Absolute Software Reports Third Quarter Fiscal 2009 Results

    VANCOUVER, May 5 /CNW/ - Absolute(R) Software (TSX: ABT), the leading
provider of firmware-based, patented Computer Theft Recovery, Data Protection
and Secure Asset Tracking(R) solutions, announces its financial results for
the three- and nine-month periods ended March 31, 2009. All dollar amounts are
in Canadian dollars unless otherwise stated.

                              Q3       Q3      %       YTD      YTD      %
    Key Financial Metrics   F2009    F2008  change    F2009    F2008  change
    Sales Contracts
     reported(1.a)         $16.9M   $15.0M    +13%   $51.6M   $51.0M     +1%
    Sales Contracts
     in constant
     currency(1.b)         $13.6M   $15.0M    -10%   $45.1M   $51.0M    -11%
    Cash from
     operations(1.a)        $3.1M    $6.6M    -53%   $15.3M   $24.7M    -38%
    Operating cash per
      Basic                 $0.07    $0.14    -50%    $0.32    $0.53    -40%
      Diluted               $0.06    $0.13    -54%    $0.31    $0.49    -37%
    Revenue                $13.7M   $10.1M    +35%   $38.9M   $26.6M    +46%
    Net income (loss)
     excluding stock-based
     compensation and
     restructuring charges ($0.6M)   $0.1M   -691%   ($2.6M)  ($2.7M)    +4%
    Net Loss               ($1.1M)  ($1.3M)   +16%  ($18.7M)  ($6.1M)  -209%
    Cash, cash equivalents
     and investments
     (including long term)                           $67.2M   $59.4M    +13%
    Deferred revenue                                 $97.3M   $78.3M    +24%

    Q3-F2009 Highlights:

    -   Increased contracted subscription base by 41% to 4.1 million, from
        2.9 million at the end of Q3-F2008
    -   Partnered with McAfee, Inc. to offer Computrace(R) LoJack(R) for
        Laptops available for purchase online at mcafee.com
    -   Expanded retail reach with Computrace LoJack for Laptops being rolled
        out to 1,010 Best Buy U.S. stores and online at bestbuy.com
    -   Added Wi-Fi geolocation tracking to the Computrace line of products
     -  Launched Computrace Mobile for the BlackBerry(R) platform, which
        delivers asset management, data protection and geolocation tracking
        for the BlackBerry line of smartphones
    -   Launched new Global Customer Center with enhanced security and
        management features
    -   Announced that Getac rugged notebooks and tablet PCs are now
        available with firmware support for the Computrace line of products
    -   Purchased 2.5 million (3.3 million year to date) shares during the
        quarter under the company's normal course issuer bid, at a total cost
        of $8.4 million.

    "While uncertainty over the economy's direction persists, we believe we
are on track to meet our financial guidance for fiscal 2009," said John
Livingston, Chairman and CEO of Absolute. "We introduced a number of promising
new initiatives in the quarter and generated solid financial performance in
our corporate segment. Heading into our seasonally strong quarters, we have
exciting opportunities emerging throughout all segments of the business in
both domestic and international markets. We believe our security tracking
solutions are a must-have in our increasingly mobile world and we will
continue to roll out features, products and worldwide programs to execute on
our significant long-term market opportunity."

