one-time provision amounts, any one-time transaction costs
associated with shareholder conflict and the July 2020 debenture financing and spending on
cloud innovation. The Company believes that Adjusted EBITDA is a
metric that investors may find useful in understanding the
Company's financial position. Additionally, the Company believes
that Adjusted EBITDA isolates the Company's results of operations
from spending on cloud development and serves as a useful yardstick
to gauge the profitability of the Company's operations prior to
spending on the development of the cloud platform which currently
generates negligible revenue to the Company. The following table
provides a reconciliation of Net Income (Loss) to EBITDA and
Adjusted EBITDA.
OPTIVA
Inc.
|
|
|
|
|
Reconciliation of Net
Income (Loss) to Adjusted EBITDA
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended,
December 31,
|
Twelve months
ending
December 31,
|
Fifteen months
ending
December 31,
|
|
2020
|
2019
|
2020
|
2019
|
|
|
|
|
|
Net income (loss) for
the period
|
$
|
1,669,668
|
$
|
(16,873,855)
|
$
|
(41,520,211)
|
$
|
(13,751,105)
|
|
|
|
|
|
Add back /
(substract):
|
|
|
|
|
Depreciation of
property and equipment
|
-
|
-
|
-
|
166,698
|
Amortization of
intangible assets
|
1,819,563
|
1,163,196
|
8,960,116
|
5,828,932
|
Finance
income
|
(155,736)
|
(125,570)
|
(405,810)
|
(604,885)
|
Finance costs
(recovery)
|
(2,029,188)
|
10,152,580
|
26,253,579
|
14,190,135
|
Income tax
expense
|
3,598,360
|
6,354,704
|
6,273,866
|
11,641,649
|
Foreign exchange
loss
|
100,211
|
1,598,079
|
1,999,216
|
1,475,908
|
Share-based
compensation
|
(383,911)
|
636,854
|
151,979
|
2,175,412
|
EBITDA
|
4,618,967
|
2,905,988
|
1,712,735
|
21,122,744
|
|
|
|
|
|
Restructuring costs
(recovery)
|
(39,449)
|
103,534
|
162,713
|
(1,715,241)
|
Change in other
provisions
|
-
|
-
|
3,072,717
|
-
|
One-time costs
related to shareholder conflict
|
|
|
|
|
and Debenture
financing
|
651,787
|
-
|
2,752,916
|
-
|
Spend on Cloud
innovation
|
430,143
|
4,385,742
|
13,055,046
|
14,136,575
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
5,661,448
|
$
|
7,395,264
|
$
|
20,756,127
|
$
|
33,544,078
|
About Optiva
Optiva Inc. is a leading provider of mission-critical,
cloud-native revenue management software for the telecommunications
industry. Its products are delivered globally on the private and
public cloud. The Company's solutions help service providers
maximize digital, 5G, IoT and emerging market opportunities to
achieve business success. Established in 1999, Optiva Inc. is on
the Toronto Stock Exchange (TSX: OPT). For more information, visit
www.optiva.com.
Caution Concerning Forward-Looking Statement
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.
These statements are forward-looking as they are based on our
current expectations, as at March 3,
2021, about our business and the markets we operate in, and
on various estimates and assumptions. Our actual results could
materially differ from our expectations if known or unknown risks
affect our business, or if our estimates or assumptions turn out to
be inaccurate. As a result, there is no assurance that any
forward-looking statements will materialize. Risks that could cause
our results to differ materially from our current expectations are
discussed in the Company's most recent Annual Information Form,
which is available on SEDAR at www.sedar.com and on Optiva's
website at www.optiva.com/investors/. 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.
|
|
|
Consolidated
Statements of Financial Position
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
December
31,
|
|
2020
|
2019
|
|
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$
|
17,663,998
|
$
|
31,747,993
|
Trade accounts and
other receivables
|
7,868,501
|
7,808,293
|
Unbilled
revenue
|
4,086,395
|
4,468,014
|
Prepaid
expenses
|
2,752,304
|
1,983,391
|
Income taxes
receivable
|
4,281,673
|
4,105,144
|
Other
assets
|
222,101
|
243,199
|
Inventories
|
-
|
473,201
|
Total current
assets
|
36,874,972
|
50,829,235
|
|
|
|
Restricted
cash
|
625,692
|
951,291
|
Deferred income
taxes
|
208,237
|
217,423
|
Other
assets
|
624,134
|
-
|
Investment tax
credits
|
-
|
358,309
|
Long-term unbilled
revenue
|
3,520,177
|
4,676,597
|
Intangible
assets
|
3,255,482
|
12,215,598
|
Goodwill
|
32,271,078
|
32,271,078
|
|
|
|
Total
assets
|
$
|
77,379,772
|
$
|
101,519,531
|
|
|
|
Liabilities and
Shareholders' Equity (Deficit)
|
|
|
|
|
|
Current
liabilities:
|
|
|
Trade
payables
|
$
|
8,811,407
|
$
|
7,350,942
|
Accrued
liabilities
|
9,677,245
|
10,518,015
|
Provisions
|
5,555,373
|
3,630,550
|
Income taxes
payable
|
4,932,157
|
3,644,752
|
Deferred
revenue
|
4,894,195
|
6,363,724
|
Total current
liabilities
|
33,870,377
|
31,507,983
|
|
|
|
Deferred
revenue
|
661,837
|
702,143
|
Other
liabilities
|
2,797,836
|
2,628,408
|
Pension and other
long-term employment benefit plans
|
15,582,459
|
12,486,732
|
Debentures
|
86,338,367
|
-
|
Provisions
|
-
|
36,611
|
Preferred
shares
|
-
|
66,345,563
|
Series A
Warrant
|
16,662,808
|
22,679,934
|
Deferred income
taxes
|
898,146
|
753,036
|
Total
liabilities
|
156,811,830
|
137,140,410
|
|
|
|
Shareholders' equity
(deficit):
|
|
|
Share
capital
|
250,904,013
|
250,893,223
|
Standby
Warrant
|
997,500
|
997,500
|
Contributed
surplus
|
11,406,814
|
11,291,632
|
Deficit
|
(335,842,249)
|
(294,322,038)
|
Accumulated other
comprehensive loss
|
(6,898,136)
|
(4,481,196)
|
Total shareholders'
equity (deficit)
|
(79,432,058)
|
(35,620,879)
|
|
|
|
Total liabilities and
shareholders' equity (deficit)
|
$
|
77,379,772
|
$
|
101,519,531
|
OPTIVA
Inc.
|
|
|
Consolidated
Statements of Comprehensive Loss
|
|
|
(Expressed in U.S.
dollars, except per share and share amounts)
|
|
|
|
|
Twelve months ended
December 31, 2020 and Fifteen months ended December 31,
2019
|
|
|
|
|
2020
|
2019
|
|
|
|
Revenue:
|
|
|
Support and
subscription
|
$
|
58,288,775
|
$
|
86,859,693
|
Software licenses,
services and other
|
17,626,729
|
34,022,831
|
|
75,915,504
|
120,882,524
|
|
|
|
Cost of
revenue
|
19,603,845
|
39,351,285
|
|
|
|
Gross
profit
|
56,311,659
|
81,531,239
|
|
|
|
Operating
expenses:
|
|
|
Sales and
marketing
|
7,952,320
|
12,552,570
|
General and
administrative
|
30,058,707
|
22,585,631
|
Research and
development
|
25,537,279
|
35,156,577
|
Restructuring costs
(recovery)
|
162,713
|
(1,715,241)
|
|
63,711,019
|
68,579,537
|
|
|
|
Income (loss) from
