CounterPath Reports Third Quarter Fiscal 2012 Financial Results
Growth in revenue and margins driven by increased adoption of mobile applications
VANCOUVER, March 12, 2012 /PRNewswire/ - CounterPath Corporation ("CounterPath" or the "Company") (TSX-V: CCV) (OTCBB: CPAH), an award-winning provider of desktop and mobile VoIP software products and solutions, today announced the financial and operating results for the three months ended January 31, 2012.
Financial and operating highlights include:
- Record revenue of $3.5 million, an increase of 15% compared to revenue of $3.0 million for the third quarter ended January 31, 2011.
- Non-GAAP gross profit increased to 87% of revenue compared to 83% for the same quarter last year.
- Non-GAAP operating income of $0.04 million compared to a non-GAAP operating loss of $0.4 million for the same quarter last year.
- Net loss of $0.1 million, or $0.00 per share, compared to a net loss of $0.5 million, or ($0.01) per share for the same quarter last year.
- Three 2011 INTERNET TELEPHONY Product of the Year Awards by TMC, a global, integrated media company, for CounterPath's Bria iPhone Edition, Bria iPad Edition and Bria Android Edition mobile softphones.
- Subsequent to the quarter, the launch by Canada's largest wireless provider of the Rogers One NumberTM Service using CounterPath technology to enable Canadians to use their wireless numbers to enable single-number reachability by talk and text whether they are using their mobile devices or computers.
"Sales and margins were strong again this quarter, particularly from our mobile applications, despite it being a seasonally softer period, and we achieved positive operating income reflecting the inflection point we are at in our growth," said Donovan Jones, President and Chief Executive Officer. "Our strategy of augmenting our industry leading desktop softphone with our iPhone, iPad and Android mobile applications is proving sound. The market is getting stronger for our mobile applications as smartphone sales continue to grow and now outpace sales of PCs (Canalys). We are seeing significant interest from global service providers who are increasingly looking to deploy softphone applications to compete with the over-the-top threats such as Skype," continued Jones.
Financial Results
(All amounts in U.S. dollars and in accordance with accounting principles generally accepted in the United States ("GAAP") unless otherwise specified.)
For the quarter ended January 31, 2012, revenue was $3.5 million compared to $3.0 million for the same quarter last year. Software revenue was $1.9 million, compared to $1.5 million for the same quarter last year, and service revenue was $1.6 million, compared to $1.5 million for same quarter last year. Increased sales reflect greater sales of products to original equipment manufacturers, as well as increased sales of mobile applications.
Operating expenses for the quarter ended January 31, 2012 were $3.8 million compared to $3.7 million for the same quarter last year. Operating expenses for the quarter included a non-cash expense of $0.2 million for amortization of intangible assets and a non-cash stock-based compensation expense of $0.2 million.
Sales and marketing expenses were $1.0 million for the quarter ended January 31, 2012 compared to $0.8 million for same quarter last year. For the quarter ended January 31, 2012, research and development expenses were $1.2 million and general and administrative expenses were $0.9 million, compared to $1.2 million and $1.0 million, respectively, for the same quarter last year.
The net loss for the quarter ended January 31, 2012 was $0.1 million, or $0.00 per share, compared to a net loss of $0.5 million, or a loss of $0.01 per share, for the quarter ended January 31, 2011. The net loss included a non-cash gain of $0.2 million for the change of fair value of derivative liability attributable to warrants issued to investors in the June 14, 2011 financing.
At January 31, 2012, the Company had $8.1 million in cash, compared to $1.7 million at April 30, 2011. At January 31, 2012, the Company's working capital was $7.5 million, compared to $1.4 million at April 30, 2011.
About CounterPath
CounterPath's SIP-based VoIP softphones are changing the face of telecommunications. An industry and user favorite, Bria softphones for desktop and mobile devices, together with the company's server applications and Fixed Mobile Convergence (FMC) solutions, enable service providers, OEMs and enterprises large and small around the globe to offer a seamless and unified communications experience across both fixed and mobile networks. 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 Alcatel-Lucent, AT&T, Verizon, BT, Mobilkom Austria, Rogers, Avaya, BroadSoft, Cisco Systems, GENBAND, Metaswitch Networks, Mitel and NEC. For more information, visit www.counterpath.com.
