Absolute Software Reports First Quarter F2014 Results

            Absolute Software Reports First Quarter F2014 Results

PR Newswire

VANCOUVER, Nov. 6, 2013

Sales Contracts rise 15% with growth in all market verticals

VANCOUVER, Nov. 6, 2013 /PRNewswire/ - Absolute® Software Corporation
("Absolute" or the "Company") (TSX: ABT), the industry standard for persistent
endpoint security and management solutions for computers, laptops, tablets and
smartphones, today announced its financial results for the three months ended
September 30, 2013. All financial statements are prepared in accordance with
International Financial Reporting Standards ("IFRS") and reported in U.S.
dollars.

Key Financial Metrics                   Q1-F2014 Q1-F2013 % change
Sales Contracts^(1)                       $23.8      $20.6M      +15%
Cash from operating activities            $5.4M      $5.3M       +1%
Operating cash per share^(2) 
(basic)                                   $0.13      $0.12       +8%
(diluted)                                 $0.12      $0.12        -
Revenue                                   $21.7      $19.8M      +10%
Adjusted EBITDA^(3)                       $3.3M      $1.7M       +89%
Net income                                $1.1M      $0.5M      +140%
Net income per share
(basic)                                   $0.03      $0.01      +200%
(diluted)                                 $0.03      $0.01      +200%
Dividends paid                            $2.0M        -          nm
 Per share (CAD)                        $0.05        -          nm
Cash, cash equivalents and investments   $68.5M     $72.5M      (6%)
Deferred revenue                         $132.7M    $126.0M      +5%

(1)(2)(3) - Please refer to "Non-IFRS Measures and Definitions"

Q1 F2014 Highlights:

  *Achieved Sales Contracts of $23.8 million, a year-over-year increase of
    15% compared to $20.6 million in Q1-F2103
  *Sales Contracts grew in each of the education, corporate, healthcare and
    government verticals
  *Commercial Sales Contracts increased by 16% to $21.7 million compared to
    $18.6 million in Q1-F2013
  *Sales of Device Management and Data Security products were up 15% compared
    to Q1-F2013, while sales of Theft Management products increased 17% over
    the same period
  *International Sales Contracts increased by 32%, which included a
    significant Computrace Data Protection sale in the Asia Pacific region
  *Generated $5.4 million in Cash from Operating Activities compared to $5.3
    million in Q1-F2013
  *Paid a quarterly dividend of $2.0 million, or CAD$0.05 per common share.
    Subsequent to quarter-end, announced a 20% dividend increase to CAD$0.06
    per common share
  *Announced first to market theft recovery solution for Android smartphones,
    available on Samsung Galaxy S4 mobile devices
  *Released Absolute Service version 8.0, an ITIL 2011 Certified IT Service
    Management solution

"Strong momentum with our core Computrace products has continued into fiscal
2014, helping to deliver 15% overall growth in sales contracts for Q1," said
John Livingston, CEO of Absolute. "Our vision of 'Many Devices One Solution'
is resonating well with customers across all of our target markets. We believe
that managing governance, risk and compliance will continue to become
increasingly important for all types of organizations as they work to manage
the potential liabilities associated with the growing adoption of mobile
computing."

"Our focus in fiscal 2014 remains on execution," added Mr. Livingston. "In
particular we are focusing on sales and product development. On the sales
side, we have modified our sales incentive programs and we are working to
enhance our opportunity with value-added resellers. On the product side, we
will focus our efforts on adding new features to our existing products, and
delivering an integrated web console for our Computrace and Absolute Manage
products. We believe the impact of these initiatives will help to drive growth
through the second half of the year and into fiscal 2015."

F2013 Q1 Financial Review
Q1-F2014 Sales Contracts increased 15% to $23.8 million compared to $20.6
million in Q1-F2013. This stronger sales performance was driven by strength in
all industry verticals and associated growth in both the device management and
data security and the theft management product lines.

Commercial Sales Contracts for Absolute's flagship theft management products
were $15.0 million for Q1-F2014. This represents a 17% increase from $12.8
million in Q1-F2013.

Q1-F2014 commercial Sales Contracts from Absolute's device management and data
security products were $6.7 million. This was up 15% compared to $5.8 million
in Q1-F2013.

International Sales Contracts increased 32% over Q1-F2013 from $2.7 million to
$3.5 million. The growth in our international business included the impact of
a large Computrace sale in the Asia Pacific region.

For Q1-F2014, Sales Contracts for consumer solutions were $2.1 million, or 9%
of Sales Contracts, compared to $2.0 million, or 10% of Sales Contracts in
Q1-F2013.