operations
|
(7,399,360)
|
12,951,702
|
|
|
|
Foreign exchange
loss
|
(1,999,216)
|
(1,475,908)
|
Finance
income
|
405,810
|
604,885
|
Finance
costs
|
(26,253,579)
|
(14,190,135)
|
|
|
|
Loss before income
taxes
|
(35,246,345)
|
(2,109,456)
|
|
|
|
Income tax
expense:
|
|
|
Current
|
5,801,865
|
9,162,706
|
Deferred
|
472,001
|
2,478,943
|
|
6,273,866
|
11,641,649
|
|
|
|
Loss for the
year
|
$
|
(41,520,211)
|
$
|
(13,751,105)
|
|
|
|
Other comprehensive
income (loss):
|
|
|
Items that will not
be reclassified to net income:
|
|
|
Actuarial (loss) gain
on pension and non-pension
|
|
post-employment
benefit plans, net of income
|
|
tax expense of nil
(2019 - nil)
|
$
|
(2,416,940)
|
$
|
3,590,172
|
|
|
|
Total comprehensive
loss
|
$
|
(43,937,151)
|
$
|
(10,160,933)
|
|
|
|
Loss per subordinate
share:
|
|
|
Basic
|
$
|
(7.81)
|
$
|
(2.60)
|
Diluted
|
(7.81)
|
(2.60)
|
|
|
|
|
|
|
Weighted average
number of common shares:
|
|
|
Basic
|
5,315,940
|
5,280,662
|
Diluted
|
5,315,940
|
5,280,662
|
|
|
|
OPTIVA
Inc.
|
|
|
Consolidated
Statements of Cash Flows
|
|
|
(Expressed in U.S.
dollars)
|
|
|
|
|
|
|
|
|
Twelve months ended
December 31, 2020 and Fifteen months ended December 31,
2019
|
|
|
|
|
2020
|
2019
|
|
|
|
Cash provided by
(used in):
|
|
|
|
|
|
Operating
activities:
|
|
|
Loss for the
year
|
$
|
(41,520,211)
|
$
|
(13,751,105)
|
Adjustments
for:
|
|
|
Depreciation of
property and equipment
|
-
|
166,698
|
Amortization of
intangible assets
|
8,960,116
|
5,828,932
|
Finance
income
|
(405,810)
|
(604,885)
|
Finance
costs
|
26,253,579
|
14,190,135
|
Income tax
expense
|
6,273,866
|
11,641,649
|
Unrealized foreign
exchange (gain) / loss
|
(1,683,892)
|
39,847
|
Share-based
compensation
|
151,979
|
2,175,412
|
Pensions
|
1,236,746
|
(684,984)
|
Provisions
|
1,888,212
|
(9,650,047)
|
Loss on disposal of
property and equipment
|
-
|
307,707
|
Change in non-cash
operating working capital
|
(4,153,635)
|
(7,094,600)
|
|
(2,999,050)
|
2,564,759
|
Interest
paid
|
(38,897)
|
(77,487)
|
Interest
received
|
78,201
|
281,776
|
Income taxes
paid
|
(4,940,550)
|
(5,028,410)
|
|
(7,900,296)
|
(2,259,362)
|
|
|
|
Financing
activities:
|
|
|
Issuance of
debentures
|
90,000,000
|
-
|
Transaction costs on
debentures
|
(3,933,723)
|
-
|
Redemption of
preferred shares
|
(80,000,000)
|
-
|
Dividends
paid
|
(13,588,145)
|
(4,264,969)
|
|
(7,521,868)
|
(4,264,969)
|
|
|
|
Investing
activities:
|
|
|
Sale of property and
equipment
|
-
|
67,456
|
Increase in
restricted cash
|
325,599
|
2,556,468
|
|
325,599
|
2,623,924
|
|
|
|
Effect of foreign
exchange rate changes
|
|
|
on cash and cash
equivalents
|
1,012,570
|
(526,463)
|
|
|
|
(Decrease) in cash
and cash equivalents
|
(14,083,995)
|
(4,426,870)
|
|
|
|
Cash and cash
equivalents, beginning of year
|
31,747,993
|
36,174,863
|
|
|
|
Cash and cash
equivalents, end of year
|
$
|
17,663,998
|
$
|
31,747,993
|
SOURCE Optiva Inc.