CounterPath Corporation (NASDAQ:CPAH) (TSX:PATH) (the “Company” or
“CounterPath”), a global provider of award-winning over-the-top
(OTT) Unified Communications solutions for enterprises and service
providers, today announced the financial and operating results for
its fourth quarter and fiscal year ended April 30, 2018.
Fiscal 2018 Financial Highlights
- Annual revenue of $12.4 million for fiscal 2018, an increase of
16% over the $10.7 million in revenue for fiscal 2017.
- Quarterly revenue of $2.8 million for the fourth quarter of
fiscal 2018, compared to revenue of $2.4 million for the fourth
quarter of fiscal 2017.
- Subscription, support and maintenance revenue (revenue of a
recurring nature) grew to $4.3 million year-over-year, representing
35% of total sales for fiscal 2018. Fourth quarter subscription,
support and maintenance was $1.2 million or 43% of total
sales.
- Gross margin of 87% in fiscal 2018, compared to gross margin of
84% in fiscal 2017.
- Non-GAAP loss from operations of $2.2 million for fiscal 2018,
compared to non-GAAP loss from operations of $2.1 million in fiscal
2017.
- Net loss of $3.2 million, or $0.59 per share for fiscal 2018,
compared to $2.5 million, or $0.52 per share, in fiscal 2017.
- Non-GAAP net loss of $2.2 million, or $0.40 per share for
fiscal 2018, compared to non-GAAP loss of $2.1 million, or $0.45
per share, in fiscal 2017.
- Cash of $2.3 million as of April 30, 2018 compared to $2.1
million as of April 30, 2017.
Management Commentary
“We made progress on several fronts in FY2018,” said Donovan
Jones, President and Chief Executive Officer. “We managed double
digit growth in revenue, while continuing our transition to
recurring revenue. Our recurring revenue increased to a record
level of $4.3 million, representing over a third of our total
revenue. The team has been working hard on improving our
cloud-hosted collaboration platform and is ready to roll it out
aggressively in FY2019. Our team-based service combines instant
messaging with HD voice and video, on any device, enabling a
business user to enjoy a secure communication experience, all
within one application. There is a tremendous market opportunity
for collaboration products and solutions as the enterprise
collaboration market size is estimated to grow from $35 billion in
2018 to $60 billion by 2023i. For FY2019 we will be focusing on
increasing the marketing and sale of our own services to continue
to drive recurring revenue. We will be focusing on recurring
revenue both through selling to service provider customers, as we
have done through our recent three-year $1.8 million agreement with
a North American Tier 1 service provider, and by migrating our
existing base of customers with perpetual software to hosted
services, as we have done with our recent agreement with a leading
contact center vendor. We are also now better positioned to offer
our products and services to large enterprises with the
solidification of our Oracle partnership this last spring. Finally,
we expect to target small and medium sized enterprises through our
upgraded e-store platform, where we will be introducing new
communication services throughout the year that should further
drive our monthly recurring revenue,” continued Jones.
FY2018 Business Highlights
- Signed a contract with a North American Tier 1 service provider
to offer a solution built on the Bria Softphone and Stretto™
Platform worth a minimum of $1.8 million over a three-year
period.
- Launched Stretto Collaboration, a cloud-based service which
integrates voice, video, messaging and presence with collaboration
over any network, from any device, anywhere, which will enable
teams of up to 200 people with tools to drive productivity and cost
savings.
- Partnered on an integrated cloud platform and services solution
with Oracle Communications at the Enterprise Connect conference in
Orlando, where we showcased an “Always Connected” enterprise
experience, enabled through improved quality and reliability of
voice calling and messaging to elevating communications to full HD
audio/video conference rooms.
- Announced the availability of Stretto Platform 2.0 with support
for premises-based push notifications, cloud-ready installations
and usability enhancements.
- Announced Bria for Salesforce support for Lightning,
integrating any communications platform with business process and
customer management.
- Secured distribution partnerships with Telegate, Unified
Communications Co., Ltd. and TaraSpan, expanding opportunities into
Australia, Japan, Singapore and India.
- Awarded a patent that optimizes how users will leverage their
presence and location to intelligently route real-time
communications across mobile and IP networks.
- Reached a company milestone as X-Lite, our free client,
achieved millions of users in over 190 countries, providing a base
for growth for our SaaS-based offerings.
Financial Overview
(All amounts are presented in U.S. dollars and in accordance
with accounting principles generally accepted in the United States
(“GAAP”) unless otherwise specified.)
