TMCnet News
Redknee Solutions Reports Third Quarter Fiscal 2016 Results– Quarter Highlighted by Return to Strong Momentum in New Orders and Record Backlog of More Than $180 Million – TORONTO, Aug. 3, 2016 /CNW/ - Redknee Solutions Inc. (TSX: RKN) a leading provider of real-time monetization and subscriber management software, reported results for its fiscal third quarter ended June 30, 2016. (All figures are in U.S. dollars unless otherwise stated.) Fiscal Q3 2016 Financial Highlights
Fiscal Q3 2016 Operational Highlights
Management Commentary "The third quarter was highlighted by strong momentum in new orders resulting in over $60 million of new bookings, further strengthening our order backlog at quarter end, which surpassed the $180 million mark for the first time," said Lucas Skoczkowski, President and CEO, Redknee Solutions Inc. "Delays in customer decisions continue to impact our revenues, but we expect that our backlog will contribute to increased revenue visibility for the fiscal year 2017, as implementation of these new contracts will begin. More importantly, these wins further underscore the competitive strength of our solutions in supporting our customers, as they make the critical transition from traditional to real time digital business models. Our customer discussions remain very active and we look forward to continuing to convert our robust sales pipeline into significant contract wins." Fiscal Q3 2016 Financial Results Revenue was $40.5 million compared to $46.7 million in the same year-ago quarter. The decrease resulted mainly from the impact of lower license revenue due to delays in customer purchasing decisions, compared to the same year-ago quarter. Order backlog increased 11% to $180.7 million from $162.5 million in the same year-ago quarter, and, sequentially, increased 3% from $175.5 million from the second quarter of 2016. Recurring revenue was 63% of total revenue, compared to 53% in the same year-ago quarter. Gross margin was $18.3 million, or 45% of total revenue, compared to $26.6 million, or 57% of total revenue, in the same year-ago quarter. The decrease resulted mainly from lower revenue from high-margin software license deals. Adjusted EBITDA loss was $1.9 million compared to Adjusted EBITDA of $5.3 million, or 11% of revenue, in the same year-ago quarter (see discussion about the presentation of Adjusted EBITDA, a non-IFRS measure, below). Net loss was $12.3 million, or $0.11 loss per basic and diluted share, compared to a net loss of $5.5 million, or $0.05 loss per basic and diluted share, in the same year-ago quarter. Net loss included $4.1 million of restructuring costs. The Company expects its restructuring program will reduce annual overall expenses by up to $25 million by Fiscal 2017, with partial savings occurring through the last quarter of Fiscal 2016. At June 30, 2016, total cash ended at $43.0 million. Cash flow from operations was a $4.0 million. Adjusted cash flow from operations was at $7.6 million (see discussion about the presentation of Adjusted cash flow from operations, a non-IFRS measure, below). Please refer to the section regarding Forward-Looking Statements below which form an integral part of this release. These results, along with the annual audited consolidated financial statements and the Company's MD&A, are available on the Company's website at www.redknee.com and on SEDAR at www.sedar.com. Financial Guidance The Company is providing the following financial guidance for Fiscal 2016 and Fiscal 2017:
Mr. Skoczkowski commented: "As we look out to the remainder of this year and into next, while we continue to be confident in our ability to win new contracts, we expect delays in customer decisions will persist, tempering software license sales and constraining near-term top-line growth. With strong visibility afforded by the expansion of our order backlog throughout Fiscal 2016 and supported by last year's restructuring and our ongoing disciplined cost management, in Fiscal 2017 we expect to generate adjusted EBITDA in the range of $15 to $20 million dollars." "As we move forward, we remain firmly focused on maximizing customer retention as well as our near-term business priorities of expanding gross margin, growing recurring revenue and generating cash flow." This financial guidance constitutes forward-looking information within the meaning of applicable securities laws and is based on a number of assumptions and subject to a number of risks. Actual results could vary materially as a result of numerous factors, including certain risk factors, many of which are beyond Redknee's control. Please refer to the section regarding Forward-Looking Statements below. All numbers provided in this section are approximate. Conference Call The Company will host a conference call tomorrow (August 4, 2016) to discuss these results. CEO Lucas Skoczkowski and CFO David Charron will host the presentation starting at 8:30 a.m. Eastern time. A question and answer session will follow management's presentation. Date: Thursday, August 4, 2016 The presentation will be webcast live and available for replay via either the Investors section of Redknee's website (www.redknee.com) or http://bit.ly/2a5IkjP. Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact NATIONAL | Equicom at 1 (416) 586-1955. A replay of the call will be available until 12:00 midnight (EST) Thursday, August 11, 2016. Toll-Free Replay Number: 1 (855) 859-2056 About Redknee Solutions Inc. Redknee monetizes today's digital world. We provide a complete portfolio of mission-critical monetization and subscriber management solutions and services that allow communications service providers, utility companies, auto makers and enterprise businesses of all types to charge for things in new and innovative ways. Redknee's real-time billing, charging, policy and customer care offerings provide the agility and scalability to drive a unique user experience, increase profitability and support any new product or business model. Available on premise, cloud-based, or as a Software-as-a-Service, Redknee's low-risk, flexible solutions power more than 250 businesses across the globe. Established in 1999, Redknee Solutions