Redknee Reports Strong Profitability In Fiscal 2009
By Redknee Solutions Inc., PRNETuesday, November 24, 2009
TORONTO, November 26 - Redknee (TSX:RKN), a leading provider of business-critical software and
services for communications service providers, including end-to-end converged
billing, real-time charging, rating and personalization, today announced its
results for the fourth quarter and fiscal year ended September 30, 2009.
Highlights
- Revenue grew to $53.3 million (2008: $50.7 million)
- Gross margin increases to 78% (2008: 70%)
- EBITDA profit of $6.5M (2008: loss of $4.2M)
- Operating income of $4.2M (2008: operating loss of $3.9M)
- Basic earnings per share of $0.06 (2008: loss per share of $0.08)
- Cash and investments at $25.8M (September 30, 2008: $15.3M)
- Recurring revenues increased to 41% of total revenue (2008: 31% of
total revenue)
- Six new customers across the Americas, APAC, and EMEA
- Successful admission to trading on the Toronto Stock Exchange
- Multiple industry awards and recognition for Redknee's technology,
solutions and organizational achievements
Please see section regarding Forward-Looking Statements which form an
integral part of this release. These results, along with the audited
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.
Lucas Skoczkowski, CEO for Redknee commented:
"Redknee delivered profitable growth and excellent results in 2009
despite the challenging economic and market conditions. We enter 2010 as a
stronger global organization, with a growing customer base and a solid
financial position. Our strategy has positioned us well to benefit from the
opportunities in both the high growth and Tier-1 markets. The
quarter-to-quarter revenue volatility and foreign exchange headwinds will
continue to present challenges in the near term. We remain focused on our
long-term growth in revenues and earnings, with emphasis on increasing our
recurring revenues, while continuing to take market share in the real-time
monetization space."
OVERVIEW
--------
As we continue to make progress toward our vision of becoming the
leading global communications solutions provider of choice, Redknee
remains focused on the three core elements of its corporate strategy:
1. Continued expansion and evolution of our business-critical solutions
to our global customer base;
2. Market share growth and leadership in our served addressable market;
and
3. An increasing proportion of sustainable recurring revenues.
----------------------------------
(1) Earnings Before Interest Expense, Income Taxes, Depreciation, and
Amortization (EBITDA) is a non-GAAP measure. While useful in
understanding Company operational results, EBITDA is not
standardized and may not be comparable to similar results reported
by other companies. EBITDA described above is calculated as Income
(loss) from operations, net of foreign exchange gain/loss,
amortization and stock-based compensation.
Sales of Redknee's business-critical solutions have continued to grow in
the fiscal year 2009, with our Turnkey Converged Billing and Next Generation
Rating & Charging solutions contributing more than 90% of revenue.
Sales of Redknee's business-critical solutions continued to grow in
fiscal 2009, with our Turnkey Converged Billing and Next Generation Rating &
Charging solutions contributing to more than 90% of revenue. Through the
disciplined product roadmap process, Redknee has continued its investment in
advancing its competitive advantage and brought to market new releases of its
key flagship offerings - Turnkey Converged Billing, InBill and Next
Generation Rating Charging & Policy.
Redknee's market leading solutions continue to be recognized globally by
telecom providers. Redknee has continued to take market share in its served
addressable market by gaining six new customers across Americas, APAC and
EMEA through combination of deliveries to new operators, modular software
delivery that integrate with existing systems, as well as replacement of
competitors' end-to-end platforms. Furthermore, Redknee's customer care
solution, One Call Resolution, was awarded the International Engineering
Consortium (IEC) Info Vision Award for providing the best network and
services management and operations solution available. Technology Marketing
Corporation (TMC) has named Redknee's One Call Resolution a recipient of the
2009 INTERNET TELEPHONY BSS/OSS Excellence Award presented by INTERNET
TELEPHONY magazine. The One Call Resolution customer service representatives
and tactical network support technicians to resolve complex network problems
quickly and efficiently. The solution increases the 'first call resolution'
of subscriber complaints and reduces call handling times by giving support
representatives an aggregated view of subscriber services. Redknee has found
that this solution is especially important to operators who are deploying
increasing number of smartphone platforms and services in their markets.