Revenue was $12.4 million for the year ended April 30, 2018
compared to $10.7 million for last fiscal year. For fiscal 2018,
software revenue was $6.3 million, compared to $5.4 million for
last fiscal year, subscription, support and maintenance revenue was
$4.3 million, compared to $3.9 million for last fiscal year, and
professional services and other revenue was $1.8 million, compared
to $1.3 million for last fiscal year.
Operating expenses for the year ended April 30, 2018 were $15.2
million, compared to $13.6 million for last fiscal year. Operating
expenses for fiscal 2018 included a non-cash stock-based
compensation expense of $0.6 million, compared to $0.8 million for
last fiscal year. Sales and marketing expenses were $4.2 million
for the year ended April 30, 2018 compared to $3.8 million for last
fiscal year. For the year ended April 30, 2018, research and
development expenses were $5.5 million and general and
administrative expenses were $3.9 million, compared to $4.8 million
and $3.2 million, respectively, for last fiscal year.
Foreign exchange loss for the year ended April 30, 2018 was $0.4
million, compared to foreign exchange gain of $0.5 million for last
fiscal year. The foreign exchange gain (loss) represents the gain
(loss) on account of translation of intercompany accounts of the
Company’s subsidiary, which are maintained in Canadian dollars, and
transactional gains and losses resulting from transactions
denominated in currencies other than U.S. dollars.
Net loss for the year ended April 30, 2018 was $3.2 million, or
$0.59 per share, compared to $2.5 million, or $0.52 per share, for
last fiscal year. As at April 30, 2018, the Company had $2.3
million in cash, compared to $2.1 million as at April 30, 2017.
Forward-Looking Statements
This news release contains "forward-looking statements".
Statements in this news release which are not purely historical are
forward-looking statements and include any statements regarding
beliefs, plans, outlook, expectations or intentions regarding the
future, including (i) the team has been working hard on improving
our hosted collaboration platform and is ready to roll it out
aggressively in FY2019; (ii) there is a tremendous market
opportunity for collaboration products and solutions as the
enterprise collaboration market size is estimated to grow from $35
billion in 2018 to $60 billion by 2023; (iii) for FY2019 we will be
focusing on increasing the marketing and sale of our own services
to continue to drive recurring revenue; (iv) we will be focusing on
recurring revenue both through selling to service provider
customers and by migrating our existing base of customers with
perpetual software to hosted services; (v) we expect to target
small and medium sized enterprises through our upgraded e-store
platform, where we will be introducing new communication services
throughout the year that should further drive our monthly recurring
revenue; and (vi) that Stretto Collaboration will enable teams of
up to 200 people with tools to drive productivity and cost
savings. It is important to note that actual outcomes and the
Company’s actual results could differ materially from those in such
forward-looking statements. Actual results could differ from those
projected in any forward-looking statements due to numerous
factors. Such factors include, among others: (1) the variability in
CounterPath’s sales from reporting period to reporting period due
to extended sales cycles as a result of selling CounterPath’s
products through channel partners or the length of time of
deployment of CounterPath’s products by its customers; (2) the
Company’s ability to manage its operating expenses, which may
adversely affect its financial condition; (3) the Company’s ability
to remain competitive as other better financed competitors develop
and release competitive products; (4) a decline in the Company’s
stock price or insufficient investor interest in the Company’s
securities which may impact the Company’s ability to raise
additional financing as required or may cause the Company to be
delisted from a stock exchange on which its common stock trades;
(5) the impact of intellectual property litigation that could
materially and adversely affect CounterPath’s business; (6) the
success by the Company of the sales of its current and new
products; (7) the impact of technology changes on the Company’s
products and industry; (8) the failure to develop new and
innovative products using the Company’s technologies; and (9) the
potential dilution to shareholders or overhang on the Company’s
share price of its outstanding stock options. Readers should
also refer to the risk disclosures outlined in the Company’s
quarterly reports on Form 10-Q, the Company’s annual reports on
Form 10-K, and the Company’s other disclosure documents filed from
time-to-time with the Securities and Exchange Commission at
http://www.sec.gov and the Company’s interim and annual filings and
other disclosure documents filed from time-to-time on SEDAR at
www.sedar.com.
About CounterPathCounterPath Unified
Communications solutions are changing the face of
telecommunications. An industry and user favorite, Bria softphones
for desktop, tablet and mobile devices, together with Stretto
Platform™ server solutions, enable operators, OEMs and enterprises
large and small around the globe to offer a seamless and unified
over-the-top (OTT) communications experience across both fixed and
mobile networks. The Bria and Stretto combination enables an
improved user experience as an overlay to the most popular UC and
IMS telephony and applications servers on the market today.
