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Absolute Reports Fiscal 2017 Second Quarter Results
[February 06, 2017]

Absolute Reports Fiscal 2017 Second Quarter Results


Absolute® (TSX: ABT), the self-healing endpoint security company, today announced its financial results for the three and six months ended December 31, 2016. All dollar figures are unaudited and stated in U.S. dollars, unless otherwise indicated.



USD Millions, except per share data   Q2     YTD  
F2017   F2016 Change F2017   F2016 Change
Revenue
DDS Segment(1) $ 22.5 $ 21.0 7% $ 44.9 $ 42.2 6%
DDS recurring as % of DDS total 99% 99% 99% 98%
Total $ 22.5 $ 21.1 6% $ 44.9 $ 45.1 (0%)
 
Commercial ACV Base(2) $ 86.2 $ 79.5 8%
 
Adjusted EBITDA(2)(3) $ 1.7 $ 2.0 (13%) $ 3.6 $ 6.3 (43%)
As a percentage of revenue 8% 9% 8% 15%
 
Net (Loss) Income $ (1.8) $ 8.7 (121%) $ (2.6) $ 9.8 (127%)
Per share (basic) $ (0.05) $ 0.22 $ (0.07) $ 0.23
Per share (diluted) $ (0.05) $ 0.21 $ (0.07) $ 0.22
 
Cash (used in) from operating activities $ (1.2) $ 1.4 (188%) $ 0.7 $ 6.3 (89%)
 
Dividends paid $ 2.3 $ 2.3 1% $ 4.7 $ 4.7 2%
Per share (CAD) $ 0.08 $ 0.08 - $ 0.16 $ 0.15 7%
 
Cash, equivalents, and investments $ 37.7 $ 55.9 (33%)
Total assets $ 98.6 $ 108.3 (9%)
Deferred revenue $ 133.7 $ 131.5 2%
 
Common shares outstanding   39.0   38.5 1%      

(1) As a result of the divestiture of the Absolute Manage and Absolute Service business unit on October 5, 2015, the Data and Device Security operating segment solely comprises Absolute's ongoing operations. This measure is specifically related to our DDS operating segment.
(2) Please refer to "Non-IFRS Measures and Definitions".
(3) Adjusted EBITDA in the year to date period of F2016 included a $1.0 million contribution from the Absolute Manage and Absolute Service business unit. This business unit was disposed in Q2-F2016.

Q2-F2017 and YTD Overview
Key Financial Metrics

  • Q2-F2017 Absolute Data and Device Security ("DDS") segment revenue was $22.5 million, representing a year-over-year increase of 7%. Recurring revenue represented 99% of Q2-F2017 total revenue and also increased 7% year-over-year
  • Year-to-date DDS segment revenue was $44.9 million, representing a year-over-year increase of 6%. Recurring revenue represented 99% of year-to-date revenue and increased 7% over the prior year period
  • Absolute DDS Commercial annual contract value ("ACV") Base of $86.2 million increased by 8% over the trailing four quarters and by 2% sequentially
  • Incremental ACV from New DDS Customers was $2.1 million in Q2-F2017 compared to $0.9 million in Q2-F2016. New customer ACV in the quarter included a significant enterprise license agreement to secure more than 100,000 endpoints for a large North American healthcare organization
  • For the year-to-date period of F2017, incremental ACV from New DDS Customers was $3.1 million compared to $1.6 million in the prior year-to-date period
  • Net ACV Retention from existing Absolute DDS customers was 100% during Q2-F2017 and 101% over the trailing four quarters
  • Adjusted EBITDA in Q2-F2017 was $1.7 million, or 8% of revenue, and was $3.6 million, or 8% of revenue, for the year-to-date period
  • Cash used in operating activities during Q2-F2017 was $1.2 million. Prior to payment of reorganization charges of $0.8 million, cash used in operating activities was $0.4 million. For the year-to-date period, cash generated from operating activities was $0.7 million, and prior to payment of reorganization charges of $1.7 million and income tax payments of $3.2 million, cash generated from operating activities was $5.6 million
  • DDS segment Billings in Q2-F2017 were $21.0 million, representing a year-over-year increase of 11%. DDS segment Billings for the year-to-date period were $40.7 million, representing a year-over-year increase of 6%

