Absolute Software Reports Fiscal 2013 First Quarter Results

Company continues to diversify sales, delivering growth in key expansion areas 
of the business 
VANCOUVER, Nov. 5, 2012 /CNW/ - Absolute(®) Software Corporation ("Absolute" 
or the "Company") (TSX: ABT), the leading provider of persistent endpoint 
security and management solutions for PCs, Macs, iOS, Android, Windows and 
Blackberry devices, today announced its financial results for the three months 
ended September 30, 2012. All financial statements are prepared in accordance 
with International Financial Reporting Standards ("IFRS") and reported in U.S. 
dollars. 
 __________________________________________________________
|Key Financial Metrics         |Q1 F2013|Q1 F2012|%  change|
|______________________________|________|________|_________|
|Sales Contracts((1))          |  $20.6M|  $25.3M|    (19)%|
|______________________________|________|________|_________|
|Cash from operating activities|   $5.3M|   $5.5M|     (3)%|
|______________________________|________|________|_________|
|Operating cash per share((2)) |        |        |         |
|   (basic and diluted)        |   $0.12|   $0.13|     (8)%|
|______________________________|________|________|_________|
|Revenue                       |  $19.8M|  $18.2M|      +8%|
|______________________________|________|________|_________|
|Adjusted Operating Income((3))|   $1.4M|   $2.7M|    (48)%|
|______________________________|________|________|_________|
|Net income (loss)             |   $0.5M| $(1.9)M|       nm|
|______________________________|________|________|_________|
|Net income (loss) per share   |        |        |         |
|   (basic and diluted)        |   $0.01| $(0.04)|       nm|
|______________________________|________|________|_________|
|Cash, cash equivalents  and   |        |        |         |
|investments                   |  $72.5M|  $56.3M|     +29%|
|______________________________|________|________|_________|
|Deferred revenue              | $126.0M| $118.2M|      +7%|
|______________________________|________|________|_________| 
(1)(2)(3) - Please refer to "Non-IFRS Measures and Definitions" 
Q1 F2013 Highlights 


    --  Sales Contracts were $20.6 million, down 19% from Q1 F2012,
        reflecting challenging factors in the PC industry.
    --  Commercial Sales Contracts were $18.6 million, down 19% from Q1
        F2012, reflecting the impact of challenging PC industry trends,
        most significantly within the education and government
        verticals.
    --  Company achieved year-over-year growth in key expansion areas
        of the business - corporate and healthcare verticals, the
        Absolute Manage product line and international sales.
    --  Sales of Theft Management Products((5) )were $12.8 million,
        down 25% compared to Q1 F2012.
    --  Device Management and Data Security product sales were $5.8
        million, a 1% decrease compared to Q1 F2012.
    --  Cash from operating activities was $5.3 million, down 3% from
        Q1 F2012.
    --  Adjusted Operating Income was $1.4 million, a 48% decrease
        compared to Q1 F2012.
    --  Announced Computrace embedded
        persistence for the Fujitsu STYLISTIC M532 Android Media Tablet.
    --  Released Absolute Manage support for Windows 8 and Mac OS X
        10.8 Mountain Lion.
    --  Announced availability of Absolute Data Protect for Android
        devices.
    --  Expanded data protection capabilities with new Absolute Secure Drive
         features.
    --  Opened a sales, marketing and customer support office in Kuala
        Lumpur, Malaysia.
    --  Repurchased 608,100 shares under the Company's Normal Course
        Issuer Bid at a cost of $2.8 million.

"We achieved year-over-year increases in the corporate and healthcare 
verticals, the Absolute Manage product line and in our international business, 
all of which are key expansion areas for Absolute," said John Livingston, CEO 
of Absolute. "However, we faced broader PC industry challenges in the quarter 
that placed downward pressure on our overall Q1 results. The magnitude of the 
impact of these challenges was unforeseen by our PC OEM and infrastructure 
partners, most of whom also underwent layoffs and reduced their guidance late 
in the September quarter. While we are disappointed with our overall results 
for the quarter, we are encouraged by industry forecasts, which are predicting 
a transition to an improved sales environment toward the end of the fiscal 
year."

