Edgewater Reports 18% Growth in Service Revenue

Positive Outlook for the Second Quarter
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Wakefield, MA, April 30, 2008 – A technology management consulting firm specializing in providing premium IT services, Edgewater Technology, Inc. (NASDAQ: EDGW, www.edgewater.com, “Edgewater” or the “Company”), today announced financial results for its first quarter ended March 31, 2008.

First Quarter Results
Actual financial results and utilization for the quarter ended March 31, 2008:

  • Total revenue increased 19.6%, to $19.5 million, compared to $16.3 million in the first quarter of 2007;
  • Service revenue increased 18.0%, to $18.0 million, compared to $15.2 million in the first quarter of 2007.  The growth in first quarter service revenue was a combination of organic growth in our CPM consulting offering, offset by a similar decline in our technical and business consulting offerings, along with the additive effect of the acquisitions completed in the second half of 2007;
  • Gross profit was $7.4 million, or 38.1% of total revenue, compared to $6.8 million, or 41.7% of total revenue in the first quarter of 2007;
  • Gross profit margin related to service revenue was 40.7%, compared to 44.0% in the first quarter of 2007;
  • Utilization was 77.2%, compared to 82.2% during the first quarter of 2007;
  • Net income amounted to $0.2 million, or $0.02 per diluted share, compared to net income of $0.8 million, or $0.07 per diluted share in the first quarter of 2007;
  • Cash Net Income amounted to $0.9 million, or $0.07 per diluted share, compared to $1.2 million, or $0.09 per diluted share, during the first quarter of 2007;
  • EBITDA amounted to $1.2 million, or $0.09 per diluted share compared to $1.6 million, or $0.13 per diluted share, during the first quarter of 2007; and
  • Cash flow used in operating activities was $3.7 million compared to cash flow used in operating activities of $1.4 million during the first quarter of 2007.

Cash Net Income, Cash Earnings per Diluted Share, and EBITDA per Diluted Share are Non-GAAP financial measures.  A reconciliation of these measures to their most directly comparable GAAP measures is included in the financial data accompanying this press release. 

“We were pleased to see better than expected service revenue growth during the first quarter.  As well, our utilization increased on a sequential basis, however, it was below our target range, which impacted our overall gross profit margins and profitability,” stated Shirley Singleton, President and Chief Executive Officer.   “To balance some of the lower utilization during the quarter, we invested in additional training programs to retool some of our consultant skills in emerging technologies and believe these investments will pay dividends in the future.  While we continue to experience delays in customer decision cycles in some offerings, we are seeing positive trends emerge throughout our business.”

Singleton continued, “While we remain cautious due to overall macro-economic conditions, we remain excited about the opportunities that lie ahead of us as we broaden our capabilities in areas such as Web Analytics, Internet Commerce 2.0 and Data Services.  With this in mind, we expect revenue to be up during the second quarter.  We further believe that the additional uplift in revenue during the second quarter will drive our utilization back to our historical ranges.” 

Click here for Q1 2008 Selected Financial Data

First Quarter Conference Call Details

Edgewater will host a conference call on Wednesday, April 30, 2008 at 10:00 a.m. (ET) to discuss first quarter 2008 financial results.  To listen to the call, you can participate by webcast at www.edgewater.com - Investor Relations section or you can dial 888-713-4213 (pass code 43928614).  Investors are advised to dial into the call at least ten minutes prior to the call to register.  Participants may pre-register for the call at www.theconferencingservice.com/prereg/key.process?key=P7HFB4EHP.  Pre-registrants will be issued a pin number to use when dialing into the live call which will provide quick access to the conference by bypassing the operator upon connection. 

A replay of the call can be accessed via Edgewater’s website at www.edgewater.com - Investor Relations section or by dialing 888-286-8010 (pass code 68660345) from 12:00 p.m. ET Wednesday, April 30 through 11:59 p.m. ET Wednesday, May 14.


About Edgewater Technology, Inc.

Edgewater Technology, Inc. (Nasdaq: EDGW) is an innovative technology management consulting firm providing a synergistic blend of premium information technology (“IT”) services primarily in the North American market.  We provide a unique blend of premium IT services by leveraging our proven industry expertise in strategy, technology and corporate performance management.  Headquartered in Wakefield, MA, we go to market by vertical industry and provide our clients with a wide range of business and technology offerings. To learn more, visit www.edgewater.com or call 800-410-4014.

