N@N

REDKNEE REPORTS FOURTH QUARTER FISCAL 2010 FINANCIAL RESULTS

^{Published on 2010-12-01 15:55:26 - Market Wire}
 

TORONTO, Dec. 1 /CNW/ - [ Redknee ] (TSX:[ RKN ]), a leading provider of business-critical software and services for communications service providers, including end-to-end converged billing, real-time charging, rating and personalization, today announced its results for the fiscal year 2010, ended September 30, 2010. 

Q4 Highlights:

• Q4 2010 revenue of $13.0M (on constant dollar basis $14.2M, Q4 2009: $10.8M)
• Gross margin of 73% (Q4 2009: 75%)
• EBITDA of $2.9M (Q4 2009: $1.9M)
• Operating income of $2.0M (Q4 2009: loss of $0.3M)
• Won $5+ million transformation contract in APAC

FY2010 Highlights:

• 2010 revenue of $48.9M (on constant dollar basis $54.6M, 2009: $53.3M)
• Gross margin of 73% (2009: 78%)
• EBITDA of $6.1M (2009: $6.5M)
• Operating income of $3.2M (2009: $4.2M)
• Order backlog of $36.5M (2009: $25.2M)
• Key TCB deals: APAC billing replacement, MVNO US reference, two long term service contracts
• Acquisition of Nimbus Systems, a Tier 1 billing and customer care specialist
• Patents: 28 issued, over 70 pending
• Awarded Billing and OSS World Excellence Award for Best Service Enablement Tool
• Named one of the Top 50 Best Managed Companies in Canada Award for the eighth consecutive year

"Redknee delivered good progress on its strategic growth plan, while achieving its key strategic objectives, securing record order backlog and positioning us for growth in fiscal 2011. We believe that our strategy of focusing on our core suite of monetization software products and services continues to drive customer and shareholder value in our company, which has been further enhanced through the acquisition of Nimbus Systems. We expect the quarter-to-quarter revenue volatility and foreign exchange headwinds to continue. We remain focused on our long-term growth in revenues and earnings, with a commitment to increasing our recurring revenues," noted Lucas Skoczkowski, CEO for Redknee. 

Please see the section regarding Forward-Looking Statements which forms an integral part of this release.  These results, along with the unaudited 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 ]

______________________________________

Earnings Before Interest Expense, Income Taxes, Depreciation, and Amortization (EBITDA) is a non-GAAP measure. While useful in understanding Company operational results, EBITDA is not standardized and may not be comparable to similar results reported by other companies. EBITDA described above is calculated as Income (loss) from operations, net of foreign exchange gain/loss, amortization and stock-based compensation.

OVERVIEW

Redknee remains focused on the three core elements of its long-term corporate growth strategy: 

1. Continued expansion and evolution of our business-critical solutions to our global customer base;
2. Market share growth and leadership in our served addressable market; and
3. An increasing proportion of sustainable recurring revenues.

Redknee's monetization suite of products and services (real-time Turnkey Converged Billing and Next Generation Rating Charging & Policy solutions) contributed to over 90% of the revenue in fiscal 2010 - in line with its plan. 

Redknee's market leading solutions continue to be recognized globally by telecom providers. Redknee has continued to take market share in its served addressable market by gaining over 15 new customers across Americas, APAC and EMEA through a combination of deliveries to new operators, modular software delivery that integrates with existing systems, as well as replacement of competitors' end-to-end platforms. Furthermore, Redknee's Next Generation Rating and Charging solution was awarded the Billing and OSS World Excellence Award for its ability to improve its customers' business performance and profitability. Redknee's NGRC is an end-to-end real-time data rating, charging and policy engine that enables operators to launch new services and manage bandwidth, while creating new revenue streams based on diverse pricing options for both prepaid and post-paid subscribers.

Redknee's acquisition of Nimbus Systems further strengthens its operating model and market share, particularly in global Tier-1 group operators, including Telefonica, Orange and Vodafone, while providing future opportunities to expand into the Latin American markets. The market, product and cultural synergies between the two companies will elevate Redknee's capabilities and market presence to better serve its customers, create cross-selling opportunities for joint product and service portfolios, while positioning the company to engage and win new customers.

Financial Review

For Q4 of fiscal 2010, revenue was $13.0 million, up 20% from the $10.8 million recorded in Q4 2009. Operating profit for the quarter was $2.0 million, compared to a loss of $0.3 million in Q4 2009. On a constant currency basis, revenue would have been $14.2M or growth of 31% over Q4 2009.

For fiscal 2010, Redknee's revenue decreased by 8% to $48.9 million compared to revenue of $53.3 million in fiscal 2009. The majority of the Company's revenue is denominated in U.S. dollars and thus revenues are impacted by exchange rate fluctuations. On a constant currency basis, fiscal 2010 revenue would have been $54.6 million.

Recurring revenue was enhanced by sales and renewals of customer support services, software subscriptions and term licenses. On a four-quarter trailing basis, recurring revenues were at 41% of overall revenues.

Gross margin for fiscal 2010 decreased to $35.8 million or 73% of revenue from $43.1 million or 78% of revenue in fiscal 2009.

Redknee recorded an EBITDA of $6.1 million for fiscal 2010 compared to an EBITDA of $6.5 million for the fiscal 2009.

The Company recognized a foreign currency exchange loss of $ 1.7 million in fiscal 2010, as compared to a foreign currency exchange loss of $0.9 million in fiscal 2009.

Net profit in fiscal 2010 was $1.1 million or $0.02 per share, as compared to $3.3 million or $0.06 per share in fiscal 2009.

Cash and investments (including restricted cash) as at September 30, 2010 was $19.6 million versus $19.9 million as at June 30, 2010.

CONFERENCE CALL

The Company will discuss the results on a conference call and webcast at 8:30 a.m. EDT time on Thursday December 2, 2010.

To participate in the conference call please dial the following numbers five minutes before the start of the call to ensure your participation:

The webcast can be accessed at: [ http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3310560 ]

Conference Replay

The conference call will be archived to replay by telephone at: 416-849-0833 or Toll-Free at 1-800-642-1687 (Passcode No. 24660302) from 11:30 a.m.

FORWARD-LOOKING STATEMENTS

Certain statements in this document may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this document, such statements use such words as "may", "will", "expect", "continue", "believe", "plan", "intend", "would", "could", "should", "anticipate" and other similar terminology. These statements reflect current assumptions and expectations regarding future events and operating performance and speak only as of the date of this document. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under  the "Risk Factors" section of the Company's the most recently filed AIF which is available on SEDAR at [ www.sedar.com ] and on the Company's web-site at [ www.redknee.com ].  

Although the forward-looking statements contained in this document are based upon what we believe are reasonable assumptions, we cannot assure investors that our actual results will be consistent with these forward-looking statements. We assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances, except as required by securities law.

About REDKNEE:

Redknee is a leading global provider of innovative communication software products, solutions and services. Redknee's award-winning solutions enable operators to monetize the value of each subscriber transaction while personalizing the subscriber experience to meet mainstream, niche and individual market segment requirements. Redknee's revenue generating solutions provide advanced converged billing, rating, charging and policy for voice, messaging and new generation data services to over 80 network operators in over 50 countries. References to Redknee refer to the combined operations of the parent Redknee Solutions Inc, and all wholly owned subsidiaries.

Redknee^®, Redknee Solutions, and the Redknee logo are trademarks or registered trademarks of Redknee Solutions Inc. All other company, product names and any registered and unregistered trademarks mentioned (if any) are used for identification purposes only and remain the exclusive property of their respective owners.

For more information, visit [ www.redknee.com ].