Route1 Inc. (OTCQB:ROIUF) (TSXV:ROI) (the “Company” or “Route1”), a
leader in secure data protection technologies and user
authentication for government and enterprise, today announced its
fourth quarter (Q4) and fiscal year (FY) financial results for the
period ended December 31, 2017
Fourth Quarter (Q4) 2017
In 000s of
CAD dollars |
Q4 2017 |
|
Q3 2017 |
|
Q2 2017 |
|
Q1 2017 |
Q4 2016 |
Q3 2016 |
Revenue |
|
|
|
|
|
|
Recurring revenue and services |
109 |
|
1,177 |
|
1,347 |
|
1,911 |
1,865 |
1,808 |
Devices and appliances |
1,263 |
|
159 |
|
24 |
|
30 |
21 |
221 |
Other |
48 |
|
2 |
|
0 |
|
0 |
0 |
2 |
Total
revenue |
1,420 |
|
1,338 |
|
1,371 |
|
1,941 |
1,886 |
2,031 |
Cost of
revenue |
331 |
|
362 |
|
298 |
|
335 |
338 |
448 |
Gross
profit |
1,089 |
|
976 |
|
1,073 |
|
1,606 |
1,548 |
1,583 |
Operating expenses |
1,164 |
|
1,131 |
|
1,151 |
|
1,289 |
1,356 |
1,243 |
Operating (loss) profit 1 |
(75 |
) |
(155 |
) |
(78 |
) |
317 |
192 |
340 |
Total
other expenses 2 |
170 |
|
183 |
|
157 |
|
109 |
101 |
34 |
Comprehensive net (loss) gain |
(245 |
) |
(338 |
) |
(235 |
) |
208 |
91 |
306 |
1 Before stock based compensation and patent
litigation2 Includes AirWatch litigation expenses
Recurring revenue and
services In CAD dollars |
Dec 312017 |
Sep 302017 |
Jun 302017 |
Mar 312017 |
Dec 312016 |
Sep 302016 |
Closing number of
MobiKEY subscribers |
|
12,421 |
|
12,261 |
|
11,649 |
|
18,270 |
|
17,883 |
|
17,344 |
Revenue per MobiKEY
subscriber |
$ |
408 |
$ |
393 |
$ |
391 |
$ |
389 |
$ |
388 |
$ |
383 |
MobiKEY subscription
revenue 3 |
$ |
1,262 |
$ |
1,176 |
$ |
1,347 |
$ |
1,759 |
$ |
1,702 |
$ |
1,639 |
Other recurring revenue
and services 3 |
$ |
1 |
$ |
1 |
$ |
0 |
$ |
152 |
$ |
163 |
$ |
169 |
Total recurring revenue
and services 3 |
$ |
1,263 |
$ |
1,177 |
$ |
1,347 |
$ |
1,911 |
$ |
1,865 |
$ |
1,808 |
3 Figures are in thousands
in 000s of CAD
dollars |
Q4 2017 |
|
Q3 2017 |
|
Q2 2017 |
|
Q1 2017 |
Q4 2016 |
Q3 2016 |
Gross Profit |
1,089 |
|
976 |
|
1,073 |
|
1,606 |
1,548 |
1,583 |
Adjusted EBITDA 4 |
24 |
|
(46 |
) |
16 |
|
406 |
307 |
447 |
Amortization |
99 |
|
109 |
|
94 |
|
89 |
115 |
107 |
Operating (loss)profit
before patent litigation expense and stock based compensation |
(75 |
) |
(155 |
) |
(78 |
) |
317 |
192 |
340 |
4 Adjusted EBITDA is defined as earnings before
interest, income taxes, depreciation and amortization, stock-based
compensation, patent litigation, restructuring and other costs.
Adjusted EBITDA does not have any standardized meaning prescribed
under IFRS and is therefore unlikely to be comparable to similar
measures presented by other companies. Adjusted EBITDA allows
Route1 to compare its operating performance over time on a
consistent basis.
Route1 used cash in operating activities of
approximately $0.4 million during Q4 2017 compared with cash used
in operating activities of $0.7 million in Q4 2016.
