ENGLEWOOD, CO--(Marketwire - August 4, 2009) - Evolving Systems, Inc. (
NASDAQ:
EVOLD)
Net income:
-- Up 42% from Q2 2008 to $1.1 million -- $0.11 EPS
-- Up 290% from first half 2008 to $2.1 million -- $0.21 EPS
-- Most profitable Q2 and first half since 2003
-- EPS figures adjusted for recent 1-for-2 reverse split
Constant currency revenue increases 8% in both second quarter and six-month
period
Bookings highlights:
-- New product offering license and services orders for first half up
258% year over year
-- New products accounted for 67% of first half license and services
bookings
-- Emerging markets customers comprise 81% of first half license and
services bookings
Record high second quarter ending license and services backlog of $9.6
million as a global business
$3 million in accelerated debt pay down in first half of 2009
Evolving Systems, Inc. (
NASDAQ:
EVOLD), a leading provider of software
solutions and services to the wireless, wireline and cable markets, today
reported increased profitability and strong overall results for its second
quarter and six month period ended June 30, 2009.
"We continue to experience solid demand for our solutions, highlighted by
growing interest in our new product offerings in emerging markets, where we
have been aggressively targeting carriers for the past few years," said
Thad Dupper, president and CEO of Evolving Systems. "We experienced good
growth in constant currency revenue, operating income, net income and
adjusted EBITDA. We're particularly pleased with fully diluted EPS of
$0.11 in the second quarter and $0.21 for the six-month period, after
reflecting the effect of our one-for-two reverse stock split.
"We recorded two more sales of our new Dynamic SIM Allocation™ (DSA)
solution in the second quarter, bringing the total number of DSA sales year
to date to four -- three with customers in emerging markets and one with a
customer in Europe," Dupper added. "Our newest product offerings -- DSA
and our international NumeriTrack® (iNT) solution -- comprised 21% of
revenue and 43% of new orders during the second quarter -- an important
indicator that our focus on new products and emerging markets is paying
off."
Second Quarter Results
Second quarter net income rose 42% to $1.1 million, or $0.11 per basic and
diluted share, from $775,000, or $0.08 per basic and diluted share, in the
second quarter of 2008. It was the Company's most profitable second
quarter since 2003 and fifth consecutive profitable quarter overall.
Non-GAAP adjusted EBITDA for the second quarter was $2.4 million, up 21%
from $2.0 million in the same quarter last year.
Due to the stronger U.S. dollar in the second quarter of 2009 compared with
the second quarter of 2008, reported revenue in the second quarter was
essentially flat at $9.6 million. However, when adjusted for the change in
foreign currency exchange rates, second quarter revenue increased 8% year
over year due to growing demand for the Company's DSA and iNT solutions in
emerging markets. Reported license fees and services revenue as well as
customer support revenue totals were nearly flat at approximately $5.4
million and $4.3 million, respectively, for the comparative second
quarters. Second quarter revenue mix included $5.6 million in Service
Activation, $3.4 million in Numbering Solutions and $0.6 million in
Mediation.
Total costs of revenue and operating expenses in the second quarter
declined 8% to $7.8 million in 2009 from $8.5 million in 2008, reflecting
the positive effects of foreign exchange transactions principally involving
the British Pound Sterling. Adjusted for currency changes, total expenses
were up approximately 5%. The increase in second quarter constant currency
expenses was due to higher costs of revenue to support the constant
currency revenue growth, increased selling costs to cover the emerging
markets, and higher professional fees.
Second quarter income from operations was up 63% to $1.8 million from $1.1
million in the comparable quarter last year. It was the Company's 12th
consecutive quarter of positive operating income and the second highest
total in that category since 2003.
6-Month Results
The Company reported a 290% increase in net income to $2.1 million, or
$0.21 per basic and diluted share, through six months as compared with net
income of $531,000, or $0.05 per basic and diluted share, in the same
period a year ago. Adjusted EBITDA for the six-month period was $4.3
million, a 47% increase over the total of $2.9 million a year ago.
