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From the Wires
Certicom Reports Results for Second Quarter of Fiscal 2009
By: PR Newswire
Dec. 3, 2008 08:00 PM
Results on target with new strategic plan
Highlights for the Quarter:
- Certicom partnered with Itron to offer authentication and enhanced
security for its market-leading Advanced Metering Infrastructure
(AMI) system
- Daintree Networks licensed Certicom's Security Builder technology for
the development of secure ZigBee Smart Energy networking products
- Sterling Commerce extended its license of Certicom's security
solutions and professional services for protecting financial
transactions
- Proginet, Nortel and Sybase all licensed Certicom's security
solutions for FIPS 140-2 certification, the benchmark standard for
government agency data security
- Certicom launched new support for Suite B algorithms in Security
Builder(R) SSL(TM) to help developers conveniently incorporate
Suite B-enabled SSL support into their products
- Certicom continued to reinforce its global infrastructure by
strengthening sales teams in Asia-Pacific and Europe
Subsequent to Quarter-End:
- Certicom launched its new Asset Management System (AMS), which is
being implemented by global leaders in semiconductor manufacturing to
help lower their inventory and supply chain costs and enable new
revenue sources
- Certicom responds to Research in Motion's announcement of their
unsolicited intent to acquire all of the outstanding Certicom shares
Revenue for the quarter was "Certicom continues to make notable progress at this early stage of our new three-year strategic plan. We're very pleased to be meeting our plan objectives even in this environment of economic turmoil, with several key licensing agreements contributing to strong quarterly and year-to-date revenue numbers," said Mr. Gupta continued: "In addition, we continue to invest in developing a comprehensive solutions portfolio. We recently launched the Certicom Asset Management System, which is initially targeted towards the semiconductor vertical to manage, secure and control manufacturing processes in a global outsourcing environment. This significant development adds to Certicom's strong heritage of solving specific and complex business problems." Second Quarter Financial Review Operating expenses(2) excluding Sony litigation expenses for the quarter were The Company posted a net loss on a GAAP basis of Certicom had Six Month Financial Review Operating expenses(2) excluding Sony litigation expenses for the six-month period were For the first six months of fiscal 2009, the Company posted a net loss on a GAAP basis of For further detail about Certicom's execution of its strategic growth plan, investors are encouraged to refer to additional supporting information on the slides posted on the Company's web site at www.certicom.com in the "Investor Events" section. Financial Outlook Revenues Given the year-to-date results, the backlog in place and the forward-looking pipeline, the Company expects to generate year-over-year revenue growth of at least 25% in fiscal 2009(1) and to double its revenue within three years. Management expects that the momentum in its new market verticals will continue to provide strong revenue growth for the remainder of fiscal 2009 and beyond. Operating expenses(2) For the third quarter of fiscal 2009, operating expenses(2), excluding expenses related to the Sony litigation, are expected to range from Cash Management The Company anticipates that it will be able to achieve positive cash flow by no later than the fourth quarter of fiscal 2010(1). Business Environment Outlook "We are encouraged by our growth in the semiconductor and the energy & utilities verticals, where our solutions offer not only efficiency and cost savings, but also enhanced brand protection and revenue growth," said Mr. Gupta. "We believe that our strong financial position, core technical strengths and early success in executing our new strategic plan provide an excellent base and give us confidence in the longer term outlook, even in the face of the current global economic uncertainty." Mr. Gupta continued, "Looking ahead, we expect to achieve further operational and financial progress as we execute on our strategic plan and move towards our ultimate goal of sustainable, profitable growth." Sony Patent Infringement Litigation Certicom continues to progress as planned through the discovery phase of the Sony litigation. The Company's patent counsel has completed most of its work on securing depositions and assessing documentation and software code. The Company remains confident of its legal position and ability to pursue this litigation to a successful conclusion. As stated previously, the claims construction hearing of the litigation case (known as a Markman hearing) has been set for Conference Call
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Conference Call and Webcast December 4, 2008, 10 a.m. ET (7 a.m. PT)
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Participant Numbers 416-644-3415 or 1-800-733-7571