Technology and Products

  • Delivered a new Security Dashboard that provides customers with a broader view of their security posture across their entire deployment, including detailed reports on the status of complementary security applications
  • Created faster remediation cycles within the Endpoint Data Discovery capability so that customers can take immediate action when at-risk data is detected on a device. This includes the ability to promptly freeze multiple devices and / or the covert deletion of multiple files before sensitive data can be accessed
  • Delivered the first cycle of Device Usage Reporting, a new offering in our Device Analytics framework that allows customers to log device usage rates and user activity on each device. This initial offering is targeted to our Education customer base who must justify technology funding and perform comparisons across school districts

Operations and Corporate

  • Continued R&D expansion work in Vietnam and Vancouver, including the opening of a new Vietnam development centre
  • Implemented a normal course issuer bid ("NCIB") to purchase up to 2,643,256 of Absolute's common shares until August 28, 2017. For the year-to-date period, the Company purchased 132,000 shares under the NCIB
  • Paid a quarterly dividend of CAD$0.08 per share on our common shares during Q2-F2017 and paid total dividends of CAD$0.16 during the year-to-date period

"During Q2, we continued on our trajectory of accelerating ACV and revenue growth, driven by both new customer acquisitions and existing customer expansions, with increasingly strong growth coming from the targeted enterprise and healthcare verticals," said Geoff Haydon, Chief Executive Officer, Absolute. "The new DDS features and capabilities that we have introduced over the past nine months, combined with an increasingly strong go-to-market capability, are translating into measureable top line results."

"Our R&D investment plan remains on track, with our new Vietnam facility now open and hiring in both Vancouver and Vietnam beginning to accelerate," continued Mr. Haydon. "We are very excited to be in a position to execute on our product roadmap and vision, which leverages our unique persistence technology and distinguishes Absolute as the leader in the self-healing endpoint security market."

Q2-F2017 and Year-to-Date Financial Review

Revenue

Absolute DDS segment revenue in Q2-F2017 was $22.5 million compared to $21.0 million in Q2-F2016, representing a 7% year-over-year increase. For the F2017 year-to-date period, DDS segment revenue was $44.9 million, representing a 6% increase over DDS segment revenues of $42.2 million in the prior year period. DDS segment revenue from recurring licenses was 99% in Q2-F2017 in line with Q2-F2016, and was 99% in the year-to-date period of F2017 compared to 98% in the prior year period.

Total revenue in Q2-F2017 was $22.5 million, representing a 6% increase from total revenue of $21.1 million in Q2-F2016. For the year-to-date period of F2017, total revenue was $44.9 million, which was in-line with $45.1 million in the prior year period. The year-over-year comparison was impacted by the divestiture of the Company's Endpoint and Service Management segment on October 5, 2015.

Annual Contract Value(1)

The Q2-F2017 closing DDS Commercial ACV Base of $86.2 million increased 8% over the prior year and increased 2% over the Q1-F2017 closing balance.

From a market vertical perspective, the enterprise and healthcare DDS Commercial ACV Base increased by 12% year-over-year and increased by 4% over the Q1-F2017 closing balance. The education and government DDS ACV Base increased by 5% year-over-year and increased by 1% over the Q1-F2017 balance. At December 31, 2016, enterprise and healthcare customers represented 48% of the DDS Commercial ACV Base and education and government customers represented 52%.

For North America, the DDS Commercial ACV Base increased 8% year-over-year and increased 3% over the Q1-F2017 closing balance. Internationally, the DDS ACV Base increased 9% year-over-year and decreased by 3% compared to the Q1-F2017 closing balance. At December 31, 2016, North American customers accounted for 90% of the Company's DDS Commercial ACV Base and international customers accounted for 10% of the base.

Net ACV Retention(1) from existing DDS commercial customers was 100% in Q2-F2017 and was 101% in the trailing four quarter period, compared to 100% and 100%, respectively, in the prior year periods.

Incremental ACV from New DDS Customers(1) was $2.1 million in Q2-F2017 compared to $0.9 million in Q2-F2016. For the year-to-date period of F2017, incremental ACV from new DDS customers was $3.1 million compared to $1.6 million in the prior year-to-date period. Enterprise and healthcare customers represented 80% of ACV from New DDS Customers in Q2-F2017 and 76% for the year-to-date period

Adjusted Operating Expenses(3)

Adjusted Operating Expenses for Q2-F2017 were $20.7 million, which represented an increase of 8% over $19.1 million in Q2-F2016. For the year-to-date period of F2017, Adjusted Operating Expenses were $41.3 million, an increase of 6% over $38.8 million in the prior year period. The year-over-year increase primarily reflected increased investment in research and development headcount and contractor costs, in line with the Company's F2017 investment plans. These increases were partially offset by lower marketing program expenditures in the quarter.

Adjusted EBITDA(2) and Net Income

Absolute generated Adjusted EBITDA of $1.7 million, or 8% of revenue, in Q2-F2017 compared to $2.0 million, or 9% of revenue, in Q2-F2016. For the year-to-date period of F2017, Adjusted EBITDA was $3.6 million, or 8% of revenue, compared to $6.3 million, or 15% of revenue, in the prior year period. Adjusted EBITDA during F2017 was impacted by the increased investment in research and development, as well as the fact that Q1-F2016 included a $1.0 million Adjusted EBITDA contribution from the Absolute Manage and Absolute Service business unit.

The Company recorded a net loss of $1.8 million, or ($0.05) per basic share, in Q2-F2017, compared to net income of $8.7 million, or $0.22 per basic share, in Q2-F2016. For the year-to-date period of F2017, the Company recorded a net loss of $2.6 million compared to net income of $9.8 million in the prior year period. The F2016 results included the impact of a pre-tax gain of $14.1 million on the sale of the Endpoint and Service Management segment.

Billings(4) and Cash from Operating Activities

Absolute DDS and Consumer Billings were $21.0 million in Q2-F2017, representing an 11% increase compared to $19.0 million in Q2-F2016. For the year-to-date period of F2017, DDS and Consumer Billings were $40.7 million, representing an increase of 6% over $38.5 million in the prior year period. The year-over-year change in Billings was influenced by a lower expiring contract opportunity in the first quarter, which was partially offset by a slightly higher expiring contract opportunity in the second quarter, as compared to the prior year periods.

The average prepaid contract term in Q2-F2017 was 33 months, which was lower than the Company's historical average of 36 months and was impacted by a significant one-year renewable enterprise license agreement with a large healthcare organization.

Cash used in operating activities during Q2-F2017 was $1.2 million and, for the year-to-date period of F2017, cash generated from operating activities was $0.7 million, compared to cash generated from operating activities of $1.4 million and $6.3 million for the comparable prior year periods. In Q2-F2017, cash used in operating activities is net of $0.8 million of reorganization payments, and in the year to date period of F2017, cash from operating activities is net of $3.2 million of income tax payments and $1.6 million in reorganization payments. In Q2-F2016, cash from operating activities was net of $1.3 million of transaction fees, and in the year to date period of F2016, cash from operating activities was net of $2.1 million of income tax payments, $0.7 million in reorganization payments and $1.3 million of transaction fees.

F2017 Corporate Outlook

The Company's outlook for F2017 is unchanged.

Revenue

The Company expects total F2017 revenue between $92.0 million and $94.6 million, representing 7% to 10% annual DDS segment revenue growth. Revenue is expected to grow at an accelerating rate through the year, driven by new customer acquisition, existing customer expansion and continuing sales productivity improvements.

Adjusted EBITDA

The Company expects Adjusted EBITDA margins ranging from 5% to 8%, reflecting relatively stable spending across most departments and increased investment in research and development.

Investment in research and development will accelerate product innovation, as well as the migration of all product offerings to Absolute's next-generation service platform. These investments will facilitate greater scalability and operating efficiency, support the rapid deployment of new services across Absolute's customer base and liberate resources currently required to support two platforms.

Cash from Operations

The Company expects cash from operations, prior to payments for income taxes and reorganization charges, as a percentage of revenue to be between 8% and 12%, reflecting a double-digit year-over-year increase in Billings.

Capital expenditures are expected to be between $3.9 million and $4.4 million, with the spending largely related to upgrades and expansion of the Company's hosted data centres, office expansion and ongoing hardware refresh cycles.

Quarterly Dividend
On January 20, 2017, Absolute declared a quarterly dividend of CAD$0.08 per share on the Company's common shares. The dividend is payable in cash on February 24, 2017 to shareholders of record at the close of business on February 3, 2017.

Quarterly Filings
Management's discussion and analysis ("MD&A") and consolidated financial statements and the notes thereto for the fiscal quarter ended December 31, 2016 can be obtained today from Absolute's corporate website at www.absolute.com. The documents will also be available at www.sedar.com.

Notice of Conference Call
Absolute will hold a conference call to discuss the Company's Q2-F2017 results on Monday, February 6, 2017 at 5:00 p.m. ET. All interested parties can join the call by dialing 647-427-7450, or 1-888-231-8191. Please dial-in 15 minutes prior to the call to secure a line. The conference call will be archived for replay until Monday, February 13, 2017 at midnight ET. To access the archived conference call, please dial 416-849-0833 or 1-855-859-2056 and enter the reservation code 51718060.

A live audio webcast of the conference call will be available at www.absolute.com and http://bit.ly/2iCeLLL. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. An archived replay of the webcast will be available on the Company's website for 90 days.

Non-IFRS Measures and Definitions
Throughout this press release, the Company refers to a number of measures which the Company believes are meaningful in the assessment of the Company's performance. All these metrics are non-standard measures under International Financial Reporting Standards ("IFRS"), and are unlikely to be comparable to similarly titled measures reported by other companies. Readers are cautioned that the disclosure of these items is meant to add to, and not replace, the discussion of financial results or cash flows from operations as determined in accordance with IFRS. For a discussion of the purpose of these non-IFRS measures, please refer to the Company's December 31, 2016 MD&A on SEDAR at www.SEDAR.com.

These measures, as well as their method of calculation or reconciliation to IFRS measures, are as follows:

1) Commercial ACV Base, Net ACV Retention, and ACV from New Customers
As the majority of the Company's customer contracts are sold under multi-year term licenses, there is a significant lag between the timing of the Billing and the associated revenue recognition. As a result, the Company focuses on the aggregate annualized value of its subscriptions under contract, measured by Annual Contract Value ("ACV"), as an indicator of its future revenues.

Commercial ACV Base measures the amount of recurring annual revenue Absolute will receive from its commercial customers under contract at a point in time, and therefore is an indicator of the Company's future revenue streams. Net ACV Retention measures the percentage increase or decrease in the Commercial ACV Base at the end of a period for the customers that comprised the Commercial ACV Base at the beginning of the same period. This metric provides insight into the effectiveness of Absolute's customer retention and expansion functions. ACV from New Customers measures the addition to the Commercial ACV base from sales to new commercial DDS customers during the quarter.

We believe that increases in the amount of ACV from New Customers, and improvement in the Company's Net ACV Retention, will grow our Commercial ACV Base and, in turn, our future revenues.

2) Adjusted EBITDA
Management believes that analyzing operating results exclusive of significant non-cash items or items not controllable in the period provides a useful measure of the Company's performance. The term Adjusted EBITDA refers to earnings before deducting interest and investment gains (losses), income taxes, amortization of acquired intangible assets and property and equipment, foreign exchange gain or loss, share-based compensation, and restructuring and reorganization charges and post-retirement benefits. The items excluded in the determination of Adjusted EBITDA are share-based compensation, amortization of acquired intangibles, amortization of property and equipment, and restructuring and reorganization charges and certain post-retirement benefits.

