Maintains Revenue and Increases Outlook on EBITDA

Absolute (TSX: ABT) (“Absolute” or the “Company”), the leader in Endpoint Resilience™, today announced its financial results for the three and nine months ended March 31, 2020. All dollar figures are stated in U.S. dollars, unless otherwise indicated.

“Amidst the impact of COVID-19, Absolute remains focused on ensuring the health and safety of our employees, helping our customers quickly mobilize their endpoint strategies to remote work and distance learning programs, and swiftly responding to our customers’ other needs,” said Christy Wyatt, President and CEO of Absolute. “We continued to see steady growth, while exceeding our expectations on EBITDA in the third quarter. Whether it’s hybrid remote work or the evolution of learning environments, there’s never been a more critical time for the undeletable endpoint defense that only Absolute can provide.”

Third Quarter Fiscal 2020 Financial Highlights

  • Total revenue in Q3-F2020 was $26.1 million, representing a year-over-year increase of 5%. Year-to-date total revenue was $77.5 million, representing an increase of 5% over the prior year-to-date period.
  • The Annual Contract Value Base (“ACV Base”) at March 31, 2020 was $101.4 million, representing an increase of 7% over the prior year balance and a sequential increase of 1% over Q2-F2020.
  • The Enterprise & Government portions of the ACV Base, combined, increased by 13% annually and by 2% sequentially. Enterprise & Government sector customers represented 70% of the ACV Base at March 31, 2020.
  • The Education sector portion of the ACV Base decreased by 7% annually and was flat sequentially. Education sector customers represented 30% of the ACV Base at March 31, 2020.
  • Incremental ACV from New Customers was $1.0 million in Q3-F2020, compared to $1.1 million in Q3-F2019.
  • Net ACV Retention from existing customers was 100% in Q3-F2020, compared with 99% in Q3-F2019.
  • Adjusted EBITDA in Q3-F2020 was $6.1 million, or 23% of revenue. Adjusted EBITDA – pre-IFRS 16 was $5.5 million, or 21% of revenue, compared to $5.8 million, or 23% of revenue, in Q3-F2019. Year-to-date Adjusted EBITDA was $19.3 million, or 25% of revenue. Year-to-date Adjusted EBITDA – pre-IFRS 16 was $17.9 million, or 23% of revenue, compared with $14.4 million, or 20% of revenue, in the prior year-to-date period.
  • Cash generated from operating activities in Q3-F2020 was $3.7 million. Cash from operating activities – pre-IFRS 16 in Q3-F2020 was $3.3 million, compared to $0.9 million in Q3-F2019. Year-to-date cash from operating activities was $13.4 million. Year-to-date cash from operating activities – pre-IFRS 16 was $12.1 million, compared with $6.8 million in the prior year-to-date period.
  • Absolute paid a quarterly dividend of CAD$0.08 per common share during Q3-F2020.

Quarterly Developments

  • In January 2020, we announced the appointment of Dianne Lapierre as Chief Information Officer.
  • In January 2020, we enhanced our customers’ license management workflow within the Absolute console for easier and simplified license expiration visibility.
  • In January 2020, we added historical event capabilities, enabling IT and security administrators with greater visibility and audit historical information on device events.
  • In January 2020, we made available Absolute Secure Channel, delivering secure and remote access to the firmware layer across endpoint devices and strengthening the foundation of firmware-level protections.
  • In January 2020, Forbes Magazine recognized Absolute as a Top 10 Cybersecurity Company to Watch in 2020 for the second year in a row.
  • In February, during RSA® Conference 2020, Absolute previewed new research from our upcoming 2nd Annual State of Endpoint Resilience Report that highlighted Windows 10 as dominant the Enterprise OS, but revealed 80% of Windows 10 devices are running on a version more than one year old.
  • In March 2020, we took significant measures to assist our existing customers in the face of the global COVID-19 outbreak, providing access to certain critical capabilities at no additional charge:
    • We provided certain customers with premium features to ‘persist,’ or proactively repair and reinstall, their existing virtual private network (VPN) applications, ensuring uninterrupted remote access to corporate and school networks, business and education applications as well as data for remote workers.
    • We provided certain customers with free access to a comprehensive library of automated, custom workflows, accelerating their ability to proactively pinpoint vulnerabilities and quickly take remedial action, whether a device is on or off the corporate network.
  • In March 2020, Absolute was featured in Lenovo’s ‘Partner Stimulus Package,’ offering a new Device-as-a-Service solution aimed at work-from-home.