Mr. Livingston continued: "In response to our experience in the first quarter, 
we are taking a more measured approach to our investment levels. We are 
scaling back on our initial plans and partially offsetting spending increases 
with cost reductions in certain areas of the business. We balanced these 
cost reductions against the long-term market opportunity for our unique 
product vision that we believe is well positioned within the key secular 
trends in the PC industry. This belief is founded in the growth we continued 
to generate in Q1 in our emerging products and markets, particularly in the 
mobile device management space where we continue to experience exciting 
growth."

Q1 F2013 Financial Review

Q1 F2013 Sales Contracts were $20.6 million, down 19% from $25.3 million in Q1 
F2012. The year-over-year decline was a result of several PC industry factors, 
including a slowdown in PC sales due to the upcoming Windows 8 release, budget 
reallocations to iOS devices in the education sector and uncertainty in the US 
public sector as a result of the impending election. The negative impact these 
factors had on the Company's Q1 F2013 results was partially offset by growth 
in expansion areas of the business, including stronger year-over-year sales in 
the corporate and healthcare verticals, increased sales of the Company's 
Absolute Manage product line and expansion of the Company's international 
sales.

Commercial Sales Contracts for Absolute's flagship theft management 
products((5) )were $12.8 million for Q1 F2013. This was down 25% from $17.1 
million in Q1 F2012, as these product sales are heavily driven by PC sales, 
with an emphasis on the education market.

Q1 F2013 Commercial Sales Contracts from Absolute's device management and data 
security products((6)) were $5.8 million, down 1% from Q1 F2012. In the 
quarter, Absolute had strong year-over-year sales gains for its Absolute 
Manage product line, in particular its Mobile Device Management offering. 
These gains were offset by a decline in Computrace Data Protection sales, 
which were negatively affected by the same factors as the Company's theft 
management products.

International Sales Contracts grew 21% to $2.7 million in Q1 F2013 from $2.2 
million in Q1 F2012. This reflects the benefits of the Company's strategy to 
invest in expansion into markets outside of North America that have the same 
needs for all of Absolute's products, but with lower current levels of 
penetration.

For Q1 F2013, Sales Contracts for consumer solutions were $2.0 million, or 10% 
of Sales Contracts, down 17% from $2.4 million, or 9% of Sales Contracts, in 
Q1 F2012. The year-over-year decline was a result of delays in PC purchases in 
anticipation of the Windows 8 launch and some displacement of PC purchases by 
tablets.

Revenue for Q1 F2013 was $19.8 million, an 8% increase from $18.2 million in 
Q1 F2012. Indicative of the Company's Software-as-a-Service (SaaS) business 
model, revenue primarily represents the amortization of deferred revenue 
balances from recurring term license sales. For Q1 F2013, 94% of revenue was 
related to the drawdown of deferred revenue balances accumulated to the end of 
the prior fiscal year.

Adjusted Operating Expenses((3)) for Q1 F2013 were $18.4 million. This was up 
18% from $15.5 million in Q1 F2012 and up 3% from $17.9 million in Q4 F2012. 
The year-over-year change was due to increased investment levels, particularly 
in sales, marketing, and research and development. These increased spending 
levels were initiated near the end of F2012.

Absolute generated Adjusted Operating Income((4)) of $1.4 million in Q1 F2013, 
down 48% from an Adjusted Operating Income of $2.7 million in Q1 F2012, due 
to the combination of lower sales contracts and increased investment in the 
business in Q1 F2013.

Absolute recorded net income of $0.5 million in Q1 F2013, compared to a net 
loss of $1.9 million in Q1 F2012. Q1 F2013 net income included a foreign 
exchanges gain of $0.5 million compared to a foreign exchange loss of $1.9 
million in Q1 F2012.

Cash from operating activities was $5.3 million for Q1 F2013, down 3% from 
$5.5 million in Q1 F2012.

At September 30, 2012, Absolute had cash, cash equivalents and investments of 
$72.5 million compared to $69.9 million at June 30, 2012.

