ENGLEWOOD, CO--(Marketwire - November 3, 2009) - Evolving Systems, Inc. (
NASDAQ:
EVOL)
Net income:
-- Up 124% from Q3 2008 to $1.3 million -- $0.13 EPS
-- Up 202% nine months YTD to $3.4 million -- $0.34 EPS
-- Most profitable Q3 and first nine months since 2003
Non-GAAP net income:
-- Up 56% from Q3 2008 to $1.7 million -- $0.16 EPS
-- Up 65% nine months YTD to $4.4 million -- $0.44 EPS
Revenue:
-- Up 10% from Q3 2008 to $9.9 million
-- 330% increase in new products revenue from Q3 2008, 180% YTD
-- 100% increase in emerging markets revenue from Q3 2008, 52% YTD
Bookings highlights:
-- New products account for 56% of YTD license fees and services bookings
-- Emerging markets account for 74% of YTD license fees and services
orders
License and services backlog up 44% to $9.3 million year over year
Evolving Systems, Inc. (
NASDAQ:
EVOL), a leading provider of software
solutions and services to the wireless, wireline and cable markets, today
reported solid growth in revenue, net income and new orders for its third
quarter and nine-month period ended September 30, 2009.
"Based on higher revenue and a stable expense base, we achieved our most
profitable third quarter and nine-month period since 2003," said CEO Thad
Dupper. "We have reported 13 consecutive quarters of positive operating
income and six straight quarters of GAAP net income. We have also begun
reporting non-GAAP net income, which came in at $1.7 million, or $0.16 per
diluted share, in the third quarter, and $4.4 million, or $0.44 per diluted
share, through nine months.
"The growth and profitability we have achieved over the past two years is
significant in light of prevailing economic conditions," Dupper added. "We
are intensely focused on providing our customers with cost-effective,
cutting edge solutions and excellent customer service. As a result, we
have a growing and highly loyal customer base, which includes many of the
largest communications carriers in the world. Additionally, we have
successfully introduced new products and opened new markets. Dynamic SIM
Allocation™ (DSA) and international NumeriTrack® (iNT) -- our latest
new product offerings -- accounted for 36% of license and services orders
in the third quarter and 56% year-to-date. We achieved a 330% increase in
new product revenue in the third quarter and 180% growth year to date.
Likewise, we are successfully executing on our strategy to win new
customers in emerging markets, where we achieved 100% revenue growth in the
third quarter and 52% growth through nine months compared to the same
periods in 2008."
Third Quarter Results
Third quarter net income grew 124% to $1.3 million, or $0.14 per basic and
$0.13 per diluted share, from $593,000, or $0.06 per basic and diluted
share, in the third quarter last year. It was the Company's sixth
consecutive profitable quarter and the most profitable third quarter since
2003. Non-GAAP net income grew by 56% to $1.7 million, or $0.16 per
diluted share, from $1.1 million, or $0.11 per diluted share, in the third
quarter of 2008. Non-GAAP adjusted EBITDA for the third quarter was $2.2
million, up 39% from $1.6 million in the same quarter last year.
Revenue increased 10% in the third quarter to $9.9 million from $9.0
million in the same quarter last year. Adjusted for the change in foreign
currency exchange rates, third quarter revenue increased 14%. The increase
in revenue was attributable to growing demand for the Company's new
products, DSA and iNT, as well as growth from emerging markets. License
fees and services revenue increased in the third quarter to $5.8 million
from $4.5 million, more than offsetting a decline in customer support
revenue to $4.1 million from $4.5 million. Third quarter revenue mix
included $6.4 million in Service Activation, $3.1 million in Numbering
Solutions and $0.4 million in Mediation.
Total costs of revenue and operating expenses increased slightly in the
third quarter to $8.3 million from $8.2 million in 2008, reflecting the
positive effects of foreign exchange transactions. Adjusted for currency
changes, total expenses were up approximately 9%. The Company had higher
product development costs in the period related to its new DSA product as
well as to new releases of legacy solutions. General and administrative
expense also increased due to higher professional fees and compensation
costs related to revenue and profitability growth.
Income from operations grew 95% in the third quarter to $1.6 million from
$834,000 in the same quarter last year. It was the Company's 13th straight
quarter of positive operating income.
