/EINPresswire.com/ -- ENGLEWOOD, CO -- (Marketwired) -- 03/15/16 -- Evolving Systems, Inc. (NASDAQ: EVOL)

• Acquisition of Sixth Sense Media expands product portfolio and accelerates move into mobile marketing and managed services, positioning Company for profitable growth over the long term
  
  
• Three new Dynamic SIM Allocation™ (DSA) wins in fourth quarter raises 2015 DSA win total to five, a new record for the Company
  
  
• License and Services bookings of $5.3 million is the highest in any quarter since 2011; sequential quarter license and services bookings up 39%; sequential quarter license and services backlog up 16%
  
  
• 31st consecutive profitable quarter; profit metrics remain strong with 73% gross margins, 14% operating margins, 26% adjusted-EBITDA margins
  
  
• First quarter dividend of $0.11 per share, payable April 1, 2016, to stockholders of record on March 28, 2016
  
  

Evolving Systems, Inc. (NASDAQ: EVOL), a leader in real-time activation, analytics and marketing for connected mobile devices, today reported financial results for its fourth quarter and year-end period ended December 31, 2015.

"Our late third quarter acquisition of Sixth Sense Media (SSM) was a seminal event for Evolving Systems that initiated the Company's transformation from a traditional software license and service model into a recurring revenue model based on managed services," said Thomas Thekkethala, CEO. "In the months that followed we have focused intensively on integrating SSM, directing our investment in sales and R&D activities and right-sizing the organization to eliminate redundancies and streamline operations. These actions have resulted in a significant reduction in annualized operating expenses.

"Our vision for the business is straightforward -- to help carriers leverage their networks and monetize lucrative next generation mobile services in the areas of advertising, banking, retail, gaming and entertainment. Carriers have invested billions of dollars in acquiring licenses and customers and in building networks -- but have yet to participate in the many emerging opportunities enabled by the mobile channel. Carriers who have watched 'over-the-top' (OTT) players leverage their networks to provide services such as voice, messaging and data, are now turning to global partners such as Evolving Systems to help them deliver these next generation mobile services to their customers.

"Having significantly strengthened our solutions portfolio with the acquisition of SSM, Evolving Systems is uniquely positioned to be a leader in this area. By combining SSM's real-time analytics and campaign capabilities with Evolving's Tertio® Service Activation and Dynamic SIM Allocation™ solutions, we can now provide contextual consumer information to accelerate the monetization of next generation services. Our integrated solutions help carriers acquire, upsell and retain consumers by creating a highly personalized experience that engages subscribers in real time from the first time they power on a new device through their day-to-day usage.

"A recent example of this new approach was our participation in a highly successful marketing program with a carrier customer in India that launched a 3G to 4G migration campaign by bundling a DSA-enabled 4G SIM card in a full-page advertisement on the front page of India's largest business newspaper. We are actively working on initiatives with our carrier customers to accelerate delivery of these next generation mobile services to their subscribers around the world."

Evolving Systems encourages current and potential investors to review its investor presentation for more information about the Company and its products. The presentation is accessible at www.evolving.com. Click the 'Investors' tab, and click the 'IR Presentation' link on the lower left.

Financial Results Recap

The Company reported net income of $1.1 million, or $0.09 per diluted share, on revenue of $7.1 million in the fourth quarter versus net income of $1.6 million, or $0.13 per diluted share, on revenue of $7.6 million in the same quarter last year. Adjusted EBITDA was $1.9 million compared to $2.7 million year over year. Full year net income was $3.3 million, or $0.28 per diluted share, on revenue of $25.6 million compared to net income of $5.6 million, or $0.47 per diluted share, on revenue of $29.7 million a year ago. Adjusted EBITDA was $5.8 million versus $9.4 million year over year.

Cash and cash equivalents at December 31, 2015, were $8.4 million versus $9.8 million at 2014 year-end. The Company declared a first quarter dividend of $0.11 per share, payable on April 1, 2016, to stockholders of record on March 28, 2016.

During February of 2016 Evolving Systems paid down $4.0 million of its $10.0 million revolving line of credit and converted the remaining $6.0 million into a term loan, which is scheduled to be fully repaid by the end of 2019.