Outlook

Management believes that many of the negative PC industry factors the Company 
experienced in Q1 F2013 will persist through to the end of fiscal 2013. As a 
result, management expects sales contracts for F2013 to be slightly below 
F2012 levels. Given the current challenging market conditions and the outlook 
for improved conditions toward the end of the fiscal year, management is 
taking a balanced approach to spending and expects cash generated from 
operating activities to decline moderately compared to F2012. As part of the 
Company's overall growth plans, management also anticipates completing one, or 
more acquisitions during F2013. The Company is targeting acquisitions with a 
purchase price of $25 million or less.

Quarterly Filings

Management's discussion and analysis ("MD&A"), consolidated financial 
statements and notes thereto for Q1 F2013 can be obtained today from 
Absolute's corporate website at www.absolute.com. The documents will also be 
available at www.sedar.com.

Notice of Conference Call

Absolute Software will hold a conference call to discuss the Company's Q1 
F2013 results on Monday, November 5, 2012 at 2:00 p.m. PT (5:00 p.m. ET). All 
interested parties can join the call by dialing 647-427-7450, or 
1-888-231-8191. Please dial-in 15 minutes prior to the call to secure a 
line. The conference call will be archived for replay until Monday, November 
12, 2012 at midnight.

A live audio webcast of the conference call will be available at 
www.absolute.com and www.newswire.ca. Please connect at least 15 minutes 
prior to the conference call to ensure adequate time for any software download 
that may be required to join the webcast. An archived replay of the webcast 
will be available for 365 days at www.newswire.ca. To access the archived 
conference call, please dial 416-849-0833, or 1-855-859-2056and enter the 
reservation code 43441455.

Non-IFRS Measures and Definitions

Throughout this press release, we refer to a number of measures which we 
believe are meaningful in the assessment of the Company's performance. All 
these metrics are non-standard measures under International Financial 
Reporting Standards ("IFRS"), and are unlikely to be comparable to similarly 
titled measures reported by other companies. Readers are cautioned that the 
disclosure of these items is meant to add to, and not replace, the discussion 
of financial results or cash flows from operations as determined in accordance 
with IFRS. For a discussion of the purpose of these non-IFRS measures, 
please refer to the Company's Fiscal 2013 Q1 MD&A on SEDAR at www.SEDAR.com.

These measures, as well as their method of calculation or reconciliation to 
IFRS measures, are as follows:

1)      Sales Contracts
        See the "Subscription Business Model" section of the MD&A for a
        detailed discussion of why we believe Sales Contracts (also
        known as "bookings") provide a meaningful performance metric. 
        Sales Contracts are included in deferred revenue (see Note 7 of
        the Notes to the Interim Condensed Consolidated Financial
        Statements), and result from invoiced sales of our products and
        services.
         

2)      Basic and diluted Cash from Operating Activities per share
        As a result of the nature of our revenues (please refer to
        "Subscription Business Model" in the MD&A), we use Cash from
        Operating Activities as a measure of profitability.
        Accordingly, we believe that Cash from Operating Activities per
        share is a meaningful indicator of profitability per share.
        Cash from Operating Activities per share is calculated by
        dividing Cash from Operating Activities by the average number
        of shares outstanding for the period (basic), or using the
        treasury stock method (diluted).
         

3)      Adjusted Operating Expenses
        A number of significant non-cash expenses are reported in our
        Cost of Revenue and Operating Expenses.  Management believes
        that analyzing these expenses exclusive of these non-cash items
        provides a useful measure of the cash invested in the
        operations of its business. The non-cash items excluded in the
        determination of Adjusted Operating Expenses are share-based
        compensation and amortization of acquired intangible assets.
        For a description of the reasons these items are adjusted,
        please refer to the Fiscal 2013 Q1 MD&A.
         

4)      Adjusted Operating Income
        Management believes that analyzing operating results exclusive
        of significant non-cash items provides a useful measure of the
        Company's performance. Adjusted Operating Income refers to IFRS
        operating (loss) income excluding charges for share-based
        compensation and amortization of acquired intangible assets.
         

