Absolute Software Reports Fiscal 2008 Results



    
    Reports record Sales Contracts of $72.5 million and Cash from Operations
    of $30.0 million
    

    VANCOUVER, Aug. 12 /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- and twelve-month periods ended June 30, 2008. All dollar amounts
are in Canadian dollars unless otherwise stated.

    
    Key Financial     Q4-       Q4-       %         YTD       YTD       %
     Metrics         F2008     F2007    change     F2008     F2007    change
    -------------------------------------------------------------------------
    Sales
     Contracts
     reported(1.a)  $21.5M    $16.2M     +32%     $72.5M    $47.3M     +53%
    -------------------------------------------------------------------------
    Sales Contracts
     in constant
     currency(1.b)  $23.1M    $16.2M     +42%     $80.4M    $47.3M     +70%
    -------------------------------------------------------------------------
    Cash from
     Operations(1.a)$ 5.4M    $ 4.5M     +20%     $30.0M    $16.9M     +78%
    -------------------------------------------------------------------------
    Basic and
     Diluted
     Operating
     Cash per
     Share(1.a),
          (1.c)     $ 0.11    $ 0.10     +10%     $ 0.64    $ 0.38     +68%
                    $ 0.11    $ 0.09     +22%      $0.60     $0.35     +71%
    -------------------------------------------------------------------------
    Revenue         $11.2M    $ 6.3M     +78%     $37.9M    $20.1M     +88%
    -------------------------------------------------------------------------
    Net Loss
     excluding
     stock-based
     compensation   ($0.7M)   ($2.0M)    +64%     ($3.4M)   ($4.9M)    +30%
    -------------------------------------------------------------------------
    Net Loss        $(2.3M)   $(2.4M)     +1%     $(8.4M)   $(5.9M)    (43%)
    -------------------------------------------------------------------------
    Loss per
     Share(1.c)     $(0.05)   $(0.05)      0%     $(0.18)   $(0.13)    (38%)
    -------------------------------------------------------------------------
    Deferred
     Revenue                                      $87.8M    $54.2M      62%


    F2008 Highlights:

    -   Increased contracted subscription base by 110% to 3.3 million
    -   Grew Sales Contracts 53% (70% in constant currency), and ended the
        fiscal year with a record sales quarter at $21.5 million in Q4-F2008
    -   Generated Cash From Operations of $30.0 million, a 78% increase over
        last year
    -   Reduced operating loss excluding Investment Tax Credits and stock-
        based compensation by 41% to $3.2 million
    -   Launched a collaboration with Intel to integrate Computrace(R)
        solutions with their Anti-Theft Technology initiative
    -   Announced real-time capability for Computrace solutions through
        collaboration with Qualcomm on their wireless Gobi platform
    -   Launched Computrace Mobile for smartphones and other wireless devices
    -   Won two of the Company's largest single Sales Contracts, one for
        US$1.7 million in Q1-F2008 and the other for a record US$2.1 million
        in Q4-F2008; both with U.S. Federal Government agencies
    -   Established retail initiatives with Best Buy Canada, Circuit City and
        Costco
    -   Achieved a milestone of 7,000 computer recoveries - now averaging
        approximately 1,000 recoveries per quarter
    

    "The global proliferation of laptops, smartphones and other mobile
devices has propelled the need for data protection and theft recovery services
for all types of users," said John Livingston, Chairman and CEO of Absolute.
"We have the products, infrastructure and business model to support mass
adoption of these types of services. Against the backdrop of an expanding
market opportunity, we believe that our leadership position in multiple
vertical markets will continue to drive growth and record performance with our
key financial and operational metrics of Sales Contracts, cash from operations
and subscriber growth."
    Mr. Livingston continued: "We expect fiscal 2009 to be another exciting
year for Absolute as we develop and commercialize our relationships with new
partners, such as Intel and Qualcomm, as well as expand those within our
established partner base. We also see tremendous opportunity with our data
protection and theft deterrence products which are only a small percentage of
sales right now, but are quick to deploy and manage, and will help drive
attach rates in global markets. Finally, we look to deliver across-the-board
growth in all our vertical markets where we maintain a dominant market
position due to our proven recovery track record, broad suite of
industry-leading recovery, deletion and deterrence solutions, and
one-of-a-kind theft recovery team."

