Optiva Inc Reports Second Quarter 2022 Financial Results

All amounts are stated in United States dollars unless otherwise indicated

Revenue remained within expected range at $15.4 million
Total Contract Value (“TCV”)(1) in Q2’22 bookings was $12.5 million
Gross margin at 71%
Adjusted EBITDA(1) of $3.7 million or 24% of revenue, versus $4.1 million in Q2’21 – the 8th consecutive quarter of Adjusted EBITDA margin over 20%
Balance sheet solid with $26.4 million in cash
Adjusted EPS(1) loss of ($0.11) versus ($0.03) last year

TORONTO, Aug. 9, 2022 /CNW/ – Optiva Inc. (“Optiva” or “the Company”) (TSX:OPT), a leading provider of mission-critical, cloud-native revenue management software for the telecommunications industry, today released its second quarter financial results for the three-month period ended June 30, 2022.

“Our second quarter financial results were in-line with our internal expectations as we managed through anticipated legacy customer revenue runoff, resulting in softer revenues during the period. Meanwhile, we continued to make substantial progress with our investment in sales manifested in our strong bookings performance year to date and robust second half pipeline,” said John Giere, President and Chief Executive Officer of Optiva. “Our sales and R&D efforts continue to provide us with confidence that we can achieve new customer revenue growth with stable margins as we progress forward into the future of our customers’ public and private cloud strategies. As we noted in the first quarter, we are putting new products with next-generation industry certifications into the market, demonstrating that our R&D investment is starting to deliver results.”

Business Highlights

TCV in Q2’22 bookings totaled $12.5 million. For the six months ended June 30, 2022, TCV bookings totaled $45.4 million
The Company and partner Jio Platforms Limited (“JPL”) announced a strategic go-to-market partnership. JPL will offer its cloud-native 5G core infrastructure to telcos globally with Optiva’s future-ready, end-to-end, converged charging engine to accelerate the monetization of 5G services and use cases. The partnership will empower leading telecom operators to unlock 5G consumer, enterprise and private business opportunities by combining innovation and scale.
The Company announced the achievement of its fifth TM Forum Open API certification, placing Optiva in TM Forum’s Open API Conformance Silver Tier. Achieving the best industry standards and signing TM Forum’s Open Digital Architecture Manifesto (ODA) demonstrates the Company’s investment in innovation and next-generation product modernization. Open API Conformance enables Optiva products to provide telecom operators with a foundation for creating innovative offerings, 5G-ready BSS, partner ecosystem facilitation and standardization supporting monetization growth.
Craig Clapper joined Optiva as VP of Global Managed Services and Support. He brings more than 20 years of executive leadership experience in the telecom and IoT sectors, working with Aeris, Tait Communications and Ericsson. His appointment further adds to a strong and seasoned management team and reinforces Optiva’s continued efforts to grow and successfully achieve its mission-critical work to deliver the highest quality support to its customers around the globe.

Second Quarter 2022 Financial Results Highlights:

Revenue for Q2’22 remained within management’s expectations at $15.4 million. On a year-over-year basis, the change by revenue type for Q2’22 included a $1.8 million decrease in support and subscription revenue, a $0.9 million increase in software and services revenue and no change in third-party software and hardware revenue.
Gross margin for Q2’22 amounted to 71% compared to 78% during the same period in 2021. The decline in gross margin is attributable primarily due to higher headcount cost related to higher software and services revenue, the impact of higher customizations with lower margins which were ordered by customers that required fulfillment compared to the previous period and lower percentage of revenue from support and subscription revenue that has a higher margin. Gross margins may fluctuate as the Company proves out its cloud-native model and product capabilities to new and existing customers when they onboard the public or private cloud in future periods.
General and administrative expenses decreased to $3.1 million compared to $4.5 million during the same period in 2021. The decrease is mainly due to lower compensation costs, lower professional fees, lower allowance for doubtful accounts and lower legal costs.
Adjusted Earnings before interest, taxes, depreciation and amortization (“EBITDA”)(1)) for Q2’22 amounted to $3.7 million as compared to $4.1 million during the same period in 2021. Adjusted EBITDA for Q2’22 decreased by $0.4 million compared to the same period in 2021, primarily driven by lower gross margin.
Net loss for Q2’22 was $0.5 million when compared to net income of $1.3 million during the same period in 2021. Excluding the impact from change in value of warrants, the Company had a net loss of $0.7 million, versus a net loss of $0.2 million during the corresponding period in 2021.

