Absolute Software Reports First Quarter Fiscal 2008 Results



    Strong momentum continues with significant growth in sales contracts,
    cash from operations and subscriptions

    VANCOUVER, Nov. 6 /CNW/ - Absolute(R) Software (TSX: ABT), the leading
provider of firmware-based, patented Computer Theft Recovery, Data Protection
and Secure Asset Tracking(TM) solutions, announces its financial results for
the three-month period ended September 30, 2007. All dollar amounts are in
Canadian dollars unless otherwise stated.

    
    Key Financial Metrics                   Q1-F2008    Q1-F2007    % change
    -------------------------------------------------------------------------
    Sales Contracts(*)                        $21.0M      $11.1M        +88%
    -------------------------------------------------------------------------
    Cash from Operations(*)                    $8.9M       $4.7M        +92%
    -------------------------------------------------------------------------
    Operating Cash per Share(*)                $0.38       $0.21        +81%
    -------------------------------------------------------------------------
    Revenue                                    $7.7M       $4.0M        +92%
    -------------------------------------------------------------------------
    Operating Profit (Loss)                   ($2.1M)     ($1.5M)       +35%
    -------------------------------------------------------------------------
    Net Profit (Loss)                         ($2.9M)     ($1.3M)      +116%
    -------------------------------------------------------------------------
    Loss per Share                            ($0.12)     ($0.06)      +100%
    -------------------------------------------------------------------------
    

    (*) Absolute refers to "Sales Contracts" (invoiced sales added to
    deferred revenue) as a revenue measure, Cash from Operations as a
    profitability measure, and "Operating Cash per Share (Basic)" (Cash from
    Operations divided by the average shares outstanding for the period) as
    an earnings per share measure. With the exception of Cash from
    Operations, these are non-standard measures under Generally Accepted
    Accounting Principals ("GAAP"). Absolute considers these measures to be
    key performance metrics as substantially all sales in each period are
    deferred on the balance sheet, while the related costs are expensed in
    the period. Refer to the Business Model section our Management Discussion
    and Analysis for more details.

    
    Q1-F2008 Highlights:
    -  Increased sales contracts by 88% to $21.0 million
    -  Increased cash from operations by 92% to $8.9 million
    -  Grew subscriptions under contract at September 30, 2007 to
       2.1 million, up from 1.6 million at June 30, 2007, and 810,000 at
       September 30, 2006
    -  Won a $US1.7 million contract with a major U.S. Federal Government
       agency
    -  Announced a contract with the State of Georgia to provide discount
       pricing to staff and faculty at 35 state-wide universities
    -  Expanded relationship with HP by obtaining BIOS support in their
       consumer notebooks and launching government and small business bundle
       programs
    -  Launched a rebate bundle program with Symantec in Apple Stores
    

    "Q1 saw continued execution on our growth strategies resulting in another
quarter of significant sales and cash flow growth," said John Livingston,
Chairman and CEO of Absolute. "We believe that industry analysts, media
outlets, computer manufacturers and customers have embraced the market
category for theft recovery, data protection and secure asset tracking; a
market that we defined, created and now dominate. Our strategic partnerships,
patented technology, large customer base, and innovative team, present
significant barriers to entry for competitors; coupled with a strong balance
sheet to support our growth plans, we are well positioned to maintain our
leadership role in this rapidly expanding market."

