08-Nov-2007
- Evolving Systems Reports 2007 Third Quarter Financial Results
- 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
ENGLEWOOD, Colorado 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 30 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
CONTACTS:
Investor Relations
Jay Pfeiffer
Pfeiffer High Investor Relations, Inc.
303.393.7044
jay@pfeifferhigh.com
Press Relations
Sarah Hurp
Marketing Communications Manager
Evolving Systems
+44 1225 478060
sarah.hurp@evolving.com