Contacts: 
Kevin Rhodes, Chief Financial Officer
Timothy R. Oakes, Investor Relations
(781) 246-3343
ir@edgewater.com


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This Press Release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements made with respect to our 2008 business outlook, market trends and second quarter 2008 revenue. The forward looking statements included in the Press Release relate to future events or our future financial conditions or performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “believe,” “anticipate,” “future,” “forward,” “potential,” “estimate,” “encourage,” “opportunity,” “goal,” “objective,” “quality,” “growth,” “leader,” “could”, “expect,” “intend,” “plan,” “planned” “expand,” “focus,” “build,” “through,” “strategy,” “expiration,” “provide,”  “offer,” “maximize,” “allow,” “allowed,” “represent,” “commitment,” “create,” “implement,” “result,” “seeking,” “increase,” “add,” “establish,” “pursue,” “feel,” “work,” “perform,” “make,” “continue,”  “can,” “will,” “ongoing,” “include” or the negative of such terms or comparable terminology.  These forward-looking statements inherently involve certain risks and uncertainties, although they are based on our current plans or assessments which are believed to be reasonable as of the date of this Press Release. Factors that may cause actual results, goals, targets or objectives to differ materially from those contemplated, projected, forecasted, estimated, anticipated, planned or budgeted in such forward-looking statements include, among others, the following possibilities: (1) inability to execute upon growth objectives, including growth in entities acquired by our Company; (2) failure to obtain new customers or retain significant existing customers; (3) the loss of one or more key executives and/or employees; (4) changes in industry trends, such as a decline in the demand for Business Intelligence (“BI”) and Corporate Performance Management (“CPM”) solutions, custom development and system integration services and/or delays in industry-wide information technology (“IT”) spending, whether on a temporary or permanent basis and/or delays by customers in initiating new projects or existing project milestones; (5) adverse developments and volatility involving geopolitical or technology market conditions; (6) unanticipated events or the occurrence of fluctuations or variability in the matters identified under “Critical Accounting Policies”; (7) delays in, or the failure of, our sales pipeline being converted to billable work and recorded as revenue; (8) failure of the middle market and the needs of middle-market enterprises for business services to develop as anticipated; (9) inability to recruit and retain professionals with the high level of information technology skills and experience needed to provide our services; (10) failure to expand outsourcing services to generate additional revenue; (11) any changes in ownership of the Company or otherwise that would result in a limitation of the net operating loss carry forward under applicable tax laws; and/or (12) the failure of the marketplace to embrace CPM or BI services.  In evaluating these statements, you should specifically consider various factors described above as well as the risks outlined under Item I “Business – Factors Affecting Finances, Business Prospects and Stock Volatility” in our 2007 Annual Report on Form 10-K filed with the SEC on March 17, 2008.  These factors may cause our actual results to differ materially from those contemplated, projected, anticipated, planned or budgeted in any such forward-looking statements.

Although we believe that the expectations in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, growth, earnings per share or achievements.  However, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements.  We are under no duty to update any of the forward-looking statements after the date of this Press Release to conform such statements to actual results.


Use of Non-GAAP Financial Information:
The Company reports its financial results in accordance with generally accepted accounting principles (“GAAP”). Management believes, however, that certain non-GAAP financial measures used in managing the Company’s business may provide users of this financial information with additional meaningful comparisons between current results and prior reported results. Certain of the information set forth herein and certain of the information presented by the Company from time to time may constitute non-GAAP financial measures within the meaning of Regulation G adopted by the Securities and Exchange Commission. We have presented herein a reconciliation of these measures to the most directly comparable GAAP financial measure. The presentation of this additional information is not meant to be considered in isolation or as a substitute for comparable amounts determined in accordance with generally accepted accounting principles in the United States.  The Non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies. A reconciliation of EBITDA and EBITDA per Diluted Share to Net Income and a reconciliation of Net Income to Cash Net Income and Cash Earnings per Diluted Share are included in the unaudited consolidated statements of operations attached to this release.

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