Summary of Key Financial Metrics

USD Millions, except per share data

Q3

 

YTD

 

F2020

F2019

Change

F2020

F2019

Change

Revenue

 

 

 

 

 

 

Commercial recurring(1)

$

25.1

 

$

24.0

 

5

%

$

74.6

 

$

70.5

 

6

%

Professional Services and Other

 

1.0

 

 

0.9

 

1

%

 

2.9

 

 

3.1

 

(6

%)

Total

$

26.1

 

$

24.9

 

5

%

$

77.5

 

$

73.6

 

5

%

 

 

 

 

 

 

 

Adjusted EBITDA(2)

$

6.1

 

 

 

$

19.3

 

 

 

As a percentage of revenue

 

23

%

 

 

 

25

%

 

 

 

 

 

 

 

 

 

Adjusted EBITDA – pre IFRS 16(2)(3)

$

5.5

 

$

5.8

 

(5

%)

$

17.9

 

$

14.4

 

24

%

As a percentage of revenue

 

21

%

 

23

%

 

 

23

%

 

20

%

 

 

 

 

 

 

 

 

Net Income

$

2.3

 

$

2.5

 

(10

%)

$

8.4

 

$

5.5

 

52

%

Per share (basic)

$

0.05

 

$

0.06

 

 

$

0.20

 

$

0.14

 

 

Per share (diluted)

$

0.05

 

$

0.06

 

 

$

0.19

 

$

0.13

 

 

 

 

 

 

 

 

 

Cash from operating activities

$

3.7

 

 

 

$

13.4

 

 

 

 

 

 

 

 

 

 

Cash from operating activities – pre IFRS 16(3)

$

3.3

 

$

0.9

 

277

%

$

12.1

 

$

6.8

 

78

%

 

 

 

 

 

 

 

Dividends paid

$

2.5

 

$

2.5

 

2

%

$

7.6

 

$

7.4

 

2

%

Per share (CAD)

$

0.08

 

$

0.08

 

-

 

$

0.24

 

$

0.24

 

-

 

 

 

 

 

 

 

 

Cash, cash equivalents, and short-term investments

$

38.9

 

$

35.5

 

10

%

 

 

 

Total assets

$

108.7

 

$

93.0

 

17

%

 

 

 

Deferred revenue

$

127.6

 

$

128.3

 

(1

%)

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

42.5

 

 

41.6

 

2

%

 

 

 

Notes:

  1. Commercial recurring revenue represents revenue derived from Cloud Services (as defined in our Q3-F2020 MD&A) and recurring managed professional services, both of which are included as part of our ACV Base. Other revenue represents revenue derived from non-recurring professional services and ancillary product lines, including consumer products.
  2. Throughout this document, “Adjusted EBITDA” is used as a profitability measure. Please refer to the “Non-IFRS Measures” section below and in our Q3-F2020 MD&A for further discussion on this and other non-IFRS measures.
  3. The Company adopted IFRS 16, “Leases”, effective July 1, 2019 using the modified retrospective approach (please refer to the “New Accounting Pronouncements” section of our Q3-F2020 MD&A and to Note 2(e) in the notes to the Q3-F2020 Condensed Consolidated Financial Statements). Accordingly, financial information presented for fiscal 2019 has not been adjusted for the impact of the adoption of IFRS 16. Figures presented that include the title “pre-IFRS 16” represent operating results had IFRS 16 not been adopted, and provide a meaningful comparative to similar operating results for F2019.

F2020 Corporate Outlook

The Company is updating its outlook for F2020 as follows:

  • The Company is maintaining its outlook on revenue, continuing to expect revenue to be between $103 million and $106 million, representing 4% to 7% annual growth.
  • The Company is increasing its expectation for Adjusted EBITDA from between 18% and 22% of revenue to between 21% and 25% of revenue.
  • The Company continues to expect cash from operating activities to be between 16% and 22% of revenue.
  • The Company is decreasing its expectation for capital expenditures from between $3.5 million and $4.0 million to between $3.0 million and $4.0 million.

