Mr. Robert Stabile reports

OPTIVA INC. REPORTS FIRST QUARTER 2024 FINANCIAL RESULTS

Optiva Inc. today released its first quarter financial results for the three-month period ended March 31, 2024. All amounts are stated in United States dollars unless otherwise indicated.

• Revenue of $11.7-million;
• Robust sales pipeline with two additional customer wins;
• Total contract value (TCV) bookings of $21.8-million
• Gross margin of 58 per cent;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss of $2.3-million;
• Adjusted EPS (earnings per share) loss of (98 cents);
• $12.0-million of cash.

Demonstrating continued momentum, Optiva signed contracts with two new customers leveraging telecom opportunities in Africa during the three-month period ended March 31, 2024. Over the past 12 months, a total of eight new customers selected Optiva, indicating confidence in the company's software portfolio. During the quarter, Optiva entered into a partnership to deliver integrated BSS and OSS solutions to leverage data and GenAI for faster time to market and new digital customer experiences. Subsequent to quarter-end, the company also announced that its BSS was selected to enable platforms to connect transitioning U.S. veterans with peer mentors and community resources.

As Optiva continues to sign new customers, the more subjected it is to customer specific delays as experienced in the most recent quarter stemming from regulatory complexity and supply chain challenges. These delays have impacted Optiva's short-term revenue, but given the large number of new customer deliveries scheduled for 2024, the expectation remains for full-year revenue to be back-end weighted. R&D (research and development) spending will remain elevated throughout 2024 as Optiva completes the substantial roadmap commitment made in 2021. While these expenditures have weighed on near-term margins and masked the underlying profitability of the business, the company is seeing meaningful positive impacts from this investment in the form of increasing customer wins, win-backs and growing revenue backlog. "Customer retention continues to be positive, including the win back of two operators in the first quarter, serving as another data point for the technical leadership that Optiva's products have re-established after the recent investments. We remain confident we will achieve our year-over-year revenue growth target of at least 10 per cent in 2024," said Robert Stabile, chairman of the board of directors and chief executive officer of Optiva.

Business highlights

• TCV of Q1 2024 bookings totalled $21.8-million. For the trailing 12 months, TCV of bookings totalled $77.7-million.
• The company announced that its Optiva BSS platform now leverages generative AI (GenAI) technology and full integration with Google Cloud's BigQuery and Analytics capabilities. This allows operators to quickly highlight new, targeted revenue opportunities and dramatically reduce customer churn. The capabilities power the deep learning and real-time market data needed for customized offerings, hyperpersonalized pricing and bundling and accelerated time to market.
• Optiva and GDi, a digital technology company with a complete portfolio for network planning, design and rollout, announced a strategic partnership to deliver integrated BSS and OSS solutions. The partnership will provide telecoms with comprehensive and complete solutions, unifying and integrating billing, and charging customer data with network management and operations support data. The preintegrated and tested BSS and OSS software leverages data and GenAI for faster time to market and new digital customer experiences.
• On May 1, 2024, the company announced that on|comms, which provides veterans with mobile connectivity to access a unified set of services, selected Optiva BSS platform, hosted on Google Cloud, to launch a unique MVNO service. Enabled with Optiva BSS data, on|comms will use predictive analytics to pro-actively identify at-risk service members, addressing the essential needs of veterans. on|comms, in partnership with Onward Ops, will provide a comprehensive transition assistance program, supporting active duty service members and their families and their reintegration into civilian life.
• On May 8, 2024, Optiva announced that it was awarded ISO 27001 certification, the leading international standard for information security, cybersecurity and privacy protection. This certification demonstrates the maturity and security of its business operations and company-wide protocols.

Revenue for Q1 2024 was $11.7-million. On a year-over-year basis, the change by revenue type included a $1.1-million decrease in support and subscription revenue, a $100,000 decrease in software and services revenue, and third party software and hardware revenue increased by $200,000. The year-over-year decline in support and subscription reflects the runoff of a few customers who had previously notified the company of their intentions to replace Optiva.

Gross margin for Q1 2024 was 58 per cent compared with 69 per cent during the same period in 2023. The decline in gross margin is primarily attributable to lower revenue from high-margin licence and support and subscription revenue, along with customizations with lower margins ordered by customers that required fulfilment, compared with the previous period. The company expects that its gross margins may fluctuate as it proves its cloud-native model and product capabilities to new and existing customers when they onboard the public or private cloud in future periods.

General and administrative expenses (G&A) increased to $3.0-million compared with $2.5-million during the same period in 2023. The increase in G&A is mainly due to higher professional fees related to certain continuing tax audits, higher bad debt expense, higher share-based compensation partially offset by lower amortization costs related to fully amortized assets. Excluding share-based compensation, amortization and depreciation, G&A expenses were $2.5-million, or 22 per cent of revenue, for the three months ended March 31, 2024. Excluding share-based compensation, amortization and depreciation, G&A expenses were $2.0-million, or 16 per cent of revenue, for the three months ended March 31, 2023.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for Q1 2024 decreased to a loss of $2.3-million as compared with income of $1.0-million during the same period in 2023, primarily driven by lower revenue and gross margin.

Net loss for Q1 2024 was $6.0-million compared with a net loss of $2.8-million during the same period in 2023.

The company ended the first quarter with a cash balance of $12.0-million (including restricted cash). The company used $3.4-million of cash from operating activities during the quarter.

About Optiva Inc.

Optiva is a leader in powering the telecom industry with cloud-native billing, charging and revenue management software on private and public clouds. Its products are delivered globally on the private and public cloud. The company's solutions help service providers maximize digital, 5G, IoT (Internet of Things) and emerging market opportunities to achieve business success. Established in 1999, Optiva is listed on the Toronto Stock Exchange (TSX: OPT).

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