Absolute Reports Fiscal 2016 Third Quarter Results

Corporate and Healthcare represent 80% of New Customer ACV

VANCOUVER, May 10, 2016 /CNW/ - Absolute® (TSX: ABT), the industry standard for persistent endpoint security and data risk management solutions, today announced its financial results for the three and nine months ended March 31, 2016. All dollar figures are unaudited and stated in U.S. dollars, unless otherwise indicated.






millions, except per share data

Q3 


YTD



F2016


F2015

Change


F2016


F2015

Change

Revenue

$

21.7

$

24.1

(10%)

$

66.8

$

70.3

(5%)


DDS Segment(1)

$

21.7

$

21.2

2%

$

63.9

$

61.8

3%


DDS recurring as % of DDS total


99%


95%



98%


96%













Adjusted EBITDA(2)

$

2.8

$

6.8

(58%)

$

9.2

$

15.1

(39%)












Net Income

$

1.2

$

2.8

(58%)

$

10.9

$

5.3

105%


Per share (basic)

$

0.03

$

0.06


$

0.27

$

0.12



Per share (diluted)

$

0.03

$

0.06


$

0.26

$

0.12














Cash from operating activities(3)

$

0.1

$

5.3

(98%)

$

6.4

$

20.3

(68%)













DDS Segment Billings(1)(2)

$

20.1

$

18.4

9%

$

58.5

$

64.1

(9%)













Dividends paid

$

2.2

$

2.5

(9%)

$

6.9

$

7.6

(9%)


Per share (CAD)

$

0.08

$

0.07

14%

$

0.23

$

0.20

10%













Cash, equivalents and investments

$

53.4

$

86.4

(38%)






Total assets

$

105.0

$

141.9

(26%)






Deferred revenue

$

129.9

$

139.0

(7%)








(1)

As a result of the divestiture of the Absolute Manage and Absolute Service business unit (see "Corporate Developments – Divestiture of Absolute Manage and Absolute Service" in the Company's Q3-F2016 MD&A), the Data and Device Security operating segment solely comprises Absolute's ongoing operations. 

(2)

Please refer to "Non-IFRS Measures and Definitions".

(3)

Year-to-date cash from operating activities is net of $1.3 million of transaction fees related to the disposal of the Endpoint and Service Management business.

 

Q3-F2016 Overview
Key Financial Metrics

  • Absolute DDS and Consumer revenue of $21.7 million, representing a year-over-year increase of 2% compared to $21.2 million in Q3-F2015. Recurring revenue was 99% in the current year period compared to 95% in the prior year period.
  • Absolute DDS commercial ACV Base increased by 2% globally and 2% in North America.
  • Net ACV Retention from existing Absolute DDS customers was 101% while incremental ACV from new DDS customers was $1.0 million. Corporate and healthcare customers represented 80% of new customer ACV.
  • Absolute DDS and Consumer Billings of $20.1 million, representing a year-over-year increase of 9% compared to $18.4 million in Q3-F2015. Billings to the combined corporate and healthcare verticals increased 25% year-over-year while Billings to the combined education and government verticals decreased 7% year-over-year.
  • Adjusted EBITDA was $2.8 million, representing 13% of revenue, and cash from operating activities was $0.1 million.

Operations and Corporate

  • Appointed technology industry veteran Sean Maxwell as Chief Commercial Officer. Mr. Maxwell previously held executive leadership roles at Symantec, Virtual Instruments and EMC.
  • Entered into an agreement with Lenovo Asia Pacific to enable automated factory installation and activation of Absolute DDS for Lenovo Asia Pacific customers.
  • Expanded partnership with Getac to include European mobile devices. Under the agreement, Persistence technology by Absolute will be embedded in Getac's European suite of rugged mobile devices during the manufacturing process.

Technology and Products

  • Introduced new Absolute DDS security functionality that automatically repairs the Microsoft® System Center Configuration Manager ("SCCM") client installed on an endpoint. This builds on previously released capabilities to monitor and alert on SCCM status.
  • Achieved RSA Ready Technical Partner Certification, enabling joint customers to use the Absolute SIEM connector to feed critical Absolute DDS security alert data directly into the RSA Security Analytics platform.
  • Subsequent to quarter end, launched Persistence Services, a new service that will persistently reinstall software agents from third-party software applications.