Standards-based, cost-effective and reliable, CounterPath’s
award-winning solutions power the voice and video calling,
messaging, and presence offerings of customers such as AT&T,
Avaya, BroadSoft, BT, Cisco Systems, Metaswitch Networks, Mitel,
NEC, Network Norway, Nokia, Ribbon Communications, Rogers and
Verizon. Visit CounterPath, www.counterpath.com.
Contacts:
David KarpChief Financial Officer,
CounterPathdkarp@counterpath.com(604) 628-9364
(TABLES TO FOLLOW)
|
|
COUNTERPATH CORPORATION |
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
(Stated in U.S. Dollars) |
|
|
|
|
|
April 30, |
|
|
April 30, |
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash |
$ |
2,348,883 |
|
$ |
2,071,019 |
|
Accounts receivable (net of allowance for doubtful accounts of
$322,638 (2017 - $80,232)) |
|
3,509,010 |
|
|
2,133,469 |
|
Prepaid expenses and deposits |
|
191,245 |
|
|
170,853 |
|
Total current assets |
|
6,049,138 |
|
|
4,375,341 |
|
|
|
|
|
|
|
|
Deposits |
|
98,633 |
|
|
91,400 |
|
Equipment |
|
121,819 |
|
|
125,813 |
|
Goodwill |
|
6,843,575 |
|
|
6,440,955 |
|
Intangibles and
other assets |
|
221,062 |
|
|
199,637 |
|
Total Assets |
$ |
13,334,227 |
|
$ |
11,233,146 |
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts payable and accrued liabilities |
$ |
2,437,733 |
|
$ |
1,825,528 |
|
Unearned revenue |
|
2,565,876 |
|
|
2,134,948 |
|
Customer deposits |
|
2,200 |
|
|
6,211 |
|
Accrued warranty |
|
63,130 |
|
|
54,365 |
|
Total current liabilities |
|
5,068,939 |
|
|
4,021,052 |
|
|
|
|
|
|
|
|
Deferred lease
inducements |
|
14,339 |
|
|
23,022 |
|
Unrecognized tax
liability |
|
9,763 |
|
|
9,763 |
|
Total
liabilities |
|
5,093,041 |
|
|
4,053,837 |
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
Preferred stock,
$0.001 par value |
|
|
|
|
|
|
Authorized: 100,000,000 |
|
|
|
|
|
|
Issued and outstanding: April 30, 2018 – nil; April 30, 2017 –
nil |
|
– |
|
|
– |
|
Common stock,
$0.001 par value |
|
|
|
|
|
|
Authorized: 100,000,000 |
|
|
|
|
|
|
Issued: |
|
|
|
|
|
|
April 30, 2018 – 5,930,468; April 30, 2017 – 5,005,245 |
|
5,931 |
|
|
5,005 |
|
Treasury
stock |
|
– |
|
|
(60 |
) |
Additional
paid-in capital |
|
75,170,181 |
|
|
71,680,575 |
|
Accumulated
deficit |
|
(63,701,685 |
) |
|
(60,481,015 |
) |
Accumulated
other comprehensive loss – currency translation adjustment |
|
(3,233,241 |
) |
|
(4,025,196 |
) |
Total stockholders’ equity |
|
8,241,186 |
|
|
7,179,309 |
|
Liabilities and
Stockholders’ Equity |
$ |
13,334,227 |
|
$ |
11,233,146 |
|
|
|
|
|
|
|
|
|
|
COUNTERPATH CORPORATION |
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
(Stated in U.S. Dollars) |
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
April 30, |
|
|
Years Ended |
|
|
|
(Unaudited) |
|
|
April 30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Software |
$ |
1,031,587 |
|
$ |
1,226,074 |
|
$ |
6,338,512 |
|
$ |
5,449,140 |
|
Subscription, support and maintenance |
|
1,204,039 |
|
|
964,977 |
|
|
4,273,410 |
|
|
3,909,326 |
|
Professional services and other |
|
538,841 |
|
|
162,073 |
|
|
1,769,819 |
|
|
1,327,124 |
|
Total revenue |
|
2,774,467 |
|
|
2,353,124 |
|
|
12,381,741 |
|
|
10,685,590 |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales |
|
498,692 |
|
|
395,545 |
|
|
1,629,814 |
|
|
1,729,930 |
|
Sales and
marketing |
|
1,123,151 |
|
|
1,061,071 |
|
|
4,155,132 |
|
|
3,831,438 |
|
Research
and development |
|
1,454,758 |
|
|
1,318,854 |
|
|
5,506,887 |
|
|
4,843,813 |
|
General
and administrative |
|
1,476,444 |
|
|
702,704 |
|
|
3,883,678 |
|
|
3,234,026 |
|
Total operating expenses |
|
4,553,045 |
|
|
3,478,174 |
|
|
15,175,511 |
|
|
13,639,207 |
|
Loss from
