Edgewater is a leading strategic consulting firm that focuses onhelping companies drive transformational change
Wakefield, MA – July 31, 2013 – 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 second quarter ended June 30, 2013.
10% growth in second quarter 2013 sequential quarterly service revenue;
25 new customers during the second quarter of 2013; and
Repurchased 201,345 shares of common stock at an aggregate purchase price of $852,000, or $4.23 per share.
Total revenue was $27.9 million compared to $27.2 million;
Service revenue was $21.6 million compared to $21.6 million;
Gross profit was $10.0 million, or 36.0% of total revenue, compared to $9.5 million, or 34.8% of total revenue;
Gross profit margin related to service revenue was 37.7% compared to 39.5%;
Utilization was 75.0% compared to 73.2%;
Net income was $1.4 million, or $0.12 per diluted share, compared to net income of $134,000, or $0.01 per diluted share;
Adjusted EBITDA (a non-GAAP measure) was $2.4 million, or 8.7% of total revenue and $0.21 per diluted share (see “Non-GAAP Financial Measures” below for further discussion of this non-GAAP term), compared to adjusted EBITDA of $1.9 million, or 6.9% of total revenue and $0.16 per diluted share; and
Cash flow used in operating activities was $(1.4) million compared to cash flow provided by operating activities of $637,000.
Total revenue was $51.4 million compared to $52.5 million;
Service revenue was $41.3 million compared to $43.4 million;
Gross profit was $17.2 million, or 33.4% of total revenue, compared to $18.0 million, or 34.4% of total revenue;
Gross profit margin related to service revenue was 35.2% compared to 38.4%;
Utilization was 72.5% compared to 74.3%;
Net income was $525,000, or $0.05 per diluted share, compared to net income of $309,000, or $0.03 per diluted share;
Adjusted EBITDA (a non-GAAP measure) was $2.6 million, or 5.1% of total revenue and $0.23 per diluted share (see “Non-GAAP Financial Measures” below for further discussion of this non-GAAP term), compared to adjusted EBITDA of $2.9 million, or 5.4% of total revenue and $0.24 per diluted share; and
Cash flow used in operating activities was $(3.6) million compared to cash flow used in operating activities of $(508,000).
“We realized a healthy conversion of our sales pipeline to signed engagements in the second quarter after a challenging back half of 2012 that continued into the beginning of the year. This helped drive the improvement in our top and bottom lines for the quarter,” said Shirley Singleton, Edgewater’s chairman, president and CEO.
“During the second quarter, we secured first-time engagements with 25 new customers, compared to 21 in the previous quarter, which helped to drive 10% sequential growth in our quarterly service revenue. Both our EPM and Classic Consulting service offerings posted strong sequential quarterly growth while ERP, our third major offering, had a strong sales quarter.
“Our strategy to design and build intellectual property to augment our mix of strategic offerings is having a positive impact on our lead generation and overall sales activity. During the second quarter, Edgewater unveiled two cloud-based applications, which has ignited numerous sales calls and other marketing activities. We expect to identify, build and introduce critical IP, specifically in the healthcare, insurance and manufacturing space.
“Given the positive momentum we are experiencing in our sales pipeline across all of our major offerings, we anticipate a sequential increase in service revenue in the third quarter.”
Edgewater has scheduled a conference call today (Wednesday, July 31, 2013) at 10:00 a.m. Eastern time to discuss its second quarter 2013 results.
Date: Wednesday, July 31, 2013Time: 10:00 a.m. Eastern TimeDial-in number: 1-877-713-9347Webcast: 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#: 16567621) after 1:00 p.m. Eastern time through August 14, 2013.
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.
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 third quarter 2013 service revenue, improvements in sales pipeline activity, conversion of our sales pipeline to signed contracts, and future benefits of intellectual property investments in 2013. 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 2012 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 2012 Annual Report on Form 10-K filed with the SEC on March 8, 2013. 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.