YTD F2016 Overview
Key Financial Metrics

  • Absolute DDS and Consumer revenue of $63.9 million, representing a year-over-year increase of 3% compared to $61.8 million for the same period of F2015.
  • Absolute DDS commercial ACV Base increased by 2% globally and 4% in North America.
  • Net ACV Retention from existing Absolute DDS customers was 99% while incremental ACV from new customers was $2.6 million.
  • Absolute DDS and Consumer Billings of $58.5 million, representing a year-over-year decrease of 9% compared to $64.1 million for the same period of F2015.
  • Adjusted EBITDA was $9.2 million, representing 14% of revenue.
  • Cash from operating activities, prior to $1.3 million of transaction fees related to the disposal of the Endpoint and Service Management business unit, was $7.7 million.

Operations and Corporate

  • Launched Absolute's new corporate brand identity which reinforces Absolute's commitment to data and device security.
  • Completed the sale of the Absolute Manage and Absolute Service business unit to HEAT Software in October 2015 for gross proceeds of $11.0 million.
  • Completed a Substantial Issuer Bid for CAD$50 million in October 2015 with the repurchase of 6,250,000 common shares, or approximately 14% of the Company's outstanding common shares, and repurchased an additional 816,000 shares under the Company's Normal Course Issuer Bid.
  • Appointed Steve Munford, non-executive chairman and former chief executive officer of Sophos to Absolute's advisory board. Mr. Munford will be joining Art Coviello, former chairman of RSA and executive vice president of EMC, in helping to refine Absolute's information security strategy.
  • Strengthened the product leadership team with the additions of Eric Aarrestad as Senior Vice President of Product Management and Todd Wakerley as Senior Vice President of Product Development.

Technology and Products

  • Announced zero-day Persistence® support for Microsoft Windows 10.
  • Released new security functionality that extends Absolute DDS reporting to include the status of Microsoft® SCCM on each device as well as the integration of Absolute alerts with Security Information and Event Management ("SIEM") solutions.
  • Announced an agreement with Advanced Micro Devices, Inc. ("AMD") to incorporate Persistence® technology by Absolute into AMD chip designs.
  • Announced the release of a new offering to specifically serve healthcare customers. Absolute DDS for Healthcare includes added support that helps customers determine healthcare compliance and regulatory exposure in the event of a security incident.
  • Announced an agreement with Aava Mobile Oy, a leading European mobile device manufacturer, to embed Persistence® technology by Absolute in the firmware of Aava Mobile devices.
  • Announced an agreement with Lenovo EMEA to introduce European factory activation of Absolute DDS, enabling customers to load and activate DDS prior to shipment.
  • Announced embedded firmware support for the Microsoft Surface Pro 4 and Surface Book devices.

"In Q3 we delivered quarter-over-quarter growth, led by strong performance in our targeted Corporate and Healthcare markets," stated Mr. Geoff Haydon, Chief Executive Officer, Absolute.

"Additionally, we substantially advanced our product strategy," Haydon said.  "Most notably, we unveiled an important phase of our Persistence Platform strategy; extending our patented technology to third-party endpoint software solutions. We believe this initiative will open up substantial new revenue opportunities for Absolute, directly with enterprises, and through prospective new partnerships with independent software vendors."

Q3-F2016 and Year-to-Date Financial Review

Revenue
Total revenue in Q3-F2016 was $21.7 million, representing a 10% decrease from total revenue of $24.1 million in Q3-F2015, with the decrease being attributable to the divestiture of the Endpoint and Service Management segment on October 5, 2015. Absolute DDS and Consumer revenue in Q3-F2016 was $21.7 million, compared to $21.2 million in Q3-F2015, representing a 2% year-over-year increase. DDS segment revenue from recurring licenses was 99% in Q3-F2016 compared to 95% in Q3-F2015 and was 98% for the F2016 year-to-date period compared to 96% in the prior year period.

For the F2016 year-to-date period, total revenue was $66.8 million, representing a decrease of 5% compared to $70.3 million in the prior year period.  Absolute DDS and Consumer revenue for the year-to-date period was $63.9 million, representing a 3% increase over $61.8 million in the prior year period.

Indicative of the Company's prepaid multi-year term license model, revenue primarily represents the amortization of deferred revenue balances from recurring term license sales from both the current and prior periods. As a result, the Company views changes in the Commercial Annual Contract Value ("ACV") Base(1) as more representative of near-term sales performance.