Inc. (TSX: RKN) is the parent of the wholly-owned operating subsidiary Redknee Inc. and its various subsidiaries. References to Redknee refer to the combined operations of those entities. For more information about Redknee and its solutions, please go to www.redknee.com. Non-IFRS Measures The Company reports "Adjusted EBITDA", which is not a financial measure calculated and presented in accordance with International Financial Reporting Standards (IFRS), and should not be considered in isolation or as a substitute to net income (loss), operating income or any other financial measures of performance calculated and presented in accordance with IFRS, or as an alternative to cash flow from operating activities as a measure of liquidity. The Company defines Adjusted EBITDA as net income (loss) excluding amounts for depreciation and amortization, other income, finance costs, finance income, income tax expense (recovery), foreign exchange gain (loss), share-based compensation, restructuring costs and acquisition and related costs. "Recurring revenue," which is not a financial measure calculated and presented in accordance with IFRS, and should not be considered in isolation or as a substitute to revenue. Recurring revenue includes revenue from support and maintenance agreements, long term service agreements, and term-based product licenses and software subscription. "Adjusted cash flow from operations", which is a non-IFRS measure, is defined as cash flow from operations excluding amounts for restructuring payments made in the period. "Order backlog" relates to contractual commitments as at period end, pending to be delivered and will be recognized as revenue in future periods. Order backlog is not a financial measure calculated and presented in accordance with IFRS and should not be considered in isolation or as a substitute to revenue. The "constant currency" presentation, which is a non-IFRS measure, excludes the impact of fluctuations in foreign currency exchange rates. The Company calculates constant currency by converting the current period local currency financial results using the comparative period exchange rates. Other companies (including competitors) may define Adjusted EBITDA, Adjusted cash flow from operations, recurring revenue, and order backlog differently. The Company presents Adjusted EBITDA, Adjusted cash flow from operations, recurring revenue, and order backlog because management believes these to be important supplemental measures of performance that are commonly used by securities analysts, investors and other interested parties in the evaluation of companies in Redknee's industry. Management uses this information internally for forecasting and budgeting. It may not be indicative of the historical operating results of Redknee nor is it intended to be predictive of potential future results. See "Reconciliation of Net Income (Loss) to Adjusted EBITDA" below for further information on this non-IFRS measure. 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. Forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Persons reading this news release are cautioned that such information may not be appropriate for other purposes. Such forward-looking statements include statements respecting order backlog contributing to increased revenue visibility for the Fiscal 2017; conversion of the Company's sales pipeline into contract wins; expectations regarding the impact of restructuring on reducing expenses; expected delays in customer decisions; and financial guidance for Fiscal 2016 and 2017; as well as statements regarding Redknee's future plans, objectives or performance for the current period and subsequent periods and regarding the markets for our products. These statements reflect current assumptions and expectations regarding future events and operating performance and speak only as of the date of this document. Such forward-looking statements involve known and unknown risks, uncertainties and other factors and assumptions that may cause the actual results, performance or achievements to differ materially. Such factors include, but are not limited to, assumptions respecting : (i) the conversion of sales pipeline into orders and orders into revenue based on the extent and timing of historical conversion; (ii) the anticipated mix of the sale of products and services of the Company and associated margin being consistent with that realized in the past; (iii) the ability of Redknee to bring new products and services to market and to increase sales; (iv) the strength of the Company's product development pipeline; (v) the estimated size and growth prospects of the markets Redknee seeks to address; (vi) the Company's competitive position in those markets and its ability to take advantage of future opportunities in those markets; (vii) the benefits of the Company's products and services to be realized by its customers; (viii) the demand for the Company's products and services and the extent of deployment of the Company's products and services; (ix) the Company's financial condition and capital requirements; * the stability of general economic and market conditions; (xi) currency exchange rates and interest rates; and (xii) capital markets continuing to provide the Company with access to capital. The risks and uncertainties that may affect forward-looking statements include, but are not limited to: the failure of demand for Redknee's products to develop as anticipated, the failure to obtain customer orders or meet customer requirements, the inability of Redknee's products to perform as expected, the inability of Redknee to achieve anticipated cost savings in the time frames and to the extent anticipated, unanticipated negative impacts on customer service or product development as a result of costs savings implemented, a material adverse change in the affairs of Redknee, and the factors discussed under the "Risk Factors" section of Redknee's most recently filed AIF which is available on SEDAR at www.sedar.com and on Redknee's web-site at www.redknee.com. 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. Redknee 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.
SOURCE Redknee Solutions Inc. |