Redknee continues to have a strong employee base, a growing number of
customers, and the right product offering to meet our customers' demands.
Market trends further support our approach; mobile data services continue to
grow in Tier 1 markets, and wireless subscriber numbers continue to expand in
the high growth markets of Africa, the Middle East and Asia Pacific.
Financial Review
----------------
For fiscal 2009, Redknee's revenue increased by 5 % to $53.3 million
compared to revenue of $50.7 million in fiscal 2008. The majority of the
Company's revenue is denominated in U.S. dollars and thus revenues may be
impacted by exchange rate fluctuations.
Recurring revenue was enhanced by sales and renewals of customer support
services, software subscriptions and term licenses. In fiscal 2009, recurring
revenues were at 41 % of total revenues compared to 2008.
Gross margin in the period increased to $41.3 million or 78% of revenue
from $35.7 million or 70% of revenue in fiscal 2008.
Redknee recorded an EBITDA profit of $6.5 million for fiscal 2009 as
compared to a loss of $4.2 million for fiscal 2008.
For the fiscal year ended September 30, 2009, the Company experienced a
foreign exchange loss of $ 0.9 million as compared to a foreign currency
exchange gain of $1.6 in fiscal 2008.
Net income in fiscal 2009 was $3.3 million or $ 0.06 per share, as
compared to a loss of $4.4 million or $0.08 per share in fiscal 2008.
Cash and investments as at September 30, 2009 was $25.8 million versus
$15.3 million as at September 30, 2008.
CONFERENCE CALL
The Company will discuss the results on a conference call and webcast at
8:30 a.m. ET time on Thursday, November 26, 2009.
To participate in the conference call please dial the following numbers
five minutes before the start of the call to ensure your participation:
Local dial-in number +1-416-644-3426
Toll-free North America +1-800-731-5319
A webcast will also be available at:
www.newswire.ca/en/webcast/viewEvent.cgi?eventID(equal sign)2880020
A copy of the presentation for the call will be available at:
redknee.com/investors/company_reports
Conference Replay
-----------------
The conference call will be archived for replay by telephone at:
+1-416-640-1917 or Toll-Free at +1-877-289-8525 (Passcode 4181245
followed by the number sign) from 10:30 am on.
FORWARD-LOOKING STATEMENTS
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 and on the Company's web-site at
www.redknee.com.
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:
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 70 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.
Consolidated Balance Sheets
As at September 30, 2009 and 2008
------------------------------------------------------------------------
(expressed in Canadian dollars)
2009 2008
$ $
Assets
Current assets
Cash and cash equivalents 25,663,047 15,242,607
Short-term investments 107,049 56,363
Trade accounts and other receivables 8,160,277 11,192,182
Unbilled revenue 2,670,431 6,060,452
Investment tax credits receivable 600,000 600,000
Prepaid expenses 1,027,056 1,066,584
Goods in transit 242,099 325,716
-------------------------
38,469,959 34,543,904
Restricted cash (notes 3 and 15(b)) 322,722 409,919
Property and equipment (note 4) 623,567 580,053
Intangible assets (note 5) 1,139,444 1,388,761
Future income taxes (note 11) 334,513 -
Other assets (note 12) 464,303 528,294
-------------------------
41,354,508 37,450,931
-------------------------
-------------------------
Liabilities
Current liabilities
Accounts payable 907,694 2,172,268
Accrued liabilities 5,899,843 8,678,539
Income taxes payable 2,529,923 2,100,785
Deferred revenue 6,988,512 5,084,287
Obligations under capital leases (note 7) - 619
-------------------------
16,325,972 18,036,498
-------------------------
Long-term deferred revenue 1,005,164 -
-------------------------
17,331,136 18,036,498
-------------------------
Shareholders' Equity
Share capital, net of employee share
purchase loans (note 8(a)) 40,744,480 39,686,701
-------------------------
Contributed surplus 4,572,737 4,410,677
-------------------------
Deficit (21,144,555) (24,471,986)
Accumulated other comprehensive loss,
net of income taxes (149,290) (210,959)
-------------------------
Total deficit and accumulated other
comprehensive loss (21,293,845) (24,682,945)
-------------------------
24,023,372 19,414,433
-------------------------
41,354,508 37,450,931
-------------------------
-------------------------
Commitments, guarantees and contingencies (note 15)
Redknee Solutions Inc.
