the 2014 Corporate Report

13 2014 2015 2016 2017
Corporate Report
Message from the President and CEO
Dear fellow shareholders,
We continued to build our business in 2014, positioning the company for growth and aligning the organization with key
market trends. Our addressable market continues to grow, and recent M&A activity, including Facebook’s acquisition of
WhatsApp for $19 billion, show that our products and services are more relevant than ever. Telecommunication service
providers are now countering the threat from third-party Over the Top (OTT) services by launching their own innovative
white labelled Operator OTT services using our products. At the same time, enterprises are mobilizing their workforces to
increase productivity and reduce costs by launching Enterprise OTT services and Bring Your Own Device (BYOD) to work
programs using our products. We continue to believe that our core strategy of developing applications that deliver voice,
video, messaging, presence and collaboration services across multiple devices and platforms is correctly timed for
the marketplace.
Laying the Foundation for Growth
Over the past several years we established a solid footprint with numerous large customers, securing a direct channel to
millions of potential end users. Rogers Communications, Canada’s largest wireless operator by subscribers, extended
its CounterPath powered OTT service to include our tablet and mobile softphones, demonstrating not only the utility and
quality of our products but also our ability to support a Tier 1 wireless carrier through multiple product launches. Comcast,
the largest cable company in the United States by subscribers, added our Bria clients to its SMB offering, while Cablemás
in Mexico offered our Bria clients to its business and home subscribers, extending the wireline number to multiple devices.
We also won deals in a number of key enterprise verticals including call centers and financial services where we sold our
software and services to a number of large business enterprises including inContact, Telefónica Brasil’s Vivo, Telmex and
Gryphon Networks. These significant wins not only position us to increase revenue with follow-on sales but provide us with
excellent references when competing for new business.
During 2014 we refined our sales strategy - placing more emphasis on capturing the large Enterprise OTT opportunity.
With this goal in mind, we expanded our direct sales force and took some key deals “in-house,” providing greater control
and visibility during the sales cycle. We also launched our Master Distribution Program and began training our channel
partners to re-sell our products through a network of over thirty thousand Value-Added-Resellers (VARs). At the same time,
we continued to support our OEM channel partners who have integrated our products into their solutions and are now reselling our products and services to their end customers.
Finally, we prepared to meet the demand for cloud based services by launching Bria Software as a Service (SaaS). We
believe our timing is right, as enterprises are simplifying their IT closets by migrating away from running stand-alone
software applications on in-house servers, to purchasing cloud-based services under subscription license agreements. We
are currently training our channel partners to sell Bria SaaS to the SME market throughout
North America and expect to see our recurring revenue rise as they move prospects
Customers
# 0f Customers (>$10k in Sales)
465
through their sales funnels.
Spotlight on Europe
In Europe, market conditions have changed. Rich Communications Suite
409
(RCS) has stalled and operators are increasingly interested in deploying OTT
388
solutions, such as ours, to counter the immediate threat from competitive
327
Internet OTT services such as WhatsApp, Viber and Skype. In response, we
have bolstered our European sales team and accelerated negotiations with
272
2010
potential OEM partners. We expect to generate higher sales in Europe as we
2011
2012
2013
2014
expand existing relationships and land new deals.
Driving Innovation
During 2014, we continued driving innovation to maintain our market leading position. We launched our new software
development kit for desktop, tablet and smartphone platforms, enabling third parties to develop custom applications
based on our proven technology. The timing of our launch couldn’t have been better. Initial uptake has been brisk, as
developers who were previously focused on WebRTC are now shifting their focus toward proven SIP based solutions such
as ours. We also improved and simplified the end user’s experience with the launch of our next generation Bria 4 product
suite. Bria 4 offers a common user interface across multiple devices and platforms and contains an innovative one-click
screen-sharing implementation that facilitates collaboration. Finally, we rounded out our product line with the launch of our
Bria BlackBerry Edition softphone, securing our position as a market leading mobile softphone vendor for enterprises.
Receiving recognition
Our market leading products and services continue to receive recognition.
Our new Bria SaaS and Blackberry offerings were recognized for their
market leadership by TMC, a global, integrated media company. We were
also named one of Canada’s Top Ten Mobile Technology Companies and
one of Canada’s Top 250 Technology Companies in the 2014 edition of
the Branham300.