Balance Sheet
ExtractsIn 000s of CAD dollars |
Dec 312017 |
Sep 302017 |
Jun 302017 |
Mar 312017 |
Dec 312016 |
Sep 302016 |
Cash |
1,037 |
1,408 |
2,080 |
704 |
1,946 |
2,898 |
Total current
assets |
2,035 |
2,856 |
2,924 |
1,890 |
2,910 |
3,938 |
Total current
liabilities |
1,829 |
2,534 |
2,396 |
1,113 |
2,500 |
3,555 |
Net working
capital |
206 |
322 |
528 |
777 |
410 |
383 |
Total assets |
3,171 |
4,081 |
4,213 |
3,114 |
4,190 |
5,230 |
Bank debt |
0 |
0 |
0 |
0 |
0 |
0 |
Total shareholders’
equity |
1,236 |
1,432 |
1,720 |
1,904 |
1,600 |
1,574 |
Route1’s cash position historically has been at
its highest level during the second quarter of the fiscal year as a
direct result of the timing of annual enterprise user subscription
renewal payments. With the closing of the Group Mobile Int’l,
LLC (“Group Mobile”) acquisition in March 2018, this likely will
change and the highest level of cash on Route1’s balance sheet will
be tied to the timing of payments of larger hardware based
sales.
Fiscal Year 2017
The Company’s operating results in fiscal year
2017 with comparatives are as follows:
In 000s of
CAD dollars |
FY2017 |
|
FY2016 |
FY2015 |
|
FY2014 |
|
FY2013 |
|
Revenue |
|
|
|
|
|
Device |
321 |
|
363 |
156 |
|
536 |
|
447 |
|
Services |
5,698 |
|
7,080 |
6,218 |
|
5,470 |
|
4,948 |
|
Other |
51 |
|
4 |
23 |
|
71 |
|
38 |
|
Total
Revenue |
6,070 |
|
7,447 |
6,397 |
|
6,077 |
|
5,433 |
|
Cost of
revenue |
1,325 |
|
1,475 |
1,164 |
|
1,145 |
|
1,137 |
|
Gross
profit |
4,745 |
|
5,972 |
5,233 |
|
4,932 |
|
4,296 |
|
Operating expenses |
4,736 |
|
5,230 |
4,515 |
|
4,398 |
|
4,485 |
|
Operating profit 5 |
9 |
|
742 |
718 |
|
534 |
|
(189 |
) |
Patent
litigation |
270 |
|
56 |
0 |
|
0 |
|
0 |
|
Total
other expenses |
349 |
|
356 |
(10 |
) |
(103 |
) |
154 |
|
Comprehensive net income |
(610 |
) |
330 |
728 |
|
637 |
|
(343 |
) |
5 Before stock-based compensation
Group Mobile
Route1 acquired Group Mobile on March 22,
2018. The company is based in Chattanooga, TN and Chandler,
AZ. Under the terms of the Agreement, Route1 issued to the
seller 25 million common shares, and 30 million, three-year common
share purchase warrants with an exercise price of CAD 5 cents per
common share. Further details of the acquisition can be found
at
www.route1.com/route1-closes-the-acquisition-of-group-mobile/.
Group Mobile supplies rugged mobile technology
solutions to leading automotive manufacturing companies and
suppliers, other leading manufacturing and distribution companies,
as well as local and state governments in the southeastern and
southwestern United States.
“Based on historical results we expect Group
Mobile to generate quarterly revenue of USD $3.4 million to USD
$4.5 million and positive EBITDA”, said Tony Busseri, CEO of Route1
Inc. “During our first month of owning Group Mobile we have
invoiced approximately USD $1.1 million, we have orders in hand
that haven’t yet been fulfilled of approximately USD $2.5 million,
and we have a strong pipeline of quality opportunities in excess of
USD $10 million. This pipeline reflects traditional Group Mobile
products and services, and does not factor in the various
technology and sales crossover opportunities for ActionPLAN and
MobiKEY, which we identified during our recent company-wide
internal sales strategy meetings held on April 12 and 13.
These opportunities are now being initiated with existing and
prospective customers; this is truly an exciting time at
Route1.”
AirWatch Update
On April 19, 2018 AirWatch filed a Request for a
Rehearing of its original IPR petition (which was denied) with the
Patent Trial and Appeal Board (PTAB). The PTAB will make a
decision on the Request for the Hearing on no fixed timetable but
historical statistics suggest that a low percentage of Rehearing
Requests are granted, when responded to by PTAB.
