Published:
Evolving Systems Reports 2008 First Quarter Results
Evolving Systems Reports 2008 First Quarter Results
Total Revenue Up 8% to $9.1 Million From $8.5 Million in Q1 2007; Balance Sheet Strengthened by Conversion of Preferred Stock, Debt Pay-Down and Debt Refinancing; Seventh Consecutive Quarter of Positive Operating Income; Two New Account Wins in Emerging Markets
Evolving Systems, Inc. (NASDAQ: EVOL)
Q1 LICENSE AND SERVICES GROWTH HIGHLIGHTS:
-- Orders up 10% to $5.5 million from $5.0 million in 2007
-- Backlog grows to $7.1 million from $6.5 million in Q4
-- Revenue up 21% to $4.8 million vs. $4.0 million in 2007
Evolving Systems, Inc. (NASDAQ: EVOL), a leading provider of software
solutions and services to the wireless, wireline and IP carrier market,
today reported financial results for its first quarter ended March 31,
2008.
First Quarter Results
Revenue in the first quarter increased 8% to $9.1 million from $8.5 million
in the first quarter of 2007. License fees and services revenue increased
21% to $4.8 million from $4.0 million year over year, more than offsetting
a 4% decline in customer support revenue, which was $4.3 million as
compared with $4.5 million in the first quarter last year. It was the
Company's fifth consecutive quarter of year-over-year growth in total
revenue. First quarter revenue mix included $4.7 million in Service
Activation, $2.9 million in Numbering Solutions and $1.5 million in
Mediation.
Consistent with management's previous guidance, total costs of revenue and
operating expenses in the first quarter increased in support of initiatives
designed to open new markets and increase revenue. Total costs were up 9%
in the first quarter to $9.0 million from $8.2 million in the first quarter
last year. The Company increased its product development expense by 95%,
to $1.1 million from $549,000, primarily related to enhancements to three
products, including Tertio(TM), international NumeriTrack® and the
Company's new Dynamic SIM Allocation solution. Sales and marketing expense
increased 7% to $2.2 million from $2.0 million in the first quarter last
year, reflecting increased international travel costs and higher variable
compensation costs due to the growing revenue base. General and
administrative expenses declined by 8% -- to $1.4 million from $1.5 million
-- due primarily to lower professional fees. Despite higher overall costs
in the first quarter, the Company achieved its seventh consecutive quarter
of positive operating income.
Evolving Systems incurred a $297,000 write-off of debt issuance costs in
the first quarter related to the refinancing of its senior debt facility.
Exclusive of this $297,000 charge, the Company saved $128,000 in interest
expense in the first quarter of 2008 compared with the same quarter last
year.
The Company reported Adjusted EBITDA, as defined, for the first quarter of
$1.0 million as compared with Adjusted EBITDA of $1.2 million in the first
quarter a year ago. Net loss in the first quarter declined to $244,000, or
$0.01 per basic and diluted share, versus a net loss of $326,000, or $0.02
per basic and diluted share, in the same period last year.
Bookings and Backlog Highlights
The Company booked $8.3 million in new orders in the first quarter,
including $5.5 million in license fees and services, up 10% from $5.0
million in license fees and services bookings in the first quarter a year
ago. The $8.3 million in new orders was down from $11.2 million a year
ago; an industry consolidation event caused a large carrier customer to
accelerate its 2008 annual support order into the fourth quarter of 2007
instead of the usual first quarter time frame. Bookings were comprised of
$5.5 million in Activation, $1.4 million in Numbering Solutions, and $1.4
million in Mediation.
Backlog at March 31, 2008, was $18.9 million, up 13% from $16.7 million at
the same time a year ago. The license and services backlog grew 23% year
over year -- to $7.1 million from $5.8 million. The Company defines
bookings as new, non-cancelable orders expected to be recognized as revenue
during the following 12 months.