Annual Contract Value
The DDS ACV Base increased by 2% in both the Q3-F2016 and F2016 year-to-date periods.  For North America, the DDS ACV Base increased by 2% in Q3-F2016 and increased by 4% in the F2016 year-to-date period. 

Net ACV Retention(1) from existing DDS commercial customers was 101% in Q3-F2016 and was 99% in the year-to-date period of F2016. Incremental ACV under contract from new DDS commercial customers in Q3-F2016 was $1.0 million and was $2.6 million in the year-to-date period of F2016.  During Q3-F2016, 80% of new customer ACV was attributable to customers from the corporate and healthcare verticals.

Billings(4)
Absolute DDS and Consumer Billings were $20.1 million in Q3-F2016, representing a 9% increase compared to $18.4 million in the prior year period. For the F2016 year-to-date period, Absolute DDS and Consumer Billings were $58.5 million, down 9% from $64.1 million in the prior year period. Billings to commercial customers represented 96% of Q3-F2016 total Billings and 95% of year-to-date total Billings. 

Billings for the combined corporate and healthcare verticals increased 25% in Q3-F2016 and decreased 1% for F2016 year-to-date compared to the prior year period. Q3-F2016 Billings for the combined education and government verticals decreased 7% compared to the prior year and decreased 17% for F2016 year-to-date compared to the prior year period.

North American commercial DDS Billings were $17.2 million in Q3-F2016, representing a 9% increase from $15.8 million in Q3-F2015 and were $49.0 million for the F2016 year-to-date period, representing a 10% decrease from $54.3 million in the prior year-to-date period.  Commercial Billings outside North America increased 13% year-over-year to $2.0 million in Q3-F2016 compared to $1.8 million in Q3-F2015 and decreased 7% to $6.3 million for the F2016 year-to-date period compared to $6.9 million in the prior year-to-date period. International DDS Billings represented 10% of total Billings for Q3-F2016 and represented 11% of total Billings for the F2016 year-to-date period.

Adjusted Operating Expenses(3)  
Adjusted Operating Expenses for Q3-F2016 were $18.8 million, which represented an increase of 9% compared to $17.3 million in Q3-F2015. The year-over-year increase reflected an increased investment in sales personnel in late F2015 as well as higher marketing expenditures and an increase in research and development personnel during F2016.  Additionally, Q3-F2015 expenses were net of a $0.8 million positive adjustment to recorded estimates of Canadian Scientific Research and Experimental Development Investment Tax Credits as a result of acceptance of certain of our historical claims in that period. The current year expense increases were partially offset by the lower Canadian dollar.

For the year-to-date period of F2016, Adjusted Operating Expenses were $57.6 million compared to $55.3 million in the prior year period, representing a 4% increase. Total headcount was 427 at March 31, 2016 compared to 444 at June 30, 2015 and 425 at March 31, 2015. 

Adjusted EBITDA(2) & Net Income
Absolute generated Adjusted EBITDA of $2.8 million in Q3-F2016 and $9.2 million in the F2016 year-to-date period, down from $6.8 million and $15.1 million in the respective prior year periods. Adjusted EBITDA represented 13% of Q3-F2016 revenue and 14% of F2016 year-to-date revenue compared to 28% and 21% for the comparable prior year periods.

The Company recorded net income of $1.2 million, or $0.03 per basic share, in Q3-F2016, compared to net income of $2.8 million, or $0.06 per basic share, in Q3-F2015.  For the F2016 year-to-date period the Company recorded net income of $10.9 million, or $0.27 per basic share, compared to $5.3 million, or $0.12 per basic share, in the prior year period.

Corporate Outlook
The Company expects F2016 revenue for the Absolute DDS and Consumer businesses to increase over F2015 levels. Total revenue for F2016 is expected to decrease from F2015 levels, reflecting the divestiture of the Absolute Manage and Absolute Service product lines in Q2-F2016.  Adjusted EBITDA for F2016 is expected to decrease from F2015 levels, reflecting lower total revenue and increased investments in research and development and sales and marketing. 

The Company expects Absolute DDS Billings for Q4-F2016 to increase over Q4-F2015 levels and for F2016 Absolute DDS Billings to be roughly in-line with F2015 levels.  Cash from operating activities for Q4-F2016 and for F2016 are expected to be below comparable F2015 levels reflecting the previously described changes and working capital fluctuations.