Nine-Month Results
The Company reported a 202% increase in net income to $3.4 million, or
$0.35 per basic and $0.34 per diluted share, through the first nine months
of 2009 as compared with net income of $1.1 million, or $0.12 per basic and
$0.11 per diluted share, in the same period a year ago. Non-GAAP net
income increased to $4.4 million, or $0.44 per diluted share, from $2.7
million, or $0.27 per diluted share, in the first nine months of 2008.
Non-GAAP adjusted EBITDA for the nine-month period was $6.5 million, a 44%
increase over $4.5 million in the same period last year.
Revenue through nine months increased 2% to $28.4 million from $27.8
million in the same period a year ago. On a constant currency basis,
however, revenue increased 10% based on growing demand for new products.
License fees and services revenue increased 8% to $15.9 million from $14.7
million, more than offsetting a 5% decline in customer support revenue to
$12.4 million from $13.1 million. Revenue mix included $17.0 million in
Activation, $9.8 million in Numbering Solutions and $1.6 million in
Mediation.
Total costs of revenue and operating expenses through nine months declined
by 8% to $23.6 million from $25.7 million in the first nine months of 2008
due primarily to the effects of foreign currency exchange transactions.
Adjusted for currency changes, total expenses were up approximately 4%.
Operating income through the first nine months of 2009 grew 134% to $4.8
million from $2.1 million in the same period of 2008.
Bookings and Backlog Highlights
The Company booked $7.4 million in new orders in the third quarter, up 27%
over bookings of $5.8 million in the comparable quarter last year. Third
quarter bookings included $5.5 million in license fees and services and
$1.9 million in customer support, representing a 27% increase in each
category year over year. Bookings by product category in the third quarter
included $5.9 million in Activation, $1.3 million in Numbering Solutions,
and $0.2 million in Mediation.
New orders for the first nine months of 2009 increased to $24.2 million
from $22.4 million in the same period last year. License fees and services
orders increased 8% year-over-year to $16.2 million -- the Company's
strongest nine-month performance in this category as a global business.
Customer support orders also increased 8% to $7.9 million. By product
category, nine-month bookings included $16.9 million in Activation, $6.3
million in Numbering Solutions and $1.0 million in Mediation.
The Company sustained sales momentum for both its DSA and iNT solutions in
the third quarter and year to date periods. These new products combined
for 36% of license fees and services bookings in the third quarter and 56%
of license fees and services bookings through nine months. Emerging
markets customers accounted for 62% of license fees and services orders in
the third quarter and 74% through the first nine months of 2009.
The Company defines bookings as new, non-cancelable orders expected to be
recognized as revenue during the following 12 months.
Backlog at September 30, 2009, was $16.8 million, up 23% over $13.6 million
at the same time last year. The license fees and services backlog grew 44%
year-over-year to $9.3 million from $6.4 million while the customer service
backlog increased 4% to $7.5 million from $7.2 million.
Balance Sheet Highlights
The Company continued to strengthen its balance sheet in the third quarter.
The cash and cash equivalents balance at September 30, 2009, was $5.2
million, up from $5.0 million in the second quarter, and the working
capital balance was $4.0 million. The Company generated $2.2 million in
cash from operations through nine months as compared with $3.6 million in
the same period a year ago. The decrease was due to accelerated interest
payments on its subordinated debt and expected longer collection cycles in
emerging markets.
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
1-888-267-6301 for domestic toll free and 719-457-2656 for international
callers. The conference ID is 4954362. A telephone replay will be
available through November 10, 2009, and can be accessed by calling
1-888-203-1112 or
1-719-457-0820, passcode 4954362. 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 November 10, 2009.