We continued to invest in our intellectual property portfolio during
fiscal 2014. In September 2013, we were granted a patent for
“Multimedia Interactive Telephony Services”, increasing our
patent portfolio to 25 patents and patents pending, including
exclusive licenses.
Looking Ahead
Looking ahead, we intend to build shareholder value by
executing our strategic plan. This includes building out
our direct sales team to drive sales to new and
existing customers, especially in Europe where
the Operator OTT market is emerging. We
will also expand our sales channel to better
service small, medium and large enterprises,
increasing our recurring revenue through
higher sales of Enterprise OTT solutions.
I would like to thank our shareholders,
customers and employees for their
continued support and I look forward to
achieving our objectives in 2015.
Donovan Jones
President and Chief Executive Officer
Enterprise OTT Communications
For anytime, anywhere, any network, any device
The changes caused by workforce mobility, multi-device BYOD, and IP-based UC technology are driving
enterprises to adopt Over the Top (OTT) UC solutions. Called Enterprise OTT, this new bourgeoning market
category combines UC, BYOD, and Mobile VoIP to enable the PBX on almost any device—desktop, tablet
or smartphone.
To keep their employees connected, increase productivity and save money, enterprises need communications solutions
that work across a wide variety of laptops, smartphones and tablets, and with their current communications infrastructure.
Further, the CIOs are being challenged to find an Enterprise OTT solution that not only delivers productivity and costs
savings, but is easily deployed and centrally managed.
The Bria Enterprise OTT solution is peerless in providing enterprises with the quality, brandability, customizability, and
compatibility that they need, both now and in the future. Bria is the logical choice for enterprises implementing a UC strategy
leveraging Enterprise OTT.
Enterprise UC Market is Exploding
Unified Communications (UC) and Bring Your Own Device (BYOD) has been
significantly trending positive. It’s predicted that the total annual spending on enterprise
unified communications (UC) infrastructure components will continue to grow.
• Fully 78% of enterprise IT professionals have either partially or fully deployed UC
solutions, and most of the rest will or would soon be in the planning phase.*
• The global Enterprise Mobility (EM) market is expected to grow by 15% every year
and will reach $140 billion by 2020. **
*Enterprise Place 2013 Unified Communications Bets, Webtorials, 2013 | ** Release Study on Enterprise Mobility, Nasscom-Deloitte, 2013
The Mobile UC Challenge
Enterprise Over the Top (OTT) services allow
Yesterday
Today and Tomorrow
• PBX
• Unified Communications
is or what device, platform or network they are on –
• VoIP Desk Phone
• Smartphones, Tablets
they will have access to all their regular PBX functions
• Business Extention
– be it corporate voicemail, dial by extension, call
• Voicemail, Phone Tag
• Anytime, Anywhere, Any
Network Access
enterprises to essentially put their PBX in their
employees’ pockets. No matter where the employee
transfer, call forwarding, or just access to their
corporate contacts – all on their mobile device. With
Enterprise OTT solutions they are untethered from
• Business mobile phone
• Business Travel
• Bring Your Own Device (BYOD)
• Instant Messaging
• Social Media
the desktop and available on mobiles and tablets.
• Video Conferencing
Cloud solutions require no additional investment in
• Screen Sharing
infrastructure, making Bria Software as a Service a
• Security
viable option for both small and large enterprises.
Bria puts the PBX in your pocket
A cross-platform UC solution that is available for over 90%
of mobile devices and operating systems, Bria clients and
provisioning services allow employees to enjoy all of their
business features on their mobile device, including:
• HD voice and video calls
• High levels of security
• Instant Messaging
• Simplified deployment
• Presence
• Centralized configuration, provisioning
• Conference calling
• Screen sharing
• Call continuity between Wi-Fi
and cellular networks
• Analytics
• No infrastructure investment
The Driver of Enterprise OTT—The Enterprise Consumer
There is new edge to the BYOD wave. Employees’ consumer behaviors are translating into expectations within the
corporate environment, putting new pressures on IT departments. Because employees increasingly view their smartphone
as a multipurpose device built for work and play, they want all apps and services (both consumer and enterprise) to feature
consumer functionality – easy to install, clearly-defined benefits and little need for backend support.