The litigation process continues to run in
parallel to IPR process. A calendar of upcoming milestones
can be found at www.route1.com/investors/patent-litigation/.
Business Update
On March 26, 2018, Route1 held an investor call
and webcast to discuss the recently announced acquisition of Group
Mobile and the status of the AirWatch litigation. A copy of
the presentation can be found on Route1’s website:
www.route1.com/company-presentations/.
Route1 expects to announce its Q1 2018 results
in late May 2018. At that time, Route1 will hold a further
shareholder conference call and webcast.
About Route1 Inc.Route1 Inc. is
a world-leader in secure data protection technologies and user
authentication for government and enterprise. Route1
solutions enable the workforce to be more productive and more
flexible without compromising system access, data-at-rest, or
data-in-use. The Company’s suite of patented enterprise
security solutions combines best-in-class authentication, data
security and secure communications with streamlined administration
tools, running on a proven, trusted infrastructure. From
mobile access to business continuity to best-in-class full system
encryption, Route1 offers the most effective, affordable methods to
secure the digital fortress, while meeting or exceeding the highest
standards for government and industry. Route1 has Full
Authority to Operate from the U.S. Department of Defense, the U.S.
Department of the Navy, the U.S. Department of the Interior, and
other government agencies. The Company is also trusted by
enterprise security teams in the banking, healthcare, legal and
education sectors, among others. With offices in Washington, D.C.,
Boca Raton, FL and Toronto, Canada, Route1 serves public and
private sector clients around the world. Route1 is listed on
the OTCQB in the United States under the symbol ROIUF and in Canada
on the TSX Venture Exchange under the symbol ROI. For more
information, visit: www.route1.com.
For More Information Contact:
Tony BusseriCEO, Route1 Inc.+1 416
814-2635tony.busseri@route1.com
This news release, required by applicable
Canadian laws, does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities in the United
States. The securities have not been and will not be registered
under the United States Securities Act of 1933, as amended (the
"U.S. Securities Act") or any state securities laws and may not be
offered or sold within the United States or to U.S. Persons unless
registered under the U.S. Securities Act and applicable state
securities laws or an exemption from such registration is
available.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
This news release contains certain
forward-looking statements within the meaning of applicable
securities laws, including statements regarding Route1’s investment
plans, financial outlook and future financial performance. Words
such as “expects”, “anticipates” and “intends” or similar
expressions are intended to identify forward-looking
statements.
These forward-looking statements are based on
Route1’s current projections and expectations about future events
and financial trends that management believes might affect its
financial condition, operations, results of operations, business
strategy, prospects and financial needs, and on certain assumptions
and analysis made by Route1 in light of the experience and
perception of historical trends, current conditions and expected
future developments and other factors management believes are
appropriate. These projections, expectations, assumptions and
analyses are subject to known and unknown risks, uncertainties,
assumptions and other factors that could cause actual results,
performance, events and achievements to differ materially from
those anticipated in these forward-looking statements. Although
Route1 believes that the assumptions underlying these
forward-looking statements are reasonable, they may prove to be
incorrect, and readers cannot be assured that actual results will
be consistent with these forward-looking statements. Actual results
could differ materially from historical results and from those
projected in the forward-looking statements as a result of numerous
factors, including certain risk factors, many of which are beyond
Route1’s control, including but not limited to: (i) expected cash
position; (ii) integration of acquisitions; (iii) timing of
hardware based sales and related payments; (iv) ability to fulfil
orders; (v) ability to capitalize on opportunities and to realize
synergies across product lines; (vi) the costs and expected results
of the patent litigation process initiated by Route1; (vii)
exchange rate fluctuations; (ix) historical results not being
indicative of future results, (x) expected profit margins, and
(xii) other one-time events and other important factors disclosed
previously and from time to time in Route1’s public filings with
the securities commissions or similar securities regulatory
authorities in each of the provinces or territories of Canada. The
forward-looking statements contained in this news release represent
Route1’s expectations as of the date of this news release, or as of
the date they are otherwise stated to be made, and subsequent
events may cause these expectations to change. Route1 undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required by law.
© 2018 Route1 Inc. All rights reserved. No part
of this document may be reproduced, transmitted or otherwise used
in whole or in part or by any means without prior written consent
of Route1 Inc. See
https://www.route1.com/terms-of-use/ for notice of Route1’s
intellectual property.
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