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Optiva Inc. Reports Second Quarter 2019 Financial Results

TORONTO, May 8, 2019 /CNW/ - Optiva Inc. (TSX: OPT) (the "Company"), 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 March 31, 2019.

Optiva Inc. Reports Second Quarter 2019 Financial Results (CNW Group/Optiva Inc.)

"In Q2, we focused on the execution of our Strategic Plan," said Danielle Royston, CEO of Optiva. "Our Customer Success program continues to improve with the new measurement coming in at 44%, up from 33%. Our planned R&D investment of $100 million resulted in our first customer choosing to upgrade and migrate their Optiva Charging Engine™ deployment to Google Cloud Platform. Finally, we continue to manage the business to cash flow break even so that we may invest in our bold vision to bring public cloud to telcos in 2019."

Second Quarter 2019 Financial Results

  • Revenues declined by $3.0 million relative to the second quarter of fiscal 2018 due to a reduction in orders from customers, delay and loss of certain customers and lower third-party revenue.

  • The Company's costs of revenue and operating expenses declined by $15.0 million relative to the second quarter of fiscal 2018 mainly due to lower cost of revenue, lower research and development costs, and lower general and administrative expenses.

  • Second quarter 2019 research and development expenses included $2 million of investments in cloud innovation, which brings the total spent to date in fiscal 2019, to $5.2 million. In 2018, the Company invested $14.0 million in cloud innovation, bringing the total to $19.2 million so far. We expect to invest up to another $80.8 million in cloud innovation over the next two to three fiscal years.
     
  • The net income for the quarter was at $0.5 million compared to a loss of $10.2 million last year mainly due to improved gross margin and a decrease in operating expenditures.

  • The Company generated $1.1 million in cash from operating activities in the second quarter ended March 31, 2019.

  • We continue to evaluate the legacy revenue base of the Company, and there is a potential risk that the run rate could be as low as $75m. The variable cost structure of the Company ensures we will remain cash flow break even to support the business.

  • To accelerate the cloud opportunity, the Company is considering accessing additional sources of capital.

Business Highlights

  • Customer Success Rate improved 11% from 33% for the measurement period of January through June 2018, to 44% for the measurement period of July through December 2018.

  • The Company launches its Optiva Revenue Management Suite™, an end-to-end, best-of-suite BSS solution, on Google Cloud Platform (GCP).

  • A pioneering connectivity and eSIM technology provider will upgrade their installation to Optiva Charging Engine™ on Google Cloud Platform with Google Cloud Spanner.

  • A leading telco provider announced the new phase and commercial launch of its multi-play billing and charging transformation on Optiva Charging EngineTM.

  • Optiva entered into an upgrade and multi-year support agreement with a leading telecom provider.

Conference Call

Optiva Inc. will hold an analyst call tomorrow, May 9, 2019, to discuss its Q2 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, May 9, 2019
Time: 8:30 a.m. Eastern Time 
Toll-free (Canada/US): 1-800-458-4121
International: 1-720-543-0206
Reference number: 2531956

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 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 (TSX: OPT). 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)










March 31,
2019


September 30,
2018







Assets












Current assets:







Cash and cash equivalents



$

33,794,182


$

36,174,863


Trade accounts and other receivables



12,344,864


14,954,291


Unbilled revenue



7,938,434


12,908,847


Prepaid expenses



1,972,212


1,833,105


Income taxes receivable



6,195,355


5,173,450


Other assets



239,430


253,517


Inventories



1,036,840


1,111,782


Total current assets



63,521,317


72,409,855







Restricted cash



2,505,734


3,507,759

Long-term unbilled revenue



5,927,050


1,531,062

Property and equipment



161,574


541,861

Deferred income taxes



2,016,240


2,093,716

Investment tax credits



349,999


361,810

Intangible assets



15,705,368


18,044,530

Goodwill



32,271,078


32,271,078

Total assets



$

122,458,360


$

130,761,671







Liabilities and Shareholders' Deficit












Current liabilities:







Trade payables



$

18,720,470


$

21,568,158


Accrued liabilities



8,910,732


12,832,812


Provisions



5,266,098


7,655,199


Income taxes payable



543,562


500,489


Deferred revenue



11,203,681


13,445,746


Total current liabilities



44,644,543


56,002,404







Deferred revenue



1,236,017


1,512,863

Other liabilities



1,728,700


1,272,488

Pension and other long-term employment benefit plans



16,041,356


16,900,821

Provisions



5,257,088


5,662,009

Preferred shares



60,780,673


57,862,418

Series A Warrant



16,662,809


21,754,223

Deferred income taxes



120,000


120,000

Total liabilities



146,471,186


161,087,226

Shareholders' deficit:







Share capital 



250,123,804


248,680,325


Standby Warrant



997,500


997,500


Contributed surplus



12,491,291


13,386,978


Deficit



(279,554,053)