Employees are effectively forcing the consumerization of IT
This means CIOs are increasingly exposed to consumer OTT products that offer siloed services (e.g. Skype for voice) and
are under pressure to offer those same capabilities to their employees tied to the PBX. Consequently, IT departments are
struggling to accommodate mass deployments while also managing numerous employees/devices and licenses in a BYOD or
dual-purpose device environment.
In everyday life, workers are using
services designed for consumers…
…and want the same functionality within
the enterprise, which requires security
Enterprise
Consumerization
Operator OTT Communications
Unifying fragmented communications across platforms
The telecommunications industry is in a state of flux. Internet OTT service providers like Skype, Viber, Rebtel,
WhatsApp, WeChat and others are eliminating billions of dollars of revenue for traditional operators by
encroaching upon both consumer and enterprise users.
Skype alone is costing the telco industry $100 million
per day, which translates to $36.5 billion per yeari. As
a result, to remain competitive in this communications
space pioneering operators across the world are turning
to companies like CounterPath to leverage Over the Top
(OTT) technology to strike back. Leading the way are
CounterPath customers Rogers, Cablemás, Network
Norway and Altibox, along with others like Orange and
The OTT communications market
is set to be worth $53.7 billion and
have 2.1 billion smartphone users
communicating by OTT services
such as WhatsApp, Skype and
WeChat by 2017.i
Telefonica.
Game-changing OTT services
In Europe, Orange has develop an OTT app called Libon, which by 2013 had
already resulted in a 22 per cent downturn in FaceTime use, a 10 per cent
reduction in Skype use and a 56 per cent reduction in the use of Tango among
Orange customersii. In North America, Rogers’ One Number app for desktop and
mobile devices, powered by CounterPath, is giving Rogers customers new ways
to connect while saving money - setting new standards for consumer expectations
and making other operators sit up and take notice.
It’s not just about the revenue that operators are losing - it’s about
the users themselves
Whether they are consumers, small businesses or large enterprises, today’s customers want more: to use/deploy flexible,
scalable and secure technology solutions; to be connected and reachable, regardless of their device, number or location;
and to be able to manage their communications with simple and easy-to-use applications.
Operators have a proven advantage over Internet OTT players – the phone number – which can extend to other
devices (PCs, tablets and mobiles) and other networks (Wi-Fi), something that Skype, Viber or WhatsApp can’t provide.
Additionally, services like Rogers One Number add more value for customers than Internet OTT apps can by providing
free calling options and the ability to include services tied to the mobile network such as SMS and address book
synchronization - things that most Internet OTT solutions are not able to include seamlessly.
Because CounterPath’s Bria client and server solutions are network and device agnostic, no existing investment in
infrastructure is required. Operators can meet their customers’ immediate needs while industry mapped, standards based
technologies and protocols such as IMS and SIP can be leveraged into potential new solutions such as RCS and VoLTE
(Voice over LTE) – making ours a viable, long term customer relationship.
By 2017, nearly half of all calls
made on a global basis will be VoIP
enabled, and up to 80 percent of
the 1.07 billion users of OTT mobile
VoIP services will be delivered by
third-party OTT players.iii
In 2012, more messages were
delivered via OTT apps than over
SMS. By 2016, the difference will
grow to a factor of four to one.iv
Bria Drives OTT Services in Latin America
In 2013 Mexico’s second largest cable operator, Cablemás, added a Bria-based
desktop and mobile softphone solution to its residential offering. With calling
enabled on mobile devices via either Wi-Fi or data networks, their customers can
be reachable anywhere they happen to be, whether home, office or anywhere
in between, and Cablemás realizes a significant competitive advantage in the
market which is becoming increasingly encroached upon by third-party OTT
communications providers.
i
Mobilesquared | ii Telco-OTT Today | iiiJuniper Networks, Gartner | iv Jupiter Networks
Client Solutions
Bria Softphone Clients
The last year saw a dramatic redesign and unification of the Graphical User Interface (GUI) across
CounterPath’s suite of Bria desktop, smartphone and tablet clients, along with several other feature updates.