Revenue for Q1-F2014 was $21.7M million, a 10% increase from $19.8 million in
Q1-F2013. Indicative of the Company's Software-as-a-Service Model ("SaaS")
business model, revenue primarily represents the amortization of deferred
revenue balances from recurring term license sales.

Adjusted Operating Expenses for Q1-F2014 were $18.4 million, up 2% from $18.0
million in Q1-F2013. The year-over-year increase was primarily attributable to
additional sales and marketing headcount and increased use of contract staff
within our research and development department.

Absolute generated Adjusted EBITDA of $3.3 million in Q1-F2014, up 89% from
$1.7 million in Q1-F2013. The increase reflects a greater increase in revenue
relative to expenses.

Absolute recorded net income of $1.1 million, or $0.03 per share, in Q1-F2014,
compared to net income of $0.5 million or $0.01 per share in Q1-F2013.

Cash from operating activities was $5.4 million for Q1-F2014, compared to $5.3
million in Q1-F2013.

In F2013, Absolute initiated a dividend policy of CAD$0.05 per common share
paid quarterly. During Q1-F2014, Absolute paid total dividends of $2.0
million, or CAD$0.05 per common share, compared to nil in the same period in
F2013. Subsequent to quarter-end, the Board of Directors announced a 20%
increase in the dividend to CAD$0.06 per common share paid quarterly.

At September 30, 2013, Absolute had cash, cash equivalents and investments of
$68.5 million compared to $72.5 million at September 30, 2012.

Fiscal 2014 Outlook
We remain confident in the market opportunity for our solutions and intend to
make continued investments, particularly in the key areas of sales and
marketing and research and development, in order to fully capitalize on this
opportunity. For F2014, we expect Sales Contracts to increase over F2013
levels and for cash generated from operating activities to grow modestly from
F2013 levels.

Quarterly Filings
Management's discussion and analysis ("MD&A"), consolidated financial
statements and notes thereto for Q1-F2014 can be obtained today from
Absolute's corporate website atwww.absolute.com. The documents will also be
available atwww.sedar.com.

Notice of Conference Call
Absolute Software will hold a conference call to discuss the Company's
Q1-F2014 results on Wednesday, November 6, 2013 at 2:00 p.m. PT (5:00 p.m.
ET). All interested parties can join the call by dialing
647-427-7450or1-888-231-8191. Please dial-in 15 minutes prior to the call to
secure a line.

To access the archived conference call, please dial
416-849-0833or1-855-859-2056enter the reservation code90965516.The
conference call will be archived for replay until Wednesday, November 13, 2013
at midnight.

A live audio webcast of the conference call will be available at
www.absolute.com andhttp://bit.ly/161d1gE. 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 athttp://bit.ly/161d1gE.

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 Q4 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 11 of the Notes to the 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,
amortization of acquired intangible assets, and amortization of property and
equipment. For a description of the reasons these items are adjusted, please
refer to the Fiscal 2013 MD&A.

4) Adjusted EBITDA
Management believes that analyzing operating results exclusive of significant
non-cash items provides a useful measure of the Company's performance. The
term Adjusted EBITDA refers to earnings before deducting interest and
investment gains (losses), income taxes, amortization of acquired intangible
asset and property and equipment, foreign exchange gain or loss, and
share-based compensation. The non-cash items excluded in the determination of
Adjusted EBITDA include share-based compensation, amortization of acquired
intangibles, and amortization of property and equipment.

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 industry standard in
persistent endpoint security and management for computers, laptops, tablets
and smartphones. The Company, a leader in device security and management
tracking for 20 years, has over 30,000 commercial customers worldwide.
Absolute's solutions - Computrace®, Absolute Manage®, Absolute Service,
Absolute Secure Drive, and Computrace LoJack for Laptops - provide
organizations with actionable intelligence to prove compliance, securely
manage BYOD, and deliver comprehensive visibility and control over all of
their devices and data. Absolute is positioned on two Gartner, Inc. Magic
Quadrants - the Magic Quadrant for Client Management Tools and the Magic
Quadrant for Mobile Device Management Software. Absolute is one of only four
vendors to be recognized on both Magic Quadrants based on providing customers
with the ability to secure and manage many different types of devices using a
single solution. Absolute persistence technology is embedded in the firmware
of computers, netbooks, tablets and smartphones 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.

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. Furthermore, the forward-looking statements contained in this
press release are made as at the date hereof and the Company does not
undertake any obligation to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information, future
events or otherwise, except as may be required by applicable securities laws.