The Company’s forecast for Adjusted EBITDA and cash from operating activities incorporates the impact of IFRS 16, “Leases”, which was adopted July 1, 2019. IFRS 16 is expected to positively impact both F2020 Adjusted EBITDA and cash from operating activities by approximately $2.0 million as a result of amortization of right of use assets and from increased interest expense. See “New Accounting Pronouncements” in our March 31, 2020 MD&A.

The foregoing expectations constitute forward-looking statements and financial outlook and are qualified in their entirety by the cautionary statement set out at the beginning of this MD&A.

Quarterly Dividend

On April 20, 2020, the Company declared a quarterly dividend of CAD$0.08 per share on its common shares, payable in cash on May 29, 2020 to shareholders of record at the close of business on May 8, 2020.

Share Buyback Program

As a measure of prudence while we monitor developing market conditions, the Company will temporarily suspend repurchases of its common shares under its current normal course issuer bid (the “Bid”). The Bid was initially announced by press release on September 27, 2019 and is set to expire on September 30, 2020. Except as set out in this press release, the Company is not in possession of any material non-public information at this time.

Quarterly Filings

Management’s Discussion and Analysis and Interim Condensed Consolidated Financial Statements and the notes thereto for the fiscal period ended March 31, 2020 can be obtained today from Absolute’s corporate website at www.absolute.com. The documents will also be available under Absolute’s profile at www.sedar.com.

Notice of Conference Call

Absolute will hold a conference call to discuss its Q3-F2020 financial results on Monday, May 11, 2020, at 5:00 p.m. ET (2:00 p.m. PT). All interested parties can join the call by dialing 647-427-7450 or 1-888-231-8191. Please dial-in 15 minutes prior to the call to secure a line. The conference call will be archived for replay until Monday, May 18, 2020 at midnight. To access the archived conference call, please dial 416-849-0833 or 1-855-859-2056 and enter the reservation code 8335599.

A live webcast and replay will be accessible from Absolute's Investor Relations website here. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. An archived replay of the webcast will be available on the Company’s website for 90 days.

Non-IFRS Measures and Definitions

Throughout this press release, the Company refers to a number of measures that the Company believes are meaningful in the assessment of the Company’s performance. All these metrics are nonstandard measures under International Financial Reporting Standards (“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 a discussion of the purpose of these non-IFRS measures, please refer to the Company’s MD&A for the period ended June 30, 2019.

These measures, as well as their method of calculation or reconciliation to IFRS measures, are as follows:

1) ACV Base, Net ACV Retention and ACV from New Customers As the majority of the Company’s customer contracts are sold under multiyear term licenses, there is a significant lag between the timing of the billing and the associated revenue recognition. As a result, the Company focuses on the aggregate annualized value of its subscriptions under contract, measured by Annual Contract Value, as an indicator of its future revenues.

The ACV Base measures the amount of recurring annual revenue Absolute will receive from its commercial customers under contract at a point in time, and therefore is an indicator of the Company’s future revenue streams. Net ACV Retention measures the percentage increase or decrease in the Commercial ACV Base at the end of a period for the customers that made up the Commercial ACV Base at the beginning of the same period. This metric provides insight into the effectiveness of Absolute’s customer retention and expansion functions. ACV from New Customers measures the addition to the Commercial ACV Base from sales to new commercial customers during the quarter.

We believe that increases in the amount of ACV from New Customers, and improvement in the Company’s Net ACV Retention, will grow our Commercial ACV Base and, in turn, our future revenues.

2) Adjusted EBITDA and Adjusted EBITDA – pre-IFRS 16 Management believes that analyzing operating results exclusive of significant noncash items or items not controllable in the period provides a useful measure of the Company’s performance. The term “Adjusted EBITDA” refers to earnings before deducting interest and investment gains (losses), income taxes, amortization of property and equipment and right of use assets, foreign exchange gain or loss, share-based compensation, and restructuring and reorganization charges and post-retirement benefits. The items excluded in the determination of Adjusted EBITDA are share-based compensation, amortization of property and equipment and right of use assets, and restructuring and reorganization charges and certain post-retirement benefits.

