Ms. Danielle Royston reports

REDKNEE SOLUTIONS INC. REPORTS FOURTH QUARTER AND FULL YEAR FISCAL 2017 RESULTS

Redknee Solutions Inc. has released results for its fiscal fourth quarter and full year ended Sept. 30, 2017. (All figures are in U.S. dollars unless otherwise stated.)

"The results of the fourth quarter reflect our continuing efforts to strengthen and enhance our long-term value proposition for shareholders," said Danielle Royston, chief executive officer of Redknee. "Using the proceeds from our rights offering, we are full speed ahead with our strategic plan and have already executed on a number of our restructuring initiatives. Furthermore, from an operational perspective, we continue to make noticeable progress on both our product revitalization plan and our customer success efforts worldwide. We remain committed to rebuilding a great company founded on great people and great products."

Fiscal fourth quarter 2017 financial highlights (comparisons made between fiscal fourth quarter fiscal 2017 and fiscal fourth quarter fiscal 2016 results, unless otherwise noted):

• Revenue totalled $33.8-million compared with $40.7-million.
• Gross profit was $20.0-million (59-per-cent gross margin) compared with $23.1-million (57-per-cent gross margin).
• Recurring revenue was 76 per cent of revenue, compared with 63 per cent.
• Operating expenses for the period were $27.5-million compared with $34.4-million.
• Net loss was $10.4-million, or a seven-cent loss per share, compared with a net loss of $14.7-million, or a 14-cent loss per share.
• Cash used in operations was $10.8-million.

Fiscal 2017 financial highlights (comparisons made between fiscal 2017 and fiscal 2016 results, unless otherwise noted):

• Revenue totalled $137.9-million compared with $171.1-million.
• Gross profit was $79.9-million (58-per-cent gross margin) compared with $92.6-million (54-per-cent gross margin).
• Recurring revenue was 69 per cent of revenue, compared with 60 per cent.
• Operating expenses for the year were $116.0-million compared with $145.9-million.
• Net loss was $58.8-million (including $18.8-million of restructuring charge), or a 49-cent loss per share compared with a net loss of $66.9-million (including $35.2-million of restructuring charge), or a 62-cent loss per share.
• Cash used in operations was $29.0-million.

Operational highlights -- fourth quarter 2017 and subsequent:

• Received shareholder approval for and completed rights offering raising $96.5-million;
• Appointed Robert Stabile to board of directors;
• Launched a restructuring plan to reduce employees, close down and streamline facilities globally, and make organizational changes for an estimated total cost of $48-million to $50-million;
• Announced collaboration between Redknee and Google cloud engineering teams to integrate cloud spanner innovation into Redknee products and began offering high performance Google cloud spanner to customers.

"Our revenue has been tracking lower, and although our customers and other stakeholders are supportive of the actions we are taking to improve our business, we expect to see revenue shrinking further in 2018 and potentially into 2019 until our restructuring is fully completed," added Ms. Royston.

"This is a long turnaround story, and while we have made a good start in executing on our strategic plan, there is still a lot of work to do. We have added strength to our board of directors, made numerous product improvements and are seeing directional improvement in our customer success rates. For the next several quarters, we will invest the proceeds from our rights offering in our continued restructuring. In turn, the savings realized from our restructuring will be channelled into customer success efforts and ongoing product revitalization."

These results, along with the annual audited consolidated financial statements and the company's management's discussion and analysis, are available on the company's website and on SEDAR.

Conference call

The company will host a conference call Dec. 7, 2017, to discuss its fourth quarter and fiscal 2017 results. CEO Ms. Royston and interim chief financial officer Anin Basu will host the presentation starting at 8:30 a.m. Eastern Time. A question-and-answer session will follow management's presentation.

Date:  Dec. 7, 2017

Time:  8:30 a.m. Eastern Time (5:30 a.m. Pacific Time)

Dial-in number:  1-888-231-8191

International:  1-647-427-7450

Conference ID No.:  3579199

The presentation will be webcast live and available for replay on the investors section of Redknee's website.

Please call the conference telephone number five to 10 minutes prior to the start time. An operator will register your name and organization.

A replay of the call will be available until 12 a.m. EST on Dec. 14, 2017.

Toll-free replay number:  1-855-859-2056

International replay number:  1-416-849-0833

Replay PIN:  3579199

Media inquiries:  media@redknee.com

About Redknee Solutions Inc.

Redknee monetizes today's digital world for communications service providers. Its market-leading portfolio of monetization and subscriber management solutions includes real-time billing, charging, policy and customer care modules and is available on premise, cloud based or as software as a service. With a central focus on driving customer success, Redknee's products power growth and innovation for operators globally. Established in 1999, Redknee Solutions can be found on the Toronto Stock Exchange.

 
                    CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
                (expressed in U.S. dollars, except per-share amounts)         
                                                                                   
                                                                  Years ended Sept. 30,
                                                                2017              2016
Revenue
Software, services and other                             $49,584,141       $76,116,137
Support and subscription                                  88,339,593        94,973,763
                                                        ------------      ------------ 
                                                         137,923,734       171,089,900
Cost of revenue                                           58,028,200        78,494,715
                                                        ------------      ------------
Gross profit                                              79,895,534        92,595,185
Operating expenditures
Sales and marketing                                       19,221,936        28,668,973
General and administrative                                36,027,413        31,705,969
Research and development                                  41,944,025        45,495,754
Acquisition and related costs                                      -         4,838,371
Restructuring costs                                       18,771,333        35,184,661
                                                        ------------      ------------
                                                         115,964,707       145,893,728
                                                        ------------      ------------
(Loss) from operations                                   (36,069,173)      (53,298,543)
Foreign exchange (loss)                                   (3,073,512)       (4,216,967)
Other (expense) income                                    (1,450,928)        6,362,935
Finance income                                               247,339            83,058
Finance costs                                            (13,139,496)       (6,260,366)
                                                        ------------      ------------
(Loss) before income taxes                               (53,485,770)      (57,329,883)
Income tax expense (recovery)
Current                                                    6,166,388         8,631,902
Deferred                                                    (878,867)          905,536
                                                        ------------      ------------
                                                           5,287,521         9,537,438
                                                        ------------      ------------
(Loss) for the year                                      (58,773,291)      (66,867,321)
Other comprehensive income (loss)
Items that will not be reclassified to net income
Actuarial gain (loss) on pension and non-pension
postemployment benefit plans, net of income tax
(recovery) expense of nil (2016: nil)                      2,984,327        (8,046,737)
                                                        ------------      ------------
Total comprehensive (loss)                              $(55,788,964)     $(74,914,058)
                                                        ============      ============
(Loss) per common share
Basic                                                         $(0.49)           $(0.62)
Diluted                                                        (0.49)            (0.62)
                                                        ============      ============

We seek Safe Harbor.