ENGLEWOOD, CO–(Marketwired – Mar 11, 2014) – Evolving Systems, Inc. (NASDAQ: EVOL)
Q4 license and services bookings up 43% to $5.2M from $3.6M in Q4 last year as order velocity increases
DSA license and services bookings up 152% in Q4 to $2.3M from $0.9M in Q4 last year
Company adds a record four new Dynamic SIM Allocation™ (DSA) customers in 2013
Cash generated from operations in 2013 increased to $8.6M from $0.2M in cash used in operations last year
First quarter dividend of $0.10 per share, payable March 31, 2014, to stockholders of record on March 24, 2014
Evolving Systems, Inc. (NASDAQ: EVOL), a leader in activation, enablement and management of services for connected mobile devices, today reported financial results for its fourth quarter and full year ended December 31, 2013.
“Evolving Systems continued to build momentum in the fourth quarter with license and services bookings growing by 43% which followed our strong third quarter bookings results,” said Thad Dupper, Chairman and CEO. “Fourth quarter DSA license and services bookings were up 152% year over year and Tertio® license and service orders increased by 6% year over year. We also completed our October acquisition of Telespree Communications — a transaction that we expect to accelerate our introduction of a cloud-based DSA solution and enhance our connected device product offerings.
“For the full year we made progress in several key areas. We added a record four new DSA customers in 2013 and were pleased to see DSA’s impact on the global wireless industry grow to more than 600 million licensed connections worldwide,” Dupper added. “For the full year DSA bookings increased 40% to $11.3 million, up from the year ago figure of $8.1 million. In addition, we continued to generate strong cash flows and profitability in 2013, while maintaining a strong balance sheet and returning value to stockholders in the form of quarterly dividends totaling $0.36 per share for the year. As a result, we remain confident that our product portfolio of both SaaS and premise-based connected device activation solutions will position us for continued growth.”
Fourth Quarter Results Recap
- Revenue of $6.6 million versus $6.9 million in the fourth quarter last year. License and services revenue of $4.1 million compared with $4.6 million last year. Customer support revenue increased to $2.4 million from $2.3 million in the fourth quarter last year.
- Operating income of $0.5 million (inclusive of $0.2 million in transaction and integration expenses and $0.6 million in restructuring costs related to the fourth quarter acquisition of Telespree Communications) versus operating income of $1.8 million in the fourth quarter last year.
- Net income of $0.8 million versus $1.4 million in the fourth quarter last year. Diluted net income per share of $0.07 versus $0.12.
- Adjusted EBITDA of $1.2 million versus $2.0 million in the fourth quarter last year.
- Cash Flow: The Company generated $1.4 million in cash from operations in the fourth quarter compared with cash used in operations of $1.8 million in the same quarter last year.
- Balance Sheet: Cash and cash equivalents at December 31, 2013, were $13.8 million, up from $8.8 million at 2012 year-end.
- Dividend Update: The Company declared a first quarter dividend of $0.10 per share, payable on March 31, 2014, to stockholders of record on March 24, 2014.
Full Year Results Recap
- Revenue of $25.1 million in 2013, down from $26.2 million in 2012. License and services revenue of $16.0 million versus $17.6 million last year. Customer support revenue of $9.1 million, up from $8.6 million.
- Operating income of $5.0 million versus $5.6 million last year. The lower operating income was attributable to approximately $1.0 million in Telespree acquisition and integration expenses and restructuring costs.
- Net income of $3.8 million compared with $5.6 million a year ago when the Company recorded $1.4 million in gain on sale and related interest associated with investments in marketable debt securities. Diluted net income per share was $0.32 versus $0.48.
- Adjusted EBITDA of $6.3 million versus $6.5 million a year ago.
- Cash Flow: Cash generated from operations increased to $8.6 million in 2013, up from $0.2 million in cash used in operations in 2012.
Bookings and Backlog Highlights
- Fourth quarter bookings totaled $7.4 million, up 5% from the third quarter of this year and up 18% over the fourth quarter last year. License and services bookings were $5.2 million, up 10% from $4.7 million in the third quarter and up 43% over $3.6 million in the fourth quarter last year. DSA license and services bookings in the fourth quarter were $2.3 million, up slightly from $2.2 million in the third quarter but up 152% from $0.9 million in the fourth quarter last year. TSA license and services bookings were $2.8 million, up from $2.5 million in the third quarter and up from $2.7 million in the fourth quarter last year. Customer support bookings in the fourth quarter were $2.2 million, down from $2.3 million in the third quarter and $2.6 million in the fourth quarter a year ago. Bookings are defined as new, non-cancelable orders expected to be recognized as revenue during the following 12 months.
- Full year bookings totaled $26.2 million, up from $24.6 million in 2012. License and services bookings were $16.4 million and included of $7.9 million in DSA orders and $8.4 million in TSA. Customer support bookings were $9.9 million, up 22% over $8.1 million last year. Customer support bookings included $3.4 million in DSA, up from $1.2 million last year, and $6.4 million in TSA, down from $6.9 million a year ago.