Bookings and Backlog Highlights

License and services bookings in the fourth quarter increased 39% sequentially to $5.3 million from $3.8 million the third quarter and increased slightly from $5.2 million in the fourth quarter last year. Mobile Marketing Solutions (MMS) license and services bookings increased 76% sequentially to $3.9 million from $2.2 million in the third quarter and increased 6% year over year from $3.7 million in the fourth quarter of 2014. Customer support bookings in the fourth quarter increased 45% year over year to $3.7 million. Bookings are defined as sales orders expected to be recognized as revenue during the following 12 months.

License and services backlog at the end of the fourth quarter was $6.1 million, up 16% sequentially from $5.2 million in the third quarter and up 9% year over year. License and services backlog included $5.0 million in MMS, up 28% sequentially and up 22% year over year, and $1.1 million in TSA.

Conference Call
The Company will conduct a conference call and webcast today at 2:30 p.m. Mountain Time. The call-in numbers for the conference call are 1-877-303-6316 for domestic toll free and 650-521-5176 for international callers. The conference ID is 59334889. A telephone replay will be available through March 29, 2016, and can be accessed by calling 1-855-859-2056 or 1-404-537-3406. Conference ID 59334889. To access a live webcast of the call, please visit Evolving Systems' website at www.evolving.com. A replay of the Webcast will be accessible at that website through March 29, 2016. The webcast is also available by clicking the following link: http://edge.media-server.com/m/p/2s528tc4

Non-GAAP Financial Measures
Evolving Systems reports its financial results in accordance with accounting principles generally accepted in the U.S. (GAAP). In addition, the Company is providing in this news release non-GAAP financial information in the form of net income, diluted net income per share and adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, impairment, stock compensation and gain/loss on foreign exchange transactions). Management believes these non-GAAP financial measures are useful to investors and lenders in evaluating the overall financial health of the Company in that they allow for greater transparency of additional financial data routinely used by management to evaluate performance. Investors and financial analysts who follow the Company use non-GAAP net income and non-GAAP diluted income per share to compare the Company against other companies. Adjusted EBITDA can be useful for lenders as an indicator of earnings available to service debt. Non-GAAP financial measures should not be considered in isolation from or as an alternative to the financial information prepared in accordance with GAAP.

About Evolving Systems®
Evolving Systems, Inc. (NASDAQ: EVOL) is a provider of software and services to 75 network operators in over 50 countries worldwide. The Company's portfolio includes market-leading activation products that address subscriber service activation, SIM card activation, mobile broadband activation and connected devices; mobile data enablement solutions to successfully monetize mobile data traffic; number management products that reliably and efficiently manage number resources; and real-time analytical and marketing solutions offering highly personalized interactive campaigns. Founded in 1985, the Company has headquarters in Englewood, Colorado, with offices in the United States, United Kingdom, India, Malaysia and Romania. For more information please visit www.evolving.com or follow us on Twitter http://twitter.com/EvolvingSystems

CAUTIONARY STATEMENT
This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, based on current expectations, estimates and projections that are subject to risk. Specifically, statements about the impact of the SSM acquisition, the market for the Company's products, prospects for new customer wins, the Company's ability to deliver and help customers accelerate monetization of new services, and the Company's continued ability to pay dividends, achieve profitable growth, or post quarterly or year to date results that are similar to those described in this press release are forward-looking statements. These statements are based on our expectations and are naturally subject to uncertainty and changes in circumstances. Readers should not place undue reliance on these forward-looking statements, and the Company may not undertake to update these statements. Actual results could vary materially from these expectations. For a more extensive discussion of Evolving Systems' business, and important factors that could cause actual results to differ materially from those contained in the forward-looking statements, please refer to the Company's Form 10-K filed with the SEC on March 15, 2016; Forms 10-Q, 10-Q/A, 8-K and 8-K/A; press releases and the Company's website.

