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Optiva Inc. Reports Third Quarter 2019 Financial Results

TORONTO , Aug. 7, 2019 /CNW/ - Optiva Inc. (OPT.TO), an innovative software provider of mission-critical, cloud-native, monetization solutions to leading communication service providers (CSPs) globally, released its financial results today for the quarter ended June 30, 2019 .







Q3 Fiscal 2019 Highlights

Three Months Ended


Nine Months Ended

($ US Thousands, except per share information)

Jun 30,


Jun 30,

(Unaudited)

2019

2018


2019

2018

Revenue

24,670

32,034


77,229

94,329

Net income (loss)

3,069

(3,540)


4,086

(78,223)

Basic Earnings (loss) Per Share 

$ 0.58

$(0.68)


$ 0.78

$(14.95)

Cash generated from (used in) operating activities

340

(17,153)


(525)

(46,856)

Total cash, including restricted cash

36,876

58,193


36,876

58,193

Optiva is an innovative software provider of mission-critical, cloud-native monetization solutions to leading CSPs globally. (CNW Group/Optiva Inc.)

 

"In Q3 we continued to focus on our advancement to the cloud - continuing our investment in our products and working with customers to position them for adoption of the cloud," said Danielle Royston , CEO of Optiva. "We have started this period's review of Customer Success and anticipate this metric to continue on its upward trajectory. We continue to manage the business cash flow break even so we may invest in our exciting vision to bring telco to the cloud in 2019."

Third Quarter 2019 Financial Results

  • Revenues were lower by $7.4 million relative to the third quarter of fiscal 2018, primarily due to the discontinuation of support to customers who had previously notified Optiva of their exit, and in some limited cases, a delay in renewal by existing customers, as well as fewer software implementations.

  • Optiva's cost of revenue and operating expenses declined by $18.7 million relative to the third quarter of 2018 as a result of Optiva's ongoing focus on operational efficiencies, cost management and lower research and development expenses.

  • Third quarter 2019 research and development expenses included $1.6 million of investments in cloud innovation, which brings the total spent to date in fiscal 2019, to $6.8 million . Since the beginning of 2018, Optiva has invested a total of $20.8 million in cloud innovation and will continue to spend up to another $80 million over the course of the next two to three years, as per its stated cloud-driven growth strategy.

  • Optiva's research and development investments and efforts have resulted in higher efficiencies in project deployments and support and ultimately achieving better results in Customer Success metrics.

  • Net income for the quarter increased to $3.1 million compared to a net loss of $3.5 million during the corresponding period in 2018. The significant improvement in earnings was mainly due to lower operating expenses.

  • Optiva generated $0.3 million in cash from operating activities in the third quarter of 2019.

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


Business Highlights

  • Optiva completed a major BSS upgrade for a Tier 1 APAC telecommunications provider, which utilizes Optiva Charging Engine™, and is one of the world's largest operators with a base of more than 400 million subscribers.

  • As part of building the cloud sales pipeline, Optiva has completed 15 TCO reviews with operators to show possible savings by moving to the cloud.

  • Vodacom Tanzania expanded its partnership with Optiva for utilization of Optiva Charging Engine™ and Policy Control (PCRF). The multiyear agreement enables Vodacom Tanzania to upgrade its current platform and support and take another step toward leveraging Optiva's innovative cloud-native BSS architecture.

  • Optiva hosted a summit on cloud migration at TM Forum Digital Transformation World and highlighted that telco public cloud usage is predicted to double in 2019, according to a recent research report by industry analyst firm Ovum, entitled "Understanding the Business Value Of Re-architecting Core Applications on the Public Cloud."


Conference Call

Optiva Inc. will hold an analyst call tomorrow, August 8, 2019 , to discuss its Q3 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, August 8, 2019
Time: 8:30 a.m. Eastern Time 
Toll-free ( Canada /US):  1-888-204-4368 
International:  1-720-543-0214
Reference number: 7726503
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/).

About Optiva Inc.

Optiva Inc. is leading the telco industry and its innovative customers around the world by offering next-generation software solutions to help them leverage today's digital technologies. Our portfolio of monetization products enables real-time billing, charging, policy management and user experience that are critical to our customers' growth and performance. When deployed in the cloud, Optiva™ solutions deliver the most impact for the best value. Our vision, market knowledge, analytical insights and unparalleled Customer Success Program ensure our customers are equipped to achieve their strategic business goals today and into the future. Established in 1999, Optiva Inc. can be found on the Toronto Stock Exchange (OPT.TO). For more information, please go to 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 May 8, 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)





     June 30, 

September 30,


2019

2018

Assets






Current assets:




Cash and cash equivalents

$

35,493,340

$

36,174,863


Trade accounts and other receivables

12,939,583

14,954,291


Unbilled revenue       

8,909,774

12,908,847


Prepaid expenses 

2,398,930

1,833,105


Income taxes receivable    

6,144,676

5,173,450


Other assets   

222,053

253,517


Inventories   

841,237

1,111,782


Total current assets

66,949,593

72,409,855




Restricted cash 

1,382,617

3,507,759

Long-term unbilled revenue   

5,889,708

1,531,062

Property and equipment   

128,815

541,861

Deferred income taxes  

2,035,358

2,093,716

Investment tax credits   

356,628

361,810

Intangible assets   

14,541,991

18,044,530

Goodwill  

32,271,078

32,271,078

Total assets  

$

123,555,788

$

130,761,671




Liabilities and Shareholders' Deficit






Current liabilities:




Trade payables   

$

15,522,395

$

21,568,158


Accrued liabilities  

8,217,413

12,832,812


Provisions  

4,068,159

7,655,199


Income taxes payable   

587,755

500,489


Deferred revenue   

12,384,251

13,445,746


Total current liabilities    

40,779,973

56,002,404




Deferred revenue  

808,690

1,512,863

Other liabilities

2,238,658

1,272,488

Pension and other long-term employment benefit plans   

16,176,279

16,900,821

Provisions    

5,283,969

5,662,009

Preferred shares    

63,321,826

57,862,418

Series A Warrant  

16,199,953

21,754,223

Deferred income taxes  

120,000

120,000

Total liabilities 

144,929,348

161,087,226

Shareholders' deficit:




Share capital     

250,893,223

248,680,325


Standby Warrant   

997,500

997,500


Contributed surplus      

11,292,451

13,386,978


Deficit   

(276,485,366)

(285,318,990)


Accumulated other comprehensive loss     

(8,071,368)

(8,071,368)


Total shareholders' deficit    

(21,373,560)

(30,325,555)

Total liabilities and shareholders' deficit            

$

123,555,788

$

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


Nine months ended


June 30,


 June 30,


2019

2018


2019

2018

Revenue:







Support and subscription 

$

17,905,010

$

21,676,078


$

56,279,696

$

64,952,705


Software licenses, services and other    

6,765,005

10,358,089


20,949,333

29,376,407


24,670,015

32,034,167



94,329,112





77,229,029


Cost of revenue   

8,093,255

9,676,473


25,622,229

41,833,923







Gross profit 

16,576,760

22,357,694


51,606,800

52,495,189







Operating expenses:







Sales and marketing  

2,276,621

3,116,201


8,569,818

8,957,567


General and administrative

4,538,587

5,928,544


14,178,677

24,552,985


Research and development   

3,810,322

17,344,922


18,831,400

47,410,763


Restructuring costs    

209,366

1,552,824


1,890,957

50,783,369


10,834,896

27,942,491


43,470,852

131,704,684







Income (loss) from operations       

5,741,864

(5,584,797)


8,135,948

(79,209,495)







Foreign exchange gain    

97,210

2,518,468


506,918

1,656,895

Finance income 

212,883

116,665


360,070

270,867

Finance (cost) recovery

(2,184,689)

1,149,825


(2,242,349)

2,352,921







Income (loss) before income taxes      

3,867,268

(1,799,839)


6,760,587

(74,928,812)







Income taxes (recovery):







Current  

824,223

1,726,038


2,621,766

3,302,783


Deferred     

(25,642)

14,234


53,254

(9,061)


798,581

1,740,272


2,675,020

3,293,722







Total comprehensive income (loss)  

$

3,068,687

$

(3,540,111)


$

4,085,567

$

(78,222,534)







Income (loss) per subordinate voting share:







Basic   

$

0.58

$

(0.68)


$

0.78

$

(14.95)


Diluted     

0.54

(0.68)


0.72

(14.95)













Weighted average number of
subordinate voting shares:







Basic      

5,305,386

5,233,047


5,257,696

5,233,047


Diluted 

5,635,914

5,233,047


5,637,786

5,233,047







 

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








    Three months ended    


Nine months ended


June 30,  


June 30,


2019

2018


2019

2018







Cash provided by (used in):












Operating activities:







Income (loss) for the period                

$

3,068,687

$

(3,540,111)


$

4,085,567

$

(78,222,534)


Adjustments for:







Depreciation of property and equipment           

33,077

24,344


158,427

2,328,849


Amortization of intangible assets                    

1,163,192

1,526,153


3,464,975

6,156,475


Finance income  

(212,883)

(116,665)


(360,070)

(270,867)


Finance costs (recovery)

2,184,689

(1,149,825)


2,242,349

(2,352,921)


Pension    

15,004

(940,537)


46,567

(601,338)


Income tax expense

798,581

1,740,272


2,675,020

3,293,722


Unrealized foreign exchange loss (gain)  

(393,196)

630,967


(755,902)

698,880


Share-based compensation  

662,805

304,332


1,088,404

2,293,159


Change in provisions  

(1,171,058)

(21,209,638)


(3,965,080)

5,281,832


Loss on disposal of property and equipment   

306,163


292,316

416,795


Change in non-cash operating working capital

(5,187,179)

7,413,024


(6,280,716)

18,959,888


961,719

(15,011,521)


2,691,857

(42,018,060)


Interest paid   

(18,992)

(31,940)


(47,508)

(108,760)


Interest received   

53,549

61,071


192,172

218,361


Income taxes paid   

(656,066)

(2,169,941)


(3,361,086)

(4,947,171)


340,210

(17,152,331)


(524,565)

(46,855,630)







Financing activities:







Payment of dividends   – 

(2,000,000)


(2,000,000)

(9,640,670)



(2,000,000)


(2,000,000)

(9,640,670)







Investing activities:







Purchase of property and equipment


(5,538)


Purchase of intangible assets 


(9,985)


Decrease in restricted cash   

1,123,117

88,817


2,125,142

975,489


1,123,117

88,817


2,125,142

959,966







Effect of foreign exchange rate changes on







cash and cash equivalents  

235,831

(876,230)


(282,100)

(740,572)







Increase (decrease) in cash and cash







equivalents   

1,699,158

(19,939,744)

(681,523)

(56,276,906)







Cash and cash equivalents,







beginning of period 

33,794,182

74,554,582

36,174,863

110,891,744







Cash and cash equivalents,

$


$



$


$



end of period        

35,493,340

54,614,838

35,493,340

54,614,838











 

SOURCE Optiva Inc.


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