|By Marketwired .||
|February 13, 2013 08:09 PM EST||
TORONTO -- (Marketwire) -- 02/13/13 -- Redknee Solutions, Inc. (TSX: RKN), a leading provider of business-critical software and solutions for communications service providers, reported results for its fiscal first quarter ended December 31, 2012. All figures below are in U.S. dollars.
Fiscal Q1 2013 Financial Highlights as Compared to the Same Year-ago Quarter
- Revenue increased 6% to $14.2 million, with 50% from recurring revenue streams
- Quarter-end contract backlog up 5% to $64.0 million
- Gross profit up 1% to $8.9 million (63% of revenue) from $8.8 million (66% of revenue)
- Adjusted EBITDA totaled $1.0 million vs. $1.5 million
- Net loss totaled $1.7 million or $0.02 loss per share vs. net income of $0.4 million or $0.01 per share
- Quarter-end cash increased from $16.5 million to $32.3 million due to the bought deal financing closed in the period
- Secured a $20 million line of credit with Wells Fargo Capital Finance
Fiscal Q1 2013 Operational Highlights
- Reached a definitive agreement to acquire the Business Support System (BSS) assets from Nokia Siemens Networks. The acquisition will increase the company's global footprint to span more than 90 countries across Asia Pacific, Europe, Middle East and Africa.
- Signed multi-million dollar, multi-year term license billing and customer care contract with Malea Multimedia Mobile and Services to launch a new mobile brand in Niger.
- Signed license upgrades and service renewals in Americas, APAC and EMEA.
- Redknee was highlighted in the Gartner 2012 Magic Quadrant report on Integrated Revenue and Customer Management (IRCM) for communications service providers.
Fiscal Q1 2013 Financial Results
Revenue increased 6% to $14.2 million from $13.4 million in same year-ago quarter. The improvement was primarily due to an increase in software upgrades and support revenue.
Recurring revenue for the quarter was 50% of total revenue as compared to 54% for the same year-ago quarter. Recurring revenues consist of support and maintenance, long-term services contracts and revenue from term-based licenses.
Gross margin was 63% compared to 66% in the same year-ago quarter.
Adjusted EBITDA was $1.0 million or 7% of total revenue, compared to $1.5 million or 11% of total revenue in the same year-ago quarter (see discussion about the presentation of Adjusted EBITDA, a non-IFRS measure, below).
Net loss totaled $1.7 million or $0.02 loss per share, compared to net income of $0.4 million or $0.01 per share in the same year-ago quarter. The first fiscal quarter 2013 net loss included $2.3 million of one-time costs related to the pending acquisition of Nokia Siemens Networks' Business Support Systems business.
Contracted order backlog increased 5% to $64.0 million compared to the end of the same year-ago quarter.
At December 31, 2012, cash and investments totaled $32.3 million, with net cash of $26.4 million. This compares to cash and investments of $16.5 million and net cash of $8.8 million at December 31, 2011, with the increases mostly due to the financing completed in mid-November 2012.
Please refer to the section regarding forward-looking statements which form an integral part of this release. These results, along with the unaudited condensed consolidated interim financial statements and the company's unaudited MD&A, are available on the company's website at www.redknee.com and on SEDAR at www.sedar.com.
"This first quarter continued to demonstrate our ability to expand our customer base while managing costs and improving operational efficiencies," said Lucas Skoczkowski, CEO of Redknee. "We plan to sustain this momentum by increasing the number of subscribers on our cloud and SaaS-based solutions, which will further drive recurring revenue and visibility. We will also remain focused on securing multi-year term license contracts, which builds backlog and recurring revenue. We believe this strategy provides a clear, profitable pathway toward becoming the world's largest independent, real-time monetization and subscriber management software company in our industry.
"The Nokia Siemens Networks' BSS acquisition marks a major milestone toward this goal. Once completed, the acquisition will increase our global presence to span more than 90 countries across Asia Pacific, Europe, the Middle East and Africa, and would add strong, long-standing relationships with key Tier 1 operators. We will be able to leverage Nokia Siemens Networks' innovative BSS software products, and benefit from their experience and capabilities in real-time software R&D. Our combined solution suite would enable new cross-selling and upselling opportunities, while their global professional services team would help serve our newly combined customer base. As we scale the combined business, we would expect to have additional opportunities to build on this new operational foundation."
The company will host a conference call tomorrow (Thursday, February 14, 2013) to discuss these results. Redknee's CEO Lucas Skoczkowski and CFO David Charron will host the presentation starting at 8:30 a.m. Eastern time. A question and answer session will follow management's presentation.
