ENGLEWOOD, Colo., Aug. 12, 2020 (GLOBE NEWSWIRE) — Evolving Systems, Inc. (NASDAQ: EVOL), a leader in real-time digital engagement, today reported financial results for its second quarter ended June 30, 2020.
2020 Second Quarter Highlights:Second quarter revenue was $6.3 million and year to date revenues are $12.6 millionYear-to-date 2020, the Company has generated positive cash flow from operationsSecond quarter operating profit was $0.3 million, net loss of less than $0.1 millionAdjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) for the second quarter was positive $0.6 million“We are pleased that in these turbulent times in a global environment, we were able to generate positive operating performance as our service revenues were slightly higher from the corresponding period a year ago and we have generated positive cash flow for the year.  We have continued throughout the global pandemic to leverage our ability to implement and provide support remotely and this has resulted in a relatively limited effect on our operations. Over the years we have developed a culture of successfully managing our business through telework. We are working with our current and prospective clients to find new ways to use our products and services to enhance their businesses during these unusual times. The largest impact we’ve seen has been on our ability to travel and interact with our clients on projects and in the traditional modes of sales and business development.  Although this has slowed our growth, we continue to look for ways to contain our costs,” said Matthew Stecker, Chief Executive Officer and Executive Chairman of the Company.Second Quarter and Year-to-Date 2020 Results
Total revenue for the second quarter ended June 30, 2020 was $6.3 million, a less than $0.1 million increase from the three months ended June 30, 2019. The change was primarily related to increased revenue from upgrades and new projects partially offset by lower one-time licensing fees recognized in the corresponding period in 2019. Total revenue for the six months ended June 30, 2020 was $12.6 million or approximately a 2.6% decrease from $13.0 million in the same period a year ago predominantly related to a large one-time licensing fee recognized in 2019. Services revenues, which are mostly recurring in nature, were $12.3 million year-to-date, an increase year-over-year of $0.3 million, or 2.7% from $12.0 million during the comparable year-ago period. Services revenue, which includes revenues from the Company’s preference for managed services over perpetual licensing, comprised approximately 98% of total revenues for the three months and six months ended June 30, 2020.The Company reported gross profit margins, excluding depreciation and amortization, of approximately 65.4% for the quarters ended June 30, 2020 and 2019.  For the six months ended June 30, 2020, the Company reported gross profit margins, excluding depreciation and amortization, of approximately 65.7% as compared to gross profit margins of approximately 68.3% for the six months ended June 30, 2019. This decrease in gross margin was primarily related to the product and service mix in the prior year, inclusive of the aforementioned licensing revenue.Total operating expenses were $3.8 million in the quarter ended June 30, 2020, a decrease from total operating expenses of $11.1 million in the quarter ended June 30, 2019. Excluding the $6.7 million goodwill impairment charge in 2019, the Company’s operating expenses were $4.4 million in the corresponding year-ago period.  The decrease was primarily related to travel and marketing costs that were reduced by $0.3 million due to the travel restrictions imposed and decreases in general and administrative costs primarily related to lower legal and accounting fees than the prior year period. Total operating expenses were $8.2 million for the six months ended June 30, 2020. Total operating expenses were $16.5 million for the six months ended June 30, 2019; or $9.8 million after excluding the $6.7 million goodwill impairment charge.  The decrease of approximately $1.6 million was related to the mix of hours as delivery staff focused on customers’ projects, not product development as in the prior year, and a decrease in the use of third party contractors.  A reduction in our incentive compensation expense and also the aforementioned decreases in travel and marketing costs were due to the travel restrictions as well as the decrease in our general and administrative costs from lower legal and accounting fees.The Company reported operating profit of $0.3 million and net loss of less than $0.1 million for the three months ended June 30, 2020 as compared to operating and net losses of $7.0 million for the three months ended June 30, 2019. Excluding the effect of the goodwill impairment in 2019, the operating and net losses would have been $0.3 million. The Company reported adjusted EBITDA of $0.6 million for the quarter ended June 30, 2020 compared to $0.1 million for the same period a year ago.Cash and cash equivalents as of June 30, 2020 were $4.3 million, an increase of 38.8% compared to $3.1 million as of December 31, 2019. At June 30, 2020 contract receivables, net of allowance for doubtful accounts, were $4.1 million, a decrease of 39.7% compared to $6.7 million as of December 31, 2019. Unbilled work-in-progress was $2.9 million at June 30, 2020, an increase of $1.8 million compared to December 31, 2019. Working capital as of June 30, 2020 increased to $4.3 million as compared to $3.8 million as of December 31^, 2019.  This includes an alternative minimum tax refund expected in the current year which was previously recorded in our deferred tax assets. In addition, we have agreed with East West Bank to the amending of our terms and financial covenants for our credit facilities. The Company has made every loan repayment in full, as originally scheduled within the loan agreement, and anticipates making all future payments. The Company believes it has sufficient cash on hand and working capital liquidity to fund its business and continued strategic investments.Matthew Stecker concluded: “We continue to monitor the effects on our business of the current global pandemic and continue to take the necessary actions to service our clients to our fullest ability. During the remainder of 2020, we plan to continue our focus on our transformation, increasing innovation and product enhancements while identifying opportunities to assist our customers in these difficult times. We are always looking for additional new sales opportunities in the telecom market. Our strong customer footprint and decades of proven performance gives us a significant head-start to meeting existing and new customers’ needs. At the same time, we continue to selectively seek new opportunities whether through potential accretive acquisitions, joint ventures, or strategic partnerships to drive both top- and bottom-line performance and over the long-term to bring our shareholders long-term value.”Conference Call
The Company will be conducting a conference call and webcast on Wednesday, August 12, 2020 at 5:00 p.m. Eastern Time and 3:00 p.m. Mountain Time. The call-in numbers for the conference call are: (877) 303-6316 for domestic toll free and (650) 521-5176 for international callers. The conference ID number is 6487115. A telephone replay will be available through August 26, 2020 and can be accessed by calling (855) 859-2056 for domestic toll free or (404) 537-3406 for international callers. The conference replay ID number is also 6487115. To access a live webcast of the call, please visit the Company’s website at www.evolving.com, click the ‘Investors’ tab and then click the ‘Q2 earnings call’ icon. A replay of the webcast will be accessible at that website through November 12, 2020. The webcast is also available by clicking the following link: https://edge.media-server.com/mmc/p/v7qhgveb.
Bay Street News