operations |
|
(1,778,578 |
) |
|
(1,125,050 |
) |
|
(2,793,770 |
) |
|
(2,953,617 |
) |
Interest and other
(expense) income, net |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
and other income |
|
3 |
|
|
– |
|
|
3 |
|
|
173 |
|
Interest
expense |
|
(26 |
) |
|
(3,105 |
) |
|
(364 |
) |
|
(3,056 |
) |
Foreign exchange
(loss) gain |
|
329,973 |
|
|
279,711 |
|
|
(426,539 |
) |
|
497,985 |
|
Total interest and
other (expense) income, net |
|
329,950 |
|
|
276,606 |
|
|
(426,900 |
) |
|
495,102 |
|
Net loss for the
year |
$ |
(1,448,628 |
) |
$ |
(848,444 |
) |
$ |
(3,220,670 |
) |
$ |
(2,458,515 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
$ |
(0.24 |
) |
$ |
(0.17 |
) |
$ |
(0.59 |
) |
$ |
(0.52 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
5,935,044 |
|
|
5,005,708 |
|
|
5,496,201 |
|
|
4,722,724 |
|
Non-GAAP Financial Measures
This news release contains “non-GAAP financial
measures”. The non-GAAP financial measures in this news release
consist of non-GAAP income (loss) from operations which excludes
non-cash stock-based compensation relative to income (loss) from
operations calculated in accordance with GAAP. The non-GAAP
financial measures also include non-GAAP net income (loss) which
excludes non-cash stock-based compensation and foreign exchange
gain (loss) relative to income (loss) calculated in accordance with
GAAP. Non-GAAP financial measures should not be considered as
a substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP. CounterPath utilizes both
GAAP and non-GAAP financial measures to assess what it believes to
be its core operating performance and to evaluate and manage its
internal business and assist in making financial operating
decisions. CounterPath believes that the inclusion of
non-GAAP financial measures, together with GAAP measures, provides
investors with an alternative presentation useful to investors'
understanding of CounterPath’s core operating results and
trends.
Reconciliation to
GAAP(Unaudited)
|
|
Three Months Ended |
|
Years Ended |
|
|
|
April 30, |
|
April 30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Non-GAAP income
(loss) from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income
(loss) from operations |
$ |
(1,778,578 |
) |
$ |
(1,125,050 |
) |
$ |
(2,793,770 |
) |
$ |
(2,953,617 |
) |
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation |
|
109,683 |
|
|
134,403 |
|
|
604,566 |
|
|
835,918 |
|
Non-GAAP income
(loss) from operations |
$ |
(1,668,895 |
) |
$ |
(990,647 |
) |
$ |
(2,189,204 |
) |
$ |
(2,117,699 |
) |
|
|
Three Months Ended |
|
Years Ended |
|
|
|
April 30, |
|
April 30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Non-GAAP net
income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss) |
$ |
(1,448,628 |
) |
$ |
(848,444 |
) |
$ |
(3,220,670 |
) |
$ |
(2,458,515 |
) |
Plus: |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation |
|
109,683 |
|
|
134,403 |
|
|
604,566 |
|
|
835,918 |
|
Foreign exchange
loss (gain) |
|
(329,973 |
) |
|
(279,711 |
) |
|
426,539 |
|
|
(497,985 |
) |
Non-GAAP net
income (loss) |
$ |
(1,668,918 |
) |
$ |
(993,752 |
) |
$ |
(2,189,565 |
) |
$ |
(2,120,582 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.24 |
) |
$ |
(0.17 |
) |
$ |
(0.59 |
) |
$ |
(0.52 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted |
$ |
(0.28 |
) |
$ |
(0.20 |
) |
$ |
(0.40 |
) |
$ |
(0.45 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
i
https://www.reportlinker.com/p04604341/Enterprise-Collaboration-Market-by-Component-Solution-Service-User-Type-Vertical-and-Region-Global-Forecast-to.html
(May 2018)
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