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
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