Tangoe, Inc. Announces First Quarter 2013 Financial Results

  Tangoe, Inc. Announces First Quarter 2013 Financial Results

  *Total revenue of $44.9 million, up 31% year-over-year
  *GAAP operating income of $0.9 million; non-GAAP operating income of $6.2
    million
  *GAAP EPS of $0.03; non-GAAP EPS of $0.15, up 67% year-over-year
  *Adjusted EBITDA of $6.7 million, a quarterly adjusted EBITDA margin of 15%
    and up 65% year-over-year

Business Wire

ORANGE, Conn. -- May 09, 2013

Tangoe, Inc. (NