Edgewater is a leading strategic consulting firm that focuses onhelping companies drive transformational change
Wakefield, MA – April 29, 2015 – Edgewater 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, 2015.
Acquired Cloud-based Microsoft CRM integrator Zero 2 Ten, Inc. ("Zero2Ten")
Hired a team of specialized consultants, expanding the Oracle Financial Close Suite service offering capabilities
Secured first time engagements with 34 new customers
First Quarter 2015 Financial Results vs. Year-Ago Quarter
Total revenue was $26.6 million compared to $27.6 million
Service revenue was $22.7 million compared to $23.5 million
Gross profit was $7.6 million, or 28.8% of total revenue, compared to $10.1 million, or 36.6% of total revenue
Gross profit margin related to service revenue was 30.4 % compared to 38.9%
Utilization was 70.4 % compared to 78.0%
Net loss of $(940,000), or $(0.08) per diluted share, compared to net income of $711,000, or $0.06 per diluted share
Adjusted EBITDA (a non-GAAP measure) was a loss of $(104,000), or (0.4)% of total revenue and $0.01 per diluted share, compared to adjusted EBITDA of $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)
Cash flow used in operating activities was $3.4 million compared to cash flow used in operating activities of $2.7 million
"During the first quarter, we executed our goal of expanding the breadth and depth of our service offerings," commented Shirley Singleton, Edgewater's chairman, president and CEO. "The acquisition of Zero2Ten, a Microsoft Dynamics 2014 Cloud Partner of the Year, provides fresh business offerings for our manufacturing clients, serves as a platform for expanding into other industry-oriented applications in the cloud, and helps build critical mass in the Microsoft Dynamics channel.
"We also further expanded our EPM service offerings with the hiring of a small group of full-time consultants who specialize in Oracle's Financial Close Suite products.
"Regarding our first quarter financial performance, in addition to the delays we experienced in the start of signed projects, we also had one large EPM project that was unexpectedly halted by the customer, resulting in the loss of billing for 21 billable consultants. Although we have already redeployed most of the consultants, the timing was such that we were unable to make up the lost service revenue during the first quarter. The resulting drop in billable consultant utilization associated with that halted project is the primary driver of the lower than expected first quarter service revenue. The decrease in service revenue from the project cancellation, combined with the acquisition costs associated with the acquisition of Zero2Ten, adversely affected our first quarter earnings.
"As we look forward we believe the combination of our core offerings plus the sales pipeline opportunities to be generated by our new offerings will drive double-digit service revenue growth in the second quarter of 2015 both sequentially and compared to the second quarter of 2014. Additionally, for the full year, when incorporating the strategic actions taken in the first quarter of 2015, we are similarly anticipating double-digit service revenue growth."
Edgewater has scheduled a conference call today (Wednesday, April 29, 2015) at 10:00 a.m. Eastern time to discuss its first quarter 2015 results.
Date: Wednesday, April 29, 2015
Time: 10:00 a.m. Eastern Time
Dial-in number: 1-877-713-9347
A replay of the conference call can be accessed via Edgewater's investor relations web site at
http://ir.edgewater.com/ or by dialing 1-404-537-3406 (Conference ID#: 28507804) after 1:00 p.m. Eastern time through May 13, 2015.
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
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 and full year 2015 service revenue, our ability to expand into other industry-oriented applications in the cloud, our ability to build critical mass in the Microsoft Dynamics channel and our ability to generate new sales pipeline opportunities through our new service offerings. 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; (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 2014 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; and/or (13) changes in our utilization levels. 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 2014 Annual Report on Form 10-K filed with the SEC on March 2, 2015. 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, it 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.