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 gross profit and non-GAAP income (loss) from operations which exclude non-cash stock-based compensation and amortization of intangible asset charges relative to gross profit and income (loss) from operations 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 | Nine Months Ended | |||||||||||||
| January 31, | January 31, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||
| Non-GAAP gross profit: | ||||||||||||||
| Revenue | $ | 3,485,871 | $ | 3,022,102 | $ | 9,718,458 | $ | 7,809,350 | ||||||
| Less: | ||||||||||||||
| Cost of sales | 670,687 | 724,309 | 2,179,033 | 2,168,993 | ||||||||||
| GAAP gross profit | $ | 2,815,184 | $ | 2,297,793 | $ | 7,539,425 | $ | 5,640,357 | ||||||
| Percentage of revenue | 81% | 76% | 78% | 72% | ||||||||||
| GAAP gross profit | $ | 2,815,184 | $ | 2,297,793 | $ | 7,539,425 | $ | 5,640,357 | ||||||
| Plus: | ||||||||||||||
| Stock-based compensation | 8,835 | 8,971 | 26,754 | 19,312 | ||||||||||
| Amortization of intangible assets | 199,561 | 214,646 | 683,735 | 633,038 | ||||||||||
| Non-GAAP gross profit | $ | 3,023,580 | $ | 2,521,410 | $ | 8,249,914 | $ | 6,292,707 | ||||||
| Percentage of revenue | 87% | 83% | 85% | 81% | ||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||
| January 31, | January 31, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||
| Non-GAAP income (loss) from operations: | ||||||||||||||
| GAAP loss from operations | $ | (319,989) | $ | (687,021) | $ | (1,499,849) | $ | (3,317,727) | ||||||
| Plus: | ||||||||||||||
| Stock-based compensation | 158,649 | 109,811 | 532,832 | 691,595 | ||||||||||
| Amortization of intangible assets | 199,561 | 214,646 | 683,735 | 633,038 | ||||||||||
| Non-GAAP income (loss) from operations | $ | 38,221 | $ | (362,564) | $ | (283,282) | $ | (1,993,094) | ||||||
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, expectations or intentions regarding the future, such as the following: (1) The market is getting stronger for our mobile applications as smartphone sales continue to grow and now outpace sales of PCs1.
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) general economic conditions as they affect CounterPath and its current and prospective customers, including a continued downturn in general economic conditions internationally, (2) the Company's ability to remain competitive as other better financed parties develop and release competitive products, the Company's ability to control its operating expenses, which may adversely affect its financial condition, (3) a decline in our stock price or insufficient investor interest in the Company's securities which may impact on the Company's ability to raise additional financing as required, (4) the impact of intellectual property litigation that could materially and adversely affect our business, (5) the success by the Company of the sales of its current and new products, (6) the impact of technology changes on the Company's products and on our industry, (7) the failure to develop new and innovative products using the Company's technologies, (8) the potential dilution to shareholders or overhang on our share price of our outstanding stock options and warrants. Readers should also refer to the risk disclosures outlined in the Company's quarterly reports on Form 10-Q or Form 10-Q/A, or in the annual reports on Form 10-K or Form 10-K/A, and the Company's other disclosure documents filed from time-to-time with the Securities and Exchange Commission at 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.
