Science & Technology
Science and Technology
Science and Technology
Mon, May 11, 2009
Fri, May 8, 2009
Thu, May 7, 2009 Evolving Systems: Evolving Systems Reports 2009 First Quarter Results
ENGLEWOOD, CO--(Marketwire - May 7, 2009) - Evolving Systems, Inc. (
-- Net income of $1.0 million, up from net loss of $244,000 last year -- EPS of $0.05 versus $0.01 loss a year ago -- Non-GAAP adjusted EBITDA $1.9 million double from $958,000 last year -- Due to strong dollar, reported revenue down 3% but up 8% in constant currency -- Cash from operations up 33% to $3.6 million -- Two new orders for Dynamic SIM Allocation™ product -- $2.0 million accelerated debt pay down
Evolving Systems, Inc. (
The Company opened 2009 with its most profitable first quarter in five years, reporting net income of $1.0 million, or $0.05 per basic and diluted share, versus a net loss of $244,000, or $0.01 per basic and diluted share, in the first quarter last year. Non-GAAP adjusted EBITDA in the first quarter was $1.9 million, up 100% from the year-ago total of $958,000.
First quarter revenue, impacted by the strong U.S. dollar, was down 3% to $8.8 million from $9.1 million but up 8% year-over-year when adjusted for the change in foreign currency exchange rates. Due to the impact of currency exchange rates, license fees and services revenue was down slightly to $4.7 million from $4.8 million last year while customer support revenue declined by 5% to $4.1 million from $4.3 million. Revenue mix in the first quarter included $4.8 million in Service Activation, $3.4 million in Numbering Solutions and $.6 million in Mediation.
The strong U.S. dollar's effect on revenue had a corresponding positive impact on expenses in the first quarter, resulting in an approximate 17% reduction in total costs of revenue and operating expenses -- to $7.5 million from $9.0 million in the first quarter a year ago. Adjusted for currency changes, total expenses were essentially flat. Product development and sales and marketing expenses in particular benefited from foreign exchange rates, declining 35% and 14%, respectively, year over year. The Company continues to carefully manage its costs and expenses while making selective investments in growth initiatives and its product portfolio.
Income from operations in the first quarter was $1.4 million, up from $120,000 in the same quarter last year. It was the Company's 11th consecutive quarter of positive operating income.
"We are pleased with our strong first quarter results, which demonstrate Evolving Systems can thrive in a difficult global economy," said Thad Dupper, president and CEO. "On a constant currency basis our Q1 revenue increased 8% from the same quarter last year. Profitability was clearly the highlight of the quarter, with very strong results being posted in operating income, adjusted EBITDA and earnings per share of $0.05. It's important to note that our improved profitability was not the result of cost cutting measures but rather the result of investments we have made in new products and new markets as well as some positive impact from foreign exchange rates. Additionally, Q1 was a breakout quarter for our Dynamic SIM Allocation™ (DSA) solution with 45% of our license and service bookings coming from that product. We added two new DSA customers in the quarter -- a tier one carrier in Africa and a tier one European carrier. Also in the first quarter, we signed a major SIM manufacturer as a distribution partner for DSA. We believe this new partnership will significantly increase our reach and ability to sell and deploy DSA solutions around the world. These results, in addition to our continued strong sales funnel for DSA, support our high expectations for this product line. As a result of these accomplishments and our continued focus on operations and execution, we believe we are in a strong position going forward."
Bookings and Backlog
The Company booked $6.3 million in new orders in the first quarter, including $4.7 million in license fees and services, compared with $8.3 million in total orders and $5.5 million in license and services in the same quarter last year. The lower license and services bookings were mostly due to the acceleration of a large, recurring 2009 license and services order into the fourth quarter of 2008. Bookings included $4.1 million in Activation, $2.0 million in Numbering Solutions, and $200,000 in Mediation.
The license and services backlog at March 31, 2009, was $8.6 million, up approximately 20% over the year-ago total and the highest level entering the second quarter since 2004. Total backlog was $17.8 million versus $18.9 million at the same time a year ago. The Company defines bookings as new, non-cancelable orders expected to be recognized as revenue during the following 12 months.