    Financial Review

    Sales Contracts were $72.5 million for F2008, up 53% from $47.3 million
in F2007. Sales Contracts for Q4-F2008 were a record $21.5 million, up 32%
from $16.2 million in Q4-F2007. A majority of Absolute's sales are denominated
in U.S. dollars and therefore the decline in the U.S. dollar relative to the
Canadian dollar has impacted Sales Contract growth rates. Had the U.S. dollar
exchange rate remained unchanged from the rates experienced in the prior year
periods, the reported Canadian dollar sales would have been $80.4 million in
F2008, up 70% over last year, and $23.1 million for Q4-F2008, up 42% over Q4
last year.
    The growth in Sales Contracts over the prior year periods is a reflection
of the strategies and partner programs initiated to exceed Absolute's target
subscription base, combined with the growing adoption of mobile computing and
the need to protect these computing assets and the data they contain.
Consistent with prior periods, 59% of YTD sales were generated by new and
renewal purchases from existing commercial customers.
    Driven by strong Sales Contract growth, F2008 cash from operations
increased 78% to $30.0 million, compared to $16.9 million last year. Cash from
operations for Q4-F2008 totaled $5.4 million, up 20% from $4.5 million in
Q4-F2007. Absolute's "Cash Margin" (a non-GAAP measure equal to Cash from
Operations divided by Sales Contracts) was 41% for F2008, up from 36% in
F2007.
    For F2008, Absolute's net loss was $8.4 million, or ($0.18) per share,
compared to $5.9 million, or ($0.13) per share, in F2007. Net loss for
Q4-F2008 was $2.3 million, or ($0.05) per share, compared to $2.4 million, or
($0.05) per share, in Q4-F2007. Excluding stock-based compensation the net
losses in F2008 and Q4-2008 decreased to $3.4 million and $734,000,
respectively, compared to net losses of $4.9 million and $2.0 million in the
corresponding periods of the prior year. Excluding stock-based compensation,
the losses for the two periods reflect the increased revenue and reduced
operating loss, and an increase in interest income due to the Company's
growing cash balances.
    "Fiscal 2008 was another year of significant growth and cash flow for
Absolute," said Rob Chase, CFO of Absolute. "As a result, we announced a
mid-year increase in our annual Cash Margin guidance from 30-35% to 40-43%,
and achieved 41% for the year. In fiscal 2009 we will continue to invest in
the rapidly growing areas of the business and will balance this investment
with a Cash Margin objective of 35-40%."
    Absolute is in a strong financial position, with no debt and the
financial resources necessary to fund its operating and capital requirements
and to execute on its growth strategies. At June 30, 2008, Absolute's cash,
cash equivalents, short-term investments and investments were $64.0 million,
compared to $34.9 million at June 30, 2007.
    Management's discussion and analysis (MD&A), consolidated financial
statements and notes thereto for the fourth quarter 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 Tuesday August 12, 2008 at 7:00 a.m. PT (10:00 a.m. ET). All
interested parties can join the call by dialing 416-644-3427 or
1-800-796-7558. Please dial-in 15 minutes prior to the call to secure a line.
The conference call will be archived for replay until Tuesday, August 19, 2008
at midnight. To access the archived conference call, please dial 416-640-1917
or 1-877-289-8525 and enter the reservation code 21279603 followed by the
number sign.
    A live audio Webcast of the conference call will be available at
www.absolute.com and www.newswire.ca. 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 for 365 days at www.newswire.ca.

    
    (1.a) Absolute refers to "Sales Contracts" (invoiced sales) as a revenue
    measure, "Cash from Operations" as a profitability measure, and "Basic
    and Diluted Operating Cash per Share" (Cash from Operations divided by
    the average shares outstanding for the period; diluted calculated using
    the treasury stock method) 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
    Contracts in each quarter are deferred on the balance sheet, while the
    related costs are expensed in that same quarter. Refer to the Business
    Model section in our Management Discussion and Analysis for more details.

    (1.b) Sales Contracts in constant currency refers to the Canadian dollar
    sales that would have been reported had the U.S. dollar exchange rate
    been unchanged from the rate in the prior year. With approximately 95% of
    Sales Contracts in U.S. dollars management believes this to be a more
    meaningful evaluation of the underlying performance of the business. The
    average U.S. dollar exchange rate on our sales fell from $1.1521 in
    Fiscal 2006, to $1.1248 in Fiscal 2007, and then to $1.0131 in Fiscal
    2008.

    (1.c) On December 14, 2007, shareholders approved a two-for-one share
    split for its common shares effective as of the close of business on
    January 4, 2008. All share and per share information included in this
    MD&A has been adjusted to reflect this share split for all periods
    presented.
    

