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Tangoe, Inc. Announces Fourth Quarter and Full Year 2012 Financial Results

  Tangoe, Inc. Announces Fourth Quarter and Full Year 2012 Financial Results

Fourth Quarter Highlights:

  *Total revenue of $44.0 million, up 51% year-over-year
  *GAAP operating income of $2.3 million; non-GAAP operating income of $7.2
    million, up 106% year-over-year
  *GAAP net income of $1.9 million; non-GAAP net income of $6.8 million, up
    113% year-over-year
  *Adjusted EBITDA of $7.5 million, a record quarterly adjusted EBITDA margin
    of 17% and up 103% year-over-year

Business Wire

ORANGE, Conn. -- February 13, 2013

Tangoe, Inc. (NASDAQ: TNGO), a leading global provider of communications
lifecycle management (CLM) software and related services, today announced
financial results for its fourth quarter and full year ended December 31,
2012.

“Our fourth quarter marked a strong finish to the year, and it was highlighted
by revenue growth that was above our expectations,” stated Al Subbloie,
president and CEO of Tangoe. “During 2012 we significantly increased the scale
of Tangoe, expanded our product offering and enhanced our lead in the CLM
market place. Our market share gains continue to be fueled by the combination
of new customer wins, robust cross sell activity, momentum with our strategic
alliance partners, geographic expansion and strong renewal rates.”

Subbloie added, “Tangoe entered 2013 with strong momentum as we continue to
grow our pipeline of opportunities and scale our global distribution
resources. We continue to expect the company to deliver a combination of
strong organic growth and margin expansion during 2013. In addition, we
believe that Tangoe has further improved its position to become the primary
winner in the multi-billion dollar CLM opportunity over the long-term.”

Fourth Quarter 2012 Financial Highlights

  *Revenue: Total revenue for the fourth quarter was $44.0 million, an
    increase of 51% on a year-over-year basis. Recurring technology and
    services revenue was $39.0 million, an increase of 51% on a year-over-year
    basis. Strategic consulting, software licenses and other services revenue
    contributed the remaining $5.0 million of total revenue for the fourth
    quarter of 2012.
  *Operating Income: GAAP operating income for the fourth quarter was $2.3
    million,  compared to a GAAP operating income of $1.2 million for the
    fourth quarter of 2011. Non-GAAP operating income for the fourth quarter
    was $7.2 million,  representing an increase of 106% compared to $3.5
    million for the fourth quarter of 2011.
  *Net Income (Loss): GAAP net income for the fourth quarter was $1.9
    million, compared to $0.9 million of net income for the same period last
    year. GAAP diluted income per share for the fourth quarter was $0.05,
    based on 40.7 million weighted-average diluted shares outstanding,
    compared to income per share of $0.02, based on 38.5 million
    weighted-average diluted shares outstanding, for the same period last
    year.

    Non-GAAP net income for the fourth quarter was $6.8 million, up 113%
    compared to $3.2 million for the fourth quarter of 2011. Non-GAAP diluted
    net income per share for the fourth quarter was $0.17 based on 40.7
    million weighted-average diluted shares outstanding compared to $0.08 per
    share based on 38.5 million weighted-average diluted shares outstanding
    for the same period last year.
  *Adjusted EBITDA: Adjusted EBITDA  for the fourth quarter was $7.5 million,
    an increase of 103% compared to $3.7 million for the fourth quarter of
    2011. Adjusted EBITDA margin was a record 17.1% for the fourth quarter of
    2012, an increase compared to a 12.7% margin for the same period last
    year.
  *Cash and Cash Flow: As of December 31, 2012, Tangoe had cash and cash
    equivalents of $50.2 million, a decrease of $5.5 million from the end of
    the prior quarter due primarily to the payment of deferred purchase price
    obligations for acquisitions and the repurchase of common shares during
    the quarter.

