​Edgewater Reports Record First Quarter 2014 Results

Year-Over-Year Service Revenue Increases 19% to a Record High

Wakefield, MA April 30, 2014Edgewater Technology, Inc.​ (NASDAQ: EDGW), a leading consulting firm that brings a blend of classic and product-based consulting services to its clients, reported financial results for the first quarter ended March 31, 2014.

First Quarter 2014 Highlights

  • Total revenue increased 18% to $27.6 million

  • Service revenue increased 19% to $23.5 million

  • Gross profit margin related to service revenue increased by 650 basis points to 38.9%

  • Secured first time engagements with 24 new customers

  • Adjusted EBITDA increased by $1.8 million to $2.0 million

First Quarter 2014 Financial Results vs. Year-Ago Quarter

  • Total revenue was $27.6 million compared to $23.5 million in the first quarter of 2013

  • Service revenue was $23.5 million compared to $19.7 million in the first quarter of 2013

  • Gross profit was $10.1 million, or 36.6 % of total revenue, compared to $7.1 million, or 30.4% of total revenue, in the first quarter of 2013

  • Gross profit margin related to service revenue was 38.9 % compared to 32.4% in the first quarter of 2013

  • Utilization was 78.0 % compared to 69.0% in the first quarter of 2013

  • Net income was $711,000, or $0.06 per diluted share, compared to a net (loss) of $(889,000), or $(0.08) per diluted share, in the first quarter of 2013

  • Adjusted EBITDA (a non-GAAP measure) was $2.0 million, or 7.1% of total revenue and $0.16 per diluted share (see "Non-GAAP Financial Measures" below for further discussion of this non-GAAP term), compared to adjusted EBITDA of $198,000, or 0.8% of total revenue and $0.02 per diluted share, in the first quarter of 2013

  • Cash flow used in operating activities was $2.7 million compared to cash flow used in operating activities of $2.2 million during the first quarter of 2013

Management Commentary

"A rise in customer demand coupled with disciplined staff management enabled us to achieve these record first quarter results," commented Shirley Singleton, Edgewater's chairman, president and CEO. "Quarterly service revenue, which grew on both a year-over-year and sequential basis, drove our significant improvement in billable consultant utilization as well as our service revenue gross margins, adjusted EBITDA and bottom line.

"As we begin the second quarter of 2014, we are already seeing a healthy number of signed engagements that will provide a solid base to drive continued service revenue growth. Based upon the strength of our current pipeline, we anticipate that second quarter service revenue will be up sequentially and that we will once again experience double-digit growth compared to the second quarter of 2013."

Selected Financial Data​

Conference Call and Webcast Information

Edgewater has scheduled a conference call today (Wednesday, April 30, 2014) at 10:00 a.m. Eastern time to discuss its first quarter 2014 results.

Date: Wednesday, April 30, 2014
Time: 10:00 a.m. Eastern Time
Dial-in number: 1-877-713-9347
Webcast: http://ir.edgewater.com/

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

A replay of the conference call can be accessed via Edgewater's investor relations web site at http://ir.edgewater.com/ or by dialing 1-855-859-2056 (Conference ID#: 22604760) after 1:00 p.m. Eastern time through May 14, 2014.

About Edgewater

Edgewater Technology, Inc. (NASDAQ: EDGW) is a strategic consulting firm delivering a blend of classic and product-based consulting services. Edgewater addresses the market both vertically by industry and horizontally by product and technology specialty, providing its client base with a wide range of business and technology solutions. As one of the largest IT consulting firms based in New England, the company works with clients to reduce costs, improve processes and increase revenue through the judicious use of technology. Edgewater's brand names include Edgewater Technology, Edgewater Ranzal and Edgewater Fullscope. To learn more, please visit www.edgewater.com.

Forward-Looking Statements

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 2014 service revenue, improvements in billable consultant utilization, improvements in sales pipeline activity and the conversion of our sales pipeline to signed contracts. 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 Enterprise Resource Planning and Enterprise Performance Management solutions, custom development and system integration services and/or declines in industry-wide information technology 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 geopolitical or technology market conditions; (6) unanticipated events or the occurrence of fluctuations or variability in the matters identified under "Critical Accounting Policies" in our 2013 Annual Report on Form 10-K; (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) 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; (12) the failure of the marketplace to embrace advisory and product-based consulting services; (13) changes in our utilization levels; and/or (14) 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 2013 Annual Report on Form 10-K filed with the SEC on March 10, 2014. 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 the Company believes that the expectations in the forward-looking statements are reasonable, they cannot guarantee future results, levels of activity, performance, growth, earnings per share or achievements. However, neither the Company nor any other person assumes responsibility for the accuracy and completeness of such statements. Except as required by law, the Company undertakes no obligation to update any of the forward-looking statements after the date of this Press Release to conform such statements to actual results.