Absolute Software Reports Second Quarter Fiscal 2008 Results

    -   Increases subscriber target to 6 million, up from 4 million, by
        June 30, 2009

    -   Increases fiscal 2008 Cash Margin guidance to 35-40%, up from 30-35%

    VANCOUVER, Feb. 7 /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 six-month periods ended December 31, 2007. All dollar amounts
are in Canadian dollars unless otherwise stated.

    Key Financial Metrics     Q2-      Q2-      %      YTD      YTD      %
                             F2008    F2007  change   F2008    F2007  change
    Sales Contracts
     reported(*)            $15.0M    $9.3M    +61%  $36.0M   $20.4M    +76%
    Sales Contracts in
     constant currency(xx)  $17.4M    $9.3M    +86%  $39.9M   $20.4M    +95%
    Cash from Operations(*)  $9.1M    $4.3M   +111%  $18.0M    $9.0M   +101%
    Operating Cash per
     Share(*)  (xxx)         $0.19    $0.10    +90%   $0.39    $0.20    +90%
    Revenue                  $8.9M    $4.6M    +94%  $16.5M    $8.5M    +94%
    Net Profit (Loss)       $(1.9M)  $(1.0M)   +84%  $(4.7M)  $(2.3M)  +102%
    Loss per Share(xxx)     $(0.04)  $(0.02)  +100%  $(0.10)  $(0.05)  +100%
    Deferred Revenue                                 $73.7M   $39.0M     89%

    (*) 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 in our Management
    Discussion and Analysis for more details.

    (xx) 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 periods. 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 Absolute's sales
    fell from $1.1204 in Q1-F2007 and $1.1428 in Q2-F2007, to $1.0409 in
    Q1-F2008 and $0.9875 in Q2-F2008.

    (xxx) 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

    Q2-F2008 Highlights:

    -   Sales Contracts increased 61% (86% in U.S. dollars) to $15.0 million
        for the quarter, and 76% (95% in U.S. dollars) to $36.0 million for
        the year-to-date ("YTD") period
    -   Cash from operations grew 111% to $9.1 million in Q2-F2008, and 101%
        to $18.0 million for the YTD period
    -   Operating loss excluding stock-based compensation declined 58% to
        $635,000 for Q2-F2008 and declined 35% to $1.9 million for the YTD
    -   Announced Computrace(R) Professional bundle with HP's Care Pack
        Services Program
    -   Expanded BIOS footprint with Computrace embedded support in Lenovo's
        ThinkCentre(R) line of business desktops, and announced embedded BIOS
        support in General Dynamics' Itronix' GoBook(R) XR-1 military-grade
    -   Launched retail initiative with Best Buy Canada to offer Computrace
        LoJack(R) for Laptops(TM) both in-store and through Best Buy's Geek
        Squad at-home service division
    -   Expanded partner ecosystem by attaining Gold Certified Partner status
        in the Microsoft Partner Program
    -   Announced our 5,000th computer recovery and are now recovering an
        average of 60-70 per week

    "Our financial performance in the quarter reflected another period of
substantial growth, with overall quarterly and year-to-date exchange adjusted
results in-line with our expectations," said John Livingston, Chairman and CEO
of Absolute. "We continue to see strength in all of our vertical markets, and
are also seeing an increasing number of collaborative opportunities with
industry leaders. In particular, we have seen an increase in partner demand
for consumer and commercial bundle programs such as the ones we currently have
with Dell and HP. From a technology perspective, we are making good progress
on our wireless broadband initiatives to both enhance our current product
offerings and enable our solutions for handheld devices. We are expecting to
have product announcements in this area during calendar 2008. Based on our
current results and outlook, I am pleased to announce an increase to our
June 30, 2009 subscriber base target to six million subscribers, up from our
previous target of four million."