5)      Theft Management products
        Management defines the Company's theft management product line
        as Computrace products that include an investigations and
        recovery services component.
         

6)      Device Management and Data Security products
        Management defines the Company's device management and data
        security product line as are defined as our Absolute Manage and
        Absolute Secure Drive products, as well as Computrace products
        that do not include an investigations and recovery services
        component (for example, Absolute Track and Computrace Data
        Protection).

About Absolute Software

Absolute Software Corporation (TSX: ABT) is the world leader in persistent 
endpoint security and management solutions for computers and ultra-portable 
devices and the data they contain. Positioned as a Visionary vendor in 
Gartner, Inc.'s Magic Quadrant for Client Management Tools in 2012, Absolute's 
solutions - Absolute Computrace, Absolute Manage, Absolute Secure Drive, and 
Computrace LoJack for Laptops - provide organizations with actionable 
intelligence to track, manage and secure both employee and corporate liable 
devices accessing their network and restore trust, visibility and control over 
all of their devices and data, ensuring best practices for governance, risk 
mitigation and compliance. The Company's persistence technology is pre-built 
into the firmware of laptop, Ultrabook, desktop, netbook, and tablet computers 
by global leaders, including Acer, ASUS, Dell, Fujitsu, HP, Lenovo, Motion, 
Panasonic, Samsung, and Toshiba, and the Company has reselling partnerships 
with these OEMs and others, including Apple. For more information about 
Absolute Software, visit www.absolute.com and http://blog.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 performance, functionality and availability of our services and 
products, 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.

©2012 Absolute Software Corporation. All rights reserved. Computrace and 
Absolute are registered trademarks of Absolute Software Corporation. LoJack is 
a registered trademark of LoJack Corporation, used under license by Absolute 
Software Corporation. LoJack Corporation is not responsible for any content 
herein. U.S. patents No. 5,715,174, No. 5,764,892, No. 5,802,280, No. 
5,896,497, No. 6,087,937, No. 6,244,758, No. 6,269,392, No. 6,300,863, No. 
6,507,914, No. 7,818,557, No. 7,818,803, No. 7,945,709 and No. 8,062,380. 
Canadian patents No. 2,211,735, No. 2,284,806, and No. 2,205,370. U.K. patents 
No. EP0793823, No. GB2298302, and No. GB2338101. German patent No. 69512534. 
Australian patent No. 699045. Japanese patent No. JP4067035. The Toronto Stock 
Exchange has neither approved nor disapproved of the information contained in 
this news release.

ABSOLUTE SOFTWARE CORPORATION
Consolidated Statements of Financial Position
(Expressed in United States dollars) (Unaudited)
                                  September 30, 2012    June 30, 2012
                                                                     

ASSETS                                                               
                                                                     

CURRENT                                                              

  Cash and cash equivalents       $       56,008,100   $   45,412,147

  Short-term investments                   4,049,087        8,642,435

  Trade and other receivables             15,194,809       18,105,369

  Prepaid expenses and other               1,957,897        2,010,165
                                          77,209,893       74,170,116

INVESTMENTS                               12,477,882       15,875,256

PROPERTY AND EQUIPMENT                     1,500,772        1,561,495

DEFERRED INCOME TAX ASSETS                20,742,672       19,848,221

INTANGIBLE ASSETS                         16,842,287       18,256,872
                                  $      128,773,506   $  129,711,960
                                                                     

LIABILITIES                                                          
                                                                     

CURRENT                                                              

  Trade and other payables        $        7,688,968   $    7,016,921

  Acquisition payable - current            1,660,789        1,657,949

  Accrued warranty                           580,000          590,000

  Deferred revenue - current              64,573,135       63,173,264
                                          74,502,892       72,438,134

DEFERRED REVENUE                          61,470,828       62,038,434
                                         135,973,720      134,476,568