Date: Thursday, February 14, 2013
Time: 8:30 a.m. Eastern time
Dial-In Number: 1-877-941-1427
Conference ID#: 4590886
The presentation will be webcast live and available for replay via the Investors section of the company's website at www.redknee.com.
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.
A replay of the call will be available after 11:30 a.m. Eastern time on the same day until March 14, 2013.
Toll-Free Replay Number: 1-877-870-5176
International Replay Number: 1-858-384-5517
Replay PIN #: 4590886
About Redknee Solutions, Inc.
Redknee is a leading global provider of innovative communication software products, solutions and services. Redknee's award-winning solutions enable operators to monetize the value of each subscriber transaction while personalizing the subscriber experience to meet mainstream, niche and individual market segment requirements. Redknee's revenue generating solutions provide advanced converged billing, rating, charging and policy for voice, messaging and new generation data services to over 90 network operators in over 50 countries. References to Redknee refer to the combined operations of the parent Redknee Solutions, Inc., and all wholly owned subsidiaries.
Redknee, Redknee Solutions, and the Redknee logo are trademarks or registered trademarks of Redknee Solutions Inc. All other company, product names and any registered and unregistered trademarks mentioned (if any) are used for identification purposes only and remain the exclusive property of their respective owners. For more information, visit www.redknee.com.
About the Presentation of Adjusted EBITDA
Beginning in this first fiscal quarter of 2013, the company has begun to report adjusted EBITDA, which is not a financial measure calculated and presented in accordance with International Financial Reporting Standards (IFRS), and should not be considered as an alternative to net income, operating income or any other financial measures so calculated and presented, or as an alternative to cash flow from operating activities as a measure of liquidity. The company defines adjusted EBITDA as net income (loss) from continuing operations excluding amounts for depreciation and amortization, finance costs, finance income, income taxes, foreign exchange (gain) loss, share-based compensation, and expenses related to the acquisition of Business Support System (BSS) assets from Nokia Siemens Networks. EBITDA is not a measure of financial performance under IFRS, and should not be considered in isolation or as a substitute for consolidated net income (loss) as a measure of performance.
Other companies (including competitors) may define adjusted EBITDA differently. The company presents adjusted EBITDA because management believes it to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in Redknee's industry. Management also uses this information internally for forecasting and budgeting. It may not be indicative of the historical operating results of Redknee or is it intended to be predictive of potential future results. Investors should not consider adjusted EBITDA in isolation or as a substitute for analysis of the company's results as reported under IFRS. See "Reconciliation of Net Income (Loss) to adjusted EBITDA" below for further information on this non-IFRS measure.
Certain statements in this document may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which 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 reflect current assumptions and expectations regarding future events and operating performance and speak only as of the date of this document. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under the "Risk Factors" section of the Company's the most recently filed AIF which is available on SEDAR at www.sedar.com and on the Company's website at www.redknee.com.
Although the forward-looking statements contained in this document are based upon what we believe are reasonable assumptions, we cannot assure investors that our actual results will be consistent with these forward-looking statements. We assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances, except as required by securities law.
REDKNEE SOLUTIONS INC. Condensed Consolidated Interim Statements of Financial Position (Expressed in U.S. dollars) (Unaudited) December 31, September 30, 2012 2012 ------------- ------------- Assets Current assets: Cash and cash equivalents $ 31,423,899 $ 16,878,523 Trade accounts and other receivables 13,352,217 10,394,639 Unbilled revenue 12,281,498 12,125,089 Prepaid expenses 956,231 799,901 Other assets 241,582 649,272 Inventory 266,832 580,171 ------------- ------------- Total current assets 58,522,259 41,427,595 Restricted cash 920,873 913,270 Property and equipment 1,059,632 726,818 Deferred income taxes 663,391 659,260 Investment tax credits 543,778 550,000 Other assets 3,847,612 3,170,308 Intangible assets 3,506,514 3,671,306 Goodwill 7,638,590 7,638,590 ------------- ------------- Total assets $ 76,702,649 $ 58,757,147 ============= ============= Liabilities and