    Financial Review

    Sales Contracts were $36.0 million YTD, up 76% from $20.4 million in the
same period last year. Sales Contracts for Q2-F2008 were $15.0 million, up 61%
from $9.3 million in Q2-F2007. The increase over the prior year was driven by
growth in the consumer, corporate, government and education verticals.
Absolute has now achieved year-over-year Sales Contract growth of more than
50% in thirteen consecutive quarters.
    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. In U.S. dollar terms, Q2-F2008 Sales
Contracts increased 86% to US$15.2 million from US$8.1 million in Q2-F2007. On
a F2008 YTD basis, in U.S. dollar terms, Sales Contracts were up 95% to
$35.3 million. Had the U.S. dollar exchange rate been unchanged from the rates
experienced in the prior year periods, the reported Canadian dollar sales
would have been $39.9 million YTD and $17.4 million for Q2-F2008.
    At December 31, 2007 Absolute's subscriber base was approximately
2.5 million, up 169% from 940,000 at December 31, 2006. Year-to-date, Absolute
has sold 1.1 million new and renewal subscriptions, with an average term of
31 months and an average selling price of $33.41, compared to 354,000, 32
months and $57.71, respectively, in the same period last year. The average
price decreased from F2007 to F2008 due to volume pricing for certain consumer
bundle programs, an increased proportion of sales coming from Absolute's lower
priced asset tracking solutions, and a 15% year-on-year reduction in the
U.S.-Canadian dollar exchange rate.
    Driven by strong Sales Contract growth in the first two quarters of
F2008, cash from operations for the YTD period increased 101% to
$18.0 million, compared to $9.0 million in the same period last year. Cash
from operations for Q2-F2008 totaled $9.1 million, up 111% from $4.3 million
in Q2-F2007. Absolute's "CashMargin" (a non-GAAP measure equal to Cash from
Operations divided by Sales Contracts) was 50% in the first half of F2008, up
from 44% in the same period in fiscal 2007, reflecting the Sales Contract
growth and increasing leverage in the business.
    "We are pleased with our Sales Contract and cash generation performance
so far in fiscal 2008," said Rob Chase, CFO at Absolute. "With Cash Margins at
50% year-to-date, we are now increasing our fiscal 2008 guidance to 35-40%
from 30-35% previously. This reflects our planned operating expense increases
for the second half of this fiscal year in support of our fiscal 2009 growth
    Revenue was $16.5 million YTD, up 94% from the same period last year.
Revenue in Q2-F2008 increased 94% to $8.9 million from $4.6 million in
Q2-F2007. Revenue is considered a lagging indicator for business operations as
it is a function of deferred revenue as opposed to sales in the quarter.
Substantially all of the revenue from Q2-F2008 Sales Contracts is included in
deferred revenue on the balance sheet at December 31, 2007, which climbed to
$73.7 million, compared to $54.2 million at June 30, 2007.
    Total operating expenses excluding stock-based compensation were
$18.4 million YTD, or 51% of Sales Contracts, compared to $11.4 million, or
56% of Sales Contracts in the same period last year. For Q2-F2008, total
operating expenses excluding stock-based compensation were $9.5 million, or
63% of Sales Contracts, compared to $6.1 million, or 65% of Sales Contracts in
Q2-F2007. Management considers a majority of total operating expenses to
relate to current period Sales Contracts rather than recognized revenue.
Accordingly, management focuses on total expenses as a percentage of Sales
Contracts to measure the efficiency and effectiveness of the business, and
expects this percentage to remain lower in F2008 than in F2007.
    Absolute reported an operating loss of $3.8 million ($1.9 million,
excluding stock-based compensation) for the YTD period, compared to
$3.2 million ($2.9 million, excluding stock-based compensation) for the same
period in the prior year. The decrease in the operating loss excluding
stock-based compensation is due to higher revenue levels driven by the strong
growth in sales contracts during the past three years.
    For the year-to-date period, Absolute's net loss increased to
$4.7 million, or ($0.10) per share, compared to $2.3 million, or ($0.05) per
share, in the same period last year. Net loss for Q2-F2008 was $1.9 million,
or ($0.04) per share, compared to $1.0 million, or ($0.02) per share, in
Q2-F2007. The increased losses in the year-over-year periods are due to
foreign exchange losses from the devalued U.S. dollar and increased
stock-based compensation expense. Excluding these items, the net loss has
declined significantly from the prior year. In addition, while the devaluation
of the U.S. dollar has impacted the rate of Sales Contract growth, it has not
had a negative impact on Absolute's Cash Margin.
    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 December 31, 2007, Absolute's
cash, cash equivalents and short-term investments was $52.9 million, compared
to $34.9 million at June 30, 2007.
    The management discussion and analysis (MD&A), consolidated financial
statements and notes there to for the second 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 Thursday, February 7, 2008 at 7:00 a.m. PT (10:00am ET). The
dial-in numbers for participants are 416-644-3420 or 1-800-731-6941. Please
dial-in 15 minutes prior to the call to secure a line. The conference call
will be archived for replay until Thursday, February 14, 2008 at midnight. To
access the archived conference call, please dial 416-640-1917 or 
1-877-289-8525 and enter the reservation code 21259750 followed by the number
    A live audio webcast will be available at www.absolute.com and
www.newswire.ca. The webcast will be archived for 360 days.

    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 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 execute on its growth
strategies including international expansion, the demand for 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)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.

    Consolidated Balance Sheets (Unaudited)
    (Expressed in Canadian dollars)
                                                            As At
                                                 December 31,        June 30,
                                                        2007            2007
                                                -------------   -------------


      Cash and cash equivalents                 $ 26,896,665    $  7,779,505
      Short-term investments                      25,998,946      27,116,968
      Accounts receivable                         12,021,668      11,656,260
      Prepaid expenses and deposits                  372,340         785,737
      Current portion of deferred
       contract costs                              6,447,556       5,253,390
      Current portion of future
       income tax assets                           1,477,516       1,477,516
                                                  73,214,691      54,069,376
    DEFERRED CONTRACT COSTS                        6,673,473       5,935,111
    PROPERTY AND EQUIPMENT                         1,763,577       1,204,017
    FUTURE INCOME TAX ASSETS                       1,377,145       1,377,145
    INTANGIBLE ASSET                                 319,436         383,324
                                                $ 83,348,322    $ 62,968,973