Q2 Fiscal 2022 Highlights

Three Months Ended

Six Months Ended

($ US Millions, except per share information)

June 30,

(Unaudited)

2022

2021

Revenue

15.4

16.3

31.5

32.4

Net Income (Loss)

(0.5)

1.3

18.0

Earnings (Loss) Per Share

$(0.08)

$ 0.22

$ 3.16

Adjusted Earnings (Loss) Per Share(1)

$(0.11)

$(0.03)

$ 0.00

$ 0.66

Adjusted EBITDA(1)

3.7

4.1

7.5

9.1

Cash from (used in) operating activities

0.4

0.7

Total cash, including restricted cash

26.4

33.5

(1) EBITDA, Adjusted EBITDA, TCV and adjusted EPS are non-IFRS measures. These measures are defined in the “Non-IFRS Financial Measures” section of this news release.

Conference Call

Optiva Inc. will hold an analyst call on Wednesday, August 10, 2022, to discuss its second quarter 2022 financial results for the three-month period ended June 30, 2022. John Giere, CEO, and Dinesh Sharma, V.P. Finance will host the call starting at 8:30 a.m. Eastern Daylight Time. A question and answer session will follow management’s discussion.

Date: Wednesday, August 10, 2022Time: 8:30 a.m. Eastern Daylight Time Toll-free (Canada/US): 1-888-220-8474International: 1-720-452-9217Conference ID: 9182254Online Access: https://viavid.webcasts.com/starthere.jsp?ei=1560360&tp_key=1f497216f2

Please dial into the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

Non-IFRS Measures

“EBITDA” and “Adjusted EBITDA” are not financial measures calculated and presented in accordance with International Financial Reporting Standards (IFRS) and should not be considered in isolation or as a substitute to net income (loss), operating income or any other financial measures of performance calculated and presented in accordance with IFRS, or as an alternative to cash flow from operating activities as a measure of liquidity. The Company defines EBITDA as net income (loss) excluding amounts for depreciation and amortization, other income, finance costs, finance income, income tax expense (recovery), foreign exchange gain (loss) and share-based compensation. The Company defines “Adjusted EBITDA” as EBITDA (as defined above), excluding restructuring costs, one-time provision amounts, and any one-time transaction costs associated with shareholder conflict. The Company believes that Adjusted EBITDA is a metric that investors may find useful in understanding the Company’s financial position. The following table provides a reconciliation of Net Income to EBITDA and Adjusted EBITDA (in thousands of U.S. dollars)

Three months ended, June 30

Six months ended, June 30

Net income (loss) for the period

$ (492)

$ 1,331

$ 1,345

$ 18,030

Add back / (substract):

Depreciation of property and equipment

144

236

Amortization of intangible assets

361

363

722

726

Finance income

(73)

(71)

(159)

(143)

Finance costs (recovery)

2,238

889

3,413

(10,305)

Income tax expense

494

1,077

737

1,605

Foreign exchange loss (gain)

488

(218)

537

(525)

Share-based compensation

560

693

709

1,416

EBITDA

3,720

4,082

7,540

10,822

Change in other provisions

–

(1,314)

One-time cost (recovery) related to shareholder conflict

(434)

Adjusted EBITDA

$ 3,720

$ 4,082

$ 7,540

$ 9,074

Adjusted EPS is reported diluted EPS excluding the impact of change in the fair value of warrants.

TCV is the Total Contract Value of all bookings closed in the period.

About Optiva

Optiva Inc. is a leading provider of mission-critical, cloud-native revenue management software for the telecommunications industry. Its products are delivered globally on the private and public cloud. The Company’s solutions help service providers maximize digital, 5G, IoT and emerging market opportunities to achieve business success. Established in 1999, Optiva Inc. is on the Toronto Stock Exchange (TSX: OPT). For more information, visit www.optiva.com.

Caution Concerning Forward-Looking Statement

Certain statements in this document may constitute “forward-looking” statements that involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this document, such statements use such words as “may,” “will,” “expect,” “continue,” “believe,” “plan,” “intend,” “would,” “could,” “should,” “anticipate” and other similar terminology. These statements are forward-looking as they are based on our current expectations, as at August 9, 2022, about our business and the markets we operate in and on various estimates and assumptions. Our actual results could materially differ from our expectations if known or unknown risks affect our business or if our estimates or assumptions turn out to be inaccurate. As a result, there is no assurance that any forward-looking statements will materialize. Risks that could cause our results to differ materially from our current expectations are discussed in the Company’s most recent Annual Information Form, available on SEDAR at www.sedar.com and Optiva’s website at www.optiva.com/investors/. Other unknown or unpredictable factors or underlying assumptions subsequently proving to be incorrect could cause actual results to differ materially from those in the forward-looking statements. Optiva does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.