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The conference call will be webcast live with supporting slides and subsequently archived at www.certicom.com. To listen to the webcast, participants will require Windows Media Player(TM) which can be downloaded from Certicom's website prior to the event. An archived recording will be available from About Certicom Certicom manages and protects the value of content, applications and devices with government-approved security. Adopted by the National Security Agency (NSA) for government communications, Elliptic Curve Cryptography (ECC) provides the most security per bit of any known public-key scheme. As the global leader in ECC, Certicom's security offerings are currently licensed to hundreds of multinational technology companies, including IBM, General Dynamics, Motorola, Oracle and Research In Motion. Founded in 1985, Certicom's corporate offices are in Certicom Safe Harbor Statement Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Forward-looking information includes information concerning Certicom's future financial performance, business strategy, plans, goals and objectives. When used in such documents, the words "plans", "expects", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", "will", "believes" or variations of such words and phrases often, but not always, identify forward looking statements. The forward-looking information reflects management's current beliefs and is based on information currently available to management. The forward-looking information is provided solely to give you the opportunity to review management's beliefs and opinions in respect of the future and the forward-looking information is based on management's current expectations in these areas, and should not be used for any other purpose. The forward-looking information in this news release is not a guarantee of future performance and undue reliance should not be placed upon it. The forward-looking information in this news release includes, but is not limited to, the financial outlooks in several areas in the section titled "Financial Outlook", notably, expectations respecting growth and revenue, operating expenses, and cash management. The forecasts and projections that make up the forward-looking information are based on assumptions which include, but are not limited to: the levels of demand for Certicom's products and services; the ability to obtain and maintain patents and protect Certicom's intellectual property portfolio; the execution of the strategic growth plan; retention of the existing customer base; sufficient human resources to deliver services and execute the strategic plan; currency exchange rates; favourable economic and market conditions; the ability to hedge certain risks; and favourable labour relations. The forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. The factors which could cause actual results or events to differ materially from current expectations include, but are not limited to: the ability of Certicom to successfully implement its strategic initiatives and whether such strategic initiatives will yield the expected benefits; the ability of Certicom to develop, promote and protect its proprietary technology security breaches or defects in Certicom's products; competitive conditions in the businesses in which Certicom participates; changes in consumer spending; the outcome of legal proceedings as they arise; general economic conditions and normal business uncertainty; consolidation in Certicom's industry and by its customers; customer preferences towards product offerings; the risk that customers may cancel their contracts with Certicom; reliance on a limited number of customers; demand for ECC-based technology; performance of Certicom's management team and Certicom's ability to attract and retain skilled employees; operating Certicom's business profitably; fluctuations in revenue and foreign currency exchange rates; interest rate fluctuations and other changes in borrowing costs; the ability to develop and maintain strategic relationships; and other factors identified under the heading "Risk Factors" in Certicom's annual information form dated Certicom, Certicom Security Architecture, Certicom Trust Infrastructure, Certicom CodeSign, Certicom KeyInject, Security Builder, Security Builder API, Security Builder BSP, Security Builder Crypto, Security Builder ETS, Security Builder GSE, Security Builder IPSec, Security Builder NSE, Security Builder PKI and Security Builder SSL are trademarks or registered trademarks of Certicom Corp. All other companies and products listed herein are trademarks or registered trademarks of their respective holders. Information subject to change.
ENDNOTES:
1. This financial outlook is forward-looking information - please refer
to the section "Certicom Safe Harbor Statement" of this news release when
considering this information.
2. This news release contains references to operating expenses. Certicom
defines operating expenses as total operating expenses excluding
depreciation and amortization and stock-based compensation. It also
excludes interest income, other income (expense) and withholding tax
expense.
