ENGLEWOOD, CO--(Marketwire - November 8, 2007) -
-- Revenue up 7% to $9.3 million in Q3 and $26.9 million YTD
-- Adjusted EBITDA of $1.8 million in Q3, $4.4 million YTD
-- Net income of $569,000 in Q3, $314,000 YTD
-- Fifth straight quarter of positive operating income -- $1.1 million
vs. $629,000 in Q2 and $230,000 in Q1
-- $4.4 million in operating cash flow YTD vs. $2.7 million a year ago
Evolving Systems, Inc. (
NASDAQ:
EVOL), a leading provider of software
solutions and services to the wireless, wireline and IP carrier market,
today reported improved revenue and profitability for its third quarter and
nine-month period ended September 30, 2007.
Third Quarter Results
Evolving Systems reported net income of $569,000, or $0.03 per basic and
diluted share, in the third quarter compared with net income of $42,000, or
less than one cent per basic and diluted share, in the same quarter last
year. Earnings before interest, taxes, depreciation, amortization,
impairment, stock compensation and gain/loss on foreign exchange
transactions ("adjusted EBITDA") for the third quarter were $1.8 million,
up 30% from $1.4 million in the second quarter of this year and up 23% from
$1.5 million in the same quarter last year.
Revenue in the third quarter was $9.3 million, up 7% from revenue of $8.7
million in the third quarter last year and up 2% from $9.1 million in the
second quarter of 2007. The increased revenue was attributable to a
combination of new customer engagements and additional revenue from
established customers. It was Evolving Systems' third straight quarter of
year-over-year revenue growth. For the comparative third quarters, license
fees and services revenue grew to $4.7 million from $4.0 million, more than
offsetting a slight decline in customer support revenue, which was $4.6
million versus $4.7 million in the year-ago period. Revenue mix in the
third quarter was comprised of $5.3 million in Service Activation, $2.7
million in Numbering Solutions and $1.3 million in Mediation. A $1.3
million, or 33%, increase in Service Activation revenue more than offset
year-over-year declines in Numbering Solutions and Mediation revenue.
Total costs of revenue and operating expenses were $8.2 million in the
third quarter, up from $8.0 million in the same quarter last year but down
from $8.5 million in the second quarter of this year, reflecting
management's commitment to maintaining a stable cost structure. Costs of
revenue increased to deliver the overall revenue growth. Sales and
marketing expense declined by $120,000 due to lower personnel costs while
product development expense decreased $183,000 due primarily to completion
of the international version of NumeriTrack® in the third quarter of
2006. General and administrative expense increased $179,000 due to higher
professional fees.
Income from operations in the third quarter was $1.1 million, up 59% over
$678,000 in the same quarter last year and up 72% from $629,000 in the
second quarter of 2007. It was the Company's fifth consecutive quarter of
positive operating income.
Bookings and Backlog Highlights
Third quarter new order bookings totaled $6.5 million, up from $5.8 million
in the same quarter last year. Bookings included $3.8 million in license
fees and services and $2.7 million in customer support. Bookings were
allocated $4.3 million in Activation, $1.1 million in Numbering Solutions,
and $1.1 million in Mediation. The Company defines bookings as new,
non-cancelable orders expected to be recognized as revenue during the
following 12 months. For the first nine months of 2007, orders for license
and services and for customer support were up 8% and 4%, respectively,
versus the same period in 2006.
Backlog at September 30, 2007, was $12.5 million, up $500,000 from backlog
of $12.0 million at the same time last year. The growth in backlog was
attributable to a $600,000 increase in license fees and services, partially
offset by a $100,000 decline in customer support backlog.
Balance Sheet Highlights
Evolving Systems generated $4.4 million in cash from operations through the
first nine months of 2007 as compared with $2.7 million during the same
period a year ago. As a result, the Company closed the third quarter with
cash and cash equivalents of $7.6 million, up from $5.1 million at the end
of 2006. Working capital at the end of the third quarter increased by $1.1
million to $1.9 million from $800,000 at 2006 year-end.