- Total backlog at December 31, 2013, was $12.2 million, up from $11.4 million in the third quarter and up from $11.1 million at the same time last year. License and services backlog totaled $7.1 million and included $4.0 million in DSA and $3.0 million in TSA. Customer support backlog was $5.1 million.
Conference Call
The Company will conduct a conference call and webcast today at 2:30 p.m. Mountain Time. The call-in numbers for the conference call are 1-877-303-6316 for domestic toll free and 650-521-5176 for international callers. The conference ID is 1419941. A telephone replay will be available through March 25, 2014, and can be accessed by calling 1-855-859-2056 or 1-404-537-3406. Conference ID 1419941. 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 March 25, 2014.
Non-GAAP Financial Measures
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 financial information in the form of net income, diluted net income per share and adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, impairment, stock compensation and gain/loss on foreign exchange transactions.) Management believes these non-GAAP financial measures are useful to investors and lenders in evaluating the overall financial health of the Company in that they allow for greater transparency of additional financial data routinely used by management to evaluate performance. Investors and financial analysts who follow the Company use non-GAAP net income and non-GAAP diluted income per share to compare the Company against other companies. Adjusted EBITDA can be useful for lenders as an indicator of earnings available to service debt. Non-GAAP financial measures should not be considered in isolation from or as an alternative to the financial information prepared in accordance with GAAP.
About Evolving Systems®
Evolving Systems, Inc. (NASDAQ: EVOL) is a provider of software and services to 60 network operators in over 40 countries worldwide. The Company’s product portfolio includes market-leading activation products that address subscriber service activation, SIM card activation, mobile broadband activation as well as the activation of connected devices. Founded in 1985, the Company has headquarters in Englewood, CO, with offices in San Francisco, CA; the United Kingdom; India; and Malaysia. For more information please visit www.evolving.com or follow us on Twitter: http://twitter.com/EvolvingSystems
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 market for the Company’s DSA, TSA and SaaS products, market leadership, EBITDA, cash flow and bookings growth, and the Company’s continued ability to pay dividends or post quarterly or full year results that are similar to those described in this press release 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, 2014, as well as other SEC filings, including Forms 10-Q, 10-Q/A, 8-K and press releases.
Consolidated Statements of Operations | |||||||||||||||||
(In thousands except per share data) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Three months ended | Twelve months ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Revenue: | |||||||||||||||||
License fees and services | $ | 4,145 | $ | 4,590 | $ | 15,998 | $ | 17,622 | |||||||||
Customer support | 2,425 | 2,261 | 9,095 | 8,625 | |||||||||||||
Total revenue | 6,570 | 6,851 | 25,093 | 26,247 | |||||||||||||
Costs of revenue and operating expenses: | |||||||||||||||||
Costs of license fees and services, excluding depreciation and amortization | 1,511 | 1,685 | 5,565 | 6,734 | |||||||||||||
Costs of customer support excluding depreciation and amortization | 512 | 364 | 1,599 | 1,502 | |||||||||||||
Sales and marketing | 1,588 | 1,236 | 5,364 | 5,070 | |||||||||||||
General and administrative | 964 | 769 | 3,644 | 3,613 | |||||||||||||
Product development | 840 | 887 | 2,956 | 3,069 | |||||||||||||
Depreciation | 38 | 44 | 155 | 268 | |||||||||||||
Amortization | 16 | 101 | 211 | 400 | |||||||||||||
Restructuring | 558 | – | 558 | – | |||||||||||||
Total costs of revenue and operating expenses | 6,027 | 5,086 | 20,052 | 20,656 | |||||||||||||
Income from operations | 543 | 1,765 | 5,041 | 5,591 | |||||||||||||
Other income (expense): | |||||||||||||||||
Interest income | 3 | 4 | 11 | 60 | |||||||||||||
Interest income, related party | – | – | – | 532 | |||||||||||||
Interest expense | (5 | ) | (3 | ) | (20 | ) | (3 | ) | |||||||||
Other income | 87 | – | 87 | – | |||||||||||||
Gain on sale of investments | – | – | – | 891 | |||||||||||||
Foreign currency exchange gain (loss) | (77 | ) | 60 | (39 | ) | (106 | ) | ||||||||||
Other income (expense), net | 8 | 61 | 39 | 1,374 | |||||||||||||