    Financial Review

    Sales Contracts(1.a), a non-standard measure under Canadian Generally
Accepted Accounting Principals ("GAAP"), were $51.6 million year-to-date
("YTD"), up 1% compared to $51.0 million in the same period last year. Sales
Contracts for Q3-F2009 were $16.9 million, up 13% compared to $15.0 million in
Q3-F2008. A majority of Absolute's sales are denominated in U.S. dollars and
therefore, periodic fluctuations in the US/Canadian exchange rate can impact
reported Sales Contract levels. In constant dollar terms, Sales Contracts
declined 11% for the YTD period and 10% for Q3-F2009 compared to the same
periods last year. The decline in constant dollar terms is due to reduced
consumer sales relating primarily to bundle sales with a particular PC OEM
partner. Conversely, despite overall economic conditions commercial sales are
up 9% for the quarter and 1% for the year to date periods in constant dollar
terms compared to the same periods last year.
    As a software-as-a-service ("SaaS") company, Absolute considers operating
cash flow one of its key financial metrics. On a YTD basis, cash from
operations for fiscal 2009 was $15.3 million, compared to $24.7 million in the
prior year period. Absolute's cash from operations for Q3-F2009 totaled $3.1
million compared to $6.6 million in Q3-F2008.
    "Performance of our key financial metrics was inline with our
expectations for the quarter," said Rob Chase, CFO at Absolute. "While
year-over-year results have been impacted by the economic downturn, we
continue to invest in the business in order to best position the Company for
future growth and to capitalize on the economic rebound when it occurs. We
remain excited with our growth prospects and will continue to closely monitor
expenses as we execute on our strategic objectives."
    Revenue was $38.9 million YTD, an increase of 46% from $26.6 million in
the same period last year. Revenue in Q3-F2009 increased 35% to $13.7 million,
compared to $10.1 million in Q3-F2008. Revenue is considered a lagging
performance indicator as it is a function of deferred revenue as opposed to
sales in the quarter. Substantially all of the revenue from Q3-F2009 Sales
Contracts is included in deferred revenue on the balance sheet at March 31,
2009, which climbed to $97.3 million, compared to $87.8 million at June 30,
    Excluding stock-based compensation and restructuring charges, the fiscal
2009 YTD net loss was $2.6 million, compared to $2.7 million last year, and
for Q3-F2009 the net loss was $0.6 million, compared to net income of $0.1
million in Q3 last year. The decreased operating net loss for the year to date
period is largely due to the 46% YTD increase in revenue. The revenue increase
is offset by increased operating costs as Absolute continues to invest in the
areas of sales and marketing and research and development to support and
enable our current and long-term growth plans. In addition, the year-over-year
appreciation of the U.S. dollar relative to the Canadian dollar has resulted
in an increase in operating costs, while revenue continues to be recognized at
historic rates.
    The GAAP net loss in Q3-F2009 was $1.1 million ($0.02 per share) compared
to a net loss of $1.3 million ($0.03 per share) in Q3-F2008. For the YTD
period, net loss increased to $18.7 million ($0.39 per share), compared to
$6.1 million ($0.13 per share) last year. The YTD increase is primarily due to
a one time $12.0 million stock-based compensation charge in the second quarter
of 2009 for the cancellation of 2.9 million options. The options were
cancelled following voluntary surrender by Absolute employees. As a result,
third quarter stock-based compensation charges reduced to $480,000 in Q3-F2009
compared to $1.4 million in Q3 last year.
    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. Accordingly, the company launched a
normal course issuer bid in November 2008 for the repurchase and retirement of
up to 4.2 million of Absolute's shares. Under this bid, Absolute had
repurchased 3.3 million shares for a total of $10.6 million. After the share
repurchase, at March 31, 2009, Absolute's cash, cash equivalents and
investments (including long term) were $67.2 million, compared to $64.0
million at June 30, 2008.


    With today's announcement, Absolute is maintaining its previously set
fiscal 2009 financial guidance of:

    -   Sales Contracts of $70-75 million
    -   Cash from operations of $16-18 million

    Management's discussion and analysis (MD&A), consolidated financial
statements and notes thereto for the first 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 May 5, 2009 at 8:30 a.m. ET (5:30 a.m. PT). All
interested parties can join the call by dialing 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 Tuesday, May 12, 2009 at
midnight. To access the archived conference call, please dial 416-640-1917 or
1-877-289-8525 and enter the reservation code 21303551 followed by the number
    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.

    (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
    Canadian Generally Accepted Accounting Principals. 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.