(285,318,990)


Accumulated other comprehensive loss



(8,071,368)


(8,071,368)


Total shareholders' deficit



(24,012,826)


(30,325,555)







Total liabilities and shareholders' deficit



$

122,458,360


$

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  

Six months ended


  March 31,   

March 31,


2019

2018

2019

2018

Revenue:






Support and subscription

$

17,102,903

$

21,861,774

$

38,374,686

$

43,276,627


Software licenses, services and other    

7,839,349

6,032,735

14,184,328

19,018,318


24,942,252

27,894,509

52,559,014

62,294,945






Cost of revenue    

8,905,063

12,060,742

17,528,974

32,157,450






Gross profit  

16,037,189

15,833,767

35,030,040

30,137,495






Operating expenses:






Sales and marketing

3,585,689

2,334,535

6,293,197

5,841,366


General and administrative  

4,000,323

8,871,699

9,640,090

18,624,441


Research and development  

6,304,877

13,355,150

15,021,078

30,065,841


Restructuring costs  

1,085,628

2,263,207

1,681,591

49,230,545


14,976,517

26,824,591

32,635,956

103,762,193






Income (loss) from operations   

1,060,672

(10,990,824)

2,394,084

(73,624,698)






Foreign exchange gain (loss)  

1,153,438

(241,413)

409,708

(861,573)

Finance income     

59,058

111,304

147,187

154,202

Finance (cost) recovery  

(1,218,079)

1,054,194

(57,660)

1,203,096






Income (loss) before income taxes    

1,055,089

(10,066,739)

2,893,319

(73,128,973)






Income taxes (recovery):






Current    

569,659

202,107

1,797,543

1,576,745


Deferred    

6,923

(40,602)

78,896

(23,295)


576,582

161,505

1,876,439

1,553,450






Total comprehensive income (loss)  

$

478,507

$

(10,228,244)

$

1,016,880

$

(74,682,423)






Income (loss) per subordinate voting share:






Basic   

$

0.09

$

(1.95)

$

0.19

$

(14.27)


Diluted      

0.08

(1.95)

0.18

(14.27)











Weighted average number of
subordinate voting shares:






Basic 

5,242,672

5,233,047

5,238,132

5,233,047


Diluted 

5,633,155

5,233,047

5,640,253

5,233,047







 

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









Three months ended

  Six months ended


March 31,  

   March 31,


2019


2018

2019

2018

Cash provided by (used in):










Operating activities:






Income (loss) for the period   

$

478,507

$

(10,228,244)

$

1,016,880

$

(74,682,423)


Adjustments for:







Depreciation of property and equipment   

15,889

786,808

125,350

2,304,505



Amortization of intangible assets 

1,163,170

2,336,506

2,301,783

4,630,322



Finance income     

(59,058)

(111,304)

(147,187)

(154,202)



Finance costs (recovery)  

1,218,079

(1,054,194)

57,660

(1,203,096)



Pension  

15,004

267,257

31,563

339,199



Income tax expense  

576,582

161,505

1,876,439

1,553,450



Unrealized foreign exchange loss (gain)    

(479,548)

184,892

(362,706)

67,913



Share-based compensation 

191,174

750,348

425,599

1,988,827



Change in provisions   

(485,867)

(15,105,017)

(2,794,022)

26,491,470



Loss on disposal of property

251,308

292,316

110,632



Change in non-cash operating working capital 

(130,593)

9,531,567

(1,093,537)

11,546,864


2,754,647

(12,479,876)

1,730,138

(27,006,539)



Interest paid   

(19,853)

(42,877)

(28,516)

(76,820)



Interest received  

51,496

111,288

138,623

157,290



Income taxes paid

(1,733,880)

(505,570)

(2,705,020)

(2,777,230)


1,052,410

(12,917,035)

(864,775)

(29,703,299)






Financing activities:







Payment of dividends  

(7,640,670)

(2,000,000)

(7,640,670)


(7,640,670)

(2,000,000)

(7,640,670)






Investing activities:







Purchase of property and equipment

(1,337)

(5,538)



Purchase of intangible assets  

(9,985)



Decrease in restricted cash  

520,384

899,087

1,002,025

886,672


520,384

897,750

1,002,025

871,149






Effect of foreign exchange rate changes on





cash and cash equivalents  

(137,878)

(183,118)

(517,931)

135,658






Increase (decrease) in cash and cash





equivalents   

1,434,916

(19,843,073)

(2,380,681)

(36,337,162)






Cash and cash equivalents,





beginning of period  

32,359,266

94,397,655

36,174,863

110,891,744






Cash and cash equivalents,









end of period

$

33,794,182

$

74,554,582

$

33,794,182

$

74,554,582










                                                                                                                                                                                   

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

SOURCE Optiva Inc.