Again, due to the comparatively stronger U.S. dollar in 2009, reported
revenue through the first six months of 2009 declined slightly to $18.5
million from $18.8 million in the same period a year ago. On a constant
currency basis, however, revenue increased 8% based on solid growth in
demand for new products. License fees and services revenue declined
slightly -- to $10.1 million from $10.2 million -- while customer support
revenue was $8.4 million versus $8.6 million in the year ago period.
Revenue mix included $10.5 million in Activation, $6.8 million in Numbering
Solutions and $1.2 million in Mediation.
Total costs of revenue and operating expenses through the first six months
of 2009 benefitted from the effects of foreign currency exchange
transactions, declining by nearly 13% to $15.3 million from $17.6 million
in the comparable six-month period last year. On a constant currency
basis, total costs of revenue and operating expenses increased
approximately 2%.
Operating income through six months of 2009 grew 161% to $3.2 million from
$1.2 million in the same period of 2008.
Bookings and Backlog Highlights
The Company booked $10.5 million in new orders in the second quarter, a 26%
increase over bookings of $8.3 million in the second quarter last year and
a 67% increase over bookings of $6.3 million in the first quarter of this
year. Second quarter bookings included $6.1 million in license fees and
services and $4.4 million in customer support, representing year over year
increases of 15% and 45%, respectively. Bookings by product category in
the second quarter included $6.9 million in Activation, $2.9 million in
Numbering Solutions, and $0.6 million in Mediation.
DSA and iNT solutions combined to represent 60% of license fees and
services bookings in the second quarter, with DSA contributing 52% and iNT
contributing 8%. As a percentage of total bookings, DSA represented 37%
with iNT at 6% for a combined 43% of total bookings.
New orders for the first six months of 2009 increased to $16.7 million from
$16.6 million in the same period last year. Year-to-date new orders were
impacted by the acceleration in the first quarter of a large, recurring
2009 license and services order into the fourth quarter of 2008. License
and services orders were flat at $10.8 million for the comparative
six-month periods while support orders for the same periods increased to
$6.0 million from $5.8 million. By product category, six-month bookings
included $11.0 million in Activation, $4.9 million in Numbering Solutions
and $.8 million in Mediation.
Orders for DSA solutions represented 49% of license fees and services
bookings through six months while iNT orders came in at 18%, bringing the
combined DSA and iNT orders to 67% of license fees and services bookings in
the first half of 2009. License fees and services orders for DSA and iNT
solutions in the first half increased a combined 258% over the first half
of 2008. As a percent of total new orders, DSA and iNT contributed 36% and
12%, respectively, for a total of 48% of total bookings year to date.
Emerging markets generated 81% of first half license and services orders.
The Company defines bookings as new, non-cancelable orders expected to be
recognized as revenue during the following 12 months.
Backlog at June 30, 2009, was $19.3 million, up 10% over $17.6 million.
The license fees and services backlog, a leading indicator, increased 35%
to $9.6 million from $7.1 million, more than offsetting an 8% decline in
customer support backlog.
Balance Sheet Highlights
The Company made a $1.0 million prepayment on its subordinated debt
obligations in the second quarter, raising to $3.0 million the total
sub-debt prepayments made year to date. When appropriate, the Company
expects to continue accelerating its debt payments in order to enhance
earnings and strengthen its balance sheet. The Company's cash and cash
equivalents balance at June 30, 2009, was $5.0 million.
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
1-877-548-7907 for domestic toll free and
719-325-4905 for international callers. The conference ID is 3894744. A
telephone replay will be available through August 11, 2009, and can be
accessed by calling
1-888-203-1112 or
1-719-457-0820, passcode 3894744. 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 August 11, 2009.