CEO Comments
"We continue to deliver positive financial results through a combination of
focused execution, the addition of new customers and new product
innovation," said Thad Dupper, president and CEO. "On the customer front,
we added a new account in the third quarter, raising to four the total
number of new accounts year-to-date and exceeding our total for all of
2006. Equally important as the number of new accounts we have won is the
geographic distribution of these new customers, which validates our
decision to invest in the emerging markets of Central and Latin America and
Asia Pacific. We will continue to invest in maintaining our long-standing
relationships with customers in our traditional markets of Europe and North
America. However, we believe the emerging markets represent an attractive
additional opportunity to create new sales momentum. Consequently, we are
investing in our worldwide sales and professional services capabilities,
and local partnerships, to pursue emerging market opportunities.
"On the product front, we are seeing increased interest in our new
products," Dupper added. "In addition to winning new business for our
Tertio™ 7 Service Activation and International NumeriTrack® solutions
with four new accounts this year, we have high expectations for our Dynamic
SIM Allocation solution, which significantly simplifies SIM management and
inventory for wireless carriers and provides them with the ability to offer
prepaid customers the facility to select a phone number at the point of
purchase -- a feature we believe will be attractive to carriers around the
world who wish to gain an edge in the fiercely competitive wireless
market."
Nine Month Results
Evolving Systems reported net income of $314,000, or $0.02 per basic and
diluted share, in the nine-month period as compared with a net loss of
$17.8 million, or $0.93 per basic and diluted share, in the same period
last year. The year-ago net loss included a $15.0 million impairment
charge net of income tax benefit. Earnings before interest, taxes,
depreciation, amortization, impairment, stock compensation and gain/loss on
foreign exchange transactions ("adjusted EBITDA") for the nine-month period
increased 77% to $4.4 million from $2.5 million in the same period last
year.
Revenue through nine months was $26.9 million, up 7% from $25.0 million in
the comparable period of 2006. License fees and services revenue increased
13%, or $1.6 million, to $13.4 million from $11.9 million, while customer
support revenue increased 2% to $13.5 million from $13.2 million a year
ago. Revenue mix included $14.8 million in Activation, $8.8 million in
Numbering Solutions and $3.3 million in Mediation.
Total costs of revenue and operating expenses in the first nine months of
2007 were $25.0 million versus $42.7 million in the same period last year
when the Company reported the $16.5 million impairment. Excluding the
$16.5 million impairment in the second quarter of 2006, the Company reduced
its total costs of revenue and operating expenses by $1.2 million, or 5%,
for the comparative nine-month periods. This improvement included
reductions in most expense categories except for costs of revenue, which
increased to support the higher revenues for the period, and general and
administrative, which increased 15% due to higher professional fees and
incentive compensation resulting from improved year over year financial
results.
Operating income in the first nine months of 2007 was $1.9 million compared
with an operating loss of $17.7 million, including the $16.5 million
impairment, in the same period last year.
Conference Call
The Company will conduct a conference call and Web cast today at 2:15 p.m.
Mountain Time. The call-in numbers for the conference call are
1-866-578-5771 for domestic toll free and 617-213-8055 for international
callers. The passcode is 45157066. A telephone replay will be available
through November 22, 2007, and can be accessed by calling 1-888-286-8010 or
617-801-6888, passcode 36457077. 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 December 7, 2007.
About Evolving Systems
Evolving Systems, Inc. (
NASDAQ:
EVOL) is a provider of software and
services to more than 50 network operators in over 40 countries worldwide.
Its portfolio includes market-leading products for Activation, Number
Portability, Number Inventory and Mediation. Founded in 1985, the Company
has headquarters in Englewood, Colorado, with offices in the United States,
United Kingdom, Germany, India and Malaysia. Further information is
available on the web at
www.evolving.com.
