On Friday, before market opened, Absolute Software Corporation (ABT: CN) declared plans to divest its non-core enterprise mobility management and IT service management products and provided an update to its FY 2015 outlook. Absolute® Software Corporation (TSX: ABT), the industry standard for persistent endpoint security and management solutions for desktops, laptops, tablets and smartphones, today announced its financial results for the three and six months ended December 31, 2014. All financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) and are reported in U.S. dollars.
Q2-F2015 Sales Contracts of $25.2 million represented an increase of 13% compared to Q2-F2014, while year to date Sales Contracts of $51.2 million represented an increase of 11% over the prior year period.
Sales Contracts to commercial customers increased 15% in Q2-F2015 compared to Q2-F2014 and also increased 15% for the year to date period. The combined education and government verticals increased 16% in Q2-F2015 compared to the prior year and increased 22% for the year to date period. The combined corporate and healthcare verticals increased 13% for the quarter and increased 6% for the year to date period.
Commercial Sales Contracts for North America increased 24% in Q2-F2015 and increased 21% for the year to date period. Commercial Sales Contracts outside North America were down 30% for the quarter and down 18% for the year to date period. The year-over-year decrease in the Company’s international sales reflect lower sales in the Asia Pacific and Latin America regions attributable to large deals recorded in the prior year that were not replicated in the current year periods. International sales represented 11% of total Sales Contracts for the quarter and 12% of total sales contracts year to date.
Q2-F2015 Commercial Sales Contracts for Absolute’s Device Management and Data Security products(6) were $10.2 million, up 21% from $8.4 million in Q2-F2014, and were $17.7 million for YTD F2015, a 17% improvement over $15.1 million for YTD F2014. The year-over-year growth for the Q2 and YTD F2015 periods was primarily driven by increased sales of Computrace Data Protection.
Commercial Sales Contracts for Absolute’s Theft Management products(5) were $14.2 million in Q2-F2015, representing an increase of 11% from $12.8 million in Q2-F2014. YTD F2015 Commercial Sales Contracts for Absolute’s Theft Management products(5) were $31.4 million, up 13% from $27.8 million for the same period in F2014.
Sales Contracts for consumer solutions for Q2-F2015 were $0.8 million (3% of total Sales Contracts), down from $1.0 million (5% of total Sales Contracts) in Q2-F2014. YTD F2015 Sales Contracts for consumer solutions were $2.1 million (4% of total Sales Contracts) down from $3.1 million (7% of total Sales Contracts) for the same period in F2014.
Revenue in Q2-F2015 was $23.1 million, a 5% increase from $21.9 million in Q2-F2014. YTD F2015 revenue was $46.3 million, up 6% compared to the same period in F2014. Indicative of the Company’s prepaid Software-as-a-Service (SaaS) business model, revenue primarily represents the amortization of deferred revenue balances from recurring term license sales from both the current and prior periods.
Adjusted Operating Expenses(3) for Q2-F2015 were $19.1 million, up 4% from $18.3 million in Q2-F2014. For YTD F2015, Adjusted Operating Expenses were $38.0 million, a 4% increase over $36.7 million for the same period in F2014. The year-over-year increase primarily reflects an increase in sales and marketing as well as research and development. These increases were offset, in part, by benefits the Company realized as a result of a weakened Canadian dollar, which reduced the costs of the Company’s Canadian-based expenditures. As a percentage of revenue, Adjusted Operating Expenses decreased to 83% in Q2-F2015 from 84% in Q2-F2014 and 82% for YTD F2015 compared to 84% for the same period in F2014.
Absolute generated Adjusted EBITDA(4) of $4.0 million in Q2-F2015, up 13% from $3.5 million in Q2-F2014. For YTD F2015, Adjusted EBITDA was $8.2 million, a 21% increase over YTD F2014.
Absolute recorded net income of $2.2 million, or $0.05 per share, in Q2-F2015, compared to net income of $0.2 million, or $0.01 per share, in Q2-F2014. YTD F2015 net income was $2.5 million, or $0.06 per share, up from $1.4 million, or $0.03 per share, for the same period in F2014. The year-over-year improvement for the Q2 and YTD F2015 periods reflect revenue growth that outpaced the increase in the Company’s Adjusted Operating Expenses, which was partially offset by foreign exchange losses versus foreign exchange gains for the same periods in F2014 as well a year-over-year increase in income taxes.