10 Mar 2009 - Evolving Systems Reports 2008
Fourth Quarter and Year-End Financial Results
- Revenue increases: 11% to $10.0 million in fourth quarter
5% to $37.8 million in 2008 - Net income increases: 535% in fourth quarter to $1.8 million - $0.09 per diluted share 390% for full year to $2.9 million - $0.15 per diluted share
- $5.5 million in 2008 operating cash flow versus $4.8 million a year ago
- License and services orders up 21% in fourth quarter and 16% in 2008
- Year-end backlog of $20.6 million is largest since Tertio Telecoms acquisition in 2004
- Balance Sheet strengthened during 2008 by debt pay-down, debt refinancing and preferred stock conversion
ENGLEWOOD, Colorado - Evolving Systems,
Inc. (NASDAQ-EVOL), a leading provider of software solutions and services to
the wireless, wireline and cable markets, today reported increased revenue,
net income, license/services orders and backlog for its fourth quarter and
year ended December 31, 2008.
"We believe the past year's strong financial results, highlighted by a fourth quarter in which we attained $10 million in revenue, are a direct reflection of the progress we have made in executing on our strategic growth initiatives," stated Thad Dupper, president and chief executive officer of Evolving Systems. "As a result of our Q4 performance we carry momentum into 2009 with over $20 million in backlog and strong customer interest in our Dynamic SIM Allocation™ (DSA) product. We are also in the process of securing an additional strategic channel partner for DSA, which we believe will significantly expand our reach. In the current economic environment we are seeing longer sales cycles and some project delays. That said, we continue to believe we are well positioned to pursue our strategy and build upon our 2008 accomplishments."
Fourth Quarter Results
Fourth
quarter net income increased 535% to $1.8 million, or $0.09 per basic and diluted
share, from $284,000, or $0.01 per basic and diluted share, in the fourth quarter
last year. Earnings before interest, taxes, depreciation, amortization, impairment,
stock compensation and gain/loss on foreign exchange transactions ("Adjusted
EBITDA") for the fourth quarter were $2.5 million, up 100% from $1.2 million
in the fourth quarter last year. The improved profitability in the fourth quarter,
which was the third consecutive quarter of positive net income for the Company,
was due to a combination of higher revenue and lower expenses.
Revenue in the fourth quarter increased 11% to $10.0 million from $9.1 million in the same quarter a year ago, the result of steady growth from our core products, DSA and momentum in emerging markets, partially offset by negative effects of foreign exchange. License fees and services revenue in the fourth quarter grew by 26% to $5.6 million versus $4.5 million a year ago, more than offsetting a 4% decrease in customer support revenue to $4.4 million from $4.6 million a year ago, due to pricing pressures. Revenue mix in the fourth quarter included $5.2 million in Service Activation, $4.0 million in Numbering Solutions and $0.8 million in Mediation.
Total costs of revenue and operating expenses in the fourth quarter declined by 5% to $8.2 million from $8.6 million, reflecting the positive effects of foreign exchange transactions involving the British Pound Sterling. Lower totals in most expense categories were partially offset by a 32% increase in general and administrative expense due to higher incentive compensation, as well as a reserve taken in connection with a delinquent account.
Income from operations in the fourth quarter was $1.9 million, up 271% from $500,000 in the fourth quarter last year. It was the Company's tenth consecutive quarter of positive operating income and the highest total in that category since 2004.
12-Month Results
The Company reported a 390% increase in net income to $2.9 million in 2008,
or $0.15 per basic and diluted share, as compared with net income of $598,000,
or $0.03 per basic and diluted share, in 2007. Adjusted EBITDA for the full
year was $7.0 million, up 24% from $5.6 million a year ago.
Revenue in 2008 grew 5% to $37.8 million from $36.0 million in 2007 - the second consecutive year of top line growth. The Company achieved a 14% increase in license fees and services revenue - to $20.3 million from $17.9 million. This increase more than offset a 3% decline in customer support revenue - to $17.5 million in 2008 from $18.1 million a year ago. Revenue mix included $20.6 million in Activation, $13.3 million in Numbering Solutions and $3.9 million in Mediation.
Total costs of revenue and operating expenses in 2008 grew by just 1% to $33.9 million from $33.5 million last year. Due primarily to careful management of costs, the Company achieved reductions in all expense categories with the exception of product development, which increased to $3.6 million from $2.4 million year-over-year as the Company continued to invest in its DSA solution and enhancements to its Activation and Numbering Solutions products.
Operating income in 2008 grew by 60% to $3.9 million from $2.4 million in 2007.
Bookings and Backlog Highlights
The
Company booked $16.9 million in new orders in the fourth quarter, up from $16.6
million in the same quarter last year. The bookings mix included $7.8 million
in license fees and services, which was up 21% from $6.4 million in the fourth
quarter last year and represented the strongest license and services bookings
quarter since the 2004 Tertio acquisition. Customer support orders in the fourth
quarter totaled $9.1 million as compared with $10.2 million a year ago. Bookings
by product category in the fourth quarter included $7.8 million in Activation,
$7.9 million in Numbering Solutions, and $1.2 million in Mediation.
For the full year new orders totaled $39.3 million, which was lower than $42.0 million in 2007 due to lower customer support bookings. Importantly, however, bookings of new license and service orders in 2008 increased 16% to $22.8 million from $19.6 million in 2007 - again, the highest total in that category since 2004. Customer support bookings in 2008 totaled $16.5 million versus the prior year's $22.4 million due to the timing of certain annual support orders, lower Mediation bookings and pricing pressures. Bookings by product category for the full year included $23.0 million in Activation, $13.4 million in Numbering Solutions and $2.9 million in Mediation. Evolving Systems added seven new carriers to its customer base in 2008. The Company defines bookings as new, non-cancelable orders expected to be recognized as revenue during the following 12 months.
Backlog at December 31, 2008, was $20.6 million, up 5% from $19.7 million a year ago and representing the Company's largest year-end backlog since 2004. The license and services backlog grew 34% year over year to $8.7 million from $6.5 million.
Balance Sheet Highlights
The Company significantly strengthened its balance sheet in 2008, highlighted
by a $10.0 million reduction in total debt and preferred stock obligations.
In addition to converting its remaining $5.6 million preferred stock balance
to common stock, the Company reduced its long-term debt obligations by $4.4
million. The $10.0 million debt refinancing, completed in the first quarter
of 2008, had the effect of lowering the average cash interest rate and improving
financial flexibility with more favorable covenants. The Company generated
$5.5 million in cash from operations in 2008, up from $4.8 million a year
ago. The cash and cash equivalents balance at December 31, 2008, was $5.8
million.
Conference Call
The Company will conduct a conference call and Web cast today at 2:45 p.m. Mountain
Time. The call-in numbers for the conference call are 1-877-718-5107 for
domestic toll free and 719-325-4796 for international callers. The conference
ID is 1720246. A telephone replay will be available through March 16, 2009,
and can be accessed by calling 1-888-203-1112 or 1-719-457-0820, passcode
1720246. 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 16, 2009.
About Evolving Systems®
Evolving Systems, Inc. (NASDAQ-EVOL) 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,
Process Management, 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. Further information is available on the web at www.evolving.com
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 13, 2009, as well as subsequently filed Forms 10-Q, 8-K
and press releases.
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
