Absolute Software Revises Guidance for Fiscal Year 2010 and Announces Departure of Chief Operating Officer, Carter McCrary
Vancouver, Canada: April 8, 2010 – Absolute® Software Corporation (“Absolute” or the “Company”) (TSX: ABT), the leading provider of firmware-based, patented, computer theft recovery, data protection and secure IT asset management today announces preliminary financial results for the third quarter of fiscal 2010 (Q3-F2010), ended March 31, 2010. The Company also revises its fiscal 2010 guidance for Sales Contracts(1) and Cash from Operating Activities(1).
Based on preliminary financial data, Q3-F2010 Sales Contracts are expected to be in a range of $15.5 million to $16.0 million, and Cash from Operating Activities is expected to be in a range of $100,000 to $200,000.
For Q3-F2010, Sales Contracts are expected to be 5% to 10% lower than in Q3-F2009. In part, this is due to the decline of the U.S. dollar relative to the Canadian dollar, which has gone from $1.2509 in Q3-F2009 to $1.035 in Q3-F2010. Excluding currency fluctuations, Sales Contracts rose in Q3-F2010 and are expected to be up 11% to 15% over Q3-F2009. The constant currency(2) growth reflects improved performance in Absolute’s consumer and international verticals, while North American commercial sales were down.
“While we had anticipated a positive impact from the computer refresh cycle in Q3, we found that a number of commercial customers continue to delay their purchase decisions,” said John Livingston, Chairman and CEO. “As a result, a number of sales we forecasted to close in Q3 have now moved into our future quarter pipelines. In addition, while the U.S. economy is showing signs of a turnaround, corporate spending remains cautious and the ongoing erosion of the U.S. dollar has further dampened year-over-year Sales Contract comparisons. These factors have led to the revision of our guidance figures for fiscal 2010.”
Mr. Livingston continued, “Looking beyond fiscal 2010, we remain bullish on the long term prospects for our business. From our efforts this year-to-date, we will enter fiscal 2011 with a consumer renewal opportunity nearly three times greater than in fiscal 2010 (to more than 1.5 million consumer subscriptions in fiscal 2011, up from 532,000 in fiscal 2010), and with our commercial customer renewal opportunity up more than 30% (to more than 900,000 subscriptions in fiscal 2011 from 660,000 in fiscal 2010). In addition, we have been diligently building the pipeline for our newly acquired Absolute Manage offering, and through our strategic investment in the sales, marketing and product development segments of the business, we have significantly improved our capability to execute on a global scale.”
Effective today, the Company also announces that Carter McCrary, Chief Operating Officer of Absolute, is leaving the Company. We would like to take this opportunity to thank Carter for his contributions over the past two years and we wish him success in his future endeavors. We have no immediate plans to find a replacement for this position and will evaluate our needs in this area on an ongoing basis.
Based on Q3-F2010 preliminary numbers, management is revising its Fiscal 2010 guidance as follows:
• Sales Contracts of $68-72 million (was $76-82 million)
• Cash from Operating Activities of $5-7 million (was $8-11 million)
(1) Absolute refers to “Sales Contracts” (invoiced sales) as a revenue measure and “Cash from Operating Activities” as a profitability measure. Sales Contracts is a non-standard measure under Canadian Generally Accepted Accounting Principles. 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.
(2) “Constant currency” refers to the Canadian dollar Sales Contracts 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.