These changes both improved the look, feel and ease-of-use of the clients, and created a more cohesive
brand between desktop and mobile. Bria users now enjoy the same voice and video calling and messaging
experience regardless of which platform they are using.
New Branded Feature Add-ons
for Operators and Enterprises
Screen Sharing Service
Instant screen sharing with up to
100 contacts using Bria for Windows
Bria Add-In for Outlook®
Enables calls, messaging and
presence directly from Outlook®
using Bria for Windows
BroadWorks Feature Pack
Extends BroadSoft BroadWorks
features into Bria desktop and
mobile clients
Oracle Tunnel Session
Management (TSM)
Eliminates network traversal issues
and supports seamless roaming in
Bria desktop and mobile clients
Softphone SDK for Desktop and Mobile
This year CounterPath also launched a new SIP Software Development Kit (SDK) targeted at customers who require highly
customized Voice over IP, Video over IP and messaging solutions and have the necessary in-house software programming
expertise to develop their own customized applications. With technologies like WebRTC and others joining the market,
CounterPath’s SDK fills the gap where SIP compliance and advanced codec selection are required. The SDK leverages
CounterPath’s market leadership from deploying millions of SIP softphone clients, with best-in-class voice quality and proven
interoperability with a broad range of SIP-based network equipment.
CounterPath’s core SDK is in C++, with wrappers available for different programming environments such as .NET for
Windows, Java for Android and Objective-C for iOS and OS X.
Platform Technology
Building and Evolving for the Future
CounterPath’s Platform Technology has seen a continuous development over the last decade. Currently
performing convergence gateway, handover, messaging and provisioning functions, CounterPath is working
towards the next evolution of our platform and adding additional modules that will give operators and enterprises
more flexibility and features to solve their UC solution needs.
Platform Technology
Future Planing
Currently Available
User Support
Solution Support
Service Support
Multi-Device/Network
Messaging
Provisioning Module
API Enhancements
including partitioning
for SaaS customers
Geo-redundancy
Operational Measurements
additional User Activity and
API Activity reports
User Trace Partitioning that
enables vewing of specific user
event logs for trouble-shooting
Voice Quality Monitoring Reports that
collects and reports voice quality metrics
from Bria Mobile and Desktop clients
Provisioning Module Updates
CounterPath’s Provisioning Module, the Client Configuration Server (CCS), provides reseller, carrier and enterprise customers
with the ability to remotely configure Bria clients, including initial installations as well as ongoing updates and upgrades. The
CCS provides a number of value-added tools including summary reports of all devices under management and enhanced
client debug logs.
In the past year, the CCS gained several new features including Voice Quality Monitoring Reports, Operational
Measurements, User Trace Partitioning, Geo-redundancy and API enhancements.
Channel Partner Solutions
Increasing Sales Through Value Added Resellers
The past year saw a large effort in developing Channel Partner
Solutions, primarily strengthening our Bria Software as a Service
(SaaS) offering, as well as sales and marketing efforts.
Bria SaaS combines CounterPath’s Bria for CCS softphones
and Hosted/Cloud-based CCS (provisioning module of our
Platform Technology) as a subscription based solution for Channel
Partners and Resellers. It provides them with the ability to offer an
immediate mobility solution to enterprises and SMBs that includes
softphone client licenses and a fully-hosted provisioning system for
distributing, provisioning and managing softphone end-points – all
centrally managed by the company’s IT team.
By implementing a robust sales and marketing campaign including
webinars, sales collateral and partner events, CounterPath secured
the following Channel Partner accounts:
Multi-National Satellite Corporation Uses Bria to Reduce Costs and Save Space
Channel Partner TeleDynamics and their reseller The Answer SAS used Bria to address the international mobile
communications needs of Gilat Satellite Networks. Gilat needed a Unified Communications solution that would help
executives traveling abroad avoid the exorbitant costs of international calling and roaming, save desk space, and
seamlessly integrate with their existing communications infrastructure.
Bria SaaS was able to accomplish all of their goals by enabling executives to use Bria on smartphones to reduce
calling and roaming costs, providing Bria on desktop computers so they could remove cumbersome desk phones,
and seamlessly tying into Gilat’s existing premise-based Asterisk IP-PBX infrastructure. Overall, the Bria UC clients
enhanced Gilat’s executives’ global mobility and productivity, while saving considerable money.
