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Optiva Inc. Reports First Quarter 2019 Financial Results

TORONTO, Feb. 6, 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 December 31, 2018.

Optiva Inc. (CNW Group/Optiva Inc.)

Financial Highlights

(In thousands of US dollars, except per share information)

 

Optiva Inc.

For the three-month periods
ended December 31,

2018

2017

Revenues

$27,617

$34,400

Net income (loss)

$538

$(64,454)

Basic and diluted earnings (loss) per share

$0.10

($12.32)

Cash used in operating activities

($1,917)

($16,786)

 

"In Q1, we focused on the execution of our Strategic Plan," said Danielle Royston, CEO of Optiva. "Our Customer Success program continues to progress, and planned R&D investment of $100 million is now resulting in our first customer deployment on the public cloud. Our collaboration with Google Cloud Platform has led to the innovation and cloud-native transformation of our products, equipping Optiva to bring public cloud to telcos in 2019 and offer customers game-changing competitive and cost advantages."

First Quarter 2019 Results

  • Revenues declined by $6.8 million relative to the first quarter of fiscal 2018 due to a reduction in orders from customers, loss of certain customers and lower third party revenue. The Company adopted IFRS 15 - Revenue from Contracts with Customers, effective October 1, 2018 on a prospective basis.

  • The Company's costs of revenue and operating expenses declined by $70.7 million relative to the first quarter of fiscal 2018 mainly due to lower restructuring costs, research and development costs, and lower cost of revenue.

  • First quarter 2019 research and development expenses included $3.2 million of investment in cloud innovation. In 2018, the Company invested $14.0 million in cloud innovation, bringing the total to $17.2 million so far. We expect to invest up to another $82.8 million in cloud innovation over the next two to three fiscal years.

  • The net income for the quarter is $0.5M compared to a loss of $64.5 million last year mainly due to a decrease in operating expenditures this quarter and the restructuring expense of $47.0 million incurred in the comparative quarter of fiscal 2018.

  • The Company consumed $1.9 million in cash from operating activities in the first quarter ended December 31, 2018, primarily due to payments associated with restructuring.

Business Highlights

  • The Customer Success metric is showing improvement for the period July to December, increasing to the high 30s and up from 33%.

  • Migrated Optiva Wholesale Billing Solution for a Tier 1 telecom service provider in Australia to the public cloud and on Google Cloud Platform.

  • Deployed a new mobile virtual network enabler (MVNE) platform for a Tier 1 telecom provider in Latin America.

  • Launched Optiva Charging Engine for postpaid, multi-play and converged product offerings for Middle East telecom leader.

Conference Call

Optiva Inc. will hold an analyst call tomorrow, February 7, 2019, to discuss its Q1 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, February 7, 2019
Time: 8:30 a.m. Eastern time 
Toll-free (Canada/US): 1-800-478-9326
Local: 1 (416) 340-2218
Reference number: 4298672
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 Statements

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 February 6, 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 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)








December 31,


September 30,



2018


2018

Assets










Current assets:






Cash and cash equivalents

$

32,359,266

$

36,174,863


Trade accounts and other receivables


14,326,817


14,954,291


Unbilled revenue


7,542,256


12,908,847


Prepaid expenses


1,873,117


1,833,105


Income taxes receivable


5,220,842


5,173,450


Other assets


358,384


253,517


Inventories


1,101,752


1,111,782


Total current assets


62,782,434


72,409,855







Restricted cash


3,026,118


3,507,759

Long-term unbilled revenue


5,647,957


1,531,062

Property and equipment


417,866


541,861

Deferred income taxes


2,013,177


2,093,716

Investment tax credits


342,856


361,810

Intangible assets


16,879,443


18,044,530

Goodwill


32,271,078


32,271,078

Total assets

$

123,380,929

$

130,761,671





Liabilities and Shareholders' Deficit









Current liabilities:






Trade payables

$

22,049,178

$

21,568,158


Accrued liabilities


11,000,467


12,832,812


Provisions


5,748,003


7,655,199


Income taxes payable


638,001


500,489


Deferred revenue


7,600,674


13,445,746


Total current liabilities


47,036,323


56,002,404







Deferred revenue


1,730,822


1,512,863

Other liabilities


1,011,363


1,272,488

Pension and other long-term employment benefit plans


16,654,169


16,900,821

Provisions


5,261,050


5,662,009

Preferred shares


58,305,787


57,862,418

Series A Warrant


18,051,376


21,754,223

Deferred income taxes


120,000


120,000

Total liabilities


148,170,890


161,087,226

Shareholders' deficit:






Share capital


248,680,325


248,680,325


Standby Warrant


997,500


997,500


Contributed surplus


13,636,142


13,386,978


Deficit


(280,032,560)


(285,318,990)


Accumulated other comprehensive loss


(8,071,368)


(8,071,368)


Total shareholders' deficit


(24,789,961)


(30,325,555)







Total liabilities and shareholders' deficit

$

123,380,929

$

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



December 31,



2018


2017






Revenue:






Support and subscription

$

21,271,783

$

21,414,853


Software licenses, services and other


6,344,979


12,985,583



27,616,762


34,400,436






Cost of revenue


8,623,911


20,096,708






Gross profit


18,992,851


14,303,728






Operating expenses:






Sales and marketing


2,707,508


3,506,831


General and administrative


5,639,767


9,752,742


Research and development


8,716,201


16,710,691


Restructuring costs


595,963


46,967,338



17,659,439


76,937,602






Income (loss) from operations


1,333,412


(62,633,874)






Foreign exchange loss


(743,730)


(620,160)

Finance income


88,129


42,898

Finance recovery


1,160,419


148,902






Income (loss) before income taxes


1,838,230


(63,062,234)






Income tax expense:






Current


1,227,884


1,374,638


Deferred


71,973


17,307



1,299,857


1,391,945






Total comprehensive income (loss)

$

538,373

$

(64,454,179)






Income (loss) per subordinate voting share:





Basic

$

0.10

$

(12.32)

Diluted


0.10


(12.32)






Weighted average number of subordinate voting shares:





Basic


5,233,047


5,233,047

Diluted


5,646,352


5,233,047






 

OPTIVA INC.





Condensed Consolidated Interim Statements of Cash Flows





(Expressed in U.S. dollars)





(Unaudited)












Three months ended



December 31,



2018


2017






Cash provided by (used in):










Operating activities:






Income (loss) for the period

$

538,373

$

(64,454,179)


Adjustments for:





Depreciation of property and equipment


109,461


1,517,697

Amortization of intangible assets


1,138,613


2,293,816

Finance income


(88,129)


(42,898)

Finance recovery


(1,160,419)


(148,902)

Pension


16,559


71,942

Income tax expense


1,299,857


1,391,945

Unrealized foreign exchange loss (gain)


116,842


(116,979)

Share-based compensation


234,425


1,238,479

Change in provisions


(2,308,155)


41,596,487

Loss on disposal of property and equipment


41,008


110,632


Change in non-cash operating working capital


(962,944)


2,015,297



(1,024,509)


(14,526,663)


Interest paid


(8,663)


(33,943)


Interest received


87,127


46,002


Income taxes paid


(971,140)


(2,271,660)



(1,917,185)


(16,786,264)






Financing activities:






Payment of dividends


(2,000,000)




(2,000,000)







Investing activities:






Purchase of property and equipment



(4,201)


Purchase of intangible assets 



(9,985)


Decrease (increase) in restricted cash


481,641


(12,415)



481,641


(26,601)






Effect of foreign exchange rate changes on cash and cash equivalents


(380,053)


318,776






Decrease in cash and cash equivalents


(3,815,597)


(16,494,089)






Cash and cash equivalents, beginning of period


36,174,863


110,891,744






Cash and cash equivalents, end of period

$

32,359,266

$

94,397,655

 

SOURCE Optiva Inc.