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Optiva Inc. Reports Fourth Quarter 2019 Financial Results

TORONTO , Nov. 6, 2019 /CNW/ - TORONTO , November 6, 2019 - Optiva Inc. (OPT.TO), the leader in providing communications service providers (CSPs) worldwide with cloud-native revenue management software on the public cloud, released its financial results today for the quarter ended September 30, 2019 .

Optiva Canada Inc. a wholly owned subsidiary of Optiva Inc. (CNW Group/Optiva Inc.)

Q4 Fiscal 2019 Highlights

Three Months Ended


Twelve Months Ended

($ US Thousands, except per share information)

September 30,


September 30,

(Unaudited)

2019

2018


2019

2018

Revenue

23,124

27,298


100,353

121,627

Net income (loss)

(963)

(14,369)


3,123

(92,592)

Earnings (loss) Per Share

$(0.18)

$(2.75)


$ 0.59

$(17.69)

Cash generated from (used in) operating activities

1,232

(14,156)


707

(61,011)

Total cash, including restricted cash

37,677

39,683


37,677

39,683

 

"During the quarter, Customer Success showed continued improvement, reporting close to 50% and we remain committed to our plan to invest $100m to pivot our company toward the public cloud," said Danielle Royston , CEO of Optiva. "Our sales funnel continues to strengthen and we recently signed a new customer onto our SaaS platform. We continue to manage the business cash flow break even so we may invest in our exciting vision to bring telco to the cloud."

Fourth Quarter 2019 Financial Results

  • Revenues decreased by $4.2 million relative to the fourth quarter of fiscal 2018, primarily due to the discontinuation of support and subscription sales to customers who had previously notified Optiva of their exit as well as fewer software implementations and hardware sales.

  • Optiva's cost of revenue and operating expenses declined by $13.5 million relative to the fourth quarter of 2018 as a result of Optiva's ongoing focus on operational efficiencies, cost management and lower research and development expenses.

  • Fourth quarter 2019 research and development expenses included $3.0 million of investments in cloud innovation, which brings the total spent in fiscal 2019, to $9.8 million . Since the beginning of 2018, Optiva has invested a total of $23.8 million in cloud innovation and will continue to spend up to another $76 million over the course of the next two to three years, as per its stated cloud-driven growth strategy.

  • Net loss for the quarter decreased to $1.0 million compared to a net loss of $14.4 million during the corresponding period in 2018. The improvement in earnings was mainly due to lower operating expenses.

  • Optiva generated $1.2 million in cash from operating activities in the fourth quarter of 2019, versus consuming $14.2 million of cash in the corresponding period in 2018.

  • Continued focus and investments in cloud innovation remain at the forefront of the Company's growth strategy.


Business Highlights

  • Subsequent to quarter-end, Vodafone Idea Ltd (VIL), India's leading telecom service provider initiated a pilot to deploy Optiva's Charging Engine BSS solution on VIL's universal cloud. The pilot to deploy Optiva Charging Engine BSS solution on the VIL's universal cloud is aligned with the focus of Vodafone Idea. The pilot design includes a two-step process — first on a Kubernetes enabled private cloud and then an option for a future, second step on a public cloud platform.

  • New customer announced to utilize Optiva's BSS platform on the public cloud. The operator will leverage the platform to launch a new mobile virtual network operator service. The Optiva BSS platform, re-architected and made available on the public cloud, is Optiva's new entry into the Software-as-a-Service (SaaS) market. The multi-tenant BSS platform allows customers to focus on their business, not on deploying and managing enterprise software.

  • Optiva announced it has been selected and has won a contract with a Tier 1 telecom operator in the Middle East to be its payment application provider. The application, which will be architected and deployed on the telecom's private cloud, will equip the operator with the scalability necessary to meet its market demands today and achieve continued growth long-term.

  • Customer Success results for the period January - June have been completed with 49% of revenue reporting success with Optiva products and services.


Change in Fiscal Year End

As previously announced on December 12, 2018 , Optiva is changing its fiscal year end from September 30 to December 31 to better align the Company's year-end reporting cycle with its business operations. The Company's transition to a December 31 year-end in fiscal 2019 will include five fiscal quarters.