Shareholders' Equity Current liabilities: Trade payables $ 4,191,037 $ 1,756,532 Accrued liabilities 5,236,708 7,156,844 Income taxes payable 2,162,168 2,036,864 Deferred revenue 6,044,265 7,258,759 ------------- ------------- Total current liabilities 17,634,178 18,208,999 Deferred revenue 1,054,213 78,002 Other liabilities 599,649 439,398 Loans and borrowings 5,494,703 5,461,970 Deferred income taxes 372,121 408,156 ------------- ------------- Total liabilities 25,154,864 24,596,525 Shareholders' equity: Share capital, net of employee share purchase loans 65,515,926 46,543,100 Treasury stock (174,339) (264,584) Contributed surplus 4,850,473 4,787,549 Deficit (18,657,744) (16,918,912) Accumulated other comprehensive income 13,469 13,469 ------------- ------------- Total shareholders' equity 51,547,785 34,160,622 ------------- ------------- Total liabilities and shareholders' equity $ 76,702,649 $ 58,757,147 ============= ============= REDKNEE SOLUTIONS INC. Condensed Consolidated Interim Statements of Comprehensive Income (Loss) (Expressed in U.S. dollars) (Unaudited) Three months ended December 31, 2012 2011 ------------- ------------- Revenue: Software, services and other $ 8,274,738 $ 7,623,792 Support 5,962,225 5,749,120 ------------- ------------- 14,236,963 13,372,912 Cost of revenue 5,319,408 4,585,236 ------------- ------------- Gross profit 8,917,555 8,787,676 Operating expenses: Sales and marketing 2,953,095 3,393,658 General and administrative 2,396,603 1,883,915 Research and development 3,199,661 2,418,650 Special charges 2,278,472 - ------------- ------------- 10,827,831 7,696,223 ------------- ------------- Income (loss) from operations (1,910,276) 1,091,453 Foreign exchange gain (loss) 360,363 (561,415) Finance income 12,181 18,072 Finance costs (114,162) (117,139) ------------- ------------- Income (loss) before income taxes (1,651,894) 430,971 Income taxes (recovery): Current 125,429 119,287 Deferred (38,491) (46,460) ------------- ------------- 86,938 72,827 ------------- ------------- Net income (loss) and comprehensive income (loss) $ (1,738,832) $ 358,144 ============= ============= Net income (loss) per common share: Basic (0.02) 0.01 Diluted (0.02) 0.01 ============= ============= Weighted average number of common shares: Basic 75,446,243 64,221,515 Diluted 75,446,243 65,097,593 ============= ============= REDKNEE SOLUTIONS INC. Condensed Consolidated Interim Statements of Cash Flows (Expressed in U.S. dollars) (Unaudited) Three months ended December 31, 2012 2011 ------------- ------------- Cash provided by (used in): Operating activities: Net income (loss) $ (1,738,832) $ 358,144 Adjustments for: Depreciation of property and equipment 71,158 43,138 Amortization of intangible assets 164,792 191,333 Finance income (12,181) (18,072) Finance costs 114,162 117,139 Income tax expense 86,938 72,827 Unrealized foreign exchange loss 66,462 42,923 Share-based compensation 392,654 129,325 Other - (30,852) Changes in non-cash operating working capital (2,841,741) 405,805 ------------- ------------- (3,696,588) 1,311,710 Interest paid (87,236) 8,398 Interest received 12,195 (22,096) Income taxes paid (118,398) (6,102) ------------- ------------- (3,890,027) 1,291,910 Financing activities: Issuance of share capital 18,731,390 - Proceeds from exercise of stock options 182,050 94,659 Repayment of loans and borrowings - (354,253) ------------- ------------- 18,913,440 (259,594) Investing activities: Purchase of property and equipment (403,972) (100,454) Purchase of intangible assets - (42,357) Increase (decrease) in restricted cash (7,603) 73,844 ------------- ------------- (411,575) (69,967) Effect of foreign exchange rate changes on cash and cash equivalents (66,462) (42,923) ------------- ------------- Increase in cash and cash equivalents 14,545,376 920,426 Cash and cash equivalents, beginning of period 16,878,523 14,879,940 ------------- ------------- Cash and cash equivalents, end of period $ 31,423,899 $ 15,800,366 ============= ============= REDKNEE SOLUTIONS INC. Reconciliation of Net Income (Loss) to Adjusted EBITDA (Expressed in U.S. dollars) (Unaudited) Three months ended December 31, 2012 2011 ------------- ------------- Net income (loss) for the period (1,738,832) 358,144 Add back / (subtract): Depreciation of property and equipment 71,158 43,138 Amortization of intangible assets 164,792 191,333 Finance income (12,181) (18,072) Finance costs 114,162 117,139 Income tax expense 86,938 72,827 Share-based compensation 392,654 129,325 Foreign exchange loss (gain) (360,363) 561,415 ------------- ------------- EBITDA (1,281,672) 1,455,249 Adjustments Special charges related to acquisition 2,278,472 - ------------- ------------- Adjusted EBITDA $ 996,800 $ 1,455,249 ============= =============
For Further Details Please Contact:
Redknee Solutions Inc.
Chief Executive Officer
Chief Financial Officer
Tel: +1 905 625 2622
Liolios Group, Inc.
Matt Glover or Michael Koehler
Tel: +1 949 574 3860
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