Edgewater is a leading strategic consulting firm that focuses onhelping companies drive transformational change
Wakefield, MA – May 11, 2011 – Edgewater Technology, Inc. (NASDAQ: EDGW, www.edgewater.com, “Edgewater” or the “Company”), a strategic consulting firm that brings a synergistic blend of business advisory and product-based consulting services to its clients, today announced financial results for its first quarter ended March 31, 2011.
Financial results and utilization for the quarter ended March 31, 2011:
Total revenue increased 16.4% to $23.6 million compared to $20.3 million in the first quarter of 2010;
Service revenue increased 25.5% to $19.7 million compared to service revenue of $15.7 million in the first quarter of 2010;
Gross profit was $8.6 million, or 36.4% of total revenue, compared to $6.7 million, or 33.1% of total revenue, in the first quarter of 2010;
Gross margin related to service revenue was 38.5% compared to 34.1% in the first quarter of 2010;
Utilization was 79.3% compared to 75.3% for the first quarter of 2010;
Net income was $310 thousand, or $0.03 per diluted share, compared to a net loss of $(639) thousand, or $(0.05) per diluted share, in the first quarter of 2010;
Adjusted EBITDA amounted to $1.1 million, or $0.09 per diluted share, compared to $22 thousand, or $0.00 per diluted share, in the first quarter of 2010; and
Cash flow used in operating activities was $(1.3) million compared to cash flow used in operating activities of $(5.9) million during the first quarter of 2010.
Adjusted EBITDA and Adjusted 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 are pleased to report that the first quarter showed little sign of traditional seasonality As we anticipated, strong fourth quarter bid and proposal activity enabled us to post Edgewater’s all-time high in quarterly service revenue. Even removing the effects of the mid-year Meridian acquisition, we are reporting double-digit organic growth on both a sequential and year-over-year basis. Our first quarter metrics show improvement in billable consultant utilization, gross margin and EBITDA, all reflective of operational leverage due to service revenue growth,” commented Shirley Singleton, Edgewater’s Chairman, President and Chief Executive Officer.
“While the buying climate has improved from a year ago, we attribute the lion’s share of improved performance to the addition of product-based consulting offerings to our overall strategy. Customers can now choose to engage us in point solutions through the channel, or engage us through our classic advisory services, where transformational change is laid out on a higher level. Either way, we believe our overall strategy capitalizes on our customers’ appetite for services as we emerge from the downturn,” continued Ms. Singleton.
“On a sequential basis, we anticipate second quarter of 2011 service revenue will have some volatility. We have previously disclosed the scheduled conclusion of Fullscope’s process-related service contracts in connection with the completion of the Fullscope earnout. The completion of the earnout will result in a sequential decrease in certain second quarter process-related service revenue. Given the extraordinary growth we achieved in the first quarter of 2011 and the volatility introduced by the completion of certain Fullscope process-related contracts, we estimate that our second quarter service revenue will be down compared to the first quarter of 2011."
“We believe our overall business appears to be gaining momentum as a result of the strength and size of our pipeline activity and anticipate that we will continue to report year-over-year growth in service revenue in the second quarter of 2011,” concluded Ms. Singleton.
Edgewater has scheduled a conference call on Wednesday, May 11, at 10:00 a.m. (ET) to discuss its first quarter financial results and other matters. To listen to the call, you can participate by webcast on Edgewater’s investor relations website at
http://ir.edgewater.com or you can dial 877-713-9347. Investors are advised to dial into the call at least ten minutes prior to the call to register.
A replay of the call can be accessed via Edgewater’s investor relations website at
http://ir.edgewater.com or by dialing 800-642-1687 (domestic) and 706-645-9291 (international) (pass code 59207515) from 1:00 p.m. ET Wednesday, May 11 through 11:59 p.m. ET Wednesday, May 25.
Edgewater is a strategic consulting firm that brings a synergistic blend of advisory and product-based consulting services to our client base. Headquartered in Wakefield, MA, we typically go to market both vertically by industry and horizontally by product and technology specialty and provide our clients with a wide range of business and technology offerings. We work with clients to reduce costs, improve process and increase revenue through the judicious use of technology.
Edgewater provides services under brand names such as Edgewater Technology, Edgewater Ranzal, Edgewater Fullscope and Edgewater SAP. To learn more, visit edgewater.com or call 800-410-4014.
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 concerning our expected second quarter service revenue on a sequential basis from the first quarter of 2011, our expected second quarter service revenue on a year-over-year basis from the second quarter of 2010, the continuation of bid and proposal activity across the enterprise and our ability to capitalize on our customer’s appetite for services. 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) failure to obtain new customers or retain significant existing customers; (2) the loss of one or more key executives and/or employees; (3) changes in industry trends, such as a decline in the demand for Business Intelligence (“BI”); Enterprise Performance Management (“EPM”) and Enterprise Resource Planning (“ERP”) solutions, custom development and system integration services and/or declines 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; (4) inability to execute upon growth objectives, including new services and growth in entities acquired by our Company; (5) adverse developments and volatility involving economic, geopolitical or technology market conditions; (6) unanticipated events or the occurrence of fluctuations or variability in critical accounting policies and estimates; (7) delays in, or the failure of, our sales pipeline being converted to billable work and recorded as revenue; (8) inability to recruit and retain professionals with the high level of information technology skills and experience needed to provide our services; (9) 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; (10) the failure of the marketplace to embrace advisory and product-based consulting services; and/or (11) failure to make a successful claim against the Fullscope escrow account. 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 2010 Annual Report on Form 10-K filed with the SEC on March 31, 2011. 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. Except as required by law, we undertake no obligation to update any of the forward-looking statements after the date of this Press Release to conform such statements to actual results.