    The company generated $3.2 million in net cash from operations for the
    fourth quarter of 2012, compared to $4.8 million during the fourth quarter
    of 2011. The company generated $2.7 million in unlevered free cash flow
    for the quarter, compared to $4.4 million during the fourth quarter of
    2011.

Full Year 2012 Financial Highlights

  *Revenue: Total revenue for the full year 2012 was $154.5 million, an
    increase of 47% on a year-over-year basis. Recurring technology and
    services revenue was $138.0 million, an increase of 47% on a
    year-over-year basis. Strategic consulting, software licenses and other
    services contributed the remaining $16.5 million of total revenue for
    2012.
  *Operating Income: GAAP operating income for the full year 2012 was $4.4
    million,  compared to GAAP operating income of $2.6 million for 2011.
    Non-GAAP operating income was $21.1 million,  representing an increase of
    74% compared to $12.1 million for 2011.
  *Net Income (Loss): GAAP net income for the full year 2012 was $3.0
    million, compared to a $3.0 million net loss for 2011. GAAP diluted net
    income per share was $0.08 based on 39.9 million weighted-average diluted
    shares outstanding for the full year 2012, compared to a loss per share of
    $0.31, after deducting dividends and accretion related to our preferred
    stock and based on 16.4 million weighted-average diluted shares
    outstanding for 2011.

    Non-GAAP net income for the full year 2012 was $19.7 million, up 105%
    compared to $9.6 million for 2011. Non-GAAP diluted net income per share
    for 2012 was $0.50 based on 39.9 million weighted-average diluted shares
    outstanding, an increase of 72% compared to $0.29 per share based on 33.5
    million weighted-average diluted shares outstanding for 2011.
  *Adjusted EBITDA:  Adjusted EBITDA  for the full year 2012 was $22.3
    million, an increase of 76% compared to $12.7 million for 2011. Adjusted
    EBITDA margin was 14.4% for 2012, representing a record annual adjusted
    EBITDA margin and an increase compared to a 12.1% margin for 2011.
  *Cash Flow: The Company generated $16.7 million in net cash from operations
    during the full year 2012, compared to $10.1 million in 2011. The Company
    generated $15.0 million in unlevered free cash flow for 2012, an increase
    of 41% compared to $10.6 million for 2011.

A reconciliation of GAAP to non-GAAP financial measures has been provided in
the financial statement tables included in this press release. An explanation
of these measures is also included below under the heading “Non-GAAP Financial
Measures.”

Financial Outlook

As of February 13, 2013, Tangoe is providing guidance for its first quarter
and raising its full year 2013 guidance:

  *First Quarter 2013 Guidance: Total revenue is expected to be in the range
    of $43.8 million to $44.3 million. Adjusted EBITDA is expected to be in
    the range of $6.4 million to $6.6 million. Non-GAAP net income per share
    is expected to be approximately $0.14 based on approximately 40.8 million
    weighted-average diluted shares outstanding.
  *Full Year 2013 Guidance: Total revenue is expected to be in the range of
    $188.5 million to $191.5 million. Adjusted EBITDA is expected to be in the
    range of $31.0 million to $32.0 million. Non-GAAP net income per share is
    expected to be in the range of $0.67 to $0.70 based on approximately 41.0
    million weighted-average diluted shares outstanding.

Quarterly Conference Call

Tangoe will host a conference call today at 5:00 p.m. EST to review the
company's financial results for the fourth quarter and full year 2012 and
business outlook. To access this call, dial 800.390.5705 (United States), or
719.325.2271 (international), with conference ID #2193548. A live webcast of
the conference call will be accessible from the investor relations page of
Tangoe's website at http://investor.tangoe.com/, and a recording will be
archived and accessible at http://investor.tangoe.com/events.cfm. A recording
of this conference call will also be available through February 27, 2012, by
dialing 877.870.5176 (United States), or 858.384.5517 (international). The
recording access code is #2193548.

