Company delivers record cash from operations of $17 million
Enterprise and Government ARR growth accelerates to record 18% year over year, and total ARR breaks $200 million
Absolute Software Corporation (Nasdaq: ABST) (TSX: ABST) (the “Company”), a leader in self-healing endpoint and secure access solutions, today announced its financial results for its third quarter fiscal 2022 ended March 31, 2022. All dollar figures are stated in U.S. dollars, unless otherwise indicated.
“We continued to deliver strong financial results in Q3, achieving record Enterprise and Government ARR growth and breaking the $200 million ARR mark while meeting the Rule of 40 for the seventh consecutive quarter,” said Christy Wyatt, Absolute Software’s President and CEO. “The momentum we are seeing is a direct result of our integrated product strategy resonating with customers, and the steady cadence of product innovation we are bringing to market. As more organizations adopt a robust endpoint-centric security posture in this next chapter of hybrid work, we are strongly positioned to address their top priorities and challenges with our unique self-healing endpoint and secure access solutions.”
Third Quarter Fiscal 2022 (“Q3 F2022”) Financial Highlights
- Revenue for Q3 F2022 was $52.0 million, representing 69% growth compared to Q3 of fiscal year 2021 (“Q3 F2021”).
- Adjusted Revenue(1) for Q3 F2022 was $54.5 million, representing 78% growth compared to Q3 F2021 Adjusted Revenue, and 18% growth compared to Q3 F2021 revenue on an as-if combined basis without factoring in acquisition related adjustments(2).
- Net loss for Q3 F2022 was $6.5 million, compared to net income of $2.2 million for Q3 F2021.
- Total ARR(4) at March 31, 2022 was $202.9 million, representing 68% growth over the prior year reported ARR, and growth of 16% compared to an as-if combined basis for Q3 F2021(3).
- The Enterprise & Government portions of Total ARR grew by 101% over the prior year, and by 18% compared to an as-if combined basis for Q3 F2021(3). The Enterprise & Government portion represented 78% of Total ARR at March 31, 2022.
- The Education sector portion of Total ARR grew by 8% year over year, and by 7% compared to an as-if combined basis for Q3 F2021(3). The Education sector portion represented 22% of Total ARR at March 31, 2022.
- New Logo ARR(4) was $3.2 million for Q3 F2022, compared to $2.6 million for Q3 F2021. New Logo ARR grew by 5% compared to an as-if combined basis for Q3 F2021.
- Net Dollar Retention(4) was 107% for Q3 F2022, compared to 110% in Q3 F2021.
- Adjusted EBITDA(1) for Q3 F2022 was $13.8 million or 25% of Adjusted Revenue(1), compared to $7.7 million or 25% of Adjusted Revenue for Q3 F2021.
- Cash from operating activities was $17.0 million for Q3 F2022, an increase from $7.3 million for Q3 F2021.
- A quarterly dividend of CAD$0.08 per outstanding common share was paid in Q3 F2022.
Notes:
| (1) | Adjusted Revenue and Adjusted EBITDA are non-IFRS measures. Refer to the “Use of non-IFRS measures and key metrics” section of the Q3 F2022 MD&A for further discussion of these measures and the “Results of Operations” section of the MD&A for reconciliation to the nearest IFRS measure. |
| (2) | Q3 F2021 revenue on an as-if combined basis includes the combined revenue of Absolute and NetMotion for Q3 F2021, as if the acquisition of NetMotion occurred on July 1, 2020. Revenue attributable to Absolute Software is reported under IFRS and revenue attributable to NetMotion is reported under US GAAP. The amount does not include US GAAP to IFRS adjustments, which are deemed immaterial. |
| (3) | Q3 F2021 ARR on an as-if combined basis combines the historical ARR of Absolute and NetMotion at March 31, 2021, as if the acquisition of NetMotion occurred on July 1, 2020. |
| (4) | Total ARR, New Logo ARR and Net Dollar Retention are key metrics. Refer to the “Use of non-IFRS measures and key metrics” section of the Q3 F2022 MD&A for further discussion of these measures. |
Selected Quarterly Information
USD millions, except percentages, number of shares, and per share amounts
| Notes: | |
| (1) | Recurring revenue represents revenue derived from cloud services, term-based subscription licenses, maintenance services and recurring managed professional services. Other revenue represents revenue derived from perpetual software licenses, non-recurring professional services and ancillary product lines, including consumer products. |
| (2) | Adjusted Revenue, Adjusted EBITDA, and Adjusted EBITDA as a percentage of Adjusted Revenue are non-IFRS measures. Refer to the “Use of non-IFRS measures and key metrics” section of the Q3 F2022 MD&A for further discussion of these measures. |
| (3) | Total ARR is a key metric. Refer to the “Use of non-IFRS measures and key metrics” section of the Q3 F2022 MD&A for further discussion of this measure. |
| (4) | Deferred revenue includes current and non-current amounts. |
| (5) | Total non-current financial liabilities include non-current portion of lease liabilities and long-term debt. |
Q3 F2022 Business Highlights
Business and organizational developments:
- In February, Absolute was featured as a Representative Vendor in the 2022 Gartner Market Guide for Zero Trust Network Access (ZTNA).