CONTINGENCIES                                                        
                                                                     

SHAREHOLDERS' DEFICIENCY                                             

  Share capital                           38,035,661       38,625,463

  Equity reserve                          36,317,182       35,751,185

  Deficit                               (81,553,057)     (79,141,256)
                                         (7,200,214)      (4,764,608)
                                  $      128,773,506   $  129,711,960


ABSOLUTE SOFTWARE CORPORATION
Consolidated Statements of Operations and Comprehensive Income (Loss)
Three months ended September 30, 2012 and 2011
(Expressed in United States dollars) (Unaudited) 
                                       2012           2011 
                                                              
REVENUE                              $ 19,766,920   $  18,246,507 
                                                              
COST OF REVENUE                         4,870,689       5,056,325 
                                                              
GROSS MARGIN                           14,896,231      13,190,182 


                                                                 

OPERATING EXPENSES                                               

  Sales and marketing                   9,501,541       7,783,810

  Research and development              3,156,569       2,797,415

  General and administration            2,638,116       1,814,828

  Investment tax credits                (400,000)       (575,000)

  Share-based compensation                576,285         696,813
                                       15,472,511      12,517,866
                                                                 

OPERATING (LOSS) INCOME                 (576,280)         672,316
                                                                 

OTHER INCOME (EXPENSE)                                           

  Interest income, net                     84,906         146,484

  Foreign exchange gain (loss)            497,318     (1,862,747)

  Loss on investments                    (29,627)               -
                                          552,597     (1,716,263)
                                                                 

NET LOSS BEFORE INCOME TAXES             (23,683)     (1,043,947)
                                                                 

INCOME TAX RECOVERY (EXPENSE)             494,451       (840,000)
                                                                 

NET INCOME (LOSS) AND TOTAL                        
   COMPREHENSIVE INCOME (LOSS)       $    470,768   $ (1,883,947)
                                                                 

BASIC AND DILUTED INCOME (LOSS)                    
   PER SHARE                         $       0.01   $      (0.04)
                                                                 

WEIGHTED AVERAGE NUMBER OF COMMON                  
   SHARES OUTSTANDING, BASIC           43,643,501      43,406,230


ABSOLUTE SOFTWARE CORPORATION
Consolidated Statements of Changes in Shareholders' Deficiency
(Expressed in United States dollars) (Unaudited) 


                        Share Capital                                                     
                Number of
                  Common                        Equity
                  shares         Amount         reserve          Deficit           Total
                                                                                          

BALANCE, JUNE   43,680,498   $              $               $                $
30, 2011                       34,640,517      34,431,802     (74,766,754)     (5,694,435)

Shares issued       85,250                                                    
on options
exercised                         164,173        (53,265)                -         110,908

Shares issued       93,502                                                    
under
Employee
Share
Purchase Plan                     308,313               -                -         308,313

Shares           (683,000)                                                    
repurchased
and cancelled
   under the
Normal Course
Issuer Bid                      (735,284)               -      (2,042,281)     (2,777,565)

Share-based              -                                                    
compensation                            -         696,813                -         696,813

Net loss and             -                                                    
total
comprehensive
loss                                    -               -      (1,883,947)     (1,883,947)

BALANCE,        43,176,250   $              $               $                $
SEPTEMBER 30,
2011                           34,377,719      35,075,350     (78,692,982)     (9,239,913)

Shares issued      653,787                                                    
on options
exercised                       3,549,259     (1,105,530)                -       2,443,729

Shares issued       81,600                                                    
under
Employee
Share
   Purchase
Plan                              289,218               -                -         289,218

Shares           (320,500)                                                    
repurchased
and cancelled
   under the
Normal Course
Issuer Bid                      (418,167)               -        (916,335)     (1,334,502)

Shares issued      166,666                                                    
on
acquisition                       827,434        -                       -         827,434

Share-based              -                                                    
compensation                            -       1,781,365                -       1,781,365

Net income               -                                                    
and total
comprehensive
income                                  -               -          468,061         468,061

BALANCE, JUNE   43,757,803   $              $               $                $
30, 2012                       38,625,463      35,751,185     (79,141,256)     (4,764,608)

Shares issued        6,825                                                    
on options
exercised                          26,363        (10,288)                -          16,075