About Evolving Systems
Evolving Systems, Inc. is a provider of software and services to more than
70 network operators in over 40 countries worldwide. Its portfolio
includes market-leading products for Service Activation, Service
Verification, Dynamic SIM Allocation, Number Portability, Number Inventory
and Mediation solutions. 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 or annual 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 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 Six months ended
June 30, June 30,
2009 2008 2009 2008
---------- ---------- ---------- ----------
Revenue:
License fees and services $ 5,359 $ 5,342 $ 10,104 $ 10,174
Customer support 4,270 4,303 8,368 8,598
---------- ---------- ---------- ----------
Total revenue 9,629 9,645 18,472 18,772
---------- ---------- ---------- ----------
Costs of revenue and operating
expenses:
Costs of license fees and
services, excluding
depreciation and
amortization 2,065 1,902 3,742 4,126
Costs of customer support,
excluding depreciation and
amortization 1,401 1,632 2,834 3,125
Sales and marketing 1,942 2,194 3,829 4,381
General and administrative 1,399 1,236 2,832 2,661
Product development 686 950 1,381 2,018
Depreciation 158 252 314 482
Amortization 183 379 354 759
---------- ---------- ---------- ----------
Total costs of revenue and
operating expenses 7,834 8,545 15,286 17,552
---------- ---------- ---------- ----------
Income from operations 1,795 1,100 3,186 1,220
---------- ---------- ---------- ----------
Interest and other
expense, net (640) (212) (1,057) (650)
---------- ---------- ---------- ----------
Income before income taxes 1,155 888 2,129 570
Income tax expense 53 113 58 39
---------- ---------- ---------- ----------
Net income $ 1,102 $ 775 $ 2,071 $ 531
========== ========== ========== ==========
Basic income per common
share $ 0.11 $ 0.08 $ 0.21 $ 0.05
========== ========== ========== ==========
Diluted income per common
share $ 0.11 $ 0.08 $ 0.21 $ 0.05
========== ========== ========== ==========
Weighted average basic
shares outstanding 9,777 9,687 9,771 9,684
Weighted average diluted
shares outstanding 10,087 9,922 9,992 9,920
Reconciliation of Net Income to Adjusted EBITDA
(In thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
---------- ---------- ---------- ----------
Net income $ 1,102 $ 775 $ 2,071 $ 531
Depreciation 158 252 314 482
Amortization 183 379 354 759
Stock-based compensation
expense 225 228 426 456
Interest expense and other,
net 640 212 1,057 650
Income tax expense (benefit) 53 113 58 39
---------- ---------- ---------- ----------
Adjusted EBITDA $ 2,361 $ 1,959 $ 4,280 $ 2,917
========== ========== ========== ==========
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) June 30, December 31,
2009 2008
-------------- --------------
ASSETS
Current Assets:
Cash and cash equivalents $ 4,995 $ 5,783
Contract receivables, net 9,002 11,484
Unbilled work-in-progress 2,251 1,910
Prepaid and other current assets 1,556 1,309
-------------- --------------
Total current assets 17,804 20,486
Property and equipment, net 1,285 1,277
Amortizable intangible assets, net 2,314 2,374
Goodwill 22,898 20,811
Long-term restricted cash 100 100
Other long-term assets 194 363
-------------- --------------
Total assets $ 44,595 $ 45,411
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt
and capital lease obligations $ 1,356 $ 2,021
Accounts payable and accrued
liabilities 4,421 5,218
Unearned revenue 9,960 11,445
-------------- --------------
Total current liabilities 15,737 18,684
Long-term liabilities:
Long-term debt and other obligations 3,270 6,344
Deferred foreign income taxes 388 441
-------------- --------------
Total liabilities 19,395 25,469
Stockholders' equity:
Common stock 10 10
Additional paid-in capital 82,284 81,824
Accumulated other comprehensive loss (2,543) (5,270)
Accumulated deficit (54,551) (56,622)
-------------- --------------
Total stockholders' equity 25,200 19,942
-------------- --------------
Total liabilities and stockholders'
equity $ 44,595 $ 45,411
============== ==============
Contact Information: Investor Relations
Jay Pfeiffer
Pfeiffer High Investor Relations, Inc.
303.393.7044
Press Relations
Sarah Hurp
Marketing Manager
Evolving Systems
+44 1225 478060