Serenic Aligns With Microsoft's Volume and Cloud Based Business Models; Reports Results for the Three and Nine Months Ended

Serenic Aligns With Microsoft's Volume and Cloud Based Business Models; Reports 
Results for the Three and Nine Months Ended November
30, 2012 
EDMONTON, ALBERTA -- (Marketwire) -- 01/29/13 -- Serenic Corporation
(the "Company" or "Serenic") (TSX VENTURE:SER), an international
software developer specializing in integrated financial management
and human capital management ("HCM") solutions for Non-Profit
organizations, government agencies, and Microsoft Dynamics NAV users,
announces its financial results for the three months and nine months
ended November 30, 2012. 
Volume and Cloud-based Business Model 
In July 2012, Microsoft announced significant changes to their
strategies to market and sell their financial, accounting and
enterprise resource planning software (together, "ERP") products,
which will impact Serenic and its future strategies. Microsoft's
expectation is to significantly increase its penetration within ERP
markets, similar to their past experience in having dominated office
automation applications (word processing, spreadsheet, Power Point,
e-mail), data base applications (Microsoft Access, Microsoft SQL),
and segments of the customer relationship management ("CRM") markets.
Microsoft's objective is to deploy its ERP applications to a wider
range of customers, from small to medium size businesses ("SMB") to
major enterprise organizations (Fortune 500 and equivalent), and
allow customers to utilize on-premise licensed installations,
software-as-a-service ("SaaS" or "Cloud") applications, or any
combination thereof. Microsoft's underlying technologies are designed
to use any browser-enabled device to access these ERP solutions which
feature seamless integration to operating and office systems (e.g.,
full integration with Windows 8, Office, SharePoint, CRM etc.) and
thereby result in simplified access and a superior user experience.
We expect these technologies and strategies will provide Serenic with
a competitive advantage. 
In order to accomplish their objectives, Microsoft has initiated
significant changes to its business and sales models. To address the
SMB market, Microsoft is adopting new strategies to achieve much
higher volume sales than has been attained historically. Microsoft
has rolled out a Global Road to Repeatability ("GR2R") program,
through which Microsoft is assisting Serenic and other selected
resellers to prepare to exploit the volume market by revamping
products, pricing, lead generation, marketing, sales, deployment and
implementation strategies. The GR2R model is inclusive of both
on-premise and cloud based deployment. To simplify the purchase
experience for new customers, Microsoft has introduced "Perpetual
Product Licensing" with its latest release of Dynamics NAV.
Historically, a customer was provided with numerous choices regarding
inclusion or exclusion of functionality choices, which resulted in
complexities to the purchase process. Now a prospective client will
simply choose between a basic or comprehensive functionality
solution, select the number of users required by their organization
and select whether they wish to use an on-premise or cloud-based
computing environment. Serenic has paralleled this strategy for its
own products, which will be offered commencing with the next release
of Serenic Navigator anticipated in the first half of calendar 2013. 
Serenic's business model has historically been closely aligned with
and an integral part of Microsoft's global eco-system of ERP reseller
partners and service providers. Management believes that Serenic's
go-forward strategies should continue to align with Microsoft's in
order to maximize our opportunities by leveraging Microsoft's global
credibility and market presence within businesses. 
Serenic began to enhance its historical business model in Q2 of
Fiscal 2013 by supplementing the traditional on-premise deployment of
Serenic Navigator to larger non-profits and NGOs with a version that
management anticipates will have strong appeal in the SMB market.
While management believes this evolution represents an exciting
opportunity for Serenic in the longer term, it presents some
challenges in the shorter term. 
With respect to the SMB market for Serenic products, certain aspects
of our historical operational model will need to be revamped to
transition from the highly consultative and resource intensive
approach to a more prescriptive and automated process that will
enable Serenic to engage more efficiently with a higher volume of new
customers while expending fewer resources. The volume regime mandates
lower product and services pricing, higher automation with respect to
marketing and sales processes, shorter sales cycles, and streamlined
deployment, implementation and training cycles. It also mandates
offering cloud-based solutions that are attuned to this fast growing
segment of our markets. 
Serenic's Navigator and HCM products for SMB have been undergoing
re-development during the past few years in anticipation of the
imminent paradigm shift to Microsoft's cloud-based technology and are
essentially ready for deployment under Microsoft's Azure platform.
Azure is Microsoft's new global software hosting program, which is
expected to be released to market by mid calendar 2013. As we
progress through adoption of GR2R, Serenic's products will continue
to be modified to simplify customer decision making and the
deployment of our solutions for the cloud and volume models. As part
of this initiative, Serenic has re-developed DonorVision as a new
stand-alone, cloud based product based on Microsoft CRM, which is
anticipated to be released to market within the next three months. To
better address the larger Enterprise customers on a go-forward basis,
Serenic Navigator will be enhanced with appropriate changes to
incorporate new functionality requirements that have been identified
for this market. 
While much work to prepare for the volume model has already been
completed, certain challenges still remain to be resolved. This
transition is expected to be underway for a period of time that is
currently unknown, although Management anticipates some momentum from
cloud- based products within one or two quarters after Microsoft
makes Azure generally available in the market. Until then, we
anticipate that confusion amongst new customers about differences
between historical and GR2R product strategies, pricing and services
may delay some new customers who may elect to wait until all
components of the GR2R model are fully operational before finalizing
their buying decisions. Thus, a segment of Serenic's new customer
pipeline may temporarily continue to be "on hold" pending further
progress in this regard. Management anticipates that future
individual sales will be lower in price relative to historical
averages, but also anticipates that revenue and profits overall will
increase once the efficiencies of the GR2R strategy take hold and the
volume of transaction increases. 


