2018 Financial Results Highlights:
Evolving Systems, Inc. (NASDAQ: EVOL), a
leader in real-time digital engagement, today reported financial
results for its second quarter ended June 30, 2018.
“Our 2018 second-quarter results were in line
with expectations as revenue grew approximately 31% year-over-year,
we were profitable on an operating and net income basis, and the
cash balance on our balance sheet strengthened. Cash flow has
increased by over $1.7 million year to date and our cash balance
improved by 23% since December, while we increased investments in
research and development, marketing and sales-related initiatives.
This is an important year for Evolving Systems as we work to
further integrate the BLS and Lumata acquisitions, expedite
investments to strengthen our offerings and expand our business
with both our installed client base and add new accounts. During
the quarter, we increased our sales force and continued to hire
program and account managers increasing our support for several of
our larger customers and expanding our capabilities to bring on new
clients. All of us at Evolving Systems remain focused on
enhancing our business and creating long-term and sustainable
shareholder value,” said Matthew Stecker, Chief Executive Officer
and Executive Chairman of Evolving Systems.
2018 ResultsTotal revenue for the second quarter
ended June 30, 2018 was $8.1 million, a $1.9 million or
approximately 31.0% increase over the comparable year-ago period.
Total revenue for the six months ended June 30, 2018 was 16.3
million or approximately a 35% increase over the same period a year
ago. Services revenue which includes revenues from the
company’s preference for Managed Services over perpetual licensing,
comprised approximately 96% of total revenue and increased $4.7
million or 43% when comparing the year to date revenues for fiscal
2018 and fiscal 2017 six month periods.
The Company reported gross profit margins,
excluding depreciation and amortization, of approximately 65.0% for
the six months ended June 30, 2018 as compared to gross profit
margins of approximately 74.0% for the six months ended June 30th,
2017. This decline in gross margin was primarily related to the
Company’s product and service mix following the acquisitions of BLS
and Lumata.
Total operating expenses of $5.0 million in the
quarter ended June 30, 2018 increased by approximately $2.1
million, as compared to $2.9 million in the corresponding year-ago
period. Total operating expenses of $5.0 million for the six months
ended June 30, 2018 increased by approximately $3.8 million, as
compared to $5.7 million in the corresponding six-month period in
the prior year. The increase in total operating expenses was
directly related to added expenses associated with the BLS and
Lumata operations, which accounted for approximately $1.5 and $2.9
million respectively of the year-over-year increases. During the
second quarter the Company had non-recurring legal expenses of $0.4
million relating to settlement of a dispute arising from the SSM
acquisition in September of 2015 and the write-off of uncollectible
fees of $0.3 million related to projects that were terminated prior
to completion. Other additional operating expenses were
primarily related to the Company’s planned investments in sales and
marketing, staffing and product development.
The Company reported operating income of $1.0
million as compared to $3.3 million for the six months ended June
30, 2018 and June 30, 2017, respectively. The Company reported
Adjusted earnings before interest, taxes, depreciation and
amortization (“EBITDA”) of $2.1 million as compared to $4.1 million
for first six months of 2018 and the first six months of 2017,
respectively. Factoring that the non-recurring expenses noted
above were unanticipated, the company had expected an Adjusted
“EBITDA” of 2.8 million for the first six months of 2018.
Cash and cash equivalents as of June 30, 2018
was $9.3 million, an increase of $1.7 million or 23% compared to
$7.6 million as of December 31, 2017. Contract receivables, net of
allowance for doubtful accounts were $9.3 million, a decrease of
$0.9 million compared to December 31, 2017. Unbilled
work-in-progress, net of allowance for doubtful accounts was $4.7
million and $5.8 million for the periods ended June 30, 2018 and
December 31, 2017, respectively. Working capital as of June 30,
2018 decreased on a sequential basis to $8.0 million from $9.0
million as of December 31, 2017 and the Company continued to
generate positive cash flows from operations.
Conference
CallThe Company will be conducting a conference
call and webcast on Tuesday, August 14, 2018 at 4:30 p.m. Eastern
Time and 2:30 p.m. Mountain Time. The call-in numbers for the
conference call are: (877) 303-6316 for domestic toll free and
(650) 521-5176 for international callers. The conference ID number
is 6994236. A telephone replay will be available through August 28,
2018 and can be accessed by calling (855) 859-2056 for domestic
toll free or (404) 537-3406 for international callers. The
conference replay ID number is also 6994236. To access a live
webcast of the call, please visit Evolving Systems’ website at
www.evolving.com, click the ‘Investors’ tab and then click the ‘Q2
earnings call’ icon at right. A replay of the webcast will be
accessible at that website through August 28, 2018. The webcast is
also available by clicking the following link:
https://edge.media-server.com/m6/p/vn72799a.