    About Absolute

    Absolute Software Corporation (TSX: ABT) is the leader in computer theft
recovery, data protection and Secure Asset Tracking(R) 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 firmware of computers by global
leaders, including ASUS, Dell, Fujitsu, General Dynamics Itronix, HP, Lenovo,
Motion, Panasonic and Toshiba, and 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 in difficult economic times, the attainment of certain subscription
targets and company performance, the increased adoption of the Company's data
protection and theft deterrence products, the ability of the Company to
achieve its FY 2009 $70-75 million Sales Contracts and $16-18 million Cash
from Operations, the ability of the Company to successfully execute on its
growth strategies, including attracting new distribution partners,
continuation of embedded firmware support from its current and anticipated PC
OEM partmers, the demand for its products continuing to increase, stable
currency valuations and a sufficiently stable and healthy global economic and
business environment, 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
Absolute's current expectations. They are subject to a number of risks and
uncertainties, including, but not limited to, changes in technology and
general market conditions. In light of the many risks and uncertainties you
should understand that Absolute cannot assure you that the forward-looking
statements contained in this press release will be realized.

    (C) 2009 Absolute Software Corporation. All rights reserved. Computrace,
    Secure Asset Tracking 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. Japanese patent
    No. JP4067035.

    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
                                                     March 31,       June 30,
                                                         2009           2008
                                                 -------------  -------------


      Cash and cash equivalents                  $ 54,223,491   $ 46,460,299
      Short-term investments                        8,884,920     10,488,167
      Accounts receivable, net of allowance
       for doubtful accounts of $1,329,000
       (2008 - $715,000)                           13,425,479     18,396,731
      Prepaid expenses and other                      809,453        906,792
      Current portion of deferred contract
       costs                                        7,977,073      7,234,859
      Current portion of future income tax
       assets                                       1,341,691      1,341,691
                                                   86,662,107     84,828,539
    INVESTMENTS                                     4,114,272      7,016,074
    DEFERRED CONTRACT COSTS                         7,490,057      7,448,945
    PROPERTY AND EQUIPMENT                          2,420,265      1,971,003
    FUTURE INCOME TAX ASSETS                        3,612,970      1,512,970
    INTANGIBLE ASSET                                  159,718        255,549
                                                 $104,459,389   $103,033,080


      Accounts payable and accrued liabilities   $  6,641,757   $  6,240,941
      Income tax payable                            2,100,000              -
      Current portion of accrued warranty           6,607,721      5,448,513
      Current portion of deferred revenue          48,127,460     41,675,479
                                                   63,476,938     53,364,933
    ACCRUED WARRANTY                                7,451,259      6,396,080
    DEFERRED REVENUE                               49,154,156     46,170,998
                                                  120,082,353    105,932,011


    Share capital and other equity                 41,278,329     41,915,225
    Contributed surplus                            26,536,086     11,938,462
    Deficit                                       (83,437,379)   (56,752,618)
                                                  (15,622,964)    (2,898,931)
                                                 $104,459,389   $103,033,080

    Consolidated Statements of Operations and Deficit (Unaudited)
    Three and nine months ended March 31, 2009 and 2008
    (Expressed in Canadian dollars)

                                Three Months                Nine Months
                              2009          2008          2009          2008
                      ------------- ------------- ------------- -------------

    REVENUE             13,651,444    10,119,556    38,887,933    26,637,712

    COST OF GOODS SOLD   3,530,115     2,844,907    10,454,544     8,579,140

    GROSS MARGIN        10,121,329     7,274,649    28,433,389    18,058,572

      Sales and
       marketing         7,639,246     4,656,284    21,559,911    12,360,498
      Research and
       development       1,801,853     1,375,593     5,245,509     3,222,638
      General and
       administration    1,785,137     1,716,099     5,494,231     4,835,666
      Investment tax
       credits            (100,000)            -      (775,000)            -
       compensation        479,825     1,429,691    15,150,525     3,356,238
                        11,606,061     9,177,667    46,675,176    23,775,040
    OPERATING LOSS      (1,484,732)   (1,903,018)  (18,241,787)   (5,716,468)