    Financial Review

    Sales contracts for Q1-F2008 were $21.0 million, increasing 88% from
Q1-F2007. Sales contracts rose year-over-year due to growth in the Company's
target vertical markets (corporate, education, consumer and government),
increases in its headcount and sales and marketing cost base, expansion of the
BIOS embedded strategy, additional bundling agreements with OEM partners, and
the market's growing focus on security applications to protect computing
assets and data. It is also a result of the recurring nature of the Company's
Software-as-a-Service business model which resulted in over 50% of its
Q1-F2008 Sales Contracts being generated from existing commercial customers.
    For Q1-F2008, Absolute sold 561,000 new and renewal subscriptions to its
security and asset tracking services, with an average term of 33 months and an
average selling price of $37.38, compared to 191,000, 33 months and $58.31,
respectively, in Q1-2007. The average price decreased year-over-year due to
volume pricing for certain bundle programs.
    In Q1-F2008, Absolute generated Cash from Operations of $8.9 million
(Operating Cash per Share of $0.38), a 92% increase from $4.7 million
(Operating Cash per Share of $0.21), generated in Q1-F2007. Our "Cash Margin"
(a non-GAAP measure equal to Cash from Operations divided by Sales Contracts)
was 43% in Q1-2008, compared to 42% in Q1-F2007.
    "We continued to see a seasonally strong first quarter with record level
Sales Contract and Cash from Operations, a trend consistent with the spending
cycles of our education, government and consumer customers," said Rob Chase,
CFO at Absolute. "In addition, the 29% sequential increase in Sales Contracts
reflects progress on our strategic plan and return on our increased investment
levels. Our Cash Margins were also a record 43%, which we expect to normalize
toward our 30-35% Cash Margin guidance as we continue to increase investment
levels through the year."
    Q1-F2008 revenue of $7.7 million increased 92% from $4.0 million in
Q1-F2007. Revenue is a function of deferred revenue as opposed to sales in the
quarter, with approximately 92% of the revenue in both periods coming from
amortization of our opening deferred revenue balances. Substantially all of
the revenue from Q1-F2008 sales contracts is included in deferred revenue on
the balance sheet at September 30, 2007, which climbed to $67.5 million,
compared to $54.2 million at June 30, 2007.
    Total operating expenses increased on a dollar-basis as Absolute invests
to drive growth and develop its next generation applications and services. For
Q1-F2008, total operating expenses of $9.7 million increased 76% compared to
$5.5 million in Q1-F2007. Since sales contracts grew at a faster rate, the
ratio of operating expenses to sales contracts improved to 46% for Q1-F2008
compared to 50% in Q1-F2007. Management believes that this performance
highlights the leverage inherent in its business model.
    Absolute reported an operating loss of $2.1 million in Q1-F2008, up 35%
from $1.5 million in the same quarter last year. The increase was expected as
a majority of increased operating costs are incurred to generate Sales
Contracts growth, while the resulting revenue is deferred on the balance
sheet.
    The net loss of $2.9 million, or ($0.12) per share, in Q1-F2008, compared
to a net loss of $1.3 million, or ($0.06) per share, in Q1-F2007 was primarily
due to foreign exchange losses from the devalued U.S. dollar and a
$0.3 million write-down against $2.1 million of asset backed commercial paper.
As noted, the Company focuses on Cash from Operations as its key profitability
measure, which was $8.9 million after affecting for foreign exchange losses.
    Absolute is in a strong financial position with the necessary resources
to fund its operating and capital requirements and to execute on its growth
strategies. At September 30, 2007, the Company held cash, cash equivalents and
short-term investments of $44.0 million, up from $34.9 million at June 30,
2007.
    The management discussion and analysis, consolidated financial statements
and notes thereto for the fourth quarter and year-end financial results 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 Software will hold a conference call to discuss the contents of
this release on November 6, 2007, at 7:00AM PST / 10:00AM EST. The dial-in
numbers for participants are 416-644-3419 or 1-800-732-9303. A taped replay
will be available until November 13, 2007. To access the archived conference
call, please dial 416-640-1917 or 1-877-289-8525 and enter the reservation
code 21250999 followed by the number sign.
    A live audio webcast will be available at www.absolute.com and
www.newswire.ca. The webcast will be archived for 365 days at the Company's
website and at www.newswire.ca.

    About Absolute

    Absolute Software Corporation (TSX: ABT) is the leader in Computer Theft
Recovery, Data Protection and Secure Asset Tracking(TM) solutions. Absolute
Software provides organizations and consumers with solutions in the areas of
regulatory compliance, data protection and theft recovery. The Company's
Computrace(R) software is embedded in the BIOS of computers by global leaders,
including Dell, Fujitsu, Gateway, HP, Lenovo, Motion, Panasonic and Toshiba.
The Company has reselling partnerships with these OEMs and others, including
Apple. For more information about Absolute Software and Computrace, visit
www.absolute.com or http://blog.absolute.com/.