Shares issued       77,610                                                    
under
Employee
Share
   Purchase
Plan                              321,493               -                -         321,493

Shares           (608,100)                                                    
repurchased
and cancelled
   under the
Normal Course
Issuer Bid                      (690,847)               -      (2,112,293)     (2,803,140)

Shares                   -                                                    
committed to
be
repurchased
   under the
Normal Course
Issuer Bid                      (246,811)               -        (770,276)     (1,017,087)

Share-based              -                                                    
compensation                            -         576,285                -         576,285

Net income               -                                                    
and total
comprehensive
income                                  -               -          470,768         470,768

BALANCE,        43,234,138   $              $               $                $
SEPTEMBER 30,
2012                           38,035,661      36,317,182     (81,553,057)     (7,200,214)


ABSOLUTE SOFTWARE CORPORATION
Consolidated Statements of Cash Flows
Three months ended September 30, 2012 and 2011
(Expressed in United States dollars) (Unaudited) 
                                          2012              2011 
OPERATING ACTIVITIES                                                    
                                                                    
Net income (loss)                       $     470,768   $   (1,883,947) 
Items not involving cash                                                
Amortization of property and         
  equipment                                   330,919           316,507 
Amortization of acquired intangible  
  assets                                    1,409,845         1,336,856 
Amortization of intangible assets -  
  contract costs and brand                  1,420,175         1,468,903 
Share-based compensation                    576,285           696,813 
Deferred income taxes                     (894,451)           265,000 
Loss on investments                          29,627                 - 
Unrealized foreign exchange (gain)   
  loss                                      (277,892)         1,958,039 
Non-cash interest and amortization   
  of investment premium                       202,101            13,829 
Change in non-cash working capital                                      
Trade and other receivables               2,905,954       (2,576,900) 
Prepaid expenses and other                   52,268         (112,221) 
Intangible assets - contract costs   
  and brand additions                     (1,390,435)       (1,660,385) 
Trade and other payables                  (330,731)       (1,269,897) 
Accrued warranty                           (10,000)          (30,000) 
Deferred revenue                            832,264         6,972,207 
                                                                    
CASH FROM OPERATING ACTIVITIES              5,326,697         5,494,804 
                                                                    
INVESTING ACTIVITIES                                                    
                                                                    
Purchase of property and equipment        (310,605)         (123,531) 
Purchase of intangible assets              (25,000)                 - 
Proceeds from maturities of          
  short-term investments                    8,039,727                 - 
                                                                    
CASH FROM (USED IN) INVESTING          
ACTIVITIES                                  7,704,122         (123,531) 
                                                                    
FINANCING ACTIVITIES                                                    
                                                                    
Repurchase of common shares for      
  cancellation                            (2,803,140)       (2,777,565) 
Issuance of common shares                   337,568           419,221 
                                                                    
CASH USED IN FINANCING ACTIVITIES         (2,465,572)       (2,358,344) 
                                                                    
FOREIGN EXCHANGE EFFECT ON CASH                30,706         (238,105) 
                                                                    
INCREASE IN CASH AND CASH EQUIVALENTS      10,595,953         2,774,824 
                                                                    
CASH AND CASH EQUIVALENTS, BEGINNING    
OF PERIOD                               45,412,147        29,866,741 
                                                                    
CASH AND CASH EQUIVALENTS, END OF      
PERIOD                                  $  56,008,100   $    32,641,565 
 
Public Relations: Chris Michaels, HORN Group chris.michaels@horngroup.com 
415.905.4030 805.390.0819 
Investor Relations: Kristen Dickson, MSc, TMX|Equicom 
kdickson@tmxequicom.com or 416.815.0700 x273 
or 
Dave Mason, CFA, TMX|Equicom dmason@tmxequicom.com or 416.815.0700 x237 
SOURCE: Absolute Software Corporation 
To view this news release in HTML formatting, please use the following URL: 
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CO: Absolute Software Corporation
ST: British Columbia
NI: SOF ERN CONF  
-0- Nov/05/2012 21:00 GMT