Consolidated Statements of Operations
As at September 30, 2009 and 2008
------------------------------------------------------------------------
(expressed in Canadian dollars)
2009 2008
$ $
Revenue
Software, services and other 32,096,609 35,481,999
Support 21,153,523 15,219,345
-------------------------
53,250,132 50,701,344
Cost of revenue 11,968,026 14,972,692
-------------------------
Gross profit 41,282,106 35,728,652
-------------------------
Operating expenses
Sales and marketing 14,608,859 16,566,834
General and administrative 8,983,293 10,768,930
Research and development (note 10) 11,929,925 13,464,000
Amortization of property and equipment
and intangible assets 677,229 409,489
Foreign exchange (gain) loss (note 2) 871,514 (1,584,049)
-------------------------
37,070,820 39,625,204
-------------------------
Income (loss) from operations 4,211,286 (3,896,552)
Interest income 97,747 451,341
Interest expense (19,687) (27,584)
-------------------------
Income (loss) before income taxes 4,289,346 (3,472,795)
Income taxes (note 11)
Current 961,915 938,409
-------------------------
Net income (loss) for the year 3,327,431 (4,411,204)
-------------------------
-------------------------
Net income (loss) per common share (note 8(b))
Basic 0.06 (0.08)
Diluted 0.06 (0.08)
Weighted average number of common shares
(note 8(b))
Basic 57,761,293 56,328,674
Diluted 59,832,102 56,328,674
Redknee Solutions Inc.
Consolidated Statements of Cash Flows
For the years ended September 30, 2009 and 2008
------------------------------------------------------------------------
(expressed in Canadian dollars)
2009 2008
$ $
Cash provided by (used in)
Operating activities
Net income (loss) for the year 3,327,431 (4,411,204)
Items not involving cash
Amortization of property and equipment 427,912 291,489
Amortization of intangible assets 249,317 118,000
Investment tax credits (200,000) -
Unrealized foreign exchange (gain) loss 796,424 (1,371,401)
Stock-based compensation 708,727 889,839
Change in non-cash operating working capital
(note 13) 5,389,401 (1,708,257)
-------------------------
10,699,212 (6,191,534)
-------------------------
Financing activities
Collection of employee share purchase loans 484,526 -
Proceeds from exercise of stock options 26,586 -
Repayment of obligations under capital leases (619) (48,752)
-------------------------
510,493 (48,752)
-------------------------
Investing activities
Sale (purchase) of short-term investments (50,686) 14,706,683
Purchase of property and equipment (471,426) (586,966)
(Increase) decrease in other assets 63,991 (435,581)
Loan to Argent Networks PTY Ltd. - (529,463)
Repayment of loan to Argent Networks PTY Ltd. - 526,754
(Increase) decrease in restricted cash 87,197 (409,919)
Acquisition of Argent Networks PTY Ltd.,
net of cash acquired (note 16(b)) - (997,985)
-------------------------
(370,924) 12,273,523
-------------------------
Effect of exchange rate changes on cash
and cash equivalents (418,341) 281,600
-------------------------
Increase in cash and cash equivalents
during the year 10,420,440 6,314,837
Cash and cash equivalents - Beginning of year 15,242,607 8,927,770
-------------------------
Cash and cash equivalents - End of year 25,663,047 15,242,607
-------------------------
-------------------------
Supplemental cash flow information
Interest paid 19,687 27,584
Interest received 97,747 451,341
Income taxes paid 634,612 1,016,832
Redknee Solutions Inc., Lucas Skoczkowski, Chief Executive Officer, David Charron, Chief Financial Officer, Isabel Fernandes-Cunha, Investor Relations, Tel: +1-905-625-2622, Fax: +1-905-625-2773
Tags: canada, Redknee Solutions Inc, Toronto, United Kingdom
