Absolute Software Reports Year End Fiscal 2007 Results



    Company increases cash from operations by 302% to $16.9 million and
    raises subscriber base target to four million subscribers by
    June 30, 2009

    VANCOUVER, Aug. 14 /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 quarter and year ended June 30, 2007. All dollar amounts are in Canadian
dollars unless otherwise stated.

    
    Key Financial          Q4-      Q4-      %                          %
       Metrics            F2007    F2006   change    F2007    F2006   change
    -------------------------------------------------------------------------
    Sales contracts(*)    $16.2M    $8.4M     +94%   $47.3M   $22.5M    +110%
    -------------------------------------------------------------------------
    Cash from operations   $4.5M    $1.3M    +254%   $16.9M    $4.2M    +302%
    -------------------------------------------------------------------------
    Revenue                $6.3M    $3.4M     +88%   $20.1M   $11.7M     +72%
    -------------------------------------------------------------------------
    Net loss               $2.4M    $1.3M     +83%    $5.9M    $3.9M     +49%

    (*) Sales contracts are not a standard GAAP measure and are calculated
        as the sum of the GAAP revenue and the change in deferred revenue.

    Operational highlights:

    -   Increased sales contracts by 94% to $16.2 million for Q4-F2007 and by
        110% to $47.3 million for the fiscal year
    -   Increased cash from operations by 254% to $4.5 million for Q4-F2007
        and by 302% to $16.9 million for the fiscal year
    -   Grew subscriptions under contract at June 30, 2007, to approximately
        1.6 million, up from 1.2 million at March 31, 2007, and 700,000 at
        June 30, 2006
    -   Launched consumer bundle programs with Dell and Gateway
    -   Increased embedded BIOS partnerships to eight PC OEMs with addition
        of Panasonic, Motion Computing and Toshiba, and expanded BIOS
        embedded support with HP and Lenovo to consumer laptops
    -   Obtained BIOS support in certain Gateway and Dell desktop computers -
        the first PC OEMs to begin providing desktop BIOS support
    -   Established an alliance with American Megatrends Inc. ("AMI") to
        provide Extensible Firmware Interface ("EFI") support for Computrace,
        which is expected to provide a streamlined approach for PC OEMs to
        embed Computrace in the emerging EFI firmware standard
    -   Launched Computrace(R)One in Europe and opened an office in the UK to
        support expansion into the European market
    

    "Fiscal 2007 was a breakthrough year for Absolute both financially and
operationally, validating our vision and our Software-as-a-Service business
model," said John Livingston, Chairman and CEO of Absolute. "During the year,
we generated record sales contracts and free cash flow, expanded the number
and scope of our embedded partnerships, launched bundling programs with Dell
and Gateway, and built a platform for international growth. Based on the
trajectory of our business and the average selling price for the year, we are
increasing our subscriber target to four million, up from three million, by
June 30, 2009."
    "The global demand for mobile devices and applications is rapidly
increasing, and along with it so too is the risk and compliance requirements
to manage and secure these devices and the data they contain. Corporations,
educators, government agencies and individuals are looking for enhanced levels
of security to protect the growing value of their data and devices, and our
embedded position with eight of the top PC manufacturers has us uniquely
positioned to address their needs. With an embedded support footprint
estimated at over 35 million computers shipping worldwide in calendar 2007 and
'attach' rates of approximately 4% of total laptops shipped in the U.S., we
believe that we remain at the early stages of our growth potential and that
significant expansion opportunities exist globally in all our target markets,"
added Mr. Livingston.