      Accounts payable and accrued liabilities  $  2,421,922    $  2,171,844
      Current portion of accrued warranty          6,541,083       4,586,738
      Current portion of deferred revenue         34,351,813      25,483,198
                                                  43,314,818      32,241,780
    ACCRUED WARRANTY                               3,766,113       3,418,312
    DEFERRED REVENUE                              39,344,652      28,760,618
                                                  86,425,583      64,420,710


    Share capital and other equity                40,739,724      39,094,936
    Contributed surplus                            9,285,500       7,814,428
    Deficit                                      (53,102,485)    (48,361,101)
                                                  (3,077,261)     (1,451,737)
                                                $ 83,348,322    $ 62,968,973

    Consolidated Statements of Operations and Deficit (Unaudited)
    Three and six months ended December 31, 2007 and 2006
    (Expressed in Canadian dollars)

                      Three Months ended Dec. 31,   Six Months ended Dec. 31,
                              2007          2006          2007          2006
                      ------------- ------------- ------------- -------------
    REVENUE           $  8,866,149  $  4,558,652  $ 16,518,155  $  8,533,866

    COST OF GOODS SOLD   2,981,969     1,535,624     5,734,233     2,889,893

    GROSS MARGIN         5,884,180     3,023,028    10,783,922     5,643,973

      Sales and
       marketing         4,010,106     2,374,990     7,704,213     4,649,305
      Research and
       development         962,951       812,570     1,847,044     1,417,132
      General and
       administration    1,546,295     1,344,280     3,119,567     2,465,248
       compensation      1,087,194       183,791     1,926,547       354,120
                         7,606,546     4,715,631    14,597,371     8,885,805
    OPERATING LOSS      (1,722,366)   (1,692,603)   (3,813,449)   (3,241,832)

      Interest and
       other income        510,219       255,385       871,233       418,233
      Interest and
       bank charges        (25,731)      (20,440)      (48,462)      (30,748)
      Foreign exchange
       gain (loss)        (648,401)      435,251    (1,434,506)      428,933
      Write-down of
       investments               -             -      (316,200)            -
                          (163,913)      670,196      (927,935)      816,418
     TAXES              (1,886,279)   (1,022,407)   (4,741,384)   (2,425,414)
     TAX RECOVERY                -             -             -        80,693
     THE PERIOD         (1,886,279)   (1,022,407)   (4,741,384)   (2,344,721)
     PERIOD            (51,216,206)  (43,816,530)  (48,361,101)  (42,494,216)
     OF PERIOD        $(53,102,485) $(44,838,937) $(53,102,485) $(44,838,937)

       PER SHARE      $      (0.04) $      (0.02) $      (0.10) $      (0.05)

     OUTSTANDING        47,067,720    44,659,102    46,829,564    44,472,284

    Consolidated Statements of Cash Flows (Unaudited)
    Three and six months ended December 31, 2007 and 2006
    (Expressed in Canadian dollars)

                      Three Months ended Dec. 31,   Six Months ended Dec. 31,
                              2007          2006          2007          2006
                      ------------- ------------- ------------- -------------
      Net loss for
       the period     $ (1,886,279) $ (1,022,407) $ (4,741,384) $ (2,344,721)
      Items not
       involving cash
         of property
         and equipment     188,383       109,665       346,132       205,352
         compensation    1,087,194       183,791     1,926,547       354,120
         of intangible
         asset              31,944        31,944        63,888        63,887
        Future income
         taxes                   -             -             -       (80,693)
        Write-down of
         short term
         investments             -             -       316,200             -
      Change in
       working capital
         receivable      2,774,057        51,570      (365,408)     (717,283)
         expenses and
         deposits           32,809       (77,959)      413,397       (78,296)
         contract costs   (228,457)     (581,308)   (1,932,527)   (1,908,482)
        Accounts payable
         and accrued
         liabilities        62,016        20,339       250,078      (652,498)
        Accrued warranty   837,828       773,380     2,302,145     2,111,268
        Deferred revenue 6,207,385     4,831,512    19,452,648    12,018,585
     ACTIVITIES          9,106,880     4,320,527    18,031,716     8,971,239

      Property and
       purchased          (466,291)     (356,483)     (905,691)     (538,021)
      Proceeds from
       maturities of
       short term
       investments       8,006,180     7,904,731    16,149,106    17,055,731
      Purchases of
       short term
       investments      (2,593,525)  (17,593,114)  (15,347,284)  (26,629,299)
     ACTIVITIES          4,946,364   (10,044,866)     (103,869)  (10,111,589)

      Issuance of
       common shares       249,994        83,548     1,189,313       418,741
     ACTIVITIES            249,994        83,548     1,189,313       418,741
     (OUTFLOW)          14,303,238    (5,640,791)   19,117,160      (721,609)
     PERIOD             12,593,427     8,900,863     7,779,505     3,981,681
     END OF PERIOD    $ 26,896,665  $  3,260,072  $ 26,896,665  $  3,260,072

    %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:

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