      Interest and
       bank charges        268,302       559,178     1,232,878     1,381,949
      Foreign exchange
       gain (loss)         330,708       547,582     2,296,390      (886,923)
      Loss on foreign
       contracts          (286,380)            -    (1,512,500)            -
       charges                   -             -      (989,132)            -
       (write-down) of
       investment          163,450      (527,000)     (754,454)     (843,200)
                           476,080       579,760       273,182      (348,174)
     TAXES              (1,008,652)   (1,323,258)  (17,968,605)   (6,064,642)
     RECOVERY             (900,000)            -    (2,875,000)            -
     (EXPENSE) RECOVERY    800,000             -     2,100,000             -
     FOR THE PERIOD     (1,108,652)   (1,323,258)  (18,743,605)   (6,064,642)
     OF PERIOD         (75,992,095)  (53,102,485)  (56,752,618)  (48,361,101)
       REPURCHASE       (6,336,632)            -    (7,941,156)            -
     PERIOD           $(83,437,379) $(54,425,743) $(83,437,379) $(54,425,743)

       PER SHARE      $      (0.02) $      (0.03) $      (0.39) $      (0.13)

     DILUTED            46,671,444    47,321,614    47,582,009    46,992,388

    Consolidated Statements of Cash Flows (Unaudited)
    Three and nine months ended March 31, 2009 and 2008
    (Expressed in Canadian dollars)

                                Three Months                Nine Months
                              2009          2008          2009          2008
                      ------------- ------------- ------------- -------------

      Net loss for
       the period     $ (1,108,652) $ (1,323,258) $(18,743,605) $ (6,064,642)
      Items not
       involving cash
         of property
         and equipment     297,161       217,895       792,310       564,027
         compensation      479,825     1,429,691    15,150,525     3,356,238
         of intangible
         asset              31,944        31,943        95,832        95,830
        Future income
         taxes            (800,000)            -    (2,100,000)            -
         of investment    (163,450)      527,000       754,454       843,200
        Realized loss on
         foreign exchange
         contract          471,000             -       887,500             -
      Change in non-cash
       working capital
         receivable     (1,065,314)      556,491     4,971,250       191,083
         expenses and
         deposits          (11,219)       43,453        97,339       456,850
         contract costs   (396,630)       97,595      (783,326)   (1,834,932)
        Accounts payable
         and accrued
         liabilities       561,364       189,874       400,816       439,952
        Income tax
         payable           800,000             -     2,100,000             -
        Accrued warranty   399,768       306,043     2,214,387     2,608,188
        Deferred revenue 3,600,210     4,563,069     9,435,139    24,015,717
     ACTIVITIES          3,096,007     6,639,796    15,272,621    24,671,511

      Property and
       purchased          (286,013)     (205,102)   (1,241,572)   (1,110,792)
      Other asset          725,374             -             -             -
      Realized loss on
       foreign exchange
       contract           (471,000)            -      (887,500)            -
      Proceeds from
       maturities of
       short term
       investments       1,749,000     6,108,220     9,980,571    17,955,326
      Purchases of
       short term
       investments      (6,920,621)     (580,014)   (9,131,778)  (11,625,298)
      Proceeds from
       maturities of
       investments       7,414,000             -     8,375,000             -
      Purchases of
       investments      (1,570,140)   (2,854,167)   (5,473,198)   (2,854,167)
     ACTIVITIES            640,600     2,468,937     1,621,523     2,365,069

      Repurchase of
       common shares for
       cancellation     (8,365,219)            -   (10,637,373)            -
      Issuance of
       common shares       439,588       592,989     1,506,421     1,782,302
     ACTIVITIES         (7,925,631)      592,989    (9,130,952)    1,782,302
     (OUTFLOW)          (4,189,024)    9,701,722     7,763,192    28,818,882
     PERIOD             58,412,515    26,896,665    46,460,299     7,779,505
     END OF PERIOD    $ 54,223,491  $ 36,598,387  $ 54,223,491  $ 36,598,387

    %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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