Balance Sheet Highlights
The Company continued to strengthen its balance sheet in the first quarter
as the remainder of its preferred stock was converted to common stock
during the period. Additionally, the Company completed a $10.0 million
debt refinancing that lowered the average cash interest rate and improved
financial flexibility with more favorable covenants and anticipated
interest savings of approximately $450,000 through 2009. During the first
quarter the Company used $3.0 million of its existing cash to pay down its
senior revolver and its subordinated debt obligations. The conversion of
the preferred stock and the accelerated payments on the long-term debt
obligations reduced the Company's total preferred stock and long-term debt
obligations by $9.0 million during the first quarter. The Company
generated $2.7 million in cash from operations in the first quarter, down
from $3.8 million a year ago primarily as the result of a $790,000 first
quarter payment of accrued interest on subordinated debt. The cash and
cash equivalents balance at March 31, 2008, was $6.7 million.
CEO Comments
"We extended our 2007 momentum into the first quarter of 2008 with solid
revenue growth, strong license and services orders and two new accounts in
emerging markets as well as a significantly improved balance sheet," said
Thad Dupper, president and CEO. "Our progress reflects our continued
commitment to expanding our solutions portfolio and developing new carrier
customers in emerging markets where strong wireless subscriber growth
offers us excellent opportunities. At the same time, we will continue to
support our existing carrier customers around the world with excellent
service and innovative enhancements for their networks."
Conference Call
The Company will conduct a conference call and webcast on May 8, 2008, at
3:00 p.m. Mountain Time (5:00 p.m. Eastern Time). The call-in numbers for
the conference call are 1-888-680-0894 for domestic toll free and
617-213-4860 for international. The passcode is 73636226. Callers may
pre-register by going to the following link:
https://www.theconferencingservice.com/prereg/key.process?key=PPK7K483T
A telephone replay will be available through May 22, 2008, and can be
accessed by calling 1-888-286-8010 or 617-801-6888, passcode 54260693. To
access a live webcast of the call, please visit Evolving Systems' web site
at www.evolving.com. A replay of the webcast will be accessible at that
web site through May 22, 2008.
About Evolving Systems®
Evolving Systems (NASDAQ: EVOL) is a worldwide provider of software and
services to telecommunications carriers, with 70 network operators in 45
countries. The Company's software offerings address Activation, Dynamic
SIM Allocation, Number Portability, Number Management and Mediation. These
solutions help carriers deliver an improved customer experience, shorter
time-to-market and lower cost of rendering value-added services. With an
expanding solutions portfolio, global sales and support, onshore/offshore
development, and a focus on emerging markets, Evolving Systems is well
positioned for growth. Founded in 1985, the Company has headquarters in
Englewood, Colorado, with offices in the United Kingdom, Germany, India and
Malaysia.
CAUTIONARY STATEMENT
This news release contains "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995, based on current
expectations, estimates and projections that are subject to risk.
Specifically, statements about the Company's growth and future
profitability, future business, revenue and expense projections, the
Company's continued ability to post quarterly results that are similar to
those described in this press release and the impact of new products and
accounts on the Company's business are forward-looking statements. These
statements are based on our expectations and are naturally subject to
uncertainty and changes in circumstances. Readers should not place undue
reliance on these forward-looking statements, and the Company may not
undertake to update these statements. Actual results could vary materially
from these expectations. For a more extensive discussion of Evolving
Systems' business, and important factors that could cause actual results to
differ materially from those contained in the forward-looking statements,
please refer to the Company's Form 10-K filed with the SEC on March 13,
2008, as well as subsequently filed Forms 10-Q, 8-K and press releases.