Conference Call

Optiva Inc. will hold an analyst call on November 7, 2019 , to discuss its Q4 2019 results. CEO Danielle Royston and Interim CFO Anin Basu will host the call starting at 8:30 a.m. Eastern time . A question and answer session will follow management's discussion.

Date: Thursday, November 7, 2019
Time: 8:30 a.m. Eastern Time 
Toll-free ( Canada /US): 1-888-220-8474 
International:  1-720-452-9217
Reference number: 2936771

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. A replay of the call will be available via Optiva's website (www.optiva.com/investors/)  Media Inquiries: media@optiva.com

About Optiva Inc.
Optiva Inc. is the leader in providing communication service providers (CSPs) worldwide with cloud-native revenue management software on the public cloud. Operators and MVNOs can integrate our best-of-breed charging engine into a BSS stack or deploy our fully managed, end-to-end, SaaS-based platform. Optiva solutions offer unmatched speed, scale, security and savings. Our market knowledge, analytical insights and unique Customer Success Program ensure telecoms are equipped to achieve their strategic business goals. Established in 1999, Optiva Inc. is on the Toronto Stock Exchange (OPT.TO). 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 November 7, 2019 , 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, both of which are 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.
Condensed Consolidated Interim Statements of Financial Position
(Expressed in U.S. dollars)
(Unaudited)








September 30,


September 30,



2019


2018






Assets










Current assets:






Cash and cash equivalents

$

36,592,926

$

36,174,863


Trade accounts and other receivables


10,684,310


14,954,291


Unbilled revenue


7,688,534


12,908,847


Prepaid expenses


1,865,394


1,833,105


Income taxes receivable


4,697,622


5,173,450


Other assets


201,996


253,517


Inventories


748,314


1,111,782


Total current assets


62,479,096


72,409,855






Restricted cash


1,084,205


3,507,759

Long-term unbilled revenue


4,635,765


1,531,062

Property and equipment



541,861

Deferred income taxes


1,910,935


2,093,716

Investment tax credits


352,427


361,810

Intangible assets


13,378,794


18,044,530

Goodwill


32,271,078


32,271,078

Total assets

$

116,112,300

$

130,761,671






Liabilities and Shareholders' Deficit










Current liabilities:






Trade payables

$

10,146,718

$

21,568,158


Accrued liabilities


11,420,207


12,832,812


Provisions


4,531,044


7,655,199


Income taxes payable


1,551,973


500,489


Deferred revenue


10,383,490


13,445,746


Total current liabilities


38,033,432


56,002,404






Deferred revenue


852,373


1,512,863

Other liabilities


2,317,200


1,272,488

Pension and other long-term employment benefit plans


14,671,564


16,900,821

Provisions


206,956


5,662,009

Preferred shares


65,931,132


57,862,418

Series A Warrant


15,274,241


21,754,223

Deferred income taxes


120,000


120,000

Total liabilities


137,406,898


161,087,226

Shareholders' deficit:






Share capital


250,893,223


248,680,325


Standby Warrant


997,500


997,500


Contributed surplus


11,300,925


13,386,978


Deficit


(277,448,183)


(285,318,990)


Accumulated other comprehensive loss


(7,038,063)


(8,071,368)


Total shareholders' deficit


(21,294,598)


(30,325,555)






Total liabilities and shareholders' deficit

$

116,112,300

$

130,761,671

 

OPTIVA INC.
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(Expressed in U.S. dollars, except per share and share amounts)
(Unaudited)                                        








Three months ended  


Twelve months ended



September 30,


 September 30,



2019


2018


2019


2018










Revenue:










Support and subscription

$

16,595,067

$

19,794,586

$

72,874,763

$

84,747,291


Software licenses, services and other


6,528,991


7,503,006


27,478,324


36,879,413



23,124,058


27,297,592


100,353,087


121,626,704










Cost of revenue


8,065,009


8,877,689


33,687,238


50,711,612










Gross profit


15,059,049


18,419,903


66,665,849


70,915,092










Operating expenses:










Sales and marketing


2,256,818


2,374,202


10,826,636


11,331,769


General and administrative


4,646,796


6,523,349


18,825,473


31,076,334


Research and development 


8,155,351


14,104,345


26,986,751


61,515,108


Restructuring costs (recovery)


(3,709,732)