    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, HP, Lenovo, Motion, MPC, 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, a continuing, or increased need for data protection and theft recovery
services, the attainment of certain subscription targets and company
performance, the increased adoption of our data protection and theft
deterrence products, the attainment of growth in all the company's vertical
markets, the adoption by PC OEMs and other technology providers of certain
technological standards that may be complementary to our success, the ability
of the Company to achieve its six million subscriber base target or its
objective of 35-40% Cash Margins, the ability of the Company to successfully
execute on its growth strategies, including attracting new retail partners,
the demand for our products continuing to increase, stable currency
valuations, 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)2008 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
                                                      June 30,       June 30,
                                                         2008           2007
                                                 -------------  -------------
    ASSETS

    CURRENT
      Cash and cash equivalents                  $ 46,460,299   $  7,779,505
      Short-term investments                       10,488,167     27,116,968
      Accounts receivable, net of allowance
       for doubtful accounts
       of $715,000 (2007 - $20,000)                18,396,731     11,656,260
      Prepaid expenses and deposits                   906,792        785,737
      Current portion of
       deferred contract costs                      7,234,859      5,253,390
      Current portion of future
       income tax assets                            1,341,691      1,477,516
    -------------------------------------------------------------------------
                                                   84,828,539     54,069,376
    INVESTMENTS                                     7,016,074              -
    DEFERRED CONTRACT COSTS                         7,448,945      5,935,111
    PROPERTY AND EQUIPMENT                          1,971,003      1,204,017
    FUTURE INCOME TAX ASSETS                        1,512,970      1,377,145
    INTANGIBLE ASSET                                  255,549        383,324
    -------------------------------------------------------------------------
                                                 $103,033,080   $ 62,968,973
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    CURRENT
      Accounts payable and accrued liabilities   $  6,240,941   $  2,171,844
      Current portion of accrued warranty           5,448,513      4,586,738
      Current portion of deferred revenue          41,675,479     25,483,198
    -------------------------------------------------------------------------
                                                   53,364,933     32,241,780
    ACCRUED WARRANTY                                6,396,080      3,418,312
    DEFERRED REVENUE                               46,170,998     28,760,618
    -------------------------------------------------------------------------
                                                  105,932,011     64,420,710
    -------------------------------------------------------------------------

    SHAREHOLDERS' DEFICIENCY

    Share capital and other equity                 41,915,225     39,094,936
    Contributed surplus                            11,938,462      7,814,428
    Deficit                                       (56,752,618)   (48,361,101)
    -------------------------------------------------------------------------
                                                   (2,898,931)    (1,451,737)
    -------------------------------------------------------------------------
                                                 $103,033,080   $ 62,968,973
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    ABSOLUTE SOFTWARE CORPORATION
    Consolidated Statements of Operations and Deficit (Unaudited)
    Three and twelve months ended June 30, 2008 and 2007
    (Expressed in Canadian dollars)
    -------------------------------------------------------------------------
                              Three Months                  Twelve Months
                           2008           2007           2008           2007
                   -------------  -------------  -------------  -------------
    REVENUE        $ 11,215,693      6,297,960   $ 37,853,404     20,136,048

    COST OF
     GOODS SOLD       2,880,408      2,239,127     11,459,549      6,938,845
    -------------------------------------------------------------------------

    GROSS MARGIN      8,335,285      4,058,833     26,393,855     13,197,203
    -------------------------------------------------------------------------

    EXPENSES
      Sales and
       marketing      5,717,932      3,006,980     18,078,427     10,069,935
      Research and
       development    1,559,400        838,306      4,782,038      3,243,833
      General and
       administration 1,850,438      1,606,373      6,686,105      5,202,887
      Investment
       Tax Credits   (1,400,000)             -     (1,400,000)             -
      Stock-based
       compensation   1,592,734        340,841      4,948,972        951,819
    -------------------------------------------------------------------------
                      9,320,504      5,792,500     33,095,542     19,468,474
    -------------------------------------------------------------------------
    OPERATING LOSS     (985,219)    (1,733,667)    (6,701,687)    (6,271,271)
    -------------------------------------------------------------------------