    Financial Review

    Sales contracts (a non-standard GAAP measure(*)) for Q4-F2007 were
$16.2 million, increasing 94% from Q4-F2006. Sales contracts for the twelve
months ended June 30, 2007, were $47.3 million, up 110% from the same period
last year. The current year's growth is a result of the general market trend
toward protecting laptops and the data stored on them from loss and theft,
combined with the Company's execution of its growth strategies, which includes
garnering embedded BIOS support from eight of the world's leading PC OEMs and
the expansion of marketing programs with those PC OEMs. It is also a result of
the recurring nature of our Software-as-a-Service business model which
resulted in 52% of fiscal 2007 sales being generated from existing customers.
    For fiscal 2007, Absolute sold 1.1 million new and renewal subscriptions
to its security and asset tracking services, with an average term of 30 months
and an average selling price of $43.89, compared to 404,000, 32 months and
$55.71, respectively, in fiscal 2006. The average price decreased from
traditional levels due to the volume pricing for the Dell bundle program
launched in Q3-F2007.
    Q4-F2007 revenue of $6.3 million increased 88% from $3.4 million in
Q4-F2006. For fiscal 2007, revenue was $20.1 million, up 72% from last year.
As a lagging indicator, the increase in revenue is a result of sales contract
growth over the last three years. Substantially all of the revenue from
Q4-F2007 sales contracts is included in deferred revenue on the balance sheet
at June 30, 2007, which climbed to $54.2 million at year end, compared to
$27.0 million at June 30, 2006.
    Total operating expenses have increased to generate and support the sales
contract and subscriber base growth, and to fund investment in business and
technology development. For Q4-F2007, total operating expenses of $8.0 million
increased 66% over Q4-F2006. For fiscal 2007, total operating expenses
increased 61% to $26.4 million. Since sales contracts grew at a faster rate,
the ratio of operating expenses to sales contracts improved to 56% for fiscal
2007 compared to 73% in fiscal 2006. Management believes this performance
highlights the leverage inherent in the Company's business model.
    The Company reported a net loss of $2.4 million, or $0.10 per share, in
Q4-F2007, compared to a net loss of $1.3 million, or $0.06 per share, in
Q4-F2006. Net loss for fiscal 2007 was $5.9 million, or $0.26 per share,
compared to $3.9 million, or $0.18 per share last year. Increased losses are
generally expected during periods of accelerated sales growth as the related
revenue is recorded on the balance sheet while most of the related costs are
expensed in the period.
    In Q4-F2007, Absolute generated cash from operations of $4.5 million
(basic cash per share of $0.19), a 254% increase from $1.3 million (basic cash
per share of $0.06), generated in Q4-F2006. In fiscal 2007, Absolute generated
cash from operations of $16.9 million (basic cash per share of $0.75), a 302%
increase from $4.2 million (basic cash per share of $0.20) generated in fiscal
2006. Basic cash per share is not a standard term under GAAP, and is
calculated by dividing the GAAP measures of cash from operations by the basic
weighted average number of common shares outstanding.
    "In fiscal 2007 we generated significant free cash flow while undertaking
the investment in our business to ensure that we have the infrastructure and
resources in place to support current and future growth," said Rob Chase, CFO
of Absolute. "Our 'cash margin' (cash from operations as a percent of sales
contracts) increased to 36% in fiscal 2007, up from 19% last year, and
exceeded our guidance range of 30-35%. In fiscal 2008 we will again target
cash margins in a range of 30-35% as we focus on prudent investment to support
our growth potential."
    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 June 30, 2007, the Company held cash, cash equivalents and
short-term investments of $34.9 million, up from $16.7 million at June 30,
2006.
    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.

    
    (*) Sales contracts are a non-standard GAAP measure calculated as the
        sum of revenue plus the change in deferred revenue for the period.
        Management focuses on sales contracts and cash flow as Absolute's
        key operational indicators, which is consistent with the Company's
        Software-as-a-Service business model. The full sales contracts
        value for the subscription term of service purchased is invoiced
        up-front with non-refundable payment due on standard invoice
        terms. The sales contracts invoiced are then deferred on the
        balance sheet and recognized as revenue ratably over the term.
        With the service terms averaging approximately 30 months, this
        creates a significant lag between the transactional sale and the
        revenue. In turn, this creates a significant discrepancy between
        cash from operations and GAAP profitability as a majority of
        period operating expenses relate to generating the period sales
        contracts as opposed to the revenue. As a result, management
        believes cash from operations to be the most accurate measure of
        the Company's overall performance and sales contracts to be the
        key indicator for growth and size of the business.
    

    Notice of Conference Call

    Absolute Software will hold a conference call to discuss the contents of
this release on August 14, 2007, at 7:00AM PST/10:00AM EST. The dial-in
numbers for participants are 416-644-3415 or 1-800-732-9303. A taped replay
will be available until August 21, 2007, by calling 416-640-1917 or
1-877-289-8525 and entering the replay PIN number: 21241256 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,
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.