Management believes that presenting F2020 Adjusted EBITDA on a pre-IFRS 16 basis will provide a meaningful comparative to F2019 Adjusted EBITDA.

About Absolute

Absolute serves as the industry benchmark for Endpoint Resilience, visibility and control. Embedded in over a half-billion devices, the company enables more than 12,000 customers with Self-Healing Endpoint® security, always-connected visibility into their devices, data, users, and applications – whether endpoints are on or off the corporate network – and the ultimate level of control and confidence required to support the modern enterprise. For the latest information, visit www.absolute.com and follow us on LinkedIn or Twitter.

©2020 Absolute Software Corporation. All rights reserved. ABSOLUTE, the ABSOLUTE logo, SELF-HEALING ENDPOINT, and PERSISTENCE are registered trademarks of Absolute Software Corporation. Other names or logos mentioned herein may be the trademarks of Absolute or their respective owners.

Forward-Looking Statements

This press release contains certain forward-looking statements and forward-looking information (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 “F2020 Corporate Outlook” 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 on Absolute’s business, operations, 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; expectations for the size of the IT security industry, including as a result of COVID-19; and Absolute’s strategies and plans for its current share buyback program. Forward-looking statements, including the F2020 Corporate Outlook, are provided 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 the impacts of COVID-19 on its business, operations, and financial results; the impacts of the COVID-19 pandemic on Absolute’s business, operations, and financial results will not impact its current outlook for F2020; 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 investments to support growth and increase profitability; 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; 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 partner and reseller network; Absolute’s current and future (if any) OEM partners will continue to provide embedded firmware and distribution and resale support; 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 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; future financing will be available to Absolute on favourable terms if and when required; Absolute’s suspension of purchases under its current share buyback program is a prudent measure at this time; 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 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 Absolute will be able to recruit and hire a suitably qualified new Chief Financial Officer on the timeline currently intended.

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, as more particularly described in the “Risk and Uncertainties” section of Absolute’s Q3-F2020 Management’s Discussion and Analysis, which is available at www.absolute.com and under Absolute’s profile on www.sedar.com. 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) (Unaudited)

 

 

 

March 31, 2020

June 30, 2019

 

 

 

 

ASSETS

 

 

 

CURRENT

 

 

 

Cash and cash equivalents

 

$

20,893,776

 

$

18,690,539

 

Short-term investments

 

 

17,967,636

 

 

17,108,226

 

Trade and other receivables

 

 

17,585,305

 

 

22,194,252

 

Income tax receivable

 

 

438,363

 

 

707,923

 

Prepaid expenses and other

 

 

2,320,261

 

 

3,088,082

 

Contract acquisition assets – current

 

 

6,113,980

 

 

6,592,335

 

 

 

 

65,319,321

 

 

68,381,357

 

PROPERTY AND EQUIPMENT

 

 

5,913,502

 

 

6,156,814

 

RIGHT OF USE ASSETS

 

 

9,467,471

 

 

-

 

DEFERRED INCOME TAX ASSETS

 

 

22,450,764

 

 

22,359,165

 

CONTRACT ACQUISITION ASSETS

 

 

4,482,107

 

 

5,313,496

 

GOODWILL

 

 

1,100,000

 

 

1,100,000

 

 

 

$

108,733,165

 

$

103,310,832

 

 

 

 

 

LIABILITIES

 

 

 

CURRENT

 

 

 

Trade and other payables

 

$

15,291,728

 

$

19,034,996

 

Income tax payable

 

 

55,625

 

 

13,543

 

Accrued warranty

 

 

182,548

 

 

450,000

 

Lease liabilities – current

 

 

1,447,207

 

 

-

 

Deferred revenue – current

 

 

74,596,397

 

 

76,312,162

 

 

 

 

91,573,505

 

 

95,810,701

 

LEASE LIABILITIES

 

 

8,887,429

 

 

-

 

DEFERRED REVENUE

 

 

53,012,771

 

 

58,115,799

 

 

 

 

153,473,705

 

 

153,926,500

 

COMMITMENTS

 

 

 

CONTINGENCIES

 

 

 