3) Adjusted Operating Expenses
A number of significant non-cash or non-recurring expenses are reported in the Company's Cost of Revenue and Operating Expenses. Management believes that analyzing these expenses exclusive of these non-cash or non-recurring items provides a useful measure of the cash invested in the operations of its business. The items excluded in the determination of Adjusted Operating Expenses are share-based compensation, amortization of acquired intangible assets, amortization of property and equipment, and restructuring and reorganization charges and certain post-retirement benefits. For a description of the reasons these items are adjusted, please refer to the "Non-IFRS Measures" section of the December 31, 2016 MD&A.

4) Billings
See the "Non-IFRS Measures" section of the December 31, 2016 MD&A for a detailed discussion of why the Company believes Cash from Operating Activities is a meaningful performance metric, and the material impact that Billings has on this measure. Billings are included in deferred revenue (see Note 7 of the Notes to the Condensed Consolidated Financial Statements), and result from invoiced sales of the Company's products and services.

About Absolute

Absolute takes a new approach to cybersecurity with the first self-healing endpoint security solution that delivers uncompromised visibility and offers real-time remediation of breaches at the source. Absolute's cloud-based platform puts IT and security professionals in total command of devices, data and applications -- whether on or off the network -- to enhance IT asset management, protect sensitive data, reduce insider threats, and ensure compliance. Absolute's patented Persistence technology is embedded in the firmware of more than one billion PC and mobile devices from global manufacturers including Acer, ASUS, Dell, Fujitsu, HP, Lenovo, Microsoft, Panasonic, Samsung, and Toshiba. Absolute is headquartered in Vancouver, Canada, and has offices around the world. For more information, visit www.absolute.com.

Forward-Looking Statements

This press release contains forward-looking statements and financial outlook that involve risks and uncertainties. These forward-looking statements and financial outlook relate to, among other things, the expected performance, functionality and availability of the Company's services and products, and other expectations, intentions and plans contained in this press release that are not historical facts. When used in this press release, the words "plan," "expect," "believe," and similar expressions generally identify forward-looking statements. These statements reflect the Company's current expectations. They are subject to a number of risks and uncertainties, including, but not limited to, changes in technology and general market conditions. In light of the many risks and uncertainties readers of the press release should understand that Absolute cannot assure them that the forward-looking statements and financial outlook contained in this press release will be realized. Furthermore, the forward-looking statements and financial outlook contained in this press release are made as at the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements and financial outlook, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

©2017 Absolute Software Corporation. All rights reserved. Absolute and Persistence are registered trademarks of Absolute Software Corporation. For patent information, visit www.absolute.com/patents. The Toronto Stock Exchange has neither approved nor disapproved of the information contained in this news release.

ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of Financial Position
(Expressed in United States dollars) (Unaudited)

  December 31, 2016   June 30, 2016
 
ASSETS
 
CURRENT
Cash and cash equivalents $ 37,066,069 $ 23,092,852
Short-term investments 636,502 11,637,085
Trade and other receivables 13,812,180 21,138,351
Income taxes receivable 1,056,837 -
Prepaid expenses and other   2,255,667   2,379,234
54,827,255 58,247,522
INVESTMENTS - 12,821,302
PROPERTY AND EQUIPMENT 6,729,590 5,853,222
DEFERRED INCOME TAX ASSETS 22,246,391 22,353,391
INTANGIBLE ASSETS AND GOODWILL   14,783,864   15,382,262
$ 98,587,100 $ 114,657,699
 
LIABILITIES
 
CURRENT
Trade and other payables $ 14,181,223 $ 13,942,922
Income taxes payable - 5,990,927
Accrued warranty 490,000 460,000
Deferred revenue - current   71,130,316   72,464,399
85,801,539 92,858,248
DEFERRED REVENUE   62,592,387   65,509,763
148,393,926 158,368,011
CONTINGENCIES
 
SHAREHOLDERS' DEFICIENCY
Share capital 59,721,564 58,607,382
Equity reserve 38,472,524 36,732,175
Treasury shares (666,546) -
Deficit   (147,334,368)   (139,049,869)
  (49,806,826)   (43,710,312)
$ 98,587,100 $ 114,657,699


ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of Operations and Comprehensive Income
Three and six months ended December 31, 2016 and 2015
(Expressed in United States dollars) (Unaudited)

 

