TORONTO--(Marketwire - March 07, 2012) - Redknee Solutions, Inc. (TSX: RKN), a leading provider of business-critical billing, charging and customer management software and solutions, reported results for the fiscal first quarter ended December 31, 2011.
Fiscal Q1 2012 Highlights & Recent Events</b>
- Functional currency changed to U.S. dollar (USD)
- Revenue increased to $14.0 million (Q1 2011: $13.6 million)
- Gross margin increased to 67% (Q1 2011: 63%)
- EBITDA increased to $2.0 million (Q1 2011: $0.6 million)
- Recurring revenue, on trailing 12-month basis, increased to 44% of revenue (Q1 2011: 42%)
- Record order backlog of $60.6 million (Q4 2011: $46.4 million)
- Cash balance increased to $16.5 million (Q4 2011: $15.7 million)
- Redknee and Tech Mahindra launched Telco-in-a-Box solution
- Redknee reported breakthrough converged billing results for 250 million subscribers
- Redknee expanded cloud offering with Windows Azure
</ul>
Fiscal Q1 2012 Results</b>
Revenue increased to $14.0 million from $13.6 million in the same year-ago quarter. The improvement was primarily due to the increase in both software and services revenue, and support revenue. Recurring revenue grew to 51% of revenues in the first quarter of fiscal 2012 from 44% in the same quarter a year ago. Recurring revenue was enhanced by sales and renewals of customer support services, software subscriptions and term licenses.
Gross profit increased to 67% from 63% in the same year-ago quarter. The increase in gross margin related to the change in mix of the revenue recorded, with a higher percentage of sales of software and services and a lower percentage of sales of third-party components recorded in the period, which generally carry the lowest gross margins.
Net income totaled $950,000 or $0.01 per basic and diluted share compared to a net loss of $670,000 or $(0.01) per basic and diluted share in the same year-ago period.
EBITDA was $2.0 million compared to an EBITDA of $0.6 million in the same quarter one year-ago.
The company recognized a foreign currency exchange loss of $560,000 compared to a foreign currency exchange loss of $525,000 in the same period a year ago.
At December 31, 2011, cash and investments totaled $16.5 million compared to $15.7 million in the same period a year ago. Cash from operating activities was $1.5 million in the first quarter of fiscal 2012 compared to a use of cash of $0.1 million for the same period last year.
As a result of the increased influence of the U.S. dollar on the economic environments in which the company operates, the functional and reporting currency changed to the U.S. dollar effective October 1, 2011.
Please see section regarding forward-looking statements which form an integral part of this release. These results, along with the unaudited consolidated financial statements and the company's MD&A, are available on the company's website at www.redknee.com and on SEDAR at www.sedar.com.
Management Commentary
</b>"We have continued to progress on our strategic growth plan during the quarter, which helped drive a profitable quarter with strong recurring revenue and record order backlog for the period," said Redknee's CEO, Lucas Skoczkowski. "Our global partnerships have positioned us for Tier-1 engagements through our announced benchmark that demonstrates our solution sales to 250 million subscribers and the Telco-In-a-Box offering with Tech Mahindra. We expect these and other important partnerships to further accelerate our growth and the expansion of our market share.
"Our strategy is to focus on real-time converged billing and customer care with on-premise and cloud delivery capability, the emphasis being on a multi-year term-based licensing model. We remain focused on securing long-term recurring revenue and earnings potential, and ultimately building shareholder value."
Conference Call
</b>The company will host a conference call tomorrow (Thursday, March 8, 2012) to discuss these results. Redknee's CEO Lucas Skoczkowski and CFO David Charron will host the presentation starting at 8:30 a.m. Eastern time. A question and answer session will follow management's presentation.
Dial-in number: 1-877-941-1427
International: 1-480-629-9664
Conference ID#: 4511631
The presentation will be webcast live and available for replay via the Investors section of the company's website at www.redknee.com.
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.
A replay of the call will be available after 11:30 a.m. Eastern time on the same day until April 8, 2012.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay PIN#: 4511631
Forward-Looking Statements
</b>Certain statements in this document may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this document, such statements use such words as "may," "will," "expect," "continue," "believe," "plan," "intend," "would," "could," "should," "anticipate" and other similar terminology. These statements reflect current assumptions and expectations regarding future events and operating performance and speak only as of the date of this document. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under the "Risk Factors" section of the Company's the most recently filed AIF which is available on SEDAR at www.sedar.com</b> and on the Company's web-site at www.redknee.com</b>.
Although the forward-looking statements contained in this document are based upon what we believe are reasonable assumptions, we cannot assure investors that our actual results will be consistent with these forward-looking statements. We assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances, except as required by securities law.
About Redknee Solutions, Inc.
</b>Redknee is a leading global provider of innovative communication software products, solutions and services. Redknee's award-winning solutions enable operators to monetize the value of each subscriber transaction while personalizing the subscriber experience to meet mainstream, niche and individual market segment requirements. Redknee's revenue generating solutions provide advanced converged billing, rating, charging and policy for voice, messaging and new generation data services to over 90 network operators in over 50 countries. References to Redknee refer to the combined operations of the parent Redknee Solutions, Inc., and all wholly owned subsidiaries.
Redknee(R), Redknee Solutions, and the Redknee logo are trademarks or registered trademarks of Redknee Solutions Inc. All other company, product names and any registered and unregistered trademarks mentioned (if any) are used for identification purposes only and remain the exclusive property of their respective owners. For more information, visit www.redknee.com.
REDKNEE SOLUTIONS INC.
Interim Condensed Consolidated Statement of Financial Position
(Expressed in U.S. dollars)
(Unaudited)
December 31, September 30, October 1,
2011 2011 2010
------------ ------------- ------------
Assets
Current assets:
Cash and cash equivalents $ 15,800,366 $ 14,879,940 $ 18,038,121
Short-term investments - - 21,356
Trade accounts and other
receivables 14,414,813 12,987,865 14,400,281
Unbilled revenue 8,741,744 9,253,901 6,927,557
Prepaid expenses 1,303,318 1,398,145 1,320,649
Inventory 337,335 450,788 247,108
------------ ------------- ------------
40,597,576 38,970,639 40,955,072
Restricted cash 710,976 784,820 781,611
Property and equipment 435,329 378,013 611,757
Deferred income taxes 1,422,326 1,463,249 765,456
Long-term unbilled revenue 1,495,482 1,226,496 -
Other assets 671,718 464,416 499,257
Intangible assets 3,827,633 3,976,609 5,642,037
Goodwill 7,638,590 7,638,590 7,381,368
------------ ------------- ------------
$ 56,799,630 $ 54,902,832 $ 56,636,558
============ ============= ============
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $ 1,716,477 $ 1,731,396 $ 2,526,188
Accrued liabilities 4,880,470 6,001,706 3,564,561
Income taxes payable 3,733,221 3,199,295 2,628,543
Current portion of contingent
consideration 839,937 870,789 -
Current portion of deferred
revenue 6,513,793 5,848,086 5,805,971
Current portion of loans and
borrowings 2,970,327 3,232,857 2,980,289
------------ ------------- ------------
20,654,225 20,884,129 17,505,552
Long-term deferred revenue 973,795 - -
Other long-term liabilities 521,240 524,520 450,983
Contingent consideration - - 1,160,816
Long-term portion of loans and
borrowings 4,787,901 4,804,700 6,859,743
Deferred income taxes 802,636 815,829 1,217,842
------------ ------------- ------------
27,739,797 27,029,178 27,194,936
Shareholders' equity:
Share capital, net of employee
share purchase loans 46,469,720 46,312,920 45,880,359
Contributed surplus 4,433,527 4,353,584 4,336,925
Deficit (21,856,883) (22,806,319) (20,775,662)
Accumulated other comprehensive
income 13,469 13,469 -
------------ ------------- ------------
29,059,833 27,873,654 29,441,622
------------ ------------- ------------
$ 56,799,630 $ 54,902,832 $ 56,636,558
============ ============= ============
REDKNEE SOLUTIONS INC.
Interim Condensed Consolidated Statement of Comprehensive Income (Loss)
(Expressed in U.S. dollars)
(Unaudited)
Three months ended
December 31,
2011 2010
------------- -------------
Revenue:
Software, services and other $ 8,189,711 $ 8,238,577
Support 5,774,493 5,360,982
------------- -------------
13,964,204 13,599,559
Cost of revenue 4,585,236 4,999,051
------------- -------------
Gross profit 9,378,968 8,600,508
Operating expenses:
Sales and marketing 3,393,658 3,411,922
General and administrative 1,883,915 2,369,657
Research and development 2,418,650 2,966,114
------------- -------------
7,696,223 8,747,693
------------- -------------
Income (loss) from operations 1,682,745 (147,185)
Foreign exchange loss (561,415) (525,162)
Other income - 169,121
Finance income 18,072 36,895
Finance costs (117,139) (138,603)
------------- -------------
Income (loss) before income taxes 1,022,263 (604,934)
Income taxes (recovery):
Current 119,287 168,222
Deferred (46,460) (105,657)
------------- -------------
72,827 62,565
------------- -------------
Net income (loss) 949,436 (667,499)
Other comprehensive income:
Foreign currency translation adjustment - 90,014
------------- -------------
Comprehensive income (loss) $ 949,436 $ (577,485)
============= =============
Net income (loss) per common share:
Basic 0.01 (0.01)
Diluted 0.01 (0.01)
------------- -------------
Weighted average number of common shares:
Basic 64,221,515 63,941,381
Diluted 65,639,559 63,941,381
============= =============
REDKNEE SOLUTIONS INC.
Interim Condensed Consolidated Statement of Cash Flows
(Expressed in U.S. dollars)
(Unaudited)
Three months ended
December 31,
2011 2010
------------- -------------
Cash provided by (used in):
Operating activities:
Net income (loss) $ 949,436 $ (667,499)
Adjustments for:
Depreciation of property and equipment 43,138 109,631
Amortization of intangible assets 191,333 350,659
Finance income (18,072) (36,895)
Finance costs 117,139 138,603
Income tax expense 72,827 62,565
Unrealized foreign exchange loss 42,923 392,016
Share-based compensation 129,325 100,285
Deferred income taxes 27,730 (292,346)
Changes in non-cash operating working
capital (36,767) (277,773)
------------- -------------
1,519,012 (120,754)
Interest paid (22,096) (10,770)
Interest received 8,398 36,895
Income taxes paid (6,102) (132,134)
------------- -------------
1,499,212 (226,763)
Financing activities:
Proceeds from exercise of stock options 94,659 121,135
Repayment of loans and borrowings (354,253) (439,540)
------------- -------------
(259,594) (318,405)
Investing activities:
Proceeds from short-term investments - 21,356
Purchase of property and equipment (100,454) (14,478)
Purchase of software (42,357) -
Decrease (increase) in other assets (207,302) 38,524
Decrease (increase) in restricted cash 73,844 (1,033,723)
Acquisition of Nimbus Systems - (180,716)
------------- -------------
(276,269) (1,169,037)
Effect of foreign exchange rate changes on
cash and cash equivalents (42,923) (319,509)
------------- -------------
Increase (decrease) in cash and cash
equivalents 920,426 (2,033,714)
Cash and cash equivalents, beginning of period 14,879,940 18,038,121
------------- -------------
Cash and cash equivalents, end of period $ 15,800,366 $ 16,004,407
============= =============
Redknee Solutions Inc.
Reconciliation of Net loss (income) to EBITDA
For the three months and years ended December 31, 2011 and 2010
(Expressed in U.S. dollars)
(Unaudited)
Three months ended
December 31
----------------------------
2011 2010
$ $
AS REPORTED
Net income (loss) income for the period 949,436 (667,499)
Addback / (subtract):
Amortization of property and equipment and
intangible assets 234,471 460,290
Interest Income (18,072) (36,895)
Interest Expense 117,139 138,603
Income Taxes 72,827 62,565
Stock based compensation 129,325 100,285
Foreign exchange 561,415 525,162
------------- -------------
EBITDA (1) 2,046,541 582,511
------------- -------------
(1) EBITDA represents net (loss) income from continuing operations
excluding amounts for amortization, interest, income taxes,
foreign exchange (gain) loss and stock based compensation and is a
common measure of operating performance in the industry.
EBITDA is not a measure of financial performance under IFRS, and should
not be considered in isolation or as a substitute
for consolidated net (loss) income as a measure of performance