OPTIVA Inc.

Condensed Consolidated Interim Statements of Financial Position

(Expressed in thousands of U.S. dollars)

December 31,

Assets

Current assets:

Cash and cash equivalents

$ 25,596

$ 29,587

Trade accounts and other receivables

10,625

7,203

Unbilled revenue

11,519

8,209

Prepaid expenses

1,527

3,044

Income taxes receivable

4,035

4,362

Other assets

952

823

Total current assets

54,254

53,228

Restricted cash

777

792

Property and equipment

1,171

883

Deferred income taxes

376

432

Other assets

372

Long-term unbilled revenue

2,474

2,878

Intangible assets

1,082

1,804

Goodwill

32,271

Total assets

$ 92,405

$ 92,660

Liabilities and Shareholders’ Deficit

Current liabilities:

Trade payables

$ 2,828

$ 2,083

Accrued liabilities

10,788

12,905

Provisions

4,200

Income taxes payable

3,770

3,468

Deferred revenue

5,003

3,995

Total current liabilities

26,589

26,651

1,259

151

Other liabilities

2,025

2,096

Pension and other long-term employment benefit plans

7,034

9,423

Debentures

87,340

86,990

Series A Warrant

279

1,495

Standby Warrant

172

Deferred income taxes

708

746

Total liabilities

125,292

127,724

Shareholders’ deficit:

Share capital

270,560

Contributed surplus

15,003

14,172

Deficit

(315,994)

(317,339)

Accumulated other comprehensive loss

(2,456)

(2,457)

Total shareholders’ deficit

(32,887)

(35,064)

Total liabilities and shareholders’ deficit

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)

(Expressed in thousands of U.S. dollars, except share amounts)

Six months ended, June 30

Revenue:

Support and subscription

$ 9,660

$ 11,482

$ 19,958

$ 24,270

Software licenses, services and other

5,738

4,829

11,576

8,132

15,398

16,311

31,534

32,402

Cost of revenue

4,456

3,599

8,527

7,274

Gross profit

10,942

12,712

23,007

25,128

Operating expenses:

Sales and marketing

2,015

1,926

4,834

3,713

General and administrative

3,062

4,536

6,236

8,994

Research and development

3,210

3,242

6,064

3,759

8,287

9,704

17,134

16,466

Income from operations

2,655

3,008

5,873

8,662

Foreign exchange gain / (loss)

(488)

218

(537)

525

159

143

Finance (cost) recovery

(2,238)

(889)

(3,413)

10,305

Income before income taxes

2,408

2,082

19,635

Income taxes (recovery):

Current

510

1,204

695

1,769

Deferred

(16)

(126)

(164)

Total comprehensive income (loss)

$ 1,331

$ 1,345

Income (loss) per common share:

Basic

$ (0.08)

$ 0.22

$ 3.16

Diluted

(0.08)

0.22

3.16

Weighted average number of

common shares (thousands):

6,178

6,076

5,699

Condensed Consolidated Interim Statements of Cash Flows

Cash provided by (used in):

Operating activities:

Income (loss) for the period

$ (492)

$ 1,331

$ 1,345

$ 18,030

Adjustments for:

Pension

(592)

219

(1,705)

(718)

Income tax expense

Unrealized foreign exchange (gain) / loss

(834)

209

(1,344)

(450)

Share-based compensation

Change in provisions

(23)

(1,355)

Change in non-cash operating working capital

(1,131)

(243)

(1,671)

(5,986)

675

4,462

2,283

2,838

Interest paid

(11)

(14)

(22)

(53)

Interest received

Promissory note paid

(2,000)

Income taxes (paid) received

(282)

(373)

(2,064)

409

4,083

357

731

Financing activities:

Issue of share capital

19,089

Payment of interest on loans and borrowings

(4,424)

(4,413)

14,676

Investing activities:

Purchase of property and equipment

(416)

(265)

(524)

Increase in restricted cash

135

(393)

(130)

(509)

(177)

Effect of foreign exchange rate changes

on cash and cash equivalents

381

585

Increase (decrease) in cash and cash equivalents

397

22,971

(3,991)

15,271

Cash and cash equivalents, beginning of period

25,199

9,964

29,587

17,664

Cash and cash equivalents, end of period

$ 25,596

$ 32,935

SOURCE Optiva Inc.

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