Consolidated Statements of Operations
(In thousands except per share data)

(Unaudited)                       Three months ended    Twelve months ended
                                     December 31,          December 31,
                                    2015       2014       2015       2014
                                 ---------  ---------  ---------  ---------
Revenue:
  License fees and services      $   4,407  $   5,048  $  15,584  $  19,738
  Customer support                   2,665      2,551      9,992      9,942
                                 ---------  ---------  ---------  ---------
Total revenue                        7,072      7,599     25,576     29,680
                                 ---------  ---------  ---------  ---------
Costs of revenue and operating
 expenses:
  Costs of license fees and
   services, excluding
   depreciation and amortization     1,423      1,345      4,881      5,782
  Costs of customer support
   excluding depreciation and
   amortization                        452        449      1,568      1,866
  Sales and marketing                1,409      1,390      5,844      5,734
  General and administrative         1,060        984      4,003      3,638
  Product development                  960        857      3,847      3,643
  Depreciation                          37         74        314        246
  Amortization                         195         24        266         95
  Restructuring and other
   recovery                            533          -        533        237
                                 ---------  ---------  ---------  ---------
Total costs of revenue and
 operating expenses                  6,069      5,123     21,256     21,241
                                 ---------  ---------  ---------  ---------
  Income from operations             1,003      2,476      4,320      8,439
                                 ---------  ---------  ---------  ---------
Other income (expense):
  Interest income                        4          6         18         19
  Interest expense                    (112)        (4)      (121)       (17)
  Other expense                          -          -          -        (27)
  Foreign currency exchange gain
   (loss)                              212        (22)        (6)        (9)
                                 ---------  ---------  ---------  ---------
Other income (expense), net            104        (20)      (109)       (34)
                                 ---------  ---------  ---------  ---------
Income from operations before
 income taxes                        1,107      2,456      4,211      8,405
    Income tax expense                  21        854        915      2,797
                                 ---------  ---------  ---------  ---------
Net income                       $   1,086  $   1,602  $   3,296  $   5,608
                                 =========  =========  =========  =========
Basic income per common share    $    0.09  $    0.14  $    0.28  $    0.48
                                 =========  =========  =========  =========
Diluted income per common share  $    0.09  $    0.13  $    0.28  $    0.47
                                 =========  =========  =========  =========
Weighted average basic shares
 outstanding                        11,740     11,664     11,693     11,642
Weighted average diluted shares
 outstanding                        11,927     11,948     11,935     11,926



Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                December 31,   December 31,
ASSETS                                              2015           2014
                                               -------------  -------------
Current Assets:
  Cash and cash equivalents                    $       8,400  $       9,781
  Contract receivables, net                            7,727          9,182
  Unbilled work-in-progress, net                       4,158          4,995
  Prepaid and other current assets                     1,459          1,331
  Deferred income taxes                                    -             80
                                               -------------  -------------
    Total current assets                              21,744         25,369
Property and equipment, net                              560            659
Amortizable intangible assets, net                     4,983            608
Goodwill                                              23,142         17,010
Long-term deferred income taxes                            -            586
                                               -------------  -------------
    Total assets                               $      50,429  $      44,232
                                               =============  =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of capital lease obligations $           5  $           5
  Revolving line of credit                            10,000              -
  Accounts payable and accrued liabilities             4,429          4,460
  Income taxes payable                                   324          1,227
  Unearned revenue                                     3,330          3,883
                                               -------------  -------------
    Total current liabilities                         18,088          9,575
Long-term liabilities:
  Capital lease obligations, net                           1              7
  Contingent earn-out obligation                         178            178
  Long-term unearned revenue                               -            420
                                               -------------  -------------

    Total liabilities                                 18,267         10,180
Stockholders' equity:
  Common stock                                            12             12
  Additional paid-in capital                          97,418         96,005
  Treasury stock                                      (1,253)        (1,253)
  Accumulated other comprehensive loss                (5,999)        (4,534)
  Accumulated deficit                                (58,016)       (56,178)
                                               -------------  -------------
    Total stockholders' equity                        32,162         34,052
                                               -------------  -------------
  Total liabilities and stockholders' equity   $      50,429  $      44,232
                                               =============  =============



Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands except per share data)
(Unaudited)
                                  Three months ended    Twelve months ended
                                     December 31,          December 31,
                                    2015       2014       2015       2014
                                 ---------  ---------  ---------  ---------
Non-GAAP net income and income
 per share:
GAAP net income                  $   1,086  $   1,602  $   3,296  $   5,608
Amortization of intangible
 assets                                195         24        266         95
Stock-based compensation expense        88         59        317        401
Restructuring                          533          -        533        237
Income tax adjustment for non-
 GAAP*                                (224)       (41)      (324)      (255)
                                 ---------  ---------  ---------  ---------
Non-GAAP net income              $   1,678  $   1,644  $   4,088  $   6,086
                                 =========  =========  =========  =========

Diluted net income per share
  GAAP                           $    0.09  $    0.13  $    0.28  $    0.47
  Non-GAAP                       $    0.14  $    0.14  $    0.34  $    0.51
  Shares used to compute diluted
   EPS                              11,927     11,948     11,935     11,926

                                  Three months ended    Twelve months ended
                                     December 31,          December 31,
                                    2015       2014       2015       2014
                                 ---------  ---------  ---------  ---------
Adjusted EBITDA:

Net income                       $   1,086  $   1,602  $   3,296  $   5,608
  Depreciation                          37         74        314        246
  Amortization of intangible
   assets                              195         24        266         95
  Stock-based compensation
   expense                              88         92        317        401
  Restructuring                        533          -        533        237
  Interest expense and other,
   net                                (104)        20        109         34
  Income tax expense                    21        854        915      2,797
                                 ---------  ---------  ---------  ---------
Adjusted EBITDA                  $   1,856  $   2,666  $   5,750  $   9,418
                                 =========  =========  =========  =========

*The estimated income tax for non-GAAP net income is adjusted by the amount of additional expense that the Company would accrue if it used non-GAAP results instead of GAAP results in the calculation of its tax liability, taking into account in which tax jurisdiction each of the above adjustments would be made and the tax rate in that jurisdiction.

Supplementary Data
(In thousands) (Unaudited)
                                   Three months ended   Twelve months ended
                                      December 31,          December 31,
Revenue                             2015       2014       2015       2014
                                 ---------- ---------- ---------- ----------
License fees and services
  MMS                            $    2,817 $    2,876 $    8,067 $   11,451
  TSA                                 1,590      2,172      7,517      8,287
                                 ---------- ---------- ---------- ----------
    Total license fees and
     services                         4,407      5,048     15,584     19,738
Customer support
  MMS                                 1,050        913      3,537      3,169
  TSA                                 1,615      1,638      6,455      6,773
                                 ---------- ---------- ---------- ----------
    Total customer support            2,665      2,551      9,992      9,942
                                 ---------- ---------- ---------- ----------
Total revenue                    $    7,072 $    7,599 $   25,576 $   29,680
                                 ========== ========== ========== ==========

                                   Three months ended   Twelve months ended
                                      December 31,          December 31,
Bookings                            2015       2014       2015       2014
                                 ---------- ---------- ---------- ----------
License fees and services
  MMS                            $    3,942 $    3,732 $    9,029 $   11,572
  TSA                                 1,337      1,428      7,143      6,792
                                 ---------- ---------- ---------- ----------
    Total license fees and
     services                         5,279      5,160     16,172     18,364
Customer support
  MMS                                 1,238        260      4,480      3,259
  TSA                                 2,471      2,289      6,546      6,721
                                 ---------- ---------- ---------- ----------
    Total customer support            3,709      2,549     11,026      9,980
                                 ---------- ---------- ---------- ----------
Total bookings                   $    8,988 $    7,709 $   27,198 $   28,344
                                 ========== ========== ========== ==========

                                   Three months ended
                                      December 31,
Backlog**                           2015       2014
                                 ---------- ----------
License fees and services
  MMS                            $    5,031 $    4,121
  TSA                                 1,053      1,435
                                 ---------- ----------
    Total license fees and
     services                         6,084      5,556
Customer support
  MMS                                 2,593      1,697
  TSA                                 3,398      3,330
                                 ---------- ----------
    Total customer support            5,991      5,027
                                 ---------- ----------
Total backlog                    $   12,075 $   10,583
                                 ========== ==========

**The change in backlog during the periods presented may not equal the difference between revenue recognized and bookings due to changes in foreign exchange rates.

Investor Relations
Jay Pfeiffer
Pfeiffer High Investor Relations, Inc.
303.393.7044
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Evolving Systems Marketing Department
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