Non-GAAP Financial
MeasuresEvolving 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 financial information in the form of non-GAAP net income
and diluted net income per share and adjusted EBITDA (earnings
before interest, taxes, depreciation, amortization, impairment,
stock compensation, restructuring 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 real-time digital
engagement solutions and services to more than 100 customers in
over 60 countries worldwide. The Company’s portfolio includes
market-leading solutions and services for real-time analytics,
customer acquisition, customer value management and loyalty for
telecom, retail and financial services companies. Founded in 1985,
the Company has its headquarters in Englewood, Colorado, with
offices in Asia, Europe, Africa, South America and North America.
For more information, please visit www.evolving.com or follow us on
Twitter at http://twitter.com/EvolvingSystems.
CAUTIONARY STATEMENTThis 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, and
performance of, the Company’s products and its ability to enhance
its products and expand its capabilities with existing and new
customers 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, 10‑Q, 10‑Q/A, 8‑K and 8‑K/A filed with the SEC and its press
releases and the Company’s website.
|
EVOLVING SYSTEMS, INC. |
CONSOLIDATED STATEMENTS OF INCOME |
(in thousands, except share data) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
License
fees |
$ |
249 |
|
|
$ |
720 |
|
|
$ |
584 |
|
|
$ |
1,063 |
|
Services |
|
7,888 |
|
|
|
5,502 |
|
|
|
15,711 |
|
|
|
11,034 |
|
Total revenue |
|
8,137 |
|
|
|
6,222 |
|
|
|
16,295 |
|
|
|
12,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS OF
REVENUE AND OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
Costs of
revenue, excluding depreciation and amortization |
|
2,891 |
|
|
|
1,564 |
|
|
|
5,748 |
|
|
|
3,109 |
|
Sales and
marketing |
|
1,599 |
|
|
|
978 |
|
|
|
3,236 |
|
|
|
2,046 |
|
General
and administrative |
|
2,188 |
|
|
|
1,020 |
|
|
|
3,928 |
|
|
|
1,993 |
|
Product
development |
|
955 |
|
|
|
669 |
|
|
|
1,808 |
|
|
|
1,143 |
|
Depreciation |
|
49 |
|
|
|
50 |
|
|
|
81 |
|
|
|
101 |
|
Amortization |
|
251 |
|
|
|
196 |
|
|
|
493 |
|
|
|
392 |
|
Total costs of revenue
and operating expenses |
|
7,933 |
|
|
|
4,477 |
|
|
|
15,294 |
|
|
|
8,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations |
|
204 |
|
|
|
1,745 |
|
|
|
1,001 |
|
|
|
3,313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense) |
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
2 |
|
|
|
1 |
|
|
|
30 |
|
|
|
1 |
|
Interest
expense |
|
(123 |
) |
|
|
(71 |
) |
|
|
(249 |
) |
|
|
(143 |
) |
Other
expense |
|
18 |
|
|
|
- |
|
|
|
(13 |
) |
|
|
- |
|
Foreign
currency exchange loss |
|
224 |
|
|
|
(219 |
) |
|
|
136 |
|
|
|
(392 |
) |
Other income (expense),
net |
|
121 |
|
|
|
(289 |
) |
|
|
(96 |
) |
|
|
(534 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
before income taxes |
|
325 |
|
|
|
1,456 |
|
|
|
905 |
|
|
|
2,779 |
|
Income
tax expense |
|
167 |
|
|
|
354 |
|
|
|
262 |
|
|
|
704 |
|
Net income |
$ |
158 |
|
|
$ |
1,102 |
|
|
$ |
643 |
|
|
$ |
2,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per common
share - net income |
$ |
0.01 |
|
|
$ |
0.09 |
|
|
$ |
0.05 |
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income per
common share - net income |
$ |
0.01 |
|
|
$ |
0.09 |
|
|
$ |
0.05 |
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average basic
shares outstanding |
|
12,112 |
|
|
|
11,935 |
|
|
|
12,094 |
|
|
|
11,928 |
|
Weighted average
diluted shares outstanding |
|
12,124 |
|
|
|
11,972 |
|
|
|
12,145 |
|
|
|
11,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EVOLVING SYSTEMS, INC. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(in thousands, except share data) |
(unaudited) |
|
|
|