Disclaimer: Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
| COUNTERPATH CORPORATION CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS (Stated in U.S. Dollars) |
||||||||
| January 31, | April 30, | |||||||
| 2012 | 2011 | |||||||
| Assets | (Unaudited) | |||||||
| Current assets: | ||||||||
| Cash | $ | 8,141,839 | $ | 1,707,397 | ||||
| Accounts receivable (net of allowance for doubtful accounts of $244,576 and $49,883, respectively) | 4,092,358 | 3,018,188 | ||||||
| Prepaid expenses and deposits | 104,246 | 110,412 | ||||||
| Total current assets | 12,338,443 | 4,835,997 | ||||||
| Deposits | 62,146 | 159,433 | ||||||
| Equipment | 16,872 | 59,574 | ||||||
| Intangible assets (net of accumulated amortization of $5,787,305 and $5,103,570, respectively) | 141,063 | 859,664 | ||||||
| Goodwill | 8,752,329 | 9,247,993 | ||||||
| Other assets | 46,193 | 48,308 | ||||||
| Total Assets | $ | 21,357,046 | $ | 15,210,969 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 2,095,965 | $ | 2,340,897 | ||||
| Derivative liability | 674,909 | - | ||||||
| Unearned revenue | 1,175,527 | 958,626 | ||||||
| Customer deposits | 807,316 | 2,018 | ||||||
| Accrued warranty | 98,668 | 146,868 | ||||||
| Total current liabilities | 4,852,385 | 3,448,409 | ||||||
| Deferred lease inducements | 59,620 | 2,474 | ||||||
| Convertible debentures | - | 1,305,002 | ||||||
| Unrecognized tax benefit | 98,575 | 98,575 | ||||||
| Total liabilities | 5,010,580 | 4,854,460 | ||||||
| Stockholders' equity: | ||||||||
| Preferred stock, $0.001 par value | ||||||||
| Authorized: 100,000,000 | ||||||||
| Issued and outstanding: January 31, 2012 - 1; April 30, 2011 - 1 | - | - | ||||||
| Common stock, $0.001 par value | ||||||||
| Authorized: 83,076,900 | ||||||||
| Issued and outstanding: | ||||||||
| January 31, 2012 - 39,908,297; April 30, 2011 - 33,439,906 | 39,909 | 33,440 | ||||||
| Additional paid-in capital | 60,786,052 | 53,420,601 | ||||||
| Accumulated deficit | (44,199,891) | (43,323,410) | ||||||
| Accumulated other comprehensive income (loss) - currency translation adjustment | (279,604) | 225,878 | ||||||
| Total stockholders' equity | 16,346,466 | 10,356,509 | ||||||
| Liabilities and Stockholders' Equity | $ | 21,357,046 | $ | 15,210,969 | ||||
| COUNTERPATH CORPORATION CONDENSED INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Stated in U.S. Dollars) (Unaudited) |
|||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||
| January 31, | January 31, | ||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||
| Revenue: | |||||||||||||||
| Software | $ | 1,856,867 | $ | 1,489,825 | $ | 5,568,778 | $ | 5,060,294 | |||||||
| Service | 1,629,004 | 1,532,277 | 4,149,680 | 2,749,056 | |||||||||||
| Total revenue | 3,485,871 | 3,022,102 | 9,718,458 | 7,809,350 | |||||||||||
| Operating expenses: | |||||||||||||||
| Cost of sales (includes depreciation of $17,363 (2011 - $15,835) and amortization of intangible assets of $683,735 (2011 - $633,038)) | 670,687 | 724,309 | 2,179,033 | 2,168,993 | |||||||||||
| Sales and marketing | 1,033,938 | 841,230 | 2,777,204 | 2,607,177 | |||||||||||
| Research and development | 1,231,789 | 1,157,581 | 3,338,317 | 3,317,343 | |||||||||||
| General and administrative | 869,446 | 986,003 | 2,923,753 | 3,033,564 | |||||||||||
| Total operating expenses | 3,805,860 | 3,709,123 | 11,218,307 | 11,127,077 | |||||||||||
| Loss from operations | (319,989) | (687,021) | (1,499,849) | (3,317,727) | |||||||||||
| Interest and other income (expense), net: | |||||||||||||||
| Interest and other income | 45,509 | 96,505 | 144,345 | 191,293 | |||||||||||
| Interest expense | (428) | (42,152) | (172,112) | (44,905) | |||||||||||
| Change in fair value of derivative liability | 208,504 | - | 636,232 | - | |||||||||||
| Gain on settlement of debt | - | - | − | 246,715 | |||||||||||
| Foreign exchange gain | 3,592 | 141,408 | 14,903 | 157,108 | |||||||||||
| Net loss for the period | $ | (62,812) | $ | (491,260) | $ | (876,481) | $ | (2,767,516) | |||||||
| Other comprehensive income (loss): | |||||||||||||||
| Foreign currency translation adjustments | (87,644) | 55,697 | (505,482) | (144,883) | |||||||||||
| Comprehensive loss | $ | (150,456) | $ | (435,563) | $ | (1,381,963) | $ | (2,912,399) | |||||||
| Net loss per share: | |||||||||||||||
| Basic and diluted | $ | (0.00) | $ | (0.01) | $ | (0.02) | $ | (0.08) | |||||||
| Weighted average common shares outstanding: | 39,876,373 | 33,206,905 | 38,420,132 | 33,128,861 | |||||||||||
SOURCE CounterPath Corporation
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