VANCOUVER, BC–(Marketwired – November 10, 2016) – Apivio Systems Inc. (“Apivio” or the “Company“) (TSX VENTURE: APV) today reported its results of operations for the third quarter ended September 30, 2016. All amounts are in thousand Canadian dollars unless otherwise specified. For the full condensed consolidated interim financial statements and management discussion & analysis for the third quarter ended September 30, 2016, please visit SEDAR at www.sedar.com.
Third Quarter Highlights:
- Sales decreased 12% to CAD $14,818 compared to $16,867 in Q3 2015. Sales were lower due to several of our largest telecom customers in Korea reducing their sales promotional activities which resulted in lower sales of our IP Phones. Weakness in the South Korean economy as well as the relative maturation of the enterprise VoIP telephony industry also contributed to the decline in growth. Apivio continues to be the market share leader of VoIP phones in the small business VoIP telephony sector in South Korea, having sold nearly six million VoIP phones in that market since inception in 2003;
- Gross margins were 18.5% compared to 17.4% in Q3 2015. Margins improved compared to 17.6% in Q2 2016 due to favourable Korean Won to USD exchange rates and product mix;
- Adjusted EBITDA decreased to $578 compared to $801 in Q3 2015;
- Net income of $284 compared to $516 in Q3 2015. Net income was lower in Q3 2016 due, in part, to the impact of the hedging program that was implemented at the end of the first quarter of 2016 in response to fluctuations in the USD and KRW rates. The Company had a loss from hedging of $331 since the Korean Won strengthened in the third quarter of 2016. In the absence of the hedging loss, net income for Q3 2016 would have been higher than the comparable quarter in 2015. The amount of the hedging loss is reflected in net finance costs on the Income Statement;
- Earnings per share of $0.01 compared to $0.01 in Q3 2015.
Nine Months Ended Highlights:
- Sales for the nine months ended September 30, 2016 decreased 5% to CAD $41,275 compared to CAD $43,632 in the same period in 2015, in part because of lower sales promotional activity by our major customers in South Korea. In addition, there were no sales of the Android desk phone in North America since our customer was (1) adding more functionalities and features to the ecosystem around the phone and (2) awaiting guidance from its parent company on expanding our partnership into a global opportunity;
- Gross margins decreased slightly to 17.5% compared to 17.9%, primarily due to the adverse effect of Korean Won to US Dollar exchange rates for the nine months ended 2016 compared to the same period in 2015;
- Adjusted EBITDA of $986 compared to $1,489 for the nine months ended 2015;
- Net income of $157 compared to net income of $644 for the nine months ended 2015. Adjusted EBITDA and net income were both lower as a result of lower sales and lower gross margins; and
- Net income per share of ($0.00) compared to $0.01 in nine months ended 2015.
| [expressed in thousands of CAD$ | Three Months Ended | Nine Months Ended | ||||||||||||||
| except percentages and EPS] | September 30, | September 30, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Total Revenues | $ | 14,818 | $ | 16,867 | $ | 41,275 | $ | 43,632 | ||||||||
| Gross Profit Margin | 18.5 | % | 17.4 | % | 17.5 | % | 17.9 | % | ||||||||
| Net Income | $ | 284 | $ | 516 | $ | 157 | $ | 644 | ||||||||
| Basic and Diluted Weighted Average | ||||||||||||||||
| Net Income per Share | 0.01* | $ | 0.01 | $ | – | $ | 0.01 | |||||||||
| Total Assets | $ | 20,411 | $ | 20,457 | $ | 20,411 | $ | 20,457 | ||||||||
| * Actual Q3 2016 EPS of $0.0053 is rounded to $0.01 | ||||||||||||||||
Operating Highlights:
- The Company announced the launch of its new Liberty L2 Wi-Fi handset in the North American market with an initial order from TeleDynamics, a leading distributor in the US
- The Company presented at the 2nd annual StableView Asset Management TECH16 Conference
- Subsequent to the quarter, the Company announced its Monet Series UT880 Android Desktop Phone completed interoperability testing with BroadSoft’s SIP call control platform
- Subsequent to the quarter, the Company announced its L2 Wi-Fi handset completed interoperability testing with BroadSoft’s SIP call control platform
- Subsequent to the quarter, the Company announced that they will be presenting their Android and Wi-Fi phones at the BroadSoft Connections 2016: Let’s Change the Game conference held November 13 to 15, 2016 in San Antonio
“During the third quarter of the year, we saw a slowdown in the sales from our South Korean telecom customers due to fewer sales promotional activities undertaken compared to the previous two years,” said Rob Bakshi, CEO of Apivio Systems Inc. “However, we maintain strong relationships with the largest telecom providers in the country as a trusted, respected and innovative supplier that is well-positioned for future growth in that market. In addition to our efforts in the South Korean market, we continue to make constructive steps towards reaching a definitive agreement with NEC Japan to market and sell Apivio’s technology globally.”
Continues Mr. Bakshi, “Lastly, earlier in the quarter we announced that TeleDynamics will distribute the company’s market-leading Wi-Fi, Android and other VoIP devices in the United States, having made an initial purchase order for 2,000 of Apivio’s Liberty L2 Wi-Fi phones. We continue to work on new distribution agreements that will provide us with additional channels to sell our suite of phones.”
About Apivio Systems Inc.
Apivio Systems Inc. (“Apivio” or the “Company”) (TSX VENTURE: APV) is a Canadian technology company principally engaged in the design, development, marketing, and sale of communications equipment and software. It has a wholly-owned Korean subsidiary with a history of supplying VoIP telephone equipment and other products to major Korean and international telecommunications carriers. For more information regarding Apivio, please refer to its respective public filings available at www.sedar.com.
This press release has been prepared by Apivio Systems Inc. Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-Looking Statements
Statements contained in this news release that are not historical facts are “forward-looking information” or “forward-looking statements” (collectively, “Forward-Looking Information”) within the meaning of applicable Canadian securities legislation. Forward-Looking Information includes, but is not limited to, disclosure regarding possible events, anticipated revenue, conditions or financial performance that is based on assumptions about future economic conditions and courses of action. In certain cases, Forward-Looking Information can be identified by the use of words and phrases such as “plans”, “expects” or “does not expect”, “is expected”, budget”, “scheduled”, “suggest”, “optimize”, “estimates”, “forecasts”, “intends”, “anticipates”, “potential” or “does not anticipate”, believes”, “anomalous” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-Looking Information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the Forward-Looking Information. Although Apivio has attempted to identify important factors that could affect Apivio and may cause actual actions, events or results to differ materially from those described in Forward-Looking Information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that Forward-Looking Information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on Forward-Looking Information. Except as required by law, Apivio does not assume any obligation to release publicly any revisions to Forward-Looking Information contained in this news release to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
For Further Information, please contact:
Babak Pedram
Investor Relations
Virtus Advisory Group Inc.
bpedram@virtusadvisory.com
416-644-5081
Rob Bakshi
President and Chief Executive Officer
rbakshi@apivio.com
604-343-4200
www.apivio.com