Consolidated Statements of Operations
(In thousands except per share data)
(Unaudited) Three months ended
March 31,
2008 2007
---- ----
Revenue:
License fees and services $ 4,832 $ 3,991
Customer support 4,295 4,470
------- -------
Total revenue 9,127 8,461
------- -------
Costs of revenue and operating expenses:
Costs of license fees and services,
excluding depreciation and amortization 2,224 1,924
Costs of customer support,
excluding depreciation and amortization 1,493 1,493
Sales and marketing 2,187 2,040
General and administrative 1,425 1,550
Product development 1,068 549
Depreciation 230 288
Amortization 380 388
Restructuring and other expense (recovery) - (1)
------- -------
Total costs of revenue and operating expenses 9,007 8,231
------- -------
Income from operations 120 230
------- -------
Interest and other expense, net (438) (416)
------- -------
Loss before income taxes (318) (186)
Income tax expense (benefit) (74) 140
------- -------
Net loss $ (244) $ (326)
======= =======
Basic and diluted loss per common share $ (0.01) $ (0.02)
======= =======
Weighted average basic and diluted shares
outstanding 19,362 19,153
Reconciliation of Net Loss to Adjusted EBITDA
(In thousands)
(Unaudited)
Three months ended
March 31,
2008 2007
---- ----
Net loss $(244) $(326)
Depreciation 230 288
Amortization 380 388
Stock-based compensation 228 249
Interest and other expense, net 438 416
Income tax expense (benefit) (74) 140
----- -----
Adjusted EBITDA 958 1,155
===== =====
Evolving Systems reports its financial results in accordance with
accounting principles generally accepted in the U.S. (GAAP). In addition,
the Company is providing in this news release non-GAAP information in the
form of Adjusted EBITDA (earnings before interest, taxes, depreciation,
amortization, stock compensation, gain/loss on debt extinguishment and
gain/loss on foreign exchange transactions). Management believes Adjusted
EBITDA is useful to investors and lenders in evaluating the overall
financial health of the Company in that it allows for greater transparency
of additional financial data routinely used by management to evaluate
performance. Adjusted EBITDA relates to a covenant contained in the
Company's loan agreements and therefore can be useful for lenders as an
indicator of earnings available to service debt. Readers of this Adjusted
EBITDA information are reminded that Adjusted EBITDA is not a recognized
term under GAAP and does not purport to be an alternative to income (loss)
from operations, an indicator of cash flow from operations or a measure of
liquidity. Not all companies calculate Adjusted EBITDA identically, so
this presentation may not be comparable to similar presentations of other
companies.
Consolidated Balance Sheets
(In thousands)
(Unaudited) March 31, December 31,
2008 2007
---- ----
ASSETS
Current Assets:
Cash and cash equivalents $ 6,737 $ 7,271
Contract receivables, net 6,448 10,959
Unbilled work-in-progress 1,555 922
Prepaid and other current assets 1,629 1,335
-------- --------
Total current assets 16,369 20,487
Property and equipment, net 1,678 1,677
Intangible assets, net 4,301 4,687
Goodwill 26,395 26,417
Other long-term assets 446 459
-------- --------
Total assets $ 49,189 $ 53,727
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
and capital lease obligations $ 2,021 $ 2,520
Accounts payable and accrued liabilities 5,749 5,937
Unearned revenue 9,766 10,635
-------- --------
Total current liabilities 17,536 19,092
Long-term liabilities:
Long-term debt and other obligations 7,329 10,242
Deferred foreign income tax 811 878
-------- --------
Total liabilities 25,676 30,212
Preferred stock - 5,587
Stockholders' equity:
Common stock 19 18
Additional paid-in capital 81,147 75,317
Accumulated comprehensive income 2,142 2,144
Accumulated deficit (59,795) (59,551)
-------- --------
Total stockholders' equity 23,513 17,928
-------- --------
Total liabilities and stockholders' equity $ 49,189 $ 53,727
======== ========
Copyright © 2008, MarketWire
Copyright © 2008, NewsBlaze,
Daily NewsTags: Tags: Software, VOIP, Phones and Telecommunications, Wi-Fi, wireless technology, , colorado
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