©2013 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, No. 8,062,380, No.
8,234,359, No. 8,241,369, No. 8,307,055, No. 8,332,953, No. 8,346,234, No.
8,362,901, No. 8,418,226, No. 8,419,806, No. 8,441,348, No. 8,510,825, No.
8,556,991 and No. 8,566,961. Canadian patents No. 2,211,735, No. 2,284,806,
No. 2,205,370 and No. 2,771,208. U.K. patents No. EP0793823, No. GB2298302,
and No. GB2338101. German patent No. 69512534. Australian patent No. 699045.
Japanese patent No. 4067035. Mexican patent No. 297,406. Russian patent No.
2,460,220. 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, 2013   June 30, 2013
                                                               
ASSETS                                                          
CURRENT                                                         
  Cash and cash equivalents        $ 36,774,884   $ 31,114,998
  Short-term investments               12,711,286      13,165,606
  Trade and other receivables          16,031,205      18,196,955
  Prepaid expenses and other            1,897,422       1,712,988
                                       67,414,797      64,190,547
INVESTMENTS                             19,048,517      18,639,550
PROPERTY AND EQUIPMENT                   1,990,665       1,294,249
DEFERRED INCOME TAX ASSETS              20,273,647      20,340,047
INTANGIBLE ASSETS AND GOODWILL          21,114,366      21,933,959
                                    $ 129,841,992  $ 126,398,352
                                                               
LIABILITIES                                                     
CURRENT                                                         
  Trade and other payables        $ 8,068,380 $ 8,943,682
  Accrued warranty                        340,000         420,000
  Deferred revenue - current           69,663,631      68,093,937
                                       78,072,011      77,457,619
DEFERRED REVENUE                        63,045,649      62,542,619
                                      141,117,660     140,000,238
CONTINGENCIES                                                   
SHAREHOLDERS' DEFICIENCY                                        
  Share capital                        45,454,400      41,690,749
  Equity reserve                       36,011,067      36,542,921
  Deficit                            (92,741,135)    (91,835,556)
                                     (11,275,668)    (13,601,886)
                                    $ 129,841,992   $ 126,398,352



ABSOLUTE SOFTWARE CORPORATION
Consolidated Statements of Operations and Comprehensive Income
Three months ended September 30, 2013 and 2012
(Expressed in United States dollars) (Unaudited)
                                     
                                            2013            2012
                                                                    
REVENUE                                    $ 21,688,096    $ 19,766,920
COST OF REVENUE                               4,894,016       4,870,689
GROSS MARGIN                                 16,794,080      14,896,231
                                                                    
OPERATING EXPENSES                                                   
      Sales and marketing                    9,852,424       9,501,541
      Research and development               3,127,388       2,756,569
      General and administration             2,053,420       2,638,116
      Share-based compensation                 544,216         576,285
                                            15,577,448      15,472,511
OPERATING INCOME (LOSS)                       1,216,632       (576,280)
                                                                    
OTHER INCOME                                                         
      Interest income, net                      53,589          84,906
      Foreign exchange gain                    224,966         497,318
      Loss on investments                            -        (29,627)
                                               278,555         552,597
                                                                    
NET INCOME (LOSS) BEFORE INCOME TAXES         1,495,187        (23,683)
                                                                    