-------------------------------------------
Three months ended Six months ended
--------------------- ---------------------
October 31, October 31,
2008 2007 2008 2007
-------------------------------------------
Cost of revenues $ 943 $ 998 $ 1,731 $ 1,616
Sales and marketing 2,771 1,796 4,893 3,995
Product development and
engineering 2,072 1,560 4,070 3,409
General and administrative 2,936 1,687 5,063 3,302
---------- ---------- ---------- ----------
Total operating expenses $ 8,722 $ 6,041 $ 15,757 $ 12,322
---------- ---------- ---------- ----------
Less: Litigation (1,841) (562) (2,976) (989)
---------- ---------- ---------- ----------
Total operating expenses
excluding litigation $ 6,881 $ 5,479 $ 12,781 $ 11,333
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
3. This news release contains references to cash, which is defined as
cash and cash equivalents, short term and long term marketable securities
and restricted cash.
October 31, April 30,
2008 2008
Cash and cash equivalents $ 4,069 $ 1,641
Marketable securities 29,202 25,980
Long-term marketable securities - 10,832
-------------------------------------------------------------------------
Total Cash $ 33,271 $ 38,453
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CERTICOM CORP.
--------------
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
CANADIAN GAAP
October 31, April 30,
2008 2008
------------- -------------
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents.................. $ 4,069 $ 1,641
Marketable securities...................... 29,202 25,980
Accounts receivable, net................... 5,439 5,426
Unbilled receivables....................... 601 503
Prepaid expenses and other
current assets............................ 612 659
------------- -------------
Total current assets..................... 39,923 34,209
Long-term marketable securities.............. - 10,832
Property and equipment, net.................. 1,094 1,173
Patents, net................................. 3,009 2,776
Other assets................................. 24 24
------------- -------------
Total assets............................. $ 44,050 $ 49,014
------------- -------------
------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable........................... $ 2,917 $ 2,255
Accrued liabilities........................ 3,420 2,332
Deferred revenue........................... 4,434 5,123
Obligation under capital lease............. 15 17
Current portion of lease inducements....... 52 52
------------- -------------
Total current liabilities................ 10,838 9,779
Other long-term payables..................... 718 718
Obligation under capital lease, long-term.... 17 30
Lease inducements, net of current portion.... 9 35
------------- -------------
Total liabilities........................ 11,582 10,562
Shareholders' equity:
Share capital.............................. 38,676 38,624
Contributed surplus........................ 10,166 9,021
Retained deficit........................... (15,068) (9,131)
Accumulated other comprehensive loss....... (1,306) (62)
------------- -------------
Total shareholders' equity............... 32,468 38,452
------------- -------------
Total liabilities and
shareholders' equity.................... $ 44,050 $ 49,014
------------- -------------
------------- -------------
CERTICOM CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
-----------------------------------------------------------
AND DEFICIT
-----------
(In thousands of U.S. dollars, except number of shares and
per share data)
(Unaudited)
CANADIAN GAAP
Three months ended Six months ended
October 31, October 31,
2008 2007 2008 2007
---------- ---------- ---------- ----------
Revenues:
Product and intellectual
property.................. $ 4,971 $ 1,638 $ 7,319 $ 3,051
Services................... 1,648 2,160 3,495 3,955
---------- ---------- ---------- ----------
Total revenues........... 6,619 3,798 10,814 7,006
Cost of revenues:
Product and intellectual
property.................. 170 - 206 12
Services................... 773 998 1,525 1,604
---------- ---------- ---------- ----------
Total cost of revenues... 943 998 1,731 1,616
---------- ---------- ---------- ----------
Gross margin................. 5,676 2,800 9,083 5,390
Operating expenses:
Sales and marketing........ 2,771 1,796 4,893 3,995
Product development and
engineering............... 2,072 1,560 4,070 3,409
General and
administrative............ 2,936 1,687 5,063 3,302
Depreciation and
amortization.............. 308 330 602 638
Stock-based compensation... 550 677 1,145 1,211
---------- ---------- ---------- ----------
Total operating
expenses................ 8,637 6,050 15,773 12,555
---------- ---------- ---------- ----------
Loss from operations......... (2,961) (3,250) (6,690) (7,165)
Other income:
Interest income............ 357 462 750 986
Interest expense and other
income (expense), net..... 46 (35) 14 (2)
---------- ---------- ---------- ----------
Total other income 403 427 764 984
---------- ---------- ---------- ----------
Loss before provision for
income taxes................ (2,558) (2,823) (5,926) (6,181)
Provision for
income taxes.............. 1 3 11 19
---------- ---------- ---------- ----------
Net loss for the period...... $ (2,559) $ (2,826) $ (5,937) $ (6,200)
Retained deficit,
beginning of period......... (12,509) (2,005) (9,131) 1,369
---------- ---------- ---------- ----------
Retained deficit,
end of period............... $(15,068) $ (4,831) $(15,068) $ (4,831)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and diluted net loss
per share................... $ (0.06) $ (0.06) $ (0.14) $ (0.14)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Shares used in basic and
diluted net loss per share
calculations (000s)......... 43,700 43,637 43,689 43,419
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
CERTICOM CORP.