SHAREHOLDERS’ DEFICIENCY

 

 

 

Share capital

 

 

81,605,151

 

 

76,778,014

 

Equity reserve

 

 

37,126,485

 

 

36,744,933

 

Treasury shares

 

 

(263,840

)

 

(359,973

)

Accumulated other comprehensive income

 

 

(247,861

)

 

-

 

Deficit

 

 

(162,960,475

)

 

(163,778,642

)

 

 

 

(44,740,540

)

 

(50,615,668

)

 

 

$

108,733,165

 

$

103,310,832

 

ABSOLUTE SOFTWARE CORPORATION

Condensed Consolidated Statements of Operations and Comprehensive Income

Three and nine months ended March 31, 2020 and 2019

(Expressed in United States dollars) (Unaudited)

 

 

 

Three months ended March 31,

 

Nine months ended March 31,

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUE

 

$

26,061,861

 

$

24,883,198

 

$

77,511,964

 

$

73,633,064

 

COST OF REVENUE

 

 

3,383,347

 

 

2,917,043

 

 

9,638,979

 

 

9,385,226

 

GROSS MARGIN

 

 

22,678,514

 

 

21,966,155

 

 

67,872,985

 

 

64,247,838

 

OPERATING EXPENSES

 

 

 

 

 

Sales and marketing

 

 

9,862,801

 

 

9,402,454

 

 

28,903,325

 

 

28,130,718

 

Research and development

 

 

4,932,323

 

 

4,709,491

 

 

12,857,632

 

 

14,201,974

 

General and administration

 

 

3,306,324

 

 

2,923,579

 

 

10,742,801

 

 

10,130,642

 

Share-based compensation

 

 

1,397,670

 

 

1,397,537

 

 

3,634,856

 

 

3,906,346

 

 

 

 

19,499,118

 

 

18,433,061

 

 

56,138,614

 

 

56,369,680

 

 

 

 

 

 

 

OPERATING INCOME

 

 

3,179,396

 

 

3,533,094

 

 

11,734,371

 

 

7,878,158

 

 

 

 

 

 

 

OTHER INCOME

 

 

 

 

 

Finance income, net

 

 

111,499

 

 

51,947

 

 

352,245

 

 

199,275

 

Interest expense – lease liability

 

 

(226,277

)

 

-

 

 

(484,205

)

 

-

 

Foreign exchange gain (loss)

 

 

270,775

 

 

78,392

 

 

217,530

 

 

(35,371

)

 

 

 

155,997

 

 

130,339

 

 

85,570

 

 

163,904

 

 

 

 

 

 

 

NET INCOME BEFORE INCOME TAXES

 

 

3,335,393

 

 

3,663,433

 

 

11,819,941

 

 

8,042,062

 

INCOME TAX EXPENSE

 

 

(1,077,000

)

 

(1,152,000

)

 

(3,400,000

)

 

(2,504,000

)

NET INCOME

 

$

2,258,393

 

$

2,511,433

 

$

8,419,941

 

$

5,538,062

 

 

 

 

 

 

 

LOSS ON DERIVATIVES, NET OF TAX

 

 

(247,861

)

 

-

 

 

(247,861

)

 

-

 

COMPREHENSIVE INCOME

 

$

2,010,532

 

 

-

 

$

8,172,080

 

 

-

 

 

 

 

 

 

 

BASIC INCOME PER SHARE

 

$

0.05

 

$

0.06

 

$

0.20

 

$

0.14

 

 

DILUTED INCOME PER SHARE

 

$

0.05

 

$

0.06

 

$

0.19

 

$

0.13

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

 

 

 

 

BASIC

 

 

42,417,785

 

 

41,101,229

 

 

42,003,168

 

 

40,626,709

 

DILUTED

 

 

44,844,730

 

 

41,101,229

 

 

44,371,228

 

 

40,626,709

 

ABSOLUTE SOFTWARE CORPORATION

Condensed Consolidated Statement of Changes in Shareholders’ Deficiency

(Expressed in United States dollars) (Unaudited)

 

 

Share Capital

 

 

 

 

 

 

Number of Common shares

Amount

Equity

reserve

Treasury shares

Accumulated Other Comprehensive Loss

Deficit

Total

 

