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Redknee Solutions Reports Fiscal First Quarter 2013 Results

TORONTO – February 13, 2013 - Redknee Solutions, Inc. (TSX: RKN), a leading provider of business-critical software and solutions for communications service providers, reported results for its fiscal first quarter ended December 31, 2012. All figures below are in U.S. dollars.

Fiscal Q1 2013 Financial Highlights as Compared to the Same Year-ago Quarter
•    Revenue increased 6% to $14.2 million, with 50% from recurring revenue streams
•    Quarter-end contract backlog up 5% to $64.0 million
•    Gross profit up 1% to $8.9 million (63% of revenue) from $8.8 million (66% of revenue)
•    Adjusted EBITDA totaled $1.0 million vs. $1.5 million
•    Net loss totaled $1.7 million or $0.02 loss per share vs. net income of $0.4 million or $0.01 per share
•    Quarter-end cash increased from $16.5 million to $32.3 million due to the bought deal financing closed in the period
•    Secured a $20 million line of credit with Wells Fargo Capital Finance


Fiscal Q1 2013 Operational Highlights

•    Reached a definitive agreement to acquire the Business Support System (BSS) assets from Nokia. The acquisition will increase the company’s global footprint to span more than 90 countries across Asia Pacific, Europe, Middle East and Africa.
•    Signed multi-million dollar, multi-year term license billing and customer care contract with Malea Multimedia Mobile and Services to launch a new mobile brand in Niger.
•    Signed license upgrades and service renewals in Americas, APAC and EMEA.
•    Redknee was highlighted in the Gartner 2012 Magic Quadrant report on Integrated Revenue and Customer Management (IRCM) for communications service providers.


Fiscal Q1 2013 Financial Results

Revenue increased 6% to $14.2 million from $13.4 million in same year-ago quarter. The improvement was primarily due to an increase in software upgrades and support revenue.

Recurring revenue for the quarter was 50% of total revenue as compared to 54% for the same year-ago quarter. Recurring revenues consist of support and maintenance, long-term services contracts and revenue from term-based licenses.

Gross margin was 63% compared to 66% in the same year-ago quarter.

Adjusted EBITDA was $1.0 million or 7% of total revenue, compared to $1.5 million or 11% of total revenue in the same year-ago quarter (see discussion about the presentation of Adjusted EBITDA, a non-IFRS measure, below).

Net loss totaled $1.7 million or $0.02 loss per share, compared to net income of $0.4 million or $0.01 per share in the same year-ago quarter. The first fiscal quarter 2013 net loss included $2.3 million of one-time costs related to the pending acquisition of Nokia's Business Support Systems business.

Contracted order backlog increased 5% to $64.0 million compared to the end of the same year-ago quarter.

At December 31, 2012, cash and investments totaled $32.3 million, with net cash of $26.4 million. This compares to cash and investments of $16.5 million and net cash of $8.8 million at December 31, 2011, with the increases mostly due to the financing completed in mid-November 2012.

Please refer to the section regarding forward-looking statements which form an integral part of this release. These results, along with the unaudited condensed consolidated interim financial statements and the company’s unaudited MD&A, are available on the company’s website at www.redknee.com and on SEDAR at www.sedar.com.


Management Commentary

“This first quarter continued to demonstrate our ability to expand our customer base while managing costs and improving operational efficiencies,” said Lucas Skoczkowski, CEO of Redknee. “We plan to sustain this momentum by increasing the number of subscribers on our cloud and SaaS-based solutions, which will further drive recurring revenue and visibility. We will also remain focused on securing multi-year term license contracts, which builds backlog and recurring revenue. We believe this strategy provides a clear, profitable pathway toward becoming the world’s largest independent, real-time monetization and subscriber management software company in our industry.

“The Nokia's BSS acquisition marks a major milestone toward this goal. Once completed, the acquisition will increase our global presence to span more than 90 countries across Asia Pacific, Europe, the Middle East and Africa, and would add strong, long-standing relationships with key Tier 1 operators.  We will be able to leverage Nokia innovative BSS software products, and benefit from their experience and capabilities in real-time software R&D. Our combined solution suite would enable new cross-selling and upselling opportunities, while their global professional services team would help serve our newly combined customer base. As we scale the combined business, we would expect to have additional opportunities to build on this new operational foundation.”


Conference Call

The company will host a conference call tomorrow (Thursday, February 14, 2013) 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.

Date: Thursday, February 14, 2013
Time: 8:30 a.m. Eastern time
Dial-In Number: 1-877-941-1427    
International: 1-480-629-9664    
Conference ID#: 4590886
 

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 March 14, 2013.


Toll-Free Replay Number: 1-877-870-5176     
International Replay Number: 1-858-384-5517     
Replay PIN #: 4590886


Media Enquiries: media@redknee.com

About Redknee:
Redknee monetizes today's digital world. We provide a complete portfolio of mission-critical monetization and subscriber management solutions, including real-time billing, charging, policy and customer care modules, which allow Communications Service Providers to charge for things in new and innovative ways and create a unique user experience. Available on premise, cloud-based, or as a Software-as-a-Service, Redknee's low-risk, flexible solutions power more than 250 businesses across the globe. Established in 1999, Redknee Solutions Inc. (TSX: RKN) is the parent of the wholly-owned operating subsidiary Redknee Inc. and its various subsidiaries.

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.

For additional information please contact:

Redknee Solutions:
Michaela Radman, Corporate Communications
Michaela.Radman@redknee.com
+1 905 625 2190

Investor Relations:
Conrad Seguin
NATIONAL | Equicom
T: (416) 586-1951
cseguin@national.ca