Edgewater is a leading strategic consulting firm that focuses onhelping companies drive transformational change
Wakefield, MA – May 2, 2012 – Edgewater Technology, Inc. (NASDAQ: EDGW, www.edgewater.com, “Edgewater” or the “Company”), a strategic consulting firm that brings a blend of business advisory and product-based consulting services to its clients, today announced financial results for its first quarter ended March 31, 2012.
Financial results and utilization for the quarter ended March 31, 2012:
Total revenue increased 7.2% to $25.3 million compared to $23.6 million in the first quarter of 2011;
Service revenue increased 10.6% to $21.8 million compared to service revenue of $19.7 million in the first quarter of 2011;
Gross profit was $8.6 million, or 33.9% of total revenue, compared to $8.6 million, or 36.4% of total revenue, in the first quarter of 2011;
Gross profit margin related to service revenue was 37.4% compared to 38.5% in the first quarter of 2011;
Utilization was 75.4% compared to 79.3% in the first quarter of 2011;
Net income was $175 thousand, or $0.02 per diluted share, compared to net income of $310 thousand, or $0.03 per diluted share, in the first quarter of 2011;
Adjusted EBITDA was $1.0 million, or 3.9% of total revenue and $0.09 per diluted share, compared to $1.4 million, or 5.9% of total revenue and $0.11 per diluted share, in the first quarter of 2011; and
Cash flow used in operating activities was $(1.1) million compared to cash flow used in operating activities of $(1.3) million during the first quarter of 2011.
Adjusted EBITDA, Adjusted EBITDA per Diluted Share and Adjusted EBITDA as a Percentage of Total Revenue 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.
“As we mentioned during our recent earnings calls, service and royalty revenues generated under Edgewater Fullscope’s process contracts came to a successful completion in June 2011. As a result, to show meaningful year-over-year service revenue growth, we first needed to replace that revenue. I am very pleased to report that we have achieved double-digit year-over-year service revenue growth during the first quarter of 2012,” commented Shirley Singleton, Edgewater’s Chairman, President and Chief Executive Officer.
“Overall, our pipeline continues to grow in breadth and depth. We are starting to see expansion in potential deal sizes, especially in our key product-based service offerings. In response to this momentum, we are accelerating our recruiting efforts and in some cases, hiring and training billable consultants in advance of anticipated need. Our recruiting and hiring initiatives, combined with the absence of the process-related royalty revenue, tempered our first quarter profitability metrics given the rise in year-over-year service revenue,” continued Ms. Singleton.
“Looking forward to the second quarter of 2012, we are anticipating service revenue growth on both a sequential and year-over-year basis. We anticipate that sequential second quarter service revenue will be slightly up, translating into strong double-digit service revenue growth on a year-over-year quarterly basis. These growth trends continue to support management’s targeted achievement of double-digit 2012 full year service revenue growth on a year-over-year basis,” concluded Ms. Singleton.
Selected Financial Data
Edgewater has scheduled a conference call for Wednesday, May 2, at 10:00 a.m. (ET) to discuss its first quarter 2012 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 conference call can be accessed via Edgewater’s investor relations web site at http://ir.edgewater.com or by dialing 855-859-2056 (Conference ID: 68572001) from 1:00 p.m. ET Wednesday, May 2 through 11:59 p.m. ET Wednesday, May16.
Edgewater is a strategic consulting firm that brings a 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 and Edgewater Fullscope. To learn more, visit www.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 2012 service revenue on both a sequential and year-over-year basis, the growth in breadth and depth of our pipeline, expansion in deal sizes in our key product-based service offerings, pipeline momentum, our recruiting efforts and our targeted full year service revenue growth. 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) termination by clients of their contracts with us or inability or unwillingness of clients to pay for our services, which may impact our accounting assumptions; (9) inability to recruit and retain professionals with the high level of information technology skills and experience needed to provide our services; (10) 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; (11) the failure of the marketplace to embrace advisory and product-based consulting services; (12) changes in the market for leased office space and/or (13) 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 “Part I - Item IA Risk Factors” in our 2011 Annual Report on Form 10-K filed with the SEC on March 12, 2012. 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.