    Forward-Looking Statements

    This press release contains forward-looking statements that involve risks
and uncertainties. These forward-looking statements relate to, among other
things, the expected raised awareness of our services and products due to
security-related and other trends, the attainment of certain subscriber
thresholds, the adoption by PC OEMs of certain technological standards that
may be complementary to our success, the ability of the Company to
successfully build support for the EFI firmware standard, the consummation of
further bundling arrangements, the ability of the Company to successfully
execute on its growth strategies including international expansion, the demand
for our mobile devices and applications and our products continuing to
increase, and other expectations, intentions and plans contained in this press
release that are not historical fact. 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 contained in this press release will
be realized.

    (C)2007 Absolute Software Corporation. All rights reserved. Computrace
and Absolute are registered trademarks of Absolute Software Corporation. All
other trademarks are property of their respective owners. Computrace U.S.
patents No. 5,715,174, No. 5,764,892, No. 5,802,280, No. 5,896,497, No.
6,244,758, No. 6,269,392, No. 6,300,863, and No. 6,507,914. Canadian patents
No. 2,284,806 and No. 2,205,370. U.K. patents No. EP793823 and No. GB2338101.
German patent No. 695 125 34.6-08. Australian patent No. 699045. The Toronto
Stock Exchange has neither approved nor disapproved of the information
contained in this news release.


    
    ABSOLUTE SOFTWARE CORPORATION
    Consolidated Balance Sheets (Unaudited)
    (Expressed in Canadian dollars)
    -------------------------------------------------------------------------
                                                            As At

                                                September 30,        June 30,
                                                        2007            2007
                                                -------------   -------------
    ASSETS

    CURRENT
      Cash and cash equivalents                 $ 12,593,427    $  7,779,505
      Short-term investments                      31,411,601      27,116,968
      Accounts receivable                         14,795,725      11,656,260
      Prepaid expenses and deposits                  405,149         785,737
      Current portion of
       deferred contract costs                     6,194,754       5,253,390
      Current portion of
       future income tax assets                    1,477,516       1,477,516
    -------------------------------------------------------------------------
                                                  66,878,172      54,069,376
    DEFERRED CONTRACT COSTS                        6,697,818       5,935,111
    PROPERTY AND EQUIPMENT                         1,485,668       1,204,017
    FUTURE INCOME TAX ASSETS                       1,377,145       1,377,145
    INTANGIBLE ASSET                                 351,380         383,324
    -------------------------------------------------------------------------
                                                $ 76,790,183    $ 62,968,973
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    CURRENT
      Accounts payable
       and accrued liabilities                  $  2,359,906    $  2,171,844
      Current portion of accrued warranty          5,628,846       4,586,738
      Current portion of deferred revenue         30,945,730      25,483,198
    -------------------------------------------------------------------------
                                                  38,934,482      32,241,780
    ACCRUED WARRANTY                               3,840,521       3,418,312
    DEFERRED REVENUE                              36,543,350      28,760,618
    -------------------------------------------------------------------------
                                                  79,318,353      64,420,710
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY

    Share capital and other equity                40,343,967      39,094,936
    Contributed surplus                            8,344,069       7,814,428
    Deficit                                      (51,216,206)    (48,361,101)
    -------------------------------------------------------------------------
                                                  (2,528,170)     (1,451,737)
    -------------------------------------------------------------------------
                                                $ 76,790,183    $ 62,968,973
    -------------------------------------------------------------------------


    ABSOLUTE SOFTWARE CORPORATION
    Consolidated Statements of Operations and Deficit (Unaudited)
    Three months ended September 30, 2007 and 2006
    (Expressed in Canadian dollars)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                                        2007            2006
                                                -------------   -------------

    REVENUE                                        7,652,006       3,975,214

    COST OF GOODS SOLD                             2,752,264       1,354,269
    -------------------------------------------------------------------------

    GROSS MARGIN                                   4,899,742       2,620,945
    -------------------------------------------------------------------------