 

 

 

 

 

 

 

BALANCE, JUNE 30, 2018

40,224,231

 

$

68,362,445

 

$

36,972,197

 

$

(359,973

)

 

-

 

$

(161,484,035

)

$

(56,509,366

)

Shares issued on options exercised

729,984

 

 

4,822,164

 

 

(1,076,030

)

 

-

 

 

-

 

 

-

 

 

3,746,134

 

Shares issued under Employee Share Purchase Plan

90,254

 

 

395,372

 

 

-

 

 

-

 

 

-

 

 

-

 

 

395,372

 

Shares issued under Phantom Share Unit Plan

19,821

 

 

113,570

 

 

(113,570

)

 

-

 

 

-

 

 

-

 

 

-

 

Shares issued under Performance and Restricted Share Unit plan

489,878

 

 

2,506,789

 

 

(2,506,789

)

 

-

 

 

-

 

 

-

 

 

-

 

Share-based compensation

-

 

 

-

 

 

3,025,299

 

 

-

 

 

-

 

 

-

 

 

3,025,299

 

Dividends paid

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(7,404,171

)

 

(7,404,171

)

Net income and total comprehensive income

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

5,538,062

 

 

5,538,062

 

BALANCE, MARCH 31, 2019

41,554,168

 

$

77,200,340

 

$

36,301,107

 

$

(359,973

)

 

-

 

$

(163,350,144

)

$

(51,208,670

)

Shares issued on options exercised

25,113

 

 

151,232

 

 

(22,073

)

 

-

 

 

-

 

 

-

 

 

129,159

 

Shares issued under Performance and Restricted Share Unit plan

66,271

 

 

426,441

 

 

(426,441

)

 

-

 

 

-

 

 

-

 

 

-

 

Share-based compensation expense

-

 

 

-

 

 

892,341

 

 

-

 

 

-

 

 

-

 

 

892,341

 

Dividends paid

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(2,469,586

)

 

(2,469,586

)

Net income and total comprehensive income

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

2,041,088

 

 

2,041,088

 

BALANCE, JUNE 30, 2019

41,645,552

 

$

76,778,013

 

$

36,744,933

 

$

(359,973

)

 

-

 

$

(163,778,642

)

$

(50,615,668

)

Shares issued on options exercised

259,787

 

 

1,862,137

 

 

(378,584

)

 

-

 

 

-

 

 

-

 

 

1,483,553

 

Shares issued under Employee Share Purchase Plan

72,023

 

 

369,072

 

 

-

 

 

-

 

 

-

 

 

-

 

 

369,072

 

Shares issued under Performance and Restricted Share Unit plan

524,878

 

 

2,611,839

 

 

(2,709,740

)

 

96,133

 

 

-

 

 

-

 

 

(1,768

)

Shares repurchased and cancelled under the Normal Course Issuer Bid

(8,700

)

 

(15,909

)

 

-

 

 

 

 

(32,919

)

 

(48,828

)

Share-based compensation

-

 

 

-

 

 

3,469,875

 

 

-

 

 

-

 

 

-

 

 

3,469,875

 

Dividends paid

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(7,568,855

)

 

(7,568,855

)

Unrealized loss on derivatives, net

-

 

 

-

 

 

-

 

 

-

 

 

(247,861

)

 

-

 

 

(247,861

)

Net income

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

8,419,941

 

 

8,419,941

 

BALANCE, MARCH 31, 2020

42,493,540

 

$

81,605,151

 

$

37,121,485

 

$

(263,840

)

$

(247,861

)

$

(162,960,475

)

$

(44,740,540

)

ABSOLUTE SOFTWARE CORPORATION

Condensed Consolidated Statements of Cash Flows

Three and nine months ended March 31, 2020 and 2019

(Expressed in United States dollars) (Unaudited)

 

 

 

Three months ended March 31,

 

Nine months ended March 31,

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 

 

 

 

 

 

OPERATING ACTIVITIES

 

 

 

 

 

Net income

 

$

2,258,393

 

$

2,511,433

 

$

8,419,941

 

$

5,538,062

 

Items not involving cash

 

 

 

 

 

Amortization of property and equipment

 

 