    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
                                                      June 30,       June 30,
                                                         2007           2006
                                                 -------------  -------------
    ASSETS

    CURRENT
      Cash and cash equivalents                  $  7,779,505   $  3,981,681
      Short-term investments                       27,116,968     12,705,454
      Accounts receivable                          11,656,260      6,175,169
      Prepaid expenses and deposits                   785,737        338,969
      Current portion of deferred contract costs    5,253,390      2,686,334
      Current portion of future income tax assets   1,477,516      1,358,888
    -------------------------------------------------------------------------
                                                   54,069,376     27,246,495
    DEFERRED CONTRACT COSTS                         5,935,111      3,153,159
    PROPERTY AND EQUIPMENT                          1,204,017        715,346
    FUTURE INCOME TAX ASSETS                        1,377,145      1,415,080
    INTANGIBLE ASSET                                  383,324        511,098
    -------------------------------------------------------------------------
                                                 $ 62,968,973   $ 33,041,178
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    CURRENT
      Accounts payable and accrued liabilities   $  2,171,844   $  2,025,391
      Current portion of accrued warranty           4,586,738      1,368,174
      Current portion of deferred revenue          25,483,198     12,676,472
    -------------------------------------------------------------------------
                                                   32,241,780     16,070,037
    ACCRUED WARRANTY                                3,418,312      1,552,521
    DEFERRED REVENUE                               28,760,618     14,321,172
    -------------------------------------------------------------------------
                                                   64,420,710     31,943,730
    -------------------------------------------------------------------------

    SHAREHOLDERS' (DEFICIENCY) EQUITY
    Share capital and other equity                 39,094,936     37,026,188
    Contributed surplus                             7,814,428      7,665,150
    Loans to directors and employees                        -       (644,220)
    Deficit                                       (48,361,101)   (42,949,670)
    -------------------------------------------------------------------------
                                                   (1,451,737)     1,097,448
    -------------------------------------------------------------------------
                                                 $ 62,968,973   $ 33,041,178
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

                              Three Months                  Twelve months
                           2007           2006           2007           2006
                   -------------  -------------  -------------  -------------
    REVENUE
      Monitoring
       revenue     $  6,194,630   $  3,338,899   $ 19,915,842   $ 11,513,711
      Installation
       services,
       licensing
       fees and
       other
       revenues         103,330         16,315        220,206        177,529
    -------------------------------------------------------------------------
                      6,297,960      3,355,214     20,136,048     11,691,240
    -------------------------------------------------------------------------

    COST OF GOODS
     SOLD
      Monitoring,
       support and
       recovery       1,790,362      1,003,820      5,680,852      3,046,831
      Technical
       support and
       product
       maintenance      448,765        301,990      1,257,993      1,008,481
    -------------------------------------------------------------------------
                      2,239,127      1,305,810      6,938,845      4,055,312
    -------------------------------------------------------------------------
    GROSS MARGIN      4,058,833      2,049,404     13,197,203      7,635,928
    -------------------------------------------------------------------------

    EXPENSES
      Sales and
       marketing      3,006,980      1,895,331     10,069,935      6,682,543
      Research and
       development      838,306        537,844      3,243,833      2,030,913
      General and
       administra-
       tion           1,606,373        926,992      5,202,887      3,200,411
      Stock-based
       compensation     340,841        167,879        951,819        475,507
    -------------------------------------------------------------------------
                      5,792,500      3,528,046     19,468,474     12,389,374
    -------------------------------------------------------------------------
    OPERATING LOSS   (1,733,667)    (1,478,642)    (6,271,271)    (4,753,446)
    -------------------------------------------------------------------------