About Tangoe

Tangoe is a leading global provider of Communications Lifecycle Management
(CLM) software and services to a wide range of global enterprises. CLM
encompasses the entire lifecycle of an enterprise’s communications assets and
services, including planning and sourcing, procurement and provisioning,
inventory and usage management, mobile device management, invoice processing,
expense allocation and accounting, and asset decommissioning and disposal.
Tangoe’s Communications Management Platform (CMP) is an on-demand suite of
software designed to manage and optimize the complex processes and expenses
associated with this lifecycle for both fixed and mobile communications assets
and services. Tangoe’s customers can also manage their communications assets
and services by engaging Tangoe’s client service group.

Additional information about Tangoe can be found at www.tangoe.com. Tangoe is
a registered trademark of Tangoe, Inc.

Non-GAAP Financial Measures

Adjusted EBITDA discussed in this press release is defined as net income
(loss) plus interest expense, other expense, income tax provision,
depreciation and amortization, amortization of marketing agreement intangible
assets, stock-based compensation expense and, for 2011 only, restructuring
charge and increase in fair value of warrants for redeemable convertible
preferred stock; less amortization of leasehold interest and interest income.
Non-GAAP operating income excludes stock-based compensation expense,
amortization of intangible assets, amortization of debt discount, and, for
2011 only, restructuring charge and amortization of deferred financing costs.
Non-GAAP net income excludes stock-based compensation expense, amortization of
intangible assets, amortization of debt discount, and, for 2011 only,
restructuring charge, term loan repayment fee, term loan debt discount,
amortization of deferred financing costs and increase in fair value of
warrants for redeemable convertible preferred stock. Unlevered free cash flow
is defined as net cash provided by operating activities plus net interest
payments and, for 2011 only, IPO related expense payments, less capital
expenditures. Management presents these non-GAAP financial measures because it
considers them to be important supplemental measures of performance.
Management uses the non-GAAP financial measures for planning purposes,
including analysis of the company's performance against prior periods, the
preparation of operating budgets and determination of appropriate levels of
operating and capital investments. Management also believes that the non-GAAP
financial measures provide additional insight for analysts and investors in
evaluating the company's financial and operational performance. However, these
non-GAAP financial measures have limitations as an analytical tool and are not
intended to be an alternative to financial measures prepared in accordance
with GAAP. We intend to provide these non-GAAP financial measures as part of
our future earnings discussions and, therefore, the inclusion of these
non-GAAP financial measures will provide consistency in our financial
reporting. A reconciliation of these non-GAAP measures to GAAP is provided in
the accompanying tables.

Forward-Looking Statements

This press release contains forward-looking statements that involve
substantial risks and uncertainties. All statements, other than statements of
historical facts, included in this press release regarding our strategy,
future operations, future financial position, future revenue, projected costs,
prospects, plans and objectives of management are forward-looking statements.
The words "anticipate," "believe," "estimate," "expect," "intend," "may,"
"plan," "would," “target” and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements
contain these identifying words. These forward-looking statements include,
among other things, statements about our estimates regarding future revenue
and financial performance. We may not actually achieve the expectations
disclosed in our forward-looking statements, and you should not place undue
reliance on our forward-looking statements. Actual results or events could
differ materially from the expectations disclosed in the forward-looking
statements we make. More information about potential factors that could affect
our business and financial results is contained in our Quarterly Report on
Form 10-Q as filed with the Securities and Exchange Commission on November 14,
2012. Additional information will also be set forth in our future quarterly
reports on Form 10-Q, annual reports on Form 10-K and other filings that we
make with the Securities and Exchange Commission. We do not intend, and
undertake no duty, to release publicly any updates or revisions to any
forward-looking statements contained herein.