 
Quarter Highlights                                                          
                                                                            
Financial results are summarized as follows:                                
----------------------------------------------------------------------------
                                                       Three months ended:  
                                     ---------------------------------------
                                        Nov. 30,      Nov. 30,    Increase  
                                            2012          2011   (decrease) 
                                     ---------------------------------------
                                               $             $            % 
----------------------------------------------------------------------------
Revenue                                2,410,529     2,619,548        (8.0%)
----------------------------------------------------------------------------
Net loss                                 191,186       103,595        84.6% 
----------------------------------------------------------------------------
Basic and diluted loss per share            0.01          0.01           -  
----------------------------------------------------------------------------
EBITDA (1)                              (100,092)        4,603        NM(2) 
----------------------------------------------------------------------------
EBITDA as a % of sales                      (4.2%)         0.2%       NM(2) 
----------------------------------------------------------------------------
Weighted average common shares                                              
 outstanding - basic and fully                                              
 diluted                              14,817,260    15,171,973              
----------------------------------------------------------------------------
 
----------------------------------------------------------------------------
                                                        Nine months ended:  
                                     ---------------------------------------
                                        Nov. 30,      Nov. 30,    Increase  
                                            2012          2011   (decrease) 
                                     ---------------------------------------
                                               $             $            % 
----------------------------------------------------------------------------
Revenue                                8,166,610     8,072,748         1.2% 
----------------------------------------------------------------------------
Net loss                                 536,526       223,955       139.6% 
----------------------------------------------------------------------------
Basic and diluted loss per share            0.04          0.01       300.0% 
----------------------------------------------------------------------------
EBITDA (1)                              (230,998)      113,608      (303.3%)
----------------------------------------------------------------------------
EBITDA as a % of sales                      (2.8%)         1.4%     (300.0%)
----------------------------------------------------------------------------
Weighted average common shares                                              
 outstanding - basic and fully                                              
 diluted                              14,804,713    15,183,751              
----------------------------------------------------------------------------
(1) EBITDA represents earnings before interest, taxes, depreciation,        
    amortization, and stock based compensation. Please review the Serenic   
    Management Discussion and Analysis for the three and nine months ended  
    November 30, 2012 for more information                                  
(2) The mathematical expression of the percentage change is not meaningful  