    OTHER INCOME
     (EXPENSE)
      Interest and
       other income     321,891        125,741      1,012,415        388,070
      Interest and
       bank charges     (13,716)        (7,353)       (57,440)       (30,619)
      Foreign
       exchange loss   (931,013)      (148,070)      (640,010)      (229,295)
    -------------------------------------------------------------------------
                       (622,838)       (29,682)       314,965        128,156
    -------------------------------------------------------------------------
    LOSS FOR PERIOD
     BEFORE INCOME
     TAXES           (2,356,505)    (1,508,324)    (5,956,306)    (4,625,290)
    FUTURE INCOME
     TAX RECOVERY             -        217,283         80,693        684,827
    -------------------------------------------------------------------------
    NET LOSS FOR
     THE PERIOD      (2,356,505)    (1,291,041)    (5,875,613)    (3,940,463)
    DEFICIT,
     BEGINNING OF
     PERIOD         (46,008,787)   (41,663,624)   (42,949,670)   (39,022,766)
    SETTLEMENT OF
     LOANS TO
     DIRECTORS AND
     EMPLOYEES            4,191          4,995        464,182         13,559
    -------------------------------------------------------------------------
    DEFICIT, END
     OF PERIOD     $(48,361,101)  $(42,949,670)  $(48,361,101)  $(42,949,670)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      BASIC AND
       DILUTED
       LOSS PER
       SHARE       $      (0.10)  $      (0.06)  $      (0.26)  $      (0.18)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    WEIGHTED
     AVERAGE
     NUMBER OF
     COMMON SHARES
     OUTSTANDING,
     BASIC AND
     DILUTED         22,967,827     21,858,158     22,497,832     21,410,296
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

                              Three Months                  Twelve months
                           2007           2006           2007           2006
                   -------------  -------------  -------------  -------------

    OPERATING
     ACTIVITIES
      Net loss for
       the period  $ (2,356,505)  $ (1,291,041)  $ (5,875,613)  $ (3,940,463)
      Items not
       involving
       cash
        Amortization
         of property
         and
         equipment      249,624         74,664        580,696        326,767
        Stock-based
         compen-
         sation         340,841        167,879        951,819        475,507
        Amortization
         of
         intangible
         asset           31,943         31,944        127,774        127,775
        Future
         income
         taxes                -       (217,283)       (80,693)      (684,827)
      Change in
       non-cash
       operating
       working
       capital
        Accounts
         receivable  (3,694,327)    (2,602,927)    (5,481,091)    (2,043,165)
        Prepaid
         expenses
         and
         deposits      (354,714)        26,302       (446,768)      (148,590)
        Deferred
         contract
         costs       (2,697,852)    (1,095,176)    (5,349,008)    (2,642,308)
        Accounts
         payable and
         accrued
         liabilities    744,586        508,044        146,453        408,372
        Accrued
         warranty     2,280,356        683,308      5,084,355      1,666,632
        Deferred
         revenue      9,925,073      4,975,365     27,246,172     10,655,644
    -------------------------------------------------------------------------
    CASH FROM
     OPERATING
     ACTIVITIES       4,469,025      1,261,079     16,904,096      4,201,344
    -------------------------------------------------------------------------

    INVESTING
     ACTIVITIES
      Property and
       equipment
       purchased       (249,298)      (109,532)    (1,069,367)      (251,707)
      Proceeds from
       maturities
       of short
       term
       investments    5,063,983      1,750,000     23,115,456      3,518,000
      Purchases of
       short term
       investments   (8,164,371)    (5,591,964)   (37,526,970)   (16,089,645)
    -------------------------------------------------------------------------
    CASH USED IN
     INVESTING
     ACTIVITIES      (3,349,686)    (3,951,496)   (15,480,881)   (12,823,352)
    -------------------------------------------------------------------------

    FINANCING
     ACTIVITIES
      Common shares
       issued on
       exercises of
       options and
       warrants         150,415        136,689      1,266,207        825,277
      Loans to
       directors
       and
       employees
       collected        502,652              -      1,108,402
    -------------------------------------------------------------------------
    CASH FROM
     FINANCING
     ACTIVITIES         653,067        136,689      2,374,609        825,277
    -------------------------------------------------------------------------
    NET CASH INFLOW
     (OUTFLOW)        1,772,406     (2,553,728)     3,797,824     (7,796,731)
    CASH AND CASH
     EQUIVALENTS,
     BEGINNING OF
     PERIOD           6,007,099      6,535,409      3,981,681     11,778,412
    -------------------------------------------------------------------------
    CASH AND CASH
     EQUIVALENTS,
     END OF
     PERIOD        $  7,779,505   $  3,981,681   $  7,779,505   $  3,981,681
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %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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