Balance Sheet
During the first quarter the Company made a $2.0 million pre-payment on its subordinated debt obligations. The Company made an additional $1.0 million pre-payment early in the second quarter, continuing its strategy of accelerated debt repayment as a means of strengthening its balance sheet and improving earnings. Additionally, as a result of its debt refinancing in the first quarter a year ago, along with lower overall debt balances, the Company achieved a 24% reduction in interest expense in the first quarter of 2009. The Company generated $3.6 million in cash from operations in the first quarter, up 33% from $2.7 million a year ago. The cash and cash equivalents balance at March 31, 2009, was $8.0 million, up from $5.8 million at 2008 year-end.
Conference Call
The Company will conduct a conference call and Webcast today at 2:45 p.m. Mountain Time. The call-in numbers for the conference call are 1-877-397-0300 for domestic toll free and 719-325-4937 for international callers. The conference ID is 4065882. A telephone replay will be available through May 14, 2009, and can be accessed by calling 1-888-203-1112 or 1-719-457-0820, passcode 4065882. To access a live Webcast of the call, please visit Evolving Systems' website at [ www.evolving.com ]. A replay of the Webcast will be accessible at that website through May 14, 2009.
About Evolving Systems
Evolving Systems, Inc. (
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 and strengthen its balance sheet as 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 11, 2009, 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, 2009 2008 --------- -------- Revenue: License fees and services $ 4,745 $ 4,832 Customer support 4,098 4,295 --------- -------- Total revenue 8,843 9,127 --------- -------- Costs of revenue and operating expenses: Costs of license fees and services, excluding depreciation and amortization 1,677 2,224 Costs of customer support, excluding depreciation and amortization 1,433 1,493 Sales and marketing 1,887 2,187 General and administrative 1,433 1,425 Product development 695 1,068 Depreciation 156 230 Amortization 171 380 --------- -------- Total costs of revenue and operating expenses 7,452 9,007 --------- -------- Income from operations 1,391 120 --------- -------- Interest and other expense, net (417) (438) --------- -------- Income (loss) before income taxes 974 (318) Income tax expense (benefit) 5 (74) --------- -------- Net income (loss) $ 969 $ (244) ========= ======== Basic income (loss) per common share $ 0.05 $ (0.01) ========= ======== Diluted income (loss) per common share $ 0.05 $ (0.01) ========= ======== Weighted average basic shares outstanding 19,529 19,362 Weighted average diluted shares outstanding 19,795 19,362 Reconciliation of Net Income (Loss) to Adjusted EBITDA (In thousands) (Unaudited) Three months ended March 31, 2009 2008 --------- -------- Net income (loss) $ 969 $ (244) Depreciation 156 230 Amortization 171 380 Stock-based compensation 201 228 Interest and other expense, net 417 438 Income tax expense (benefit) 5 (74) --------- -------- Adjusted EBITDA 1,919 958 ========= ========
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, 2009 2008 --------- ------------ ASSETS Current Assets: Cash and cash equivalents $ 7,993 $ 5,783 Contract receivables, net 6,094 11,484 Unbilled work-in-progress 2,185 1,910 Prepaid and other current assets 1,266 1,309 --------- ------------ Total current assets 17,538 20,486 Property and equipment, net 1,321 1,277 Intangible assets, net 2,162 2,374 Goodwill 20,541 20,811 Long-term restricted cash 100 100 Long-term deferred income taxes 53 56 Other long-term assets 212 307 --------- ------------ Total assets $ 41,927 $ 45,411 ========= ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt and capital lease obligations $ 1,855 $ 2,021 Accounts payable and accrued liabilities 4,359 5,218 Unearned revenue 10,462 11,445 --------- ------------ Total current liabilities 16,676 18,684 Long-term liabilities: Long-term debt and other obligations 4,184 6,344 Deferred foreign income tax 403 441 --------- ------------ Total liabilities 21,263 25,469 Stockholders' equity: Common stock 20 20 Additional paid-in capital 82,030 81,814 Accumulated comprehensive (loss) (5,733) (5,270) Accumulated deficit (55,653) (56,622) --------- ------------ Total stockholders' equity 20,664 19,942 --------- ------------ Total liabilities and stockholders' equity $ 41,927 $ 45,411 ========= ============