TANGOE, INC.
Consolidated Statements of Operations (unaudited)
(in thousands, except per share amounts)
                                                              
                           Three Months Ended        Twelve Months Ended
                           December 31,              December 31,
                           2011         2012         2011          2012
                                                                   
Revenue:
Recurring technology and   $ 25,778     $ 39,010     $ 93,671      $ 137,979
services
Strategic consulting,
software licenses and       3,463      4,960      11,270      16,533  
other
Total revenue               29,241     43,970     104,941     154,512 
                                                                   
Cost of revenue:
Recurring technology and     12,397       18,167       44,814        63,976
services
Strategic consulting,
software licenses and       1,532      1,792      5,165       6,627   
other
Total cost of revenue       13,929     19,959     49,979      70,603  
                                                                   
Gross profit                 15,312       24,011       54,962        83,909
                                                                   
Operating expenses:
Sales and marketing          4,874        7,108        16,648        24,840
General and                  4,922        7,487        17,777        29,317
administrative
Research and development     3,142        4,570        11,860        16,696
Depreciation and             1,171        2,498        4,551         8,666
amortization
Restructuring charge        -          -          1,549       -       
Income from operations       1,203        2,348        2,577         4,390
                                                                   
Other income (expense),
net:
Interest expense             (184   )     (260   )     (3,047  )     (943    )
Interest income              24           20           45            80
Other expense                -            (9     )     -             (9      )
Increase in fair value
of warrants for             -          -          (1,996  )    -       
redeemable convertible
preferred stock
Income (loss) before         1,043        2,099        (2,421  )     3,518
income tax provision
Income tax provision        140        172        534         480     
Net income (loss)            903          1,927        (2,955  )     3,038
Preferred dividends          -            -            (2,168  )     -
Accretion of redeemable
convertible preferred       -          -          (37     )    -       
stock
Income (loss) applicable   $ 903       $ 1,927     $ (5,160  )   $ 3,038   
to common stockholders
                                                                   
Income (loss) per common
share:
Basic                      $ 0.03      $ 0.05      $ (0.31   )   $ 0.08    
Diluted                    $ 0.02      $ 0.05      $ (0.31   )   $ 0.08    
                                                                   
Weighted average number
of common share:
Basic                       32,972     37,720     16,412      36,492  
Diluted                     38,493     40,673     16,412      39,870  
                                                                   

TANGOE, INC.
Consolidated Balance Sheets
(in thousands)
                                                                
                                                     December 31,
                                                     2011          2012
ASSETS                                                             (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents                            $ 43,407      $ 50,211
Accounts receivable                                    25,311        38,309
Prepaid expenses and other current assets             2,503       3,384   
Total current assets                                   71,221        91,904
COMPUTERS, FURNITURE AND EQUIPMENT-NET                 3,334         3,999
                                                                   
OTHER ASSETS:
Intangible assets-net                                  28,800        44,249
Goodwill                                               36,266        65,825
Security deposits and other non-current assets        1,241       1,291   
TOTAL ASSETS                                         $ 140,862    $ 207,268 
                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable                                     $ 6,605       $ 9,128
Accrued expenses                                       7,061         12,035
Deferred revenue-current portion                       9,051         9,648
Notes payable-current portion                          7,904         22,443
Other current liabilities                             1,079       305     
Total current liabilities                              31,700        53,559
                                                                   
OTHER LIABILITIES:
Deferred rent and other non-current liabilities        1,659         3,543
Deferred revenue-less current portion                  2,624         1,415
Notes payable-less current portion                    8,290       131     
Total liabilities                                     44,273      58,648  
                                                                   
                                                                   
COMMITMENT AND CONTINGENCIES
                                                                   
STOCKHOLDERS' EQUITY
Common Stock                                           3             4
Additional paid-in capital                             142,905       191,581
Warrants for common stock                              10,610        10,610
Less: notes receivable for purchase of common          (93     )     -
stock
Accumulated deficit                                    (56,795 )     (53,757 )
Other comprehensive (loss) income                     (41     )    182     
Total stockholders' equity                            96,589      148,620 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $ 140,862    $ 207,268 
                                                                   

