Evolving Systems Reports First Quarter 2018 Financial Results

Evolving Systems Inc (NASDAQ:EVOL), a leader in real-time digital engagement reported its financial results for the first quarter ended March 31, 2018.

The company’s first quarter 2018 revenue increased 39 percent year-over-year to $8.2 million. The first quarter 2018 operating income was $0.8 million while its net income was $0.5 million and adjusted EBITDA was $1.4 million.

As quoted in the press release:

• First quarter cash flow increased year-over-year by over $1.5 million resulting in a 15% growth in cash balance
• Company continues to invest in research & development, sales, marketing and business development initiatives to improve its market position and competitive offering

“Our 2018 first-quarter results were in line with expectations as revenue grew approximately 39% year-over-year, we were profitable on an operating and net income basis, and our balance sheet strengthened. Cash flow increased by over $1.5 million year-over-year and our cash balance improved by 15% 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 hired a Vice President of Products, a Vice President of Marketing, another Regional Vice President of Sales, and program and account managers supporting several of our larger customers. All of us at Evolving Systems remain focused on enhancing our business and creating long-term and sustainable shareholder value,” said Thomas Thekkethala, Chief Executive Officer of Evolving Systems.

Total revenue for the first quarter ended March 31, 2018 was $8.2 million, a $2.3 million or approximately 39.0% increase over the comparable year-ago period. Services revenue comprised approximately 96% of total revenue and increased $2.3 million or over 41% when comparing the fiscal 2018 and fiscal 2017 first quarter periods.

The Company reported gross profit margins, excluding depreciation and amortization, of approximately 65.0% for the quarter ended March 31, 2018 as compared to gross profit margins of approximately 74.0% for the quarter ended March 31, 2017. This decline in gross margin was primarily related to product and service mix with the addition of BLS and Lumata contributing to the Company’s fiscal 2018 results.

Total operating expenses of $4.5 million in the quarter ended March 31, 2018 increased by approximately $1.7 million, as compared to $2.8 million in the corresponding year-ago period. The increase in total operating expenses was directly related to added expenses associated with the BLS and Lumata operations, which accounted for approximately $1.4 million of the year-over-year increase. Other additions were primarily related to the Company’s planned investments in sales and marketing, staffing and product development.

The Company reported operating income of $0.8 million as compared to $1.6 million in the quarter ended March 31, 2018 and March 31, 2017, respectively. Net income per share, both basic and diluted were $0.04 for the quarter ended March 31, 2018 as compared to net income per share, both basic and diluted of $0.08 in the comparable year-ago period. The Company reported Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $1.4 million as compared to $1.9 million in the first quarter of 2018 and the first quarter of 2017, respectively.

Cash and cash equivalents as of March 31, 2018 was $8.7 million, an increase of $1.1 million or 15% compared to $7.6 million as of December 31, 2017. Contract receivables, net of allowance for doubtful accounts were $11.0 million, an increase of $0.9 million compared to December 31, 2017. Unbilled work-in-progress, net of allowance for doubtful accounts was $5.5 million and $5.8 million for the periods ended March 31, 2018 and December 31, 2017, respectively. Working capital as of March 31, 2018 increased slightly on a sequential basis to $9.1 million and the Company continued to generate positive cash flows from operations.

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