844,560

 

 

843,439

 

 

2,515,754

 

 

2,613,898

 

Amortization of right of use assets

 

 

636,741

 

 

-

 

 

1,463,414

 

 

-

 

Amortization of contract acquisition assets

 

 

2,021,403

 

 

2,314,627

 

 

6,374,302

 

 

6,839,193

 

Share-based compensation

 

 

1,397,670

 

 

1,397,538

 

 

3,634,856

 

 

3,906,347

 

Deferred income taxes

 

 

384,797

 

 

847,687

 

 

(91,599

)

 

555,687

 

Unrealized gain on short-term investments

 

 

(53,716

)

 

-

 

 

(252,988

)

 

-

 

Unrealized foreign exchange gain

 

 

(405,906

)

 

-

 

 

(349,044

)

 

-

 

Change in non-cash working capital

 

 

 

 

 

Trade and other receivables

 

 

(1,353,255

)

 

(2,798,707

)

 

4,608,948

 

 

3,227,118

 

Income tax receivable

 

 

(329,587

)

 

(486,461

)

 

269,559

 

 

(479,527

)

Prepaid expenses and other

 

 

(394,896

)

 

(453,530

)

 

767,821

 

 

(233,018

)

Contract acquisition assets incurred

 

 

(1,971,869

)

 

(1,469,777

)

 

(5,064,558

)

 

(6,089,497

)

Trade and other payables

 

 

1,947,603

 

 

1,570,568

 

 

(1,865,959

)

 

2,308,197

 

Income tax payable

 

 

6,490

 

 

15,456

 

 

42,082

 

 

(367,670

)

Accrued warranty

 

 

(56,867

)

 

(20,000

)

 

(267,452

)

 

(100,000

)

Deferred revenue

 

 

(1,196,524

)

 

(3,401,606

)

 

(6,818,793

)

 

(10,932,392

)

 

 

 

 

 

 

CASH FROM OPERATING ACTIVITIES

 

 

3,735,037

 

 

870,667

 

 

13,386,284

 

 

6,786,398

 

INVESTING ACTIVITIES

 

 

 

 

 

Purchase of property and equipment

 

 

(862,537

)

 

(333,837

)

 

(3,225,099

)

 

(2,214,409

)

Proceeds from maturities of short-term investments

 

 

11,149,338

 

 

-

 

 

34,429,338

 

 

-

 

Purchase of short-term investments

 

 

(9,453,985

)

 

-

 

 

(35,035,761

)

 

-

 

 

 

 

 

 

 

CASH FROM (USED IN) INVESTING ACTIVITIES

 

 

832,816

 

 

(333,837

)

 

(3,831,522

)

 

(2,214,409

)

FINANCING ACTIVITIES

 

 

 

 

 

Dividends paid

 

 

(2,547,049

)

 

(2,487,050

)

 

(7,568,855

)

 

(7,404,171

)

Issuance of common shares

 

 

704,244

 

 

3,143,577

 

 

1,760,505

 

 

4,014,755

 

Repurchase of common shares for cancellation

 

 

(48,828

)

 

-

 

 

(48,828

)

 

-

 

Payment of lease liabilities

 

 

(452,475

)

 

-

 

 

(1,280,202

)

 

-

 

 

 

 

 

 

 

CASH (USED IN) FROM FINANCING ACTIVITIES

 

 

(2,344,108

)

 

656,527

 

 

(7,137,380

)

 

(3,389,416

)

 

 

 

 

 

 

FOREIGN EXCHANGE EFFECT ON CASH

 

 

(281,393

)

 

74,822

 

 

(214,145

)

 

(32,681

)

 

 

 

 

 

 

INCREASE IN CASH AND CASH EQUIVALENTS

 

 

1,942,352

 

 

1,268,179

 

 

2,203,237

 

 

1,149,892

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

18,951,424

 

 

33,838,701

 

 

18,690,539

 

 

33,956,988

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

20,893,776

 

$

35,106,880

 

$

20,893,776

 

$

35,106,880

 

 

For more information, please contact:

Media Relations Shannon Tierney press@absolute.com 408-313-9974

Investor Relations Joo-Hun Kim IR@absolute.com 212-868-6760

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