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 transaction.) 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 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. 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. 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 Nine months ended
September 30, September 30,
2009 2008 2009 2008
-------- -------- -------- --------
Revenue:
License fees and services $ 5,836 $ 4,539 $ 15,940 $ 14,713
Customer support 4,077 4,490 12,445 13,088
-------- -------- -------- --------
Total revenue 9,913 9,029 28,385 27,801
-------- -------- -------- --------
Costs of revenue and operating
expenses:
Costs of license fees and
services, excluding
depreciation and amortization 1,984 1,977 5,726 6,103
Costs of customer support,
excluding depreciation and
amortization 1,452 1,581 4,286 4,706
Sales and marketing 2,032 2,004 5,861 6,385
General and administrative 1,546 1,281 4,378 3,942
Product development 919 792 2,300 2,810
Depreciation 160 189 474 671
Amortization 194 371 548 1,130
-------- -------- -------- --------
Total costs of revenue and
operating expenses 8,287 8,195 23,573 25,747
-------- -------- -------- --------
Income from operations 1,626 834 4,812 2,054
-------- -------- -------- --------
Other income (expense):
Interest income 1 29 24 146
Interest expense (145) (278) (563) (897)
Loss on extinguishment of debt - - - (290)
Foreign currency exchange
gain (loss) 226 130 (436) 272
-------- -------- -------- --------
Other income (expense), net 82 (119) (975) (769)
-------- -------- -------- --------
Income before income taxes 1,708 715 3,837 1,285
Income tax expense 380 122 438 161
-------- -------- -------- --------
Net income $ 1,328 $ 593 $ 3,399 $ 1,124
======== ======== ======== ========
Basic income per common share $ 0.14 $ 0.06 $ 0.35 $ 0.12
======== ======== ======== ========
Diluted income per common share $ 0.13 $ 0.06 $ 0.34 $ 0.11
======== ======== ======== ========
Weighted average basic shares
outstanding 9,797 9,693 9,780 9,687
Weighted average diluted
shares outstanding 10,249 9,873 10,024 9,904
Consolidated Balance Sheets
(In thousands)
(Unaudited) September 30, December 31,
2009 2008
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $ 5,153 $ 5,783
Contract receivables, net 8,266 11,484
Unbilled work-in-progress 2,195 1,910
Prepaid and other current assets 1,599 1,309
---------- ----------
Total current assets 17,213 20,486
Property and equipment, net 1,264 1,277
Amortizable intangible assets, net 2,042 2,374
Goodwill 22,288 20,811
Long-term restricted cash 50 100
Other long-term assets 130 363
---------- ----------
Total assets $ 42,987 $ 45,411
========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Current portion of long-term debt and
capital lease obligations $ 857 $ 2,021
Accounts payable and accrued liabilities 4,885 5,218
Unearned revenue 7,431 11,445
---------- ----------
Total current liabilities 13,173 18,684
Long-term liabilities:
Long-term debt and other obligations 3,351 6,344
Deferred foreign income taxes 330 441
---------- ----------
Total liabilities 16,854 25,469
Stockholders equity:
Common stock 10 10
Additional paid-in capital 82,684 81,824
Accumulated other comprehensive loss (3,338) (5,270)
Accumulated deficit (53,223) (56,622)
---------- ----------
Total stockholders equity 26,133 19,942
---------- ----------
Total liabilities and stockholders equity $ 42,987 $ 45,411
========== ==========
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands except per share data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
-------- -------- -------- --------
Non-GAAP net income and income per
share data
GAAP net income $ 1,328 $ 593 $ 3,399 $ 1,124
Amortization of intangible assets 194 371 548 1,130
Stock-based compensation expense 223 189 649 645
Income tax adjustment for non-GAAP* (67) (74) (191) (231)
-------- -------- -------- --------
Non-GAAP net income $ 1,678 $ 1,079 $ 4,405 $ 2,668
======== ======== ======== ========
Diluted net income per share
GAAP $ 0.13 $ 0.06 $ 0.34 $ 0.11
======== ======== ======== ========
Non-GAAP $ 0.16 $ 0.11 $ 0.44 $ 0.27
======== ======== ======== ========
Shares used to compute
diluted EPS 10,249 9,873 10,024 9,904
*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.
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
-------- -------- -------- --------
Adjusted EBITDA
Net income $ 1,328 $ 593 $ 3,399 $ 1,124
Depreciation 160 189 474 671
Amortization 194 371 548 1,130
Stock-based compensation expense 223 189 649 645
Interest expense and other
(benefit), net (82) 119 975 769
Income tax expense 380 122 438 161
-------- -------- -------- --------
Adjusted EBITDA $ 2,203 $ 1,583 $ 6,483 $ 4,500
======== ======== ======== ========
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