Three months ended
December 31,

  Six months ended

December 31,

  2016     2015   2016     2015
 
 
REVENUE $ 22,450,143 $ 21,142,083 $ 44,935,007 $ 45,125,164
 
COST OF REVENUE   3,955,548   3,220,448   7,462,092   6,671,346
 
GROSS MARGIN 18,494,595 17,921,635 37,472,915 38,453,818
 
OPERATING EXPENSES
Sales and marketing 11,056,328 11,216,424 22,414,917 23,008,701
Research and development 4,897,163 3,078,843 9,253,788 6,077,135
General and administration 3,464,838 2,420,579 6,425,475 5,232,449
Share-based compensation   1,219,924   959,096   2,217,475   2,003,966
  20,638,253   17,674,942   40,331,655   36,322,251
 
OPERATING (LOSS) INCOME (2,143,658) 246,693 (2,838,740) 2,131,567
 
OTHER (EXPENSE) INCOME
Interest income, net 5,647 82,494 47,586 179,297
Foreign exchange loss (49,735) (718,714) (29,245) (796,062)
Gain on disposal of business unit   -   14,098,066   -   14,098,066
  (44,088)   13,461,846   18,341   13,481,301
 
NET (LOSS) INCOME BEFORE INCOME TAXES (2,187,746) 13,708,539 (2,820,399) 15,612,868
 
INCOME TAX RECOVERY (EXPENSE)   345,000   (4,960,000)   188,000   (5,850,000)
 
NET (LOSS) INCOME AND

COMPREHENSIVE (LOSS) INCOME

$ (1,842,746) $ 8,748,539 $ (2,632,399) $ 9,762,868
 
BASIC (LOSS) INCOME PER SHARE $ (0.05) $ 0.22 $ (0.07) $ 0.23
DILUTED (LOSS) INCOME PER SHARE $ (0.05) $ 0.21 $ (0.07) $ 0.22
 

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING, BASIC

  39,019,022   39,975,241   38,992,040   42,219,971


ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statement of Changes in Shareholders' Deficiency
(Expressed in United States dollars) (Unaudited)

  Share Capital        

Number of
Common
shares

  Amount Equity reserve

Treasury
Shares

Deficit Total
 
BALANCE, JUNE 30, 2015 44,862,344 $ 59,607,392 $ 35,322,483 $ - $ (108,066,367) $ (13,136,492)
Shares issued on options exercised 454,675 2,738,242 (930,618) - - 1,807,624

Shares issued under Employee Share
Purchase Plan

67,411 359,596 - - - 359,596

Shares issued under Performance Share
Unit Plan

10,000 - - - - -

Shares repurchased and cancelled
under the Normal Course Issuer Bid

(678,700) (53,474) - - (168,796) (222,270)

Shares repurchased and cancelled
under the Substantial Issuer Bid

(6,250,000) (7,685,894) - - (30,603,647) (38,289,541)
Share-based compensation - - 1,761,133 - - 1,761,133
Dividends paid - - - - (4,667,691) (4,667,691)

Net income and total comprehensive
income

-   -   -   -   9,762,868   9,762,868
BALANCE, DECEMBER 31, 2015 38,465,730 $ 54,965,862 $ 36,152,998 $ - $ (133,743,633) $ (42,624,773)
Shares issued on options exercised 429,375 2,231,597 (821,366) - - 1,410,231

Shares issued under Employee Share
Purchase Plan

58,450 262,284 - - - 262,284

Shares issued under Phantom Share
Unit plan

150,552 1,516,167 (1,100,692) - - 415,475

Shares repurchased and cancelled
under the Normal Course Issuer Bid

(222,800) (368,528) - - (678,537) (1,047,065)
Share-based compensation - - 2,501,235 - - 2,501,235
Dividends paid - - - - (4,593,513) (4,593,513)

Net income and total comprehensive
income

-   -   -   -   (34,186)   (34,186)
BALANCE, JUNE 30, 2016 38,881,307 $ 58,607,382 $ 36,732,175 $ - $ (139,049,869) $ (43,710,312)
Shares issued on options exercised 225,925 1,290,359 (430,275) - - 860,084