TANGOE, Inc.
Consolidated Statements of Cash Flows
(in thousands)
                                                    For the Years Ended
                                                     December 31,
                                                     2011         2012
Operating activities:
Net (loss) income                                    $ (2,955  )   $ 3,038
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Amortization of debt discount                          1,339         801
Amortization of leasehold interest                     -             (99     )
Depreciation and amortization                          4,551         8,666
Restructuring charge                                   1,549         -
(Decrease) increase in deferred rent liability         (58     )     19
Amortization of marketing agreement intangible         92            174
assets
Allowance for doubtful accounts                        23            96
Deferred income taxes                                  305           183
Stock based compensation                               3,980         9,165
Foreign exchange loss                                  -             46
Increase in fair value of warrants for redeemable      1,996         -
convertible preferred stock
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable                                    (4,437  )     (5,883  )
Prepaid expenses and other assets                      47            170
Other assets                                           (381    )     (19     )
Accounts payable                                       3,054         1,310
Accrued expenses                                       (184    )     885
Deferred revenue                                      1,226       (1,864  )
Net cash provided by operating activities             10,147      16,688  
Investing activities:
Purchases of computers, furniture and equipment        (853    )     (1,820  )
Cash paid in connection with acquisitions             (22,194 )    (38,410 )
Net cash used in investing activities                 (23,047 )    (40,230 )
Financing activities:
Repayment of debt                                      (38,018 )     (9,676  )
Borrowings of debt                                     20,000        778
Proceeds from public offerings, net of issuance        66,989        37,729
costs
Repurchase of common stock                             -             (2,700  )
Deferred financing costs                               (170    )     -
Proceeds from notes receivable                         -             93
Proceeds from exercise of stock options and stock     1,593       4,174   
warrants
Net cash provided by financing activities             50,394      30,398  
                                                                   
Effect of exchange rate on cash                        -             (52     )
                                                                   
Net increase in cash and cash equivalents              37,494        6,804
Cash and cash equivalents, beginning of period        5,913       43,407  
Cash and cash equivalents, end of period             $ 43,407     $ 50,211  
                                                                   

TANGOE, INC.
Calculation of Non-GAAP Operating Income (Unaudited)
(in thousands)
                                                                         
                Three Months Ended                      Twelve Months Ended
                December 31,                            December 31,
                2011               2012                2011                2012
                         % of               % of                % of                % of
               Amount    Revenue   Amount    Revenue   Amount     Revenue   Amount     Revenue
Income from     $ 1,203   4.1   %   $ 2,348   5.3   %   $ 2,577    2.5   %   $ 4,390    2.8   %
operations
                                                                                        
Add:
Stock based
compensation      1,316   4.5   %     2,626   6.0   %     3,980    3.8   %     9,165    5.9   %
expense
Restructuring     -       0.0   %     -       0.0   %     1,549    1.5   %     -        0.0   %
costs
Amortization
of                828     2.8   %     2,034   4.6   %     3,052    2.9   %     6,744    4.4   %
intangibles
Amortization
of debt           158     0.5   %     231     0.5   %     698      0.7   %     801      0.5   %
discount
Amortization
of deferred      -       0.0   %    -       0.0   %    227      0.2   %    -        0.0   %
financing
costs
Non-GAAP
income from     $ 3,505   12.0  %   $ 7,239   16.5  %   $ 12,083   11.5  %   $ 21,100   13.7  %
operations
                                                                                        

TANGOE, INC.
Reconciliation of Net (loss) income to Adjusted EBITDA (Unaudited)
(in thousands)
                                                                                 