    OTHER INCOME
     (EXPENSE)
      Interest and
       other income     529,561        321,891      1,981,835      1,012,415
      Interest and
       bank charges     (26,439)       (13,716)       (96,764)       (57,440)
      Foreign exchange
       gain (loss)       81,808       (931,013)      (805,115)      (640,010)
      Write-down of
       investment      (526,586)             -     (1,369,786)             -
    -------------------------------------------------------------------------
                         58,344       (622,838)      (289,830)       314,965
    -------------------------------------------------------------------------
    LOSS FOR PERIOD
     BEFORE INCOME
     TAXES             (926,875)    (2,356,505)    (6,991,517)    (5,956,306)
    INCOME TAX
     (EXPENSE)
     RECOVERY        (1,400,000)             -     (1,400,000)        80,693
    -------------------------------------------------------------------------
    NET LOSS FOR
     THE PERIOD      (2,326,875)    (2,356,505)    (8,391,517)    (5,875,613)
    DEFICIT,
     BEGINNING OF
     PERIOD         (54,425,743)   (46,004,596)   (48,361,101)   (42,485,488)
    DEFICIT, END
     OF PERIOD     $(56,752,618)  $(48,361,101)  $(56,752,618)  $(48,361,101)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      BASIC AND
       DILUTED
       LOSS PER
       SHARE       $      (0.05)  $      (0.05)  $      (0.18)  $      (0.13)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    WEIGHTED
     AVERAGE
     NUMBER
     OF COMMON
     SHARES
     OUTSTANDING
     (BASIC AND
     DILUTED)        47,666,899     45,935,655     47,160,094     44,995,664
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    ABSOLUTE SOFTWARE CORPORATION
    Consolidated Statements of Cash Flows (Unaudited)
    Three and twelve months ended June 30, 2008 and 2007
    (Expressed in Canadian dollars)
    -------------------------------------------------------------------------
                              Three Months                  Twelve Months
                           2008           2007           2008           2007
                   -------------  -------------  -------------  -------------
    OPERATING
     ACTIVITIES
      Net loss
       for the
       period      $ (2,326,875)  $ (2,356,505)  $ (8,391,517)  $ (5,875,613)
      Items not
       involving
       cash
        Amortization
         of property
         and
         equipment      249,571        249,624        813,597        580,696
        Stock-based
         compensation 1,592,734        340,841      4,948,972        951,819
        Amortization
         of intangible
         asset           31,944         31,943        127,775        127,774
        Future income
         taxes                -              -              -        (80,693)
        Write-down
         of investment  526,586              -      1,369,786              -
      Change in
       non-cash
       operating
       working capital
        Accounts
         receivable  (6,931,554)    (3,694,327)    (6,740,471)    (5,481,091)
        Prepaid
         expenses
         and
         deposits      (577,905)      (354,714)      (121,055)      (446,768)
        Deferred
         contract
         costs       (1,660,370)    (2,697,852)    (3,495,302)    (5,349,008)
        Accounts
         payable
         and
         accrued
         liabilities  3,629,144        744,586      4,069,096        146,453
        Accrued
         warranty     1,231,354      2,280,356      3,839,542      5,084,355
        Deferred
         revenue      9,586,943      9,925,073     33,602,660     27,246,172
    -------------------------------------------------------------------------
    CASH FROM
     OPERATING
     ACTIVITIES       5,351,572      4,469,025     30,023,083     16,904,096
    -------------------------------------------------------------------------

    INVESTING
     ACTIVITIES
      Property and
       equipment
       purchased       (469,789)      (249,298)    (1,580,581)    (1,069,367)
      Proceeds from
       maturities
       of short term
       investments    9,414,988      5,063,983     31,672,314     23,115,456
      Purchases
       of short term
       investments     (486,001)    (8,164,371)   (16,413,299)   (37,526,970)
      Purchases of
       investments   (4,161,907)             -     (7,016,074)             -
    -------------------------------------------------------------------------
    CASH FROM
     (USED IN)
     INVESTING
     ACTIVITIES       4,297,291     (3,349,686)     6,662,360    (15,480,881)
    -------------------------------------------------------------------------

    FINANCING
     ACTIVITIES
      Loans to
       directors
       and employees
       collected              -        502,652              -      1,108,402
      Issuance of
       common shares    213,049        150,415      1,995,351      1,266,207
    -------------------------------------------------------------------------
    CASH FROM
     FINANCING
     ACTIVITIES         213,049        653,067      1,995,351      2,374,609
    -------------------------------------------------------------------------
    NET CASH
     INFLOW           9,861,912      1,772,406     38,680,794      3,797,824
    CASH AND
     CASH
     EQUIVALENTS,
     BEGINNING
     OF PERIOD       36,598,387      6,007,099      7,779,505      3,981,681
    -------------------------------------------------------------------------
    CASH AND CASH
     EQUIVALENTS,
     END OF PERIOD $ 46,460,299   $  7,779,505   $ 46,460,299   $  7,779,505
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %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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