Executive Team
Corporate Governance
Donovan Jones – President, Chief Executive Officer
Code of Business Conduct and Ethics and
Compliance Program
David Karp – Chief Financial Officer
Todd Carothers – Executive Vice President of Marketing and Products
Michael Doyle – Vice President of Technology
Bruce Ford – Vice President of Product Management
Steve Hards – Vice President of Investor Relations
Michael Hill – Vice President of Client Engineering
David Stratton – Vice President of Enterprise and Channel Sales
Jim O’Brien – Vice President of Server Engineering
Terry Meredith – Vice President, EMEA Sales
Nemer D. Abourzk – General Counsel
Board of Directors
Terence Matthews – Chairman of the Board
Owen Matthews – Vice Chairman of the Board of Directors
Chris R. Cooper – Director
Donovan Jones – President, Chief Executive Officer and Director
For our Corporate Governance Program
visit us online at:
www.counterpath.com/investors.html
Corporate Information
State of Incorporation: Nevada
Date of Incorporation: April 18, 2003
CUSIP: 22228P 203
ISIN: US1112512033
EIN: 20-0004161
D-U-N-S: 141691225
Corporate Headquarters
Suite 300, One Bentall Centre 505
Burrard Street, Box 95 Vancouver, BC
V7X 1M3 Canada
www.counterpath.com
Larry Timlick – Director
Transfer Agent & Registrar
Bruce Joyce – Director
Valiant Trust Company
Advisory Board
3rd Floor, 750 Cambie Street
Vancouver, BC V6B 0A2 Canada
Andy Abramson – CEO, Comunicano, Inc.
Peter van der Gracht – Chair, Board of Directors, Wavefront
Stephen P. Cho, Ph.D. – Director, Channels and Business
Development, Google Enterprise
Alan Duric – Co-founder & CTO of Telio AS
www.valianttrust.com
Auditors
BDO Canada LLP
Ronald Gruia – Senior Strategic Analyst, Frost & Sullivan
600 Cathedral Place, 925 West Georgia Street
Vancouver, BC V6C 3L2 Canada
Rohan Mahy – Senior Consultant
www.bdo.ca
Klaus Schulz – Senior Consultant
Robert Sparks – Senior Consultant
Legal Counsel
Clark Wilson LLP
800 - 885 West Georgia Street
Vancouver, BC V6C 3H1 Canada
www.cwilson.com
2009 2010 2011 2012 20
CounterPath has filed its fiscal 2014 10K report, a copy of which may be obtained from
EDGAR at www.sec.gov or SEDAR at www.sedar.com
FORWARD-LOOKING STATEMENTS
This Corporate Report contains ‘forward-looking statements”. These statements relate to future events of the Company’s future financial performance. In some
cases, you can identify forward-looking statements by terminology such as “may”, “should”,”enable”, “intends”, “expects”, “plans”, “anticipates”, “believes”,
“estimates”, “predicts”, “potential”, or “continue” or the negative of these terms or other comparable terminology. 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 our sales from reporting period to reporting period
due to extended sales cycles as a result of selling our products through channel partners or the length of time of deployment of our products by our customers
(2) the Company’s ability to control its operating expenses, which may adversely affect its financial condition, (3) a decline in the Company’s stock price or
insufficient investor interest in the Company’s securities which may impact on the Company’s ability to raise additional financing as required, (4) the Company’s
ability to remain competitive as other better financed parties develop and release competitive products, (5) the impact of intellectual property litigation that
could materially and adversely affect our 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 on our industry, (8) the failure to develop new and innovative products using the Company’s technologies, (9) the
potential dilution to shareholders or overhang on the Company’s share price of its outstanding stock options and warrants. Readers should also refer to the
risk disclosures outlined in the Company’s quarterly reports on Form 10-Q or Form 10-Q/A, or in the annual reports on Form 10-K or Form 10-K/A, and the
Company’s other disclosure documents filed from time-to-time with the Securities and Exchange Commission at 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.
All financial information is reported in United States dollars.