                Three Months Ended                          Twelve Months Ended
                December 31,                                December 31,
                2011                 2012                  2011                  2012
                           % of                 % of                  % of                  % of
               Amount      Revenue   Amount      Revenue   Amount       Revenue   Amount       Revenue
Net income      $ 903       3.1   %   $ 1,927     4.4   %   $ (2,955 )   -2.8  %   $ 3,038      2.0   %
(loss)
Interest          184       0.6   %     260       0.6   %     3,047      2.9   %     943        0.6   %
expense
Interest          (24   )   -0.1  %     (20   )   0.0   %     (45    )   0.0   %     (80    )   -0.1  %
income
Other
(income)          -         0.0   %     9         0.0   %     -          0.0   %     9          0.0   %
expense
Income tax        140       0.5   %     172       0.4   %     534        0.5   %     480        0.3   %
provision
Depreciation
and               1,171     4.0   %     2,498     5.7   %     4,551      4.3   %     8,666      5.6   %
amortization
Amortization
of marketing
agreement         27        0.1   %     55        0.1   %     92         0.1   %     174        0.1   %
intangible
assets
Amortization
of leasehold      -         0.0   %     (25   )   -0.1  %     -          0.0   %     (99    )   -0.1  %
interest
Stock based
compensation      1,316     4.5   %     2,626     6.0   %     3,980      3.8   %     9,165      5.9   %
expense
Restructuring     -         0.0   %     -         0.0   %     1,549      1.5   %     -          0.0   %
charge
Increase in
fair value of
warrants for
redeemable       -        0.0   %    -        0.0   %    1,996     1.9   %    -         0.0   %
convertible
preferred
stock
Adjusted        $ 3,717    12.7  %   $ 7,502    17.1  %   $ 12,749    12.1  %   $ 22,296    14.4  %
EBITDA
                                                                                                

TANGOE, INC.
Calculation of Non-GAAP Net Income and Non-GAAP Net Income per Share
(Unaudited)
(in thousands, except per share data)
                                                               
                                   Three Months Ended    Twelve Months Ended
                                   December 31,          December 31,
                                  2011      2012       2011        2012
Net income (loss)                  $ 903      $ 1,927    $ (2,955 )   $ 3,038
                                                                      
Add:
Stock based compensation expense     1,316      2,626      3,980        9,165
Restructuring charge                 -          -          1,549        -
Amortization of intangibles          828        2,034      3,052        6,744
Amortization of debt discount        158        231        698          801
Amortization of deferred             -          -          227          -
financing costs
Increase in fair value of
warrants for redeemable              -          -          1,996        -
convertible preferred stock
Orix loan repayment                  -          -          400          -
Term loan debt discount             -         -         641        -
Non-GAAP net income                $ 3,205    $ 6,818    $ 9,588     $ 19,748
                                                                      
                                                                      
Non-GAAP net income per share:     $ 0.08     $ 0.17     $ 0.29      $ 0.50
diluted
                                                                      
Fully diluted weighted average      38,493    40,673    33,503     39,870
shares outstanding
                                                                      

TANGOE, INC.
Stock Based Compensation Expense (Unaudited)
(in thousands)
                                                       
                             Three Months Ended   Twelve Months Ended
                             December 31,         December 31,
                           2011      2012      2011       2012
Cost of revenue              $  170     $ 400     $  669      $ 1,347
Sales and marketing             612       678        1,201      2,133
General and administrative      487       1,378      1,934      5,105
Research and development       47       170       176       580
Total                        $  1,316   $ 2,626   $  3,980    $ 9,165
                                                              

TANGOE, INC.
Calculation of Unlevered Free Cash Flow (Unaudited)
(in thousands)
                                                               
                                      Three Months Ended   Twelve Months Ended
                                      December 31,         December 31,
                                     2011      2012      2011      2012
Net cash provided by operating        $  4,836   $ 3,153   $ 10,147   $ 16,688
activities
                                                                      
Add:
Interest payments, net                   20        33        1,620      127
IPO Expense payments                     -         -         466        -
                                                                      
Subtract:
Capital Expenditures                    451      487      1,599     1,820
Unlevered Free Cash Flow              $  4,405   $ 2,699   $ 10,634   $ 14,995
                                                                      

Contact:

Investor Contact:
ICR, Inc.
Seth Potter, 512-344-0277
ir@tangoe.com
or
Media Contact:
PAN Communications, Inc.
Kristin Conforti, 617-502-4300
tangoe@pancomm.com