Absolute Announces Preliminary First Quarter Results and Revises Outlook for Fiscal Year 2009
Absolute announces Normal Course Issuer Bid Application
Vancouver, Canada: October 9, 2008 – Absolute® Software Corporation (“Absolute” or the “Company”) (TSX: ABT), announces preliminary financial results for the first quarter of fiscal year 2009 (Q1-F2009), ended September 30, 2008. The Company also introduces fiscal 2009 guidance for Sales Contracts1 and cash from operations and announces a normal course issuer bid application.
Based on preliminary financial data, Q1-F2009 Sales Contracts are expected to be in a range of $18-$18.5 million and cash from operations is expected to be in a range of $8.9-$9.1 million.
“The unprecedented turbulence in global markets during the past month has created broad economic uncertainty which in turn led to an abrupt and unforeseen impact on our business at the end of Q1,” said John Livingston, Chairman and CEO of Absolute. “With a significant portion of our Sales Contracts typically coming in the last two weeks of a quarter, volatile market activity in September resulted in a number of large deals being put on hold at the end of the period. While we believe that a good portion of this business may still be won during the current fiscal year, these developments had a negative and material impact on our first quarter Sales Contracts.”
Mr. Livingston added: “In an effort to provide greater visibility into our outlook for fiscal 2009, we are taking this opportunity to issue Sales Contract and cash flow guidance for the fiscal year. Based on the current economic environment, we are taking a cautious approach to our forecasts. For fiscal 2009 we are expecting Sales Contracts in the range of $82-$90 million, and cash from operations in the range of $27-$33 million, reflecting Cash Margins1 of 33-37%, down from our prior range of 35-40%. We will no longer provide guidance on subscription and Cash Margin targets, but will continue to report these numbers on a quarterly basis.”
Mr. Livingston continued: “While we are disappointed to report Q1 Sales Contracts below both our and the market’s expectations, we believe that the fundamental condition of our business and finances, and the caliber of our leadership team are as strong as they have ever been. The breadth, maturity and stability of our strategic partnerships, customer base, patented technology and service offerings make us the leader in the growing computer and data security services market at a time when we believe significant opportunities for further market penetration exist. Our balance sheet has more than $70 million in cash and investments and we have no debt, which combined with our strong cash flow margins gives us a solid foundation to manage through this challenging environment and to execute on our growth plan.”
Absolute will report its complete first quarter fiscal 2009 results on November 4, 2008.
Absolute will hold a brief webcast and conference call to discuss its preliminary results at 1:30 pm Pacific Time today, October 9, 2008. The dial-in numbers for participants are 416-644-3418or 1-800-732-0232. A taped replay will be available until October 16, 2008. To access the archived conference call, please dial 416-640-1917 or 1-877-289-8525and enter the reservation code 21285835 followed by the number sign.
A live audio webcast will be available at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2438260
Normal Course Issuer Bid Application:
Absolute also announces that its Board of Directors has approved submission of an application for a normal course issuer bid under which Absolute may acquire up to 4,145,512 million of its common shares (equal to 10% of its public float) over the next year.
The normal course issuer bid requires approval of the Toronto Stock Exchange (TSX). If approved, any purchases would be made on the open market through the facilities of the TSX in accordance with regulatory requirements. Absolute would cancel any common shares purchased pursuant to the normal course issuer bid.
1 Absolute refers to “Sales Contracts” (invoiced sales or bookings in the period) as a revenue measure, and “Cash from Operations” and “Cash Margins” (Cash from Operations divided by Sales Contracts) as a profitability measures. Sales Contracts and Cash Margins are non-standard measures under Generally Accepted Accounting Principals (“GAAP”). Absolute considers Sales Contracts and cash from operations to be key top line performance metrics as substantially all Sales Contracts in each quarter are deferred on the balance sheet, while most of the related costs are expensed in that same quarter. Refer to the Business Model section in our Fiscal 2008 Management Discussion and Analysis for more details.
This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, the expected performance of our services and products, possible guarantee payment eligibility, 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.