INCOME TAX (EXPENSE) RECOVERY                 (363,200)         494,451
                                                                    
NET INCOME AND TOTAL COMPREHENSIVE    
INCOME                                      $ 1,131,987    $ 470,768
                                                                    
BASIC AND DILUTED INCOME PER SHARE     $ 0.03 $  0.01
                                                                    
WEIGHTED AVERAGE NUMBER OF COMMON     
SHARES OUTSTANDING, BASIC                     42,277,767      43,643,501
                                     

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    43,757,803  $  38,625,463  $  35,751,185  $ (79,141,256)  $  (4,764,608) 
30, 2012
Shares issued         6,825        26,363      (10,288)              -         16,075 
on options
exercised
Shares issued                                                                         
under
Employee
Share
Purchase Plan          77,610         321,493               -                -          321,493
Shares                                                                                
repurchased
and cancelled
under the
Normal Course
Issuer Bid          (608,100)       (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               -             -       576,285              -        576,285 
compensation
Net loss and              -             -             -        470,768        470,768 
total
comprehensive
loss
BALANCE,         43,234,138  $  38,035,661  $             $ (81,553,057)  $  (7,200,214) 
SEPTEMBER 30,                                      36,317,182
2012
Shares issued       789,811     4,790,514   (1,493,027)              -      3,297,487 
on options
exercised
Shares issued                                                                         
under
Employee
Share
Purchase Plan          66,436         290,628               -                -          290,628
Shares                                                                                
repurchased
and cancelled
under the
Normal Course
Issuer Bid        (2,204,800)     (2,253,488)               -      (7,431,540)      (9,685,028)
Shares issued       166,668       827,434             -              -        827,434 
on
acquisition
Share-based               -             -     1,718,766              -      1,718,766 
compensation
Dividends                 -             -             -    (4,118,643)    (4,118,643) 
paid
Net income                                                                            
and total
comprehensive
income                      -               -               -        1,267,684        1,267,684
BALANCE, JUNE    42,052,253  $  41,690,749  $  36,542,921  $ (91,835,556)  $ (13,601,886) 
30, 2013
Shares issued                                                                         
on employee
options
exercised             355,300       2,015,896       (624,138)                -        1,391,758
Shares issued                                                                         
on
non-standard
options
exercised             191,866       1,395,828       (451,932)                -          943,896
Shares issued                                                                         
under
Employee
Share
Purchase Plan          85,387         351,927               -                -          351,927
Share-based               -             -       544,216              -        544,216 
compensation
Dividends                 -             -             -    (2,037,566)    (2,037,566) 
paid
Net income                                                                            
and total
comprehensive
income                      -               -               -        1,131,987        1,131,987
BALANCE,         42,684,806  $  45,454,400  $             $ (92,741,135)  $ (11,275,668)
SEPTEMBER 30,                                      36,011,067
2013
                                                                    
                                                                    

ABSOLUTE SOFTWARE CORPORATION
Consolidated Statements of Cash Flows
Three months ended September 30, 2013 and 2012
(Expressed in United States dollars) (Unaudited)
                                               
                                                     2013          2012
OPERATING ACTIVITIES                                                       
                                                                          
Net income                                       $ 1,131,987  $ 470,768
Items not involving cash                                                   
 Amortization of property and equipment                323,000       330,919
 Amortization of acquired intangible assets          1,211,436     1,409,845
 Amortization of intangible assets - contract  
  costs and
  brand                                                1,476,264     1,420,175
 Share-based compensation                              544,216       576,285
 Deferred income taxes                                  66,400     (894,451)
 Loss on investments                                         -        29,627
 Unrealized foreign exchange (gain) loss                     -     (277,892)
 Non-cash interest and amortization            
  of investment premium                                   83,721       202,101
Change in non-cash working capital                                         
 Trade and other receivables                         2,162,750     2,905,954
 Prepaid expenses and other                          (184,434)        52,268
 Intangible assets - contract costs and brand      (1,723,232)   (1,390,435)
  additions
 Trade and other payables                          (1,715,562)     (330,731)
 Accrued warranty                                     (80,000)      (10,000)
 Deferred revenue                                    2,072,724       832,264
                                                                          
CASH FROM OPERATING ACTIVITIES                        5,369,270     5,326,697
                                                                          
INVESTING ACTIVITIES                                                       
 Purchase of property and equipment                  (206,160)     (310,605)
 Purchase of intangible assets                       (144,875)      (25,000)
 Proceeds from maturities of short-term              3,693,925     8,039,727
  investments
 Purchases of short-term investments                 (409,951)             -
 Purchases of investments                          (3,322,342)             -
                                                                          
CASH (USED IN) FROM INVESTING ACTIVITIES              (389,403)     7,704,122
                                                                          
FINANCING ACTIVITIES                                                       
 Dividends paid                                    (2,037,566)             -
 Issuance of common shares                           2,687,581       337,568
 Repurchase of common shares for cancellation                -   (2,803,140)
                                                                          
CASH FROM (USED IN) FINANCING ACTIVITIES                650,015   (2,465,572)
                                                                          
FOREIGN EXCHANGE EFFECT ON CASH                          30,004        30,706
                                                                          
INCREASE IN CASH AND CASH EQUIVALENTS                 5,659,886    10,595,953
                                                                          
CASH AND CASH EQUIVALENTS, BEGINNING            
OF PERIOD                                             31,114,998    45,412,147
                                                                          
CASH AND CASH EQUIVALENTS, END OF PERIOD           $ 36,774,884 $ 56,008,100

                                      

SOURCE Absolute Software Corporation

Contact:

Public Relations:
Allison Keller, HORN Group
allison.Keller@horngroup.com or 415.905.4006
or
Marina Guy, Absolute Software
mguy@absolute.com or 604.730.9851 x107

Investor Relations:
Dave Mason, CFA, TMX|Equicom
dmason@equicomgroup.com or 416.815.0700 x237
 
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