Income from operations before income taxes | 551 | 1,826 | 5,080 | 6,965 | |||||||||||||
Income tax expense (benefit) | (253 | ) | 389 | 1,274 | 1,401 | ||||||||||||
Net income | $ | 804 | $ | 1,437 | $ | 3,806 | $ | 5,564 | |||||||||
Basic income per common share | $ | 0.07 | $ | 0.13 | $ | 0.33 | $ | 0.49 | |||||||||
Diluted income per common share | $ | 0.07 | $ | 0.12 | $ | 0.32 | $ | 0.48 | |||||||||
Weighted average basic shares outstanding | 11,542 | 11,368 | 11,459 | 11,278 | |||||||||||||
Weighted average diluted shares outstanding | 11,871 | 11,645 | 11,756 | 11,529 | |||||||||||||
Consolidated Balance Sheets | |||||||||
(In thousands) | December 31, | December 31, | |||||||
ASSETS | 2013 | 2012 | |||||||
Current Assets: | |||||||||
Cash and cash equivalents | $ | 13,785 | $ | 8,844 | |||||
Short-term restricted cash | – | 53 | |||||||
Contract receivables, net | 6,420 | 4,803 | |||||||
Unbilled work-in-progress, net | 2,423 | 4,802 | |||||||
Deferred income taxes | 131 | – | |||||||
Prepaid and other current assets | 1,173 | 1,133 | |||||||
Total current assets | 23,932 | 19,635 | |||||||
Property and equipment, net | 342 | 211 | |||||||
Amortizable intangible assets, net | 702 | 204 | |||||||
Goodwill | 17,936 | 16,510 | |||||||
Long-term restricted cash | 24 | – | |||||||
Long-term deferred income taxes | 248 | 27 | |||||||
Other long-term assets | – | 6 | |||||||
Total assets | $ | 43,184 | $ | 36,593 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Current liabilities: | |||||||||
Current portion of capital lease obligations | $ | 8 | $ | 4 | |||||
Accounts payable and accrued liabilities | 4,479 | 3,833 | |||||||
Income taxes payable | 459 | 308 | |||||||
Unearned revenue | 5,314 | 1,596 | |||||||
Total current liabilities | 10,260 | 5,741 | |||||||
Long-term liabilities: | |||||||||
Capital lease obligations, net | 11 | 16 | |||||||
Other long-term obligations | 178 | – | |||||||
Total liabilities | 10,449 | 5,757 | |||||||
Stockholders’ equity: | |||||||||
Common stock | 12 | 11 | |||||||
Additional paid-in capital | 93,895 | 91,957 | |||||||
Treasury stock | (1,253 | ) | (1,253 | ) | |||||
Accumulated other comprehensive loss | (3,016 | ) | (3,297 | ) | |||||
Accumulated deficit | (56,903 | ) | (56,582 | ) | |||||
Total stockholders’ equity | 32,735 | 30,836 | |||||||
Total liabilities and stockholders’ equity | $ | 43,184 | $ | 36,593 |
Reconciliation of GAAP to Non-GAAP Financial Measures | ||||||||||||||||
(In thousands except per share data) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three months ended | Twelve months ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Non-GAAP net income and income per share: | ||||||||||||||||
GAAP net income | $ | 804 | $ | 1,437 | $ | 3,806 | $ | 5,564 | ||||||||
Amortization of intangible assets | 16 | 101 | 211 | 400 | ||||||||||||
Stock-based compensation expense | 61 | 59 | 288 | 264 | ||||||||||||
Restructuring | 558 | – | 558 | – | ||||||||||||
Income tax adjustment for non-GAAP* | (179 | ) | (31 | ) | (302 | ) | (127 | ) | ||||||||
Non-GAAP net income | $ | 1,260 | $ | 1,566 | $ | 4,561 | $ | 6,101 | ||||||||
Diluted net income per share | ||||||||||||||||
GAAP | $ | 0.07 | $ | 0.12 | $ | 0.32 | $ | 0.48 | ||||||||
Non-GAAP | $ | 0.11 | $ | 0.13 | $ | 0.39 | $ | 0.53 | ||||||||
Shares used to compute diluted EPS | 11,871 | 11,645 | 11,756 | 11,529 | ||||||||||||
Three months ended | Twelve months ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Adjusted EBITDA: | ||||||||||||||||
Net income | $ | 804 | $ | 1,437 | $ | 3,806 | $ | 5,564 | ||||||||
Depreciation | 38 | 44 | 155 | 268 | ||||||||||||
Amortization of intangible assets | 16 | 101 | 211 | 400 | ||||||||||||
Stock-based compensation expense | 61 | 59 | 288 | 264 | ||||||||||||
Restructuring | 558 | – | 558 | – | ||||||||||||
Interest expense and other (benefit), net | (8 | ) | (61 | ) | (39 | ) | (1,374 | ) | ||||||||
Income tax expense (benefit) | (253 | ) | 389 | 1,274 | 1,401 | |||||||||||
Adjusted EBITDA | $ | 1,216 | $ | 1,969 | $ | 6,253 | $ | 6,523 | ||||||||
*The estimated income tax for non-GAAP net income is adjusted by the amount of additional expense that the Company would accrue if it used non-GAAP results instead of GAAP results in the calculation of its tax liability, taking into account in which tax jurisdiction each of the above adjustments would be made and the tax rate in that jurisdiction.
Investor Relations
Jay Pfeiffer
Pfeiffer High Investor Relations, Inc.
303.393.7044
Email Contact
Press Relations
Lissa Franklin
Evolving Systems
415-817-0803
Email Contact
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