 
The Company has continued to focus on two primary objectives during
the quarter: to maximize organic revenue while implementing the
above-noted significant transition, and to investigate opportunities
to enhance shareholder value. During the quarter, international
Serenic Navigator software license sales improved, while in North
America, Serenic Navigator licenses slowed. HCM license sales
remained essentially on par with the corresponding period last year.
The Company announced to its prospective customers that its new
version of Serenic Navigator will be made available early in calendar
2013, that it has revised pricing and a greatly simplified ordering
process, and has features that are necessary for the Company's
transition to cloud and volume based business models as discussed in
the previous section. Certain prospective clients appear to be
waiting for the new version to be released before making their final
buying decisions, and this was a contributing factor affecting new
license sales and revenue during the quarter. Additionally, the
Company faced increased competition in its market and is therefore
taking steps to refine its sales methodology to improve initial
customer engagement. Client services revenue was also lower in the
quarter, as a result of lower demand for services being heavily
dependent upon direct license sales. Maintenance revenues continued
to grow during the quarter, due to the ongoing addition of new
customers and the high renewal rate of existing maintenance
contracts. Additionally, two of the Company's larger customers
elected to retroactively renew maintenance contracts and the
recognition of the lapsed period revenue positively impacted revenue
in the quarter. Recurring maintenance revenue has grown significantly
during the past few years and now comprises approximately 53% of our
annual revenues. 
Expenses remained in line with expectations and budgets. The reduced
revenue resulted in lower than planned gross profit which caused the
Company to record a net loss and negative EBITDA in the quarter. Due
to the operating loss in the quarter, the Company's cash balances
reduced to $3.4 million at quarter-end from $3.8 million at the
beginning of the quarter. 
The Company's marketing group remained very active in generating new
leads. Members of the marketing team, along with members of our
senior management team participated in several seminars hosted by
Microsoft, for the purpose of transitioning to the GR2R business
model. Development of Serenic's new cloud based donor management
product based on Microsoft CRM continued during the quarter, and is
anticipated to be released to market in the first half of calendar
2013. This new offering will be deployed as a cloud-based solution,
and will be marketed both as an integrated module of Serenic
Navigator and as a stand-alone application for organizations who may
not yet be ready to upgrade their existing financial systems.
Management believes that this product will compete strongly with
prevalent high-volume products offered by certain competitors, and
that sales may contribute significantly to our organic growth
revenues. 
The Company continued to investigate certain corporate development
initiatives during the quarter, in accordance with the Company's
objective to enhance and realize value for shareholders. The Company
also continued to purchase shares pursuant to its Normal Course
Issuer Bid ("NCIB") program, wherein 551,000 shares have been
acquired for cancellation during the current fiscal year through
January 3, 2013. 
Outlook 
Management believes that Serenic's pursuit of cloud and volume
strategies, combined with its traditional sale of on-premise software
licenses, represents the best opportunity to deliver maximum value
for Serenic stakeholders over the longer term. Despite the short term
challenges that we expect will continue during the next several
quarters, Management believes that the longer term outlook for
Serenic stakeholders remains very positive. Our strategy for the
balance of Fiscal 2013 is to remain focused on maximizing revenues by
operating our historical business model, while concurrently
supplementing it with the GR2R strategy and continuing to manage
resources and risks in a prudent manner. 
From a corporate development perspective, we intend to continue to
pursue potential scenarios to maximize value for our shareholders
beyond what organic growth would produce. The primary objective
remains to be that of optimizing shareholder value, which might
entail a capital structure change, new strategic ventures, and/or
merger and acquisition scenarios. Management strongly believes that
the current market capitalization of the Company as reflected in its
current share price does not adequately reflect Serenic's fair value,
and we intend to take appropriate action that would best serve the
interests of shareholders as soon as a suitable arrangement can be
identified and acted upon. 
We believe the Company remains adequately financed to operate as
anticipated. We continue to be excited about our future opportunities
and remain confident in our belief that our intended course of action
will ultimately result in the achievement of greater value for all of
our stakeholders. 
Please refer to the full financial Q3, 2013 report filed on sedar.com
for more information. 
About Serenic Corporation 
Serenic Corporation publishes mission-critical software products for
not-for-profits (NFP), educational institutions and governments. The
Company's products are based on leading application and technology
platforms from Microsoft, including Dynamics NAV, SQL Server, and
.NET, and are distributed in North America and internationally
through value-added resellers and a direct sales organization.
Serenic Corporation is the exclusive developer of human resource
management and payroll products for Microsoft Dynamics NAV ERP users
in North America. Serenic has offices in Edmonton, Alberta and Denver
(Lakewood), Colorado and staff located throughout the USA, and in
Europe and Africa. 
ON BEHALF OF THE BOARD OF DIRECTORS 
Dwayne Kushniruk, Chairman 
SERENIC CORPORATION 
Forward Looking Statements 
Certain statements contained in this press release, including
statements which may contain words such as "could", "should",
"expect", "anticipate", "believe", "will", and similar expressions
and statements relating to matters that are not historical facts, are
forward looking statements. Such forward looking statements involve
known and unknown risks and uncertainties which may cause the actual
results, performances or achievements of Serenic Corporation to be
materially different from any future results, performances or
achievements expressed or implied by such forward looking statements.
Such factors include, but are not limited to, software industry
risks, general business risks, risks associated with aligning to
Microsoft's new marketing strategy announced in 2012, foreign
currency risks, economic dependence risks, and credit risks. 
The TSX Venture Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release. 
Contacts:
Cantech Communications
Nick Waddell
Investor Relations
Toll free: (877) 737-3642 x144
ir@serenic.com 
Serenic Corporation
Dwayne Kushniruk
Chairman
dkushniruk@serenic.com 
Serenic Corporation
Paul Johnston
CFO
1-877-426-5385 x 509
pjohnston@serenic.com
 
 
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