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 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 15, 2007, 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 Nine months ended
September 30, September 30,
2007 2006 2007 2006
------- ------- -------- ---------
Revenue:
License fees and services $ 4,692 $ 3,990 $ 13,425 $ 11,855
Customer support 4,619 4,677 13,468 13,180
------- ------- -------- ---------
Total revenue 9,311 8,667 26,893 25,035
------- ------- -------- ---------
Costs of revenue and operating
expenses:
Costs of license fees and
services, excluding
depreciation and amortization 2,097 1,991 5,962 5,523
Costs of customer support,
excluding depreciation and
amortization 1,532 1,235 4,741 4,412
Sales and marketing 2,003 2,123 6,228 6,919
General and administrative 1,350 1,171 4,549 3,959
Product development 665 848 1,572 2,394
Depreciation 189 285 729 861
Amortization 396 336 1,176 2,126
Impairment of goodwill and
intangible assets - - - 16,516
Restructuring and other expense
(recovery) - - (1) (23)
------- ------- -------- ---------
Total costs of revenue and operating
expenses 8,232 7,989 24,956 42,687
------- ------- -------- ---------
Income (loss) from operations 1,079 678 1,937 (17,652)
------- ------- -------- ---------
Interest and other income
(expense), net (165) (460) (1,054) (1,421)
------- ------- -------- ---------
Income (loss) before income taxes 914 218 883 (19,073)
Income tax expense (benefit) 345 176 569 (1,278)
------- ------- -------- ---------
Net income (loss) $ 569 $ 42 $ 314 $ (17,795)
======= ======= ======== =========
Basic income (loss) per common
share $ 0.03 $ 0.00 $ 0.02 $ (0.93)
======= ======= ======== =========
Diluted income (loss) per common
share $ 0.03 $ 0.00 $ 0.02 $ (0.93)
======= ======= ======== =========
Weighted average basic shares
outstanding 19,201 19,112 19,178 19,089
Weighted average diluted shares
outstanding 19,550 19,310 19,546 19,089
Reconciliation of Net Income (Loss) to Adjusted EBITDA
(In thousands)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
------- ------- -------- ---------
Net income (loss) $ 569 $ 42 $ 314 $ (17,795)
Depreciation 189 285 729 861
Amortization 396 336 1,176 2,126
Impairment of goodwill &
intangible assets - - - 16,516
Stock-based compensation expense 162 181 543 625
Interest expense and other, net 165 460 1,054 1,421
Income tax expense (benefit) 345 176 569 (1,278)
-------- -------- -------- ---------
Adjusted EBITDA $ 1,826 $ 1,480 $ 4,385 $ 2,476
======== ======== ======== =========
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, impairment, stock compensation and gain/loss on foreign
exchange transaction.) 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)
September 30, December 31,
2007 2006
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $ 7,607 $ 5,076
Current portion of restricted cash - 300
Contract receivables, net 4,940 9,206
Unbilled work-in-progress 2,253 1,064
Prepaid and other current assets 1,384 1,701
---------- ----------
Total current assets 16,184 17,347
Property and equipment, net 1,013 1,349
Amortizable intangible assets, net 5,180 6,155
Goodwill 26,931 26,027
Long-term restricted cash 100 -
Other long-term assets 343 460
---------- ----------
Total assets $ 49,751 $ 51,338
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and
capital lease obligations $ 2,394 $ 2,037
Accounts payable and accrued liabilities 4,798 4,428
Unearned revenue 7,137 10,079
---------- ----------
Total current liabilities 14,329 16,544
Long-term liabilities:
Long-term debt and other obligations 10,677 12,153
Deferred foreign income taxes 1,052 1,202
---------- ----------
Total liabilities 26,058 29,899
Preferred stock 5,892 11,281
Stockholders' equity:
Common stock 18 16
Additional paid-in capital 74,826 68,825
Accumulated other comprehensive income 2,792 1,466
Accumulated deficit (59,835) (60,149)
---------- ----------
Total stockholders' equity 17,801 10,158
---------- ----------
Total liabilities and stockholders' equity $ 49,751 $ 51,338
========== ==========
Contact Information: Contacts:
Investor Relations
Jay Pfeiffer
Pfeiffer High Investor Relations, Inc.
303.393.7044
Press Relations
Sarah Hurp
Marketing Communications Manager
Evolving Systems
+44 1225 478060