--------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands of U.S. dollars)
(Unaudited)
CANADIAN GAAP
Three months ended Six months ended
October 31, October 31,
2008 2007 2008 2007
---------- ---------- ---------- ----------
Net loss for the period...... $ (2,559) $ (2,826) $ (5,937) $ (6,200)
Other comprehensive income:
Net unrealized gain (loss)
on derivatives designated
as cash flow hedges....... (925) 960 (1,244) 1,057
---------- ---------- ---------- ----------
Comprehensive loss......... $ (3,484) $ (1,866) $ (7,181) $ (5,143)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
CERTICOM CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(Unaudited)
CANADIAN GAAP
Three months ended Six months ended
October 31, October 31,
2008 2007 2008 2007
---------- ---------- ---------- ----------
Cash flows from operating
activities:
Net income (loss).......... $ (2,559) $ (2,826) $ (5,937) $ (6,200)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and
amortization............ 308 330 602 638
Stock-based compensation 550 677 1,145 1,211
Amortization of lease
inducements............. (13) (13) (26) (26)
Changes in operating
assets and
liabilities:............
Accounts receivable and
unbilled receivables,
net................... (2,903) 114 (111) 2,812
Prepaid expenses and
other assets.......... (763) (48) (1,197) 48
Account payable........ 708 281 662 (297)
Accrued liabilities.... 1,506 (309) 1,088 (953)
Deferred revenue....... (774) (873) (689) (679)
Obligation under
capital lease......... (8) - (15) -
Other payables......... - (1) - (28)
---------- ---------- ---------- ----------
Net cash provided by
(used in) operating
activities.......... (3,948) (2,668) (4,478) (3,474)
Cash flows from investing
activities:
Purchase of property and
equipment................. (216) (250) (325) (433)
Purchase of patents........ (223) (342) (430) (654)
Net maturity of marketable
securities................ 209 1,415 7,610 2,186
---------- ---------- ---------- ----------
Net cash provided by
(used in) investing
activities.............. (230) 823 6,855 1,099
Cash flows from financing
activities:
Proceeds from issuance of
common stock, net......... 46 57 52 2,091
Common shares repurchased.. - - - (306)
---------- ---------- ---------- ----------
Net cash provided by
financing activities.... 46 57 52 1,785
Effect of exchange rate on
cash and cash equivalents... (2) - (1) -
---------- ---------- ---------- ----------
Net increase (decrease) in
cash and cash equivalents... (4,134) (1,788) 2,428 (590)
Cash and cash equivalents,
beginning of period......... 8,203 4,595 1,641 3,397
---------- ---------- ---------- ----------
Cash and cash equivalents,
end of period............... $ 4,069 $ 2,807 $ 4,069 $ 2,807
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
SOURCE Certicom Corp.
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