- In February, we were named to G2’s 2022 Best Software Awards for Best Security Products list in the Endpoint Security category – driven by continued customer satisfaction and significant market presence.
- In March, we announced the appointment of Ron Fior as Interim Chief Financial Officer (CFO).
Product and service highlights:
- In Q3, we reached nearly 13.6 million active endpoints across our global customer base – an increase of 17% year over year.
- In Q3, we grew our catalogue of Application Persistence™ titles by 81% year over year.
- In February, our Secure Access product (NetMotion Mobility 12.14) achieved Common Criteria Evaluation Assurance Level (EAL) 4+, the highest certification level recognized internationally under the Common Criteria program for software products. Absolute is the only network solutions provider to achieve this certification across Android, iOS, macOS, and Windows for its Virtual Private Network (VPN) technology.
- In February, we successfully completed the System and Organization Controls (SOC 2) Type I audit for our Secure Access cloud platform (formerly NetMotion by Absolute).
- In March, we launched Absolute Insights™ for Endpoints and Networks – enabling organizations to track and analyze critical performance metrics spanning endpoints, users, applications, and network connections.
Partner and other highlights:
- In Q3, OEM partners included Absolute as a core component of their Net New and Expansion Education Programs, focused on enabling K-12 organizations to leverage the Emergency Connectivity Fund (ECF) and end of year device reclamation capabilities.
- In March, we appointed the Nuvias Group as distributor in the DACH region, expanding on previous distribution agreements in the UK and Benelux.
- In March, we were recognized by CRN®, a brand of The Channel Company, with a 5-star rating in its 2022 Partner Program Guide for the second consecutive year. The 5-star rating is awarded to select vendors that help push growth and positive change through their partner programs.
F2022 Financial Outlook
The Company’s updated financial outlook for its 2022 fiscal year (July 1, 2021 – June 30, 2022) is as follows(1):
- Increased full-year F2022 adjusted revenue(2) to be in the range of $209.5 million to $210.5 million; this equates to a full-year F2022 adjusted revenue growth of approximately 14.9% to 15.4% (3).
- Increased full-year F2022 Adjusted EBITDA(2) margin, calculated on adjusted revenue, to be in the range of 24.5% to 25.5%.
| Notes: | |
| 1. | The Company does not provide a reconciliation of forward-looking non-IFRS financial measures to the most directly comparable IFRS financial measure because it is unable to predict certain items contained in the IFRS measures without unreasonable efforts. |
| 2. | Adjusted revenue and adjusted EBITDA are non-IFRS measures. Please refer to “Use of non-IFRS measures and key metrics” section in this earnings release or our most recent MD&A for further discussion of these measures. |
| 3. | Adjusted revenue growth rate guidance for F2022 is based on an as-if combined basis without factoring in acquisition related adjustments and includes the combined revenue of Absolute and NetMotion for F2021. Revenue attributable to Absolute is reported under IFRS and revenue attributable to NetMotion is reported under US GAAP. The amount does not include US GAAP to IFRS adjustments, which are deemed immaterial. |
The foregoing outlook and expectations constitute forward-looking statements and financial outlook and are qualified in their entirety by the “Forward-Looking Statements” cautionary statement below. The purpose of this financial outlook is to provide readers with disclosure regarding management’s current reasonable expectations and plans for F2022. Readers are cautioned that this financial outlook may not be appropriate for other purposes.
Quarterly Dividend
On April 20, 2022, we declared a quarterly dividend of CAD$0.08 per share on its common shares, payable in cash on May 25, 2022 to shareholders of record at the close of business on May 12, 2022.
Quarterly Filings and Related Quarterly Financial Information
Management’s Discussion and Analysis (“MD&A”) and Consolidated Financial Statements and the notes thereto for the fiscal period ended March 31, 2022 can be obtained today from Absolute’s corporate website at www.absolute.com. The documents will also be available under Absolute’s SEDAR profile at www.sedar.com and on EDGAR at www.sec.gov. Additionally, the Company today will publish on the Investor Relations section of its website (www.absolute.com/company/investors/) a Q3 F2022 Earnings Presentation and a dashboard of Selected Operating and Financial Metrics.
Conference Call
Absolute Software will host a conference call on Tuesday, May 10, 2022 at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss its results and business outlook. The call will be accessible by dialing 1-844-763-8274 or 1-412-717-9224; participants should ask to join the Absolute Software call. A live audio webcast of the conference call will also be available via the Absolute Investor Relations website.
The conference call will be archived for replay until Tuesday, May 17, 2022. To access the archived conference call, please dial 855-669-9658 or 1-877-344-7529 and enter the reservation code 1508130. To access the replay using an international dial-in number, please use this link. An archived replay of the webcast will be available for one year.
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