991,769


(1,818,775)


51,775,138



11,349,233


23,993,665


54,820,085


155,698,349










Income (loss) from operations        


3,709,816


(5,573,762)


11,845,764


(84,783,257)










Foreign exchange gain (loss)                   


(384,747)


(1,974,718)


122,171


(317,823)

Finance income                                       


119,245


252,851


479,315


523,718

Finance costs                                             


(1,795,206)


(4,924,931)


(4,037,555)


(2,572,010)










Income (loss) before income taxes       


1,649,108


(12,220,560)


8,409,695


(87,149,372)










Income taxes (recovery):










Current


2,565,101


2,089,097


5,186,867


5,391,880


Deferred


46,824


59,465


100,078


50,404




2,611,925


2,148,562


5,286,945


5,442,284










Net income (loss)                             

$

(962,817)

$

(14,369,122)

$

3,122,750

$

(92,591,656)










Other comprehensive income:









Items that will not be reclassified









to net income:










Actuarial gain on pension and










non-pension post-employment










benefit plans, net of income 










tax expense of nil 


1,033,305


390,055


1,033,305


390,055










Total comprehensive income (loss)   

$

70,488

$

(13,979,067)

$

4,156,055

$

(92,201,601)










Income (loss) per subordinate voting share:










Basic 

$

(0.18)

$

(2.75)

$

0.59

$

(17.69)


Diluted


(0.18)


(2.75)


0.55


(17.69)



















Weighted average number of









subordinate voting shares:










Basic


5,315,757


5,233,047


5,271,889


5,233,047


Diluted


5,315,757


5,233,047


5,642,069


5,233,047











 

OPTIVA INC.
Condensed Consolidated Interim Statements of Cash Flows
(Expressed in U.S. dollars)
(Unaudited)








Twelve months ended


Twelve months ended



September 30,


September 30,



2019


2018


2019


2018










Cash provided by (used in):


















Operating activities:










Income (loss) for the period

$

(962,817)

$

(14,369,122)

$

3,122,750

$

(92,591,656)


Adjustments for:










Depreciation of property and equipment


8,271


176,169


166,698


2,505,018


Amortization of intangible assets


1,200,761


1,330,559


4,665,736


7,487,034


Finance income


(119,245)


(252,851)


(479,315)


(523,718)


Finance costs (recovery)


1,795,206


4,924,931


4,037,555


2,572,010


Pension


(211,122)


5,584


(164,555)


(595,754)


Income tax expense


2,611,925


2,148,562


5,286,945


5,442,284


Unrealized foreign exchange loss (gain)


227,392


2,374,860


(528,510)


3,073,740


Share-based compensation


450,154


482,849


1,538,558


2,776,008


Change in provisions


(4,614,128)


(11,443,067)


(8,579,208)


(6,161,235)


Loss on disposal of property and equipment


15,391


4,815


307,707


421,610


Change in non-cash operating working capital


624,852


1,749,060


(5,655,864)


20,708,948



1,026,640


(12,867,651)


3,718,497


(54,885,711)


Interest paid


(17,281)


(76,573)


(64,789)


(185,333)


Interest received


55,813


294,018


247,985


512,379


Income taxes recovery (paid)


166,375


(1,505,677)


(3,194,711)


(6,452,848)



1,231,547


(14,155,883)


706,982


(61,011,513)










Financing activities:










Payment of dividends



(2,000,000)


(2,000,000)


(11,640,670)





(2,000,000)


(2,000,000)


(11,640,670)










Investing activities:










Purchase of property and equipment


67,456



67,456


(5,538)


Purchase of intangible assets





(9,985)


Decrease in restricted cash


298,412


70,375


2,423,554


1,045,864



365,868


70,375


2,491,010


1,030,341










Effect of foreign exchange rate changes on










cash and cash equivalents


(497,829)


(2,354,467)


(779,929)


(3,095,039)










Increase (decrease) in cash and cash










equivalents


1,099,586


(18,439,975)


418,063


(74,716,881)










Cash and cash equivalents,










beginning of period


35,493,340


54,614,838


36,174,863


110,891,744










Cash and cash equivalents,










end of period

$

36,592,926

$

36,174,863

$

36,592,926

$

36,174,863











 

SOURCE Optiva Inc.


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