Shares issued under Employee Share
Purchase Plan

42,126 190,610 - - - 190,610

Shares issued under Phantom Share
Unit Plan

6,844 46,851 (46,851) - - -

Shares repurchased and cancelled
under the Normal Course Issuer Bid

(132,400) (195,522) - - (416,520) (612,042)

Shares committed to be repurchased
under the Normal Course Issuer Bid

- (218,116) - - (486,702) (704,818)

Treasury shares repurchased under the
Normal Course Issuer Bid

- - - (666,546) - (666,546)
Share-based compensation - - 2,217,475 - - 2,217,475
Dividends paid - - - - (4,748,878) (4,748,878)
Net loss and total comprehensive loss -   -   -   -   (2,632,399)   (2,632,399)
BALANCE, DECEMBER 31, 2016 39,023,802 $ 59,721,564 $ 38,472,524 $ (666,546) $ (147,334,368) $ (49,806,826)


ABSOLUTE SOFTWARE CORPORATION
Condensed Consolidated Statements of Cash Flows
Three and six months ended December 31, 2016 and 2015
(Expressed in United States dollars) (Unaudited)

 

Three months ended
December 31,

  Six months ended

December 31,

2016   2015 2016   2015
 
OPERATING ACTIVITIES
Net (loss) income $ (1,842,746) $ 8,748,539 $ (2,632,399) $ 9,762,868
Items not involving cash
Amortization of property and equipment 717,321 533,413 1,399,769 1,059,516
Amortization of acquired intangible assets 34,333 263,723 84,409 379,599

Amortization of intangible assets - contract costs and
brand

2,237,148 1,852,157 4,485,758 3,746,948
Share-based compensation 1,215,437 875,414 2,212,988 1,761,133
Deferred income taxes 226,000 (594,000) 107,000 (1,131,000)
Gain on disposal of business unit - (14,098,066) - (14,098,066)
Transaction fees on disposal of business unit - (1,257,910) - (1,257,910)

Non-cash interest and amortization
of investment premium

 

513,236 266,999 466,885 367,406
Change in non-cash working capital
Trade and other receivables (1,453,667) 770,281 7,326,171 9,194,214
Prepaid expenses and other 554,603 149,748 123,567 116,975
Intangible assets - contract costs and brand additions (2,158,577) (2,052,074) (4,032,572) (4,660,152)
Trade and other payables 1,463,039 2,714,727 (203,268) 1,451,141
Income taxes payable (1,212,616) 5,344,420 (4,423,874) 4,429,828
Accrued warranty - (90,000) 30,000 (50,000)
Deferred revenue (1,480,486) (2,074,444) (4,251,459) (4,740,569)
 
CASH (USED IN) FROM OPERATING ACTIVITIES (1,186,975) 1,352,927 692,975 6,331,931
INVESTING ACTIVITIES
Purchase of property and equipment (1,041,818) (413,198) (3,082,984) (860,342)
Purchase of intangible assets - (225,000) - (225,000)
Proceeds from disposal of business unit - 11,046,737 - 11,046,737
Income taxes paid on disposal of business unit - - (2,623,890) -
Proceeds from investments 23,355,000 3,700,000 23,355,000 3,700,000
Purchase of investments - (201,124) - (201,124)
 
CASH FROM INVESTING ACTIVITIES 22,313,182 13,907,415 17,648,126 13,460,271
FINANCING ACTIVITIES
Repurchase of common shares for cancellation (612,040) (38,105,614) (612,040) (42,454,880)
Dividends paid (2,316,379) (2,290,909) (4,748,878) (4,667,691)
Issuance of common shares 451,026 1,685,313 973,048 2,067,684
 
CASH USED IN FINANCING ACTIVITIES (2,477,393) (38,711,210) (4,387,870) (45,054,887)
 
FOREIGN EXCHANGE EFFECT ON CASH (45,866) (589,900) 19,986 (750,800)
 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 18,602,948 (24,040,768) 13,973,217 (26,013,485)
 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 18,463,121 42,132,833 23,092,852 44,105,550
 
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 37,066,069 $ 18,092,065 $ 37,066,069 $ 18,092,065


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