June 30, |
|
December 31, |
|
2018 |
|
2017 |
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
9,293 |
|
|
$ |
7,562 |
|
Contract
receivables |
|
9,335 |
|
|
|
10,151 |
|
Unbilled
work-in-progress |
|
4,709 |
|
|
|
5,823 |
|
Prepaid
and other current assets |
|
1,777 |
|
|
|
2,053 |
|
Total
current assets |
|
25,114 |
|
|
|
25,589 |
|
Property and equipment,
net |
|
215 |
|
|
|
258 |
|
Amortizable intangible
assets, net |
|
5,095 |
|
|
|
5,613 |
|
Goodwill |
|
25,074 |
|
|
|
25,216 |
|
Deferred income
taxes |
|
306 |
|
|
|
274 |
|
Total
assets |
$ |
55,904 |
|
|
$ |
56,950 |
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Term loan
- current |
$ |
3,677 |
|
|
$ |
2,805 |
|
Accounts
payable and accrued liabilities |
|
5,904 |
|
|
|
6,890 |
|
Contingent earnout |
|
847 |
|
|
|
396 |
|
Income
taxes payable |
|
485 |
|
|
|
1,107 |
|
Unearned
revenue |
|
6,327 |
|
|
|
5,397 |
|
Total
current liabilities |
|
17,140 |
|
|
|
16,595 |
|
Long-term
liabilities: |
|
|
|
|
|
Term
loan, net |
|
4,156 |
|
|
|
5,942 |
|
Total
liabilities |
|
21,296 |
|
|
|
22,537 |
|
|
|
|
|
|
|
Stockholders'
equity: |
|
|
|
|
|
Common
stock |
|
12 |
|
|
|
12 |
|
Additional paid-in capital |
|
99,010 |
|
|
|
98,517 |
|
Treasury
stock |
|
(1,253 |
) |
|
|
(1,253 |
) |
Accumulated other comprehensive loss |
|
(9,143 |
) |
|
|
(8,202 |
) |
Accumulated deficit |
|
(54,018 |
) |
|
|
(54,661 |
) |
Total
stockholders' equity |
|
34,608 |
|
|
|
34,413 |
|
Total
liabilities and stockholders' equity |
$ |
55,904 |
|
|
$ |
56,950 |
|
|
|
|
|
|
|
|
|
EVOLVING SYSTEMS, INC. |
Reconciliation of GAAP to Non-GAAP
Measures |
(in thousands, except share data) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
June 30, |
|
June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Adjusted
EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
158 |
|
|
$ |
1,102 |
|
|
$ |
643 |
|
|
$ |
2,075 |
|
Depreciation |
|
49 |
|
|
|
50 |
|
|
|
81 |
|
|
|
101 |
|
Amortization of intangible assets |
|
251 |
|
|
|
196 |
|
|
|
493 |
|
|
|
392 |
|
Stock-based compensation expense |
|
126 |
|
|
|
183 |
|
|
|
493 |
|
|
|
264 |
|
Interest expense and
other (benefit), net |
|
(121 |
) |
|
|
289 |
|
|
|
96 |
|
|
|
534 |
|
Income tax expense
(benefit) |
|
167 |
|
|
|
354 |
|
|
|
262 |
|
|
|
704 |
|
Adjusted
EBITDA |
$ |
630 |
|
|
$ |
2,174 |
|
|
$ |
2,068 |
|
|
$ |
4,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income |
$ |
158 |
|
|
$ |
1,102 |
|
|
$ |
643 |
|
|
$ |
2,075 |
|
Amortization of
intangible assets |
|
251 |
|
|
|
196 |
|
|
|
493 |
|
|
|
392 |
|
Stock-based
compensation expense |
|
126 |
|
|
|
183 |
|
|
|
493 |
|
|
|
264 |
|
Income tax adjustment
for non-GAAP* |
|
(68 |
) |
|
|
(141 |
) |
|
|
(231 |
) |
|
|
(243 |
) |
Non-GAAP
net income |
$ |
467 |
|
|
$ |
1,340 |
|
|
$ |
1,398 |
|
|
$ |
2,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net
income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP |
$ |
0.01 |
|
|
$ |
0.09 |
|
|
$ |
0.05 |
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP |
$ |
0.04 |
|
|
$ |
0.11 |
|
|
$ |
0.12 |
|
|
$ |
0.21 |
|
Shares used to compute
diluted net income per share |
|
12,124 |
|
|
|
11,972 |
|
|
|
12,145 |
|
|
|
11,958 |
|
|
|
|
|
|
|
|
|
|
|
|
|
* The
estimated income tax for non-GAAP net income is adjusted by the
amount of additional expense that we would accrue if we
used non-GAAP results instead of GAAP results in the
calculation of our tax liability, taking into account which tax
jurisdiction each of the above adjustments would be made and
the tax rate in that jurisdiction. |
|
|
|
|
|
|
|
|
|
|
Investor Relations Contacts:
Alice Ahern
Investor Relations
Evolving Systems
Tel: 1-844-732-5898
Email: investors@evolving.com
Evolving Systems (NASDAQ:EVOL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Evolving Systems (NASDAQ:EVOL)
Historical Stock Chart
From Apr 2023 to Apr 2024