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CounterPath Reports Fourth Quarter and Fiscal 2018 Financial Results

Annual Revenue Grows 16% as Company Continues Transition to Recurring Revenue

Vancouver, BC, Canada — July 25, 2018 —

CounterPath Corporation (NASDAQ: CPAH) (TSX: PATH) (the “Company” or “CounterPath”), a global provider of award-winning over-the-top (OTT) Unified Communications solutions for enterprises and service providers, today announced the financial and operating results for its fourth quarter and fiscal year ended April 30, 2018.

Fiscal 2018 Financial Highlights

Management Commentary

“We made progress on several fronts in FY2018,” said Donovan Jones, President and Chief Executive Officer. “We managed double digit growth in revenue, while continuing our transition to recurring revenue. Our recurring revenue increased to a record level of $4.3 million, representing over a third of our total revenue. The team has been working hard on improving our cloud-hosted collaboration platform and is ready to roll it out aggressively in FY2019. Our team-based service combines instant messaging with HD voice and video, on any device, enabling a business user to enjoy a secure communication experience, all within one application. There is a tremendous market opportunity for collaboration products and solutions as the enterprise collaboration market size is estimated to grow from $35 billion in 2018 to $60 billion by 2023. For FY2019 we will be focusing on increasing the marketing and sale of our own services to continue to drive recurring revenue. We will be focusing on recurring revenue both through selling to service provider customers, as we have done through our recent three-year $1.8 million agreement with a North American Tier 1 service provider, and by migrating our existing base of customers with perpetual software to hosted services, as we have done with our recent agreement with a leading contact center vendor. We are also now better positioned to offer our products and services to large enterprises with the solidification of our Oracle partnership this last spring. Finally, we expect to target small and medium sized enterprises through our upgraded e-store platform, where we will be introducing new communication services throughout the year that should further drive our monthly recurring revenue,” continued Jones.

FY2018 Business Highlights

Financial Overview

(All amounts are presented in U.S. dollars and in accordance with accounting principles generally accepted in the United States (“GAAP”) unless otherwise specified.)

Revenue was $12.4 million for the year ended April 30, 2018 compared to $10.7 million for last fiscal year. For fiscal 2018, software revenue was $6.3 million, compared to $5.4 million for last fiscal year, subscription, support and maintenance revenue was $4.3 million, compared to $3.9 million for last fiscal year, and professional services and other revenue was $1.8 million, compared to $1.3 million for last fiscal year.

Operating expenses for the year ended April 30, 2018 were $15.2 million, compared to $13.6 million for last fiscal year. Operating expenses for fiscal 2018 included a non-cash stock-based compensation expense of $0.6 million, compared to $0.8 million for last fiscal year. Sales and marketing expenses were $4.2 million for the year ended April 30, 2018 compared to $3.8 million for last fiscal year. For the year ended April 30, 2018, research and development expenses were $5.5 million and general and administrative expenses were $3.9 million, compared to $4.8 million and $3.2 million, respectively, for last fiscal year.

Foreign exchange loss for the year ended April 30, 2018 was $0.4 million, compared to foreign exchange gain of $0.5 million for last fiscal year. The foreign exchange gain (loss) represents the gain (loss) on account of translation of intercompany accounts of the Company’s subsidiary, which are maintained in Canadian dollars, and transactional gains and losses resulting from transactions denominated in currencies other than U.S. dollars.

Net loss for the year ended April 30, 2018 was $3.2 million, or $0.59 per share, compared to $2.5 million, or $0.52 per share, for last fiscal year. As at April 30, 2018, the Company had $2.3 million in cash, compared to $2.1 million as at April 30, 2017.

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, outlook, expectations or intentions regarding the future, including (i) the team has been working hard on improving our hosted collaboration platform and is ready to roll it out aggressively in FY2019; (ii) there is a tremendous market opportunity for collaboration products and solutions as the enterprise collaboration market size is estimated to grow from $35 billion in 2018 to $60 billion by 2023; (iii) for FY2019 we will be focusing on increasing the marketing and sale of our own services to continue to drive recurring revenue; (iv) we will be focusing on recurring revenue both through selling to service provider customers and by migrating our existing base of customers with perpetual software to hosted services; (v) we expect to target small and medium sized enterprises through our upgraded e-store platform, where we will be introducing new communication services throughout the year that should further drive our monthly recurring revenue; and (vi) that Stretto Collaboration will enable teams of up to 200 people with tools to drive productivity and cost savings. 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) the variability in CounterPath’s sales from reporting period to reporting period due to extended sales cycles as a result of selling CounterPath’s products through channel partners or the length of time of deployment of CounterPath’s products by its customers; (2) the Company’s ability to manage its operating expenses, which may adversely affect its financial condition; (3) the Company’s ability to remain competitive as other better financed competitors develop and release competitive products; (4) a decline in the Company’s stock price or insufficient investor interest in the Company’s securities which may impact the Company’s ability to raise additional financing as required or may cause the Company to be delisted from a stock exchange on which its common stock trades; (5) the impact of intellectual property litigation that could materially and adversely affect CounterPath’s business; (6) the success by the Company of the sales of its current and new products; (7) the impact of technology changes on the Company’s products and industry; (8) the failure to develop new and innovative products using the Company’s technologies; and (9) the potential dilution to shareholders or overhang on the Company’s share price of its outstanding stock options. Readers should also refer to the risk disclosures outlined in the Company’s quarterly reports on Form 10-Q, the Company’s annual reports on Form 10-K, and the Company’s other disclosure documents filed from time-to-time with the Securities and Exchange Commission at http://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.

About CounterPath

CounterPath Unified Communications solutions are changing the face of telecommunications. An industry and user favorite, Bria softphones for desktop, tablet and mobile devices, together with Stretto Platform™ server solutions, enable operators, OEMs and enterprises large and small around the globe to offer a seamless and unified over-the-top (OTT) communications experience across both fixed and mobile networks. The Bria and Stretto combination enables an improved user experience as an overlay to the most popular UC and IMS telephony and applications servers on the market today. 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 AT&T, Avaya, BroadSoft, BT, Cisco Systems, Metaswitch Networks, Mitel, NEC, Network Norway, Nokia, Ribbon Communications, Rogers and Verizon. Visit CounterPath, www.counterpath.com.

Contacts:

David Karp
Chief Financial Officer, CounterPath
dkarp@counterpath.com
(604) 628-9364

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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 income (loss) from operations which excludes non-cash stock-based compensation relative to income (loss) from operations calculated in accordance with GAAP. The non-GAAP financial measures also include non-GAAP net income (loss) which excludes non-cash stock-based compensation and foreign exchange gain (loss) relative to income (loss) 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)



i https://www.reportlinker.com/p04604341/Enterprise-Collaboration-Market-by-Component-Solution-Service-User-Type-Vertical-and-Region-Global-Forecast-to.html (May 2018)