Capital expenditures in Q4-F2016 are expected to be $2.0 - $2.5 million reflecting investments in the company's hosted infrastructure and Vancouver office expansion.

Quarterly Dividend
On April 20, 2016, Absolute declared a quarterly dividend of CAD$0.08 per share on the Company's common shares. The dividend is payable in cash on May 27, 2016 to shareholders of record at the close of business on May 6, 2016.

Quarterly Filings
Management's discussion and analysis ("MD&A") and consolidated financial statements and the notes thereto for Q3-F2016 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 Q3-F2016 results on Tuesday, May 10, 2016 at 8:30 a.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 Tuesday, May 17, 2016 at midnight.  To access the archived conference call, please dial 416-849-0833, or 1-855-859-2056 and enter the reservation code 87740234.

A live audio webcast of the conference call will be available at www.absolute.com and http://bit.ly/1WBLg8s.  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, we refer to a number of measures which we believe 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 Q3-F2016 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 and Net ACV Retention
See the "Non-IFRS Measures" section of the Q3-F2016 MD&A for a detailed discussion of why we believe Commercial ACV Base and Net ACV Retention provide meaningful performance metrics.  Commercial ACV Base measures the amount of recurring annual revenue we will receive from our commercial customers under contract at a point in time, and therefore is an indicator of our 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 our customer retention and expansion functions.

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 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 our 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 Q3-F2016 MD&A.

4) Billings
See the "Subscription Billings" section of the Q3-F2016 MD&A for a detailed discussion of why the Company believes Billings (formerly referred to as "Sales Contracts") provide a meaningful performance metric.  Billings are included in deferred revenue (see Note 8 of the Notes to the Interim Condensed Consolidated Financial Statements), and result from invoiced sales of our products and services.

About Absolute

Absolute Software Corporation (TSX: ABT) is the industry standard in persistent endpoint security and data risk management solutions for computers, laptops, tablets and smartphones. Persistence® technology from Absolute provides organizations with visibility and control over all of their devices, regardless of user or location. If an Absolute client is removed from an endpoint, it will automatically reinstall so IT can secure each device and the sensitive data it contains. No other technology can do this. Persistence technology is embedded in the firmware of computers, netbooks, tablets and smartphones by global leaders, including Acer, ASUS, Dell, Fujitsu, HP, Lenovo, Microsoft, Panasonic, Samsung, and Toshiba, and the Company has reselling partnerships with these OEMs and others, including Apple. For more information about Absolute, 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 our 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 our 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 you should understand that we cannot assure you 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.

©2016 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)












March 31, 2016


June 30, 2015








ASSETS












CURRENT







Cash and cash equivalents


$

23,693,892

$

44,105,550


Short-term investments



8,965,426


17,795,777


Trade and other receivables



11,109,898


20,900,965


Prepaid expenses and other



2,294,242


2,200,861


Assets held for sale



-


3,374,672





46,063,458


88,377,825

INVESTMENTS



20,750,272


23,857,518

PROPERTY AND EQUIPMENT



2,881,764


2,846,511

DEFERRED INCOME TAX ASSETS



20,781,391


20,506,391

INTANGIBLE ASSETS AND GOODWILL



14,514,955


14,302,372



$

104,991,840

$

149,890,617







LIABILITIES












CURRENT







Trade and other payables


$

11,577,895

$

15,903,629


Income taxes payable



4,482,788


2,042,131


Accrued warranty



350,000


370,000


Liabilities associated with assets held for sale



-


9,394,624


Deferred revenue – current 



69,351,064


68,745,515





85,761,747


96,455,899

DEFERRED REVENUE



60,559,870


66,571,210




146,321,617


163,027,109

CONTINGENCIES












SHAREHOLDERS' DEFICIENCY







Share capital



58,017,215


59,607,392


Equity reserve



35,960,764


35,322,483


Deficit



(135,307,756)


(108,066,367)





(41,329,777)


(13,136,492)




$

104,991,840

$

149,890,617

 

 


ABSOLUTE SOFTWARE CORPORATION

Consolidated Statements of Operations and Comprehensive Income

Three and nine months ended March 31, 2016 and 2015

(Expressed in United States dollars) (Unaudited)












Three months ended 


Nine months ended



March 31,


March 31,





2016


2015


2016


2015























REVENUE


$

21,658,820

$

24,086,388

$

66,783,984

$

70,343,170











COST OF REVENUE



3,359,645


4,252,380


10,030,991


13,376,975











GROSS MARGIN



18,299,175


19,834,008


56,752,993


56,966,195











OPERATING EXPENSES











Sales and marketing



10,497,110


9,840,649


33,505,811


30,489,297


Research and development



3,362,211


1,938,958


9,439,346


8,238,904


General and administration



2,275,311


2,207,709


7,507,760


7,338,136


Share-based compensation



1,589,497


1,480,650


3,593,463


2,567,419





17,724,129


15,467,966


54,046,380


48,633,756












OPERATING INCOME



575,046


4,366,042


2,706,613


8,332,439












OTHER INCOME (EXPENSE)











Interest income, net



53,231


69,900


232,528


133,764


Foreign exchange gain (loss)



170,187


(50,283)


(625,875)


(408,259)


Gain on disposal of business unit



-


-


14,098,066


-





223,418


19,617


13,704,719


(274,495)












NET INCOME BEFORE INCOME TAXES



798,464


4,385,659


16,411,332


8,057,944











INCOME TAX RECOVERY (EXPENSE) 



382,000


(1,594,000)


(5,468,000)


(2,719,000)











NET INCOME AND











COMPREHENSIVE INCOME

$

1,180,464

$

2,791,659

$

10,943,332

$

5,338,944












BASIC INCOME PER SHARE


$

0.03

$

0.06

$

0.27

$

0.12











DILUTED INCOME PER SHARE


$

0.03

$

$0.06

$

0.26

$

0.12











WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC



38,641,924


44,338,575


41,035,963


44,091,137

 

 


ABSOLUTE SOFTWARE CORPORATION

Consolidated Statement of Changes in Shareholders' Deficiency

(Expressed in United States dollars) (Unaudited)















Share Capital






Number of
Common
shares

 

Amount

 

Equity
reserve

Deficit

Total













BALANCE, JUNE 30, 2014


43,796,215

$

52,403,258

$

35,141,530

$

(97,520,919)

$

(9,976,131)

Shares issued on options exercised


1,153,176


6,572,980


(2,096,939)


-


4,476,041

Shares issued on non-standard options












exercised


52,250


385,290


(140,388)


-


244,902

Shares issued under Employee Share












Purchase Plan


140,479


734,095


-


-


734,095

Shares issued under Phantom Share












Unit Plan


50,000


406,443


(406,443)


-


-

Shares repurchased and cancelled 












under the Normal Course Issuer Bid


(384,501)


(489,643)


-


(1,794,075)


(2,283,718)

Share-based compensation


-


-


2,101,191


-


2,101,191

Dividends paid


-


-


-


(7,585,983)


(7,585,983)

Net income and total comprehensive 












income


-


-


-


5,338,944


5,338,944

BALANCE, MARCH 31, 2015


44,807,619

$

60,012,423

$

34,598,951

$

(101,562,033)

$

(6,950,659)

Shares issued on options exercised


69,625


416,933


(150,220)


-


266,713

Shares repurchased and cancelled 












under the Normal Course Issuer Bid


(14,900)


(19,715)


-


(89,002)


(108,717)

Shares committed to be repurchased  












under the Normal Course Issuer Bid


-


(802,249)


-


(3,136,278)


(3,938,527)

Share-based compensation


-


-


873,752


-


873,752

Dividends paid


-


-


-


(2,555,406)


(2,555,406)

Net loss and total comprehensive loss


-


-


-


(723,648)


(723,648)

BALANCE, JUNE 30, 2015


44,862,344

$

59,607,392

$

35,322,483

$

(108,066,367)

$

(13,136,492)

Shares issued on options exercised


759,350


4,317,142


(1,461,192)


-


2,855,950

Shares issued under Employee Share 












Purchase Plan


125,861


621,880


-


-


621,880

Shares issued under Phantom Share 












Unit Plan


160,552


1,503,355


(1,087,880)


-


415,475

Shares repurchased and cancelled 












under the Normal Course Issuer Bid


(816,000)


(283,660)


-


(561,895)


(845,555)

Shares committed to be repurchased  












under the Normal Course Issuer Bid


-


(63,000)


-


(118,000)


(181,000)

Shares repurchased and cancelled 












under the Substantial Issuer Bid


(6,250,000)


(7,685,894)


-


(30,603,647)


(38,289,541)

Share-based compensation


-


-


3,187,353


-


3,187,353

Dividends paid


-


-


-


(6,901,179)


(6,901,179)

Net income and total comprehensive












 income


-


-


-


10,943,332


10,943,332

BALANCE, MARCH 31, 2016


38,842,107

$

58,017,215

$

$  35,960,764

$

(135,307,756)

$

(41,329,777)

 

 


ABSOLUTE SOFTWARE CORPORATION

Consolidated Statements of Cash Flows

Three and nine months ended March 31, 2016 and 2015

(Expressed in United States dollars) (Unaudited)
















Three months ended 


Nine months ended 



March 31,


March 31,





2016


2015


2016


2015












OPERATING ACTIVITIES










Net income 

$

1,180,464

$

2,791,659

$

10,943,332

$

5,338,944


Items not involving cash











Amortization of property and equipment


551,391


415,491


1,610,907


1,236,515



Amortization of acquired intangible assets


125,760


557,880


505,359


2,926,374



Amortization of intangible assets – contract costs and brand


2,001,168


1,899,568


5,748,116


5,311,116



Share-based compensation


1,426,217


1,014,422


3,187,350


2,101,191



Deferred income taxes


856,000


808,000


(275,000)


660,000



Gain on disposal of business unit


-


-


(14,098,066)


-



Transaction fees on disposal of business unit


-


-


(1,257,910)


-



Non-cash interest and amortization


71,315


246,875


438,721


524,996



of investment premium






Change in non-cash working capital











Trade and other receivables


596,853


1,501,442


9,791,067


8,253,052



Prepaid expenses and other


(210,356)


(427,124)


(93,381)


(684,968)



Intangible assets – contract costs and brand additions


(2,515,988)


(2,616,359)


(7,176,139)


(6,766,271)



Trade and other payables


(432,603)


2,202,307


1,018,539


(569,621)



Income taxes payable


(1,989,171)


(265,347)


2,440,657


-



Accrued warranty


30,000


-


(20,000)


(80,000)



Deferred revenue


(1,595,905)


(2,876,582)


(6,336,474)


2,077,997












CASH FROM OPERATING ACTIVITIES


95,145


5,252,232


6,427,078


20,329,325

INVESTING ACTIVITIES










Purchase of property and equipment


(827,101)


(455,916)


(1,687,442)


(2,011,532)


Purchase of intangible assets


-


(185,436)


(225,000)


(387,436)


Proceeds from disposal of business unit


-


-


11,046,737


-


Proceeds from maturities of short-term investments


8,000,000


7,650,000


11,700,000


13,950,000


Purchase of short-term investments


-


-


-


(5,122,700)


Purchase of investments


-


(9,808,666)


(201,124)


(18,273,826)












CASH FROM (USED IN) INVESTING ACTIVITIES


7,172,899


(2,800,018)


20,633,171


(11,845,494)

FINANCING ACTIVITIES










Repurchase of common shares for cancellation 


(623,284)


(17,113)


(43,078,164)


(2,283,718)


Dividends paid


(2,233,488)


(2,451,760)


(6,901,179)


(7,585,983)


Issuance of common shares


1,119,553


2,916,396


3,187,237


5,559,508












CASH (USED IN) FROM FINANCING ACTIVITIES


(1,737,219)


447,523


(46,792,106)


(4,310,193)










FOREIGN EXCHANGE EFFECT ON CASH


71,002


(70,894)


(679,801)


(279,913)










INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


5,601,827


2,828,843


(20,411,658)


3,893,725










CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


18,092,065


41,993,421


44,105,550


40,928,539










CASH AND CASH EQUIVALENTS, END OF PERIOD

$

23,693,892

$

44,822,264

$

23,693,892

$

44,822,264

 

SOURCE Absolute Software Corporation

For further information: Public Relations: Becky Obbema, Interprose, becky.obbema@interprosepr.com or 1 408 778 2024 or Toru Levinson, Absolute, tlevinson@absolute.com or 1 604 730 9851 x208; Investor Relations: Kristen Dickson, NATIONAL Equicom, kdickson@national.ca or 1 416 848 1429


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