Redknee Solutions Reports Fiscal First Quarter 2016 Results
- Revenue totalled
$50.1 million( $54.8 million, on a constant currency basis), compared to $62.6 million;
- Gross profit was
$29.7 million(59% of total revenue) compared to $36.6 million(58% of total revenue);
- Adjusted EBITDA of
$4.8 million(10% of total revenue) versus Adjusted EBITDA of $11.0 million(18% of total revenue);
- Recurring was 52% of revenue, compared to 44%;
- Net loss was
$4.3 millionor $0.04loss per share versus a net income of $2.0 millionor $0.02income per share,
- Available liquidity as at
December 31, 2015was $89.0 million, including $49.0 millionof cash, and,
- Order backlog of
$166.8 million( $173.0 millionon a constant currency basis).
Fiscal Q1 2016 Operational Highlights
- Supported a Tier 1 Operator in
North Americawith its Mobile Virtual Network Enabler (MVNE) strategy, including an extension of its contract with Redknee worth more than $5 million;
- Delivered the latest version of
Redknee Railway, an Intelligent Network (IN) solution for GSM-Railway, to Prorail, a leading Dutch railway operator;
- Launched the Redknee Connected Suite, a software platform designed to help enterprises monetize applications for the
Internet of Things(IoT);
- Recognized as a leader in the Canadian technology industry in the
Deloitte's2015 Technology Fast 50 and Fast 500; and,
- Continued to expand patent portfolio with a total of 152 patents granted and 31 patents filed at quarter end, with additional patents still undergoing transfer following the Orga Systems acquisition.
Highlights Subsequent End of Q1 2016
- As anticipated at the time of the Orga Systems acquisition and consistent with its acquisition and integration strategy, Redknee initiated its planned cost structure optimization as it finalizes the integration of Orga. As a result of these efforts, the Company expects to close certain offices and refocus some of its activities in certain regions, resulting in headcount reductions of between 200 and 300 full-time equivalents globally. The restructuring is expected to cost between
$25 and $30 millionand result in annualized savings of between $20 and $25 million. The implementation will be executed on a timely basis and will be subject to the necessary consultation processes where required by local laws.
- As of close of trading
February 10, 2016, Redknee had purchased 1,246,590 shares for a total cost of approximately CAD$3.5 millionunder the Company's Normal Course Issuer Bid (NCIB) since the program's commencement on December 7, 2015.
"The first quarter saw continued progress on our near-term priorities, highlighted by gross margin expansion, improving cash flows and a growing order book, notwithstanding a period in which the typical lumpiness in our software license revenue was exacerbated by several purchase decision delays, as well as the full cost structure of the Orga acquisition," said Lucas Skoczkowski, CEO of Redknee. "We are encouraged by both our strong first quarter bookings and our continuing engagement with these operators and we believe that we remain well positioned to secure these orders over the coming several quarters."
Mr. Skoczkowski continued, "With the integration of Orga Systems substantially complete, as per the plan we outlined at the time of acquisition, we have moved quickly and decisively on our cost structure optimization program. The expected cost savings of
"As we look out to the year ahead, amidst the expected ongoing softness in service provider spending, we will remain laser-focused on maximizing our profitability and cash flow generation, while growing our proportion of recurring revenue. We remain steadfast in our commitment to continuing to advance our strong competitive position as the provider of choice for monetization and subscriber management solutions for service providers worldwide in our core communications market, while leveraging our reputation and experience in pursuit of the significant opportunities related to the
Fiscal Q1 2016 Financial Results
Order backlog increased 5% to
Recurring revenue was 52% of total revenue, compared to 44% in the same year-ago quarter.
Gross margin was 29.7 million or 59% compared to
Adjusted EBITDA was
Net loss totalled
Please refer to the section regarding forward-looking statements which form an integral part of this release. These results, along with the annual 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.
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References to Redknee refer to the combined operations of those entities. For more information about Redknee and its solutions, please go to www.redknee.com.
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