    EXPENSES
      Sales and marketing                          3,694,108       2,274,315
      Research and development                       884,093         604,562
      General and administration                   1,573,271       1,120,968
      Stock-based compensation                       839,353         170,329
    -------------------------------------------------------------------------
                                                   6,990,825       4,170,174
    -------------------------------------------------------------------------
    OPERATING LOSS                                (2,091,083)     (1,549,229)
    -------------------------------------------------------------------------

    OTHER INCOME (EXPENSE)
      Interest and other income                      361,014         162,848
      Interest and bank charges                      (22,731)        (10,308)
      Foreign exchange gain loss                    (786,105)         (6,318)
      Write-down of short-term investments          (316,200)              -
    -------------------------------------------------------------------------
                                                    (764,022)        146,222
    -------------------------------------------------------------------------
    LOSS FOR PERIOD BEFORE INCOME TAXES           (2,855,105)     (1,403,007)
    FUTURE INCOME TAX RECOVERY                             -          80,693
    -------------------------------------------------------------------------
    NET LOSS FOR THE PERIOD                       (2,855,105)     (1,322,314)
    DEFICIT, BEGINNING OF PERIOD                 (48,361,101)    (42,943,956)
    -------------------------------------------------------------------------
    DEFICIT, END OF PERIOD                      $(51,216,206)   $(44,266,270)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    BASIC AND DILUTED LOSS PER SHARE            $      (0.12)   $      (0.06)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    WEIGHTED AVERAGE NUMBER OF COMMON
    SHARES OUTSTANDING                            23,477,565      22,141,141
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ABSOLUTE SOFTWARE CORPORATION
    Consolidated Statements of Cash Flows (Unaudited)
    Three months ended September 30, 2007 and 2006
    (Expressed in Canadian dollars)
    -------------------------------------------------------------------------
                                                        2007            2006
                                                -------------   -------------

    OPERATING ACTIVITIES
      Net loss for the period                   $ (2,855,105)   $ (1,322,314)
      Items not involving cash
        Amortization of property and equipment       157,749          95,688
        Stock-based compensation                     839,353         170,329
        Amortization of intangible asset              31,944          31,943
        Future income taxes                                -         (80,693)
        Write-down of short-term investments         316,200               -
      Change in non-cash operating
       working capital
        Accounts receivable                       (3,139,465)       (768,853)
        Prepaid expenses and deposits                380,588            (337)
        Deferred contract costs                   (1,704,070)     (1,327,174)
        Accounts payable and accrued liabilities     188,062        (672,837)
        Accrued warranty                           1,464,317       1,337,888
        Deferred revenue                          13,245,263       7,187,073
    -------------------------------------------------------------------------
    CASH FROM OPERATING ACTIVITIES                 8,924,836       4,650,713
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
      Property and equipment purchased              (439,400)       (181,539)
      Proceeds from maturities
       of short term investments                   8,142,926       9,151,000
      Purchases of short term investments        (12,753,759)     (9,036,185)
    -------------------------------------------------------------------------
    CASH (USED IN) FROM INVESTING ACTIVITIES      (5,050,233)        (66,724)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
      Issuance of common shares                      939,319         335,193
    -------------------------------------------------------------------------
    CASH FROM FINANCING ACTIVITIES                   939,319         335,193
    -------------------------------------------------------------------------
    NET CASH INFLOW                                4,813,922       4,919,182
    CASH AND CASH EQUIVALENTS,
       BEGINNING OF PERIOD                         7,779,505       3,981,681
    -------------------------------------------------------------------------
    CASH AND CASH EQUIVALENTS,
       END OF PERIOD                            $ 12,593,427    $  8,900,863
    -------------------------------------------------------------------------
    

    %SEDAR: 00013849E




For further information:

For further information: John Livingston, Chief Executive Officer,
jliving@absolute.com, or Phone: (604) 730-9851; Rob Chase, Chief Financial
Officer, rchase@absolute.com, or Phone: (604) 730-9851; Dave Mason, Investor
Relations, dmason@equicomgroup.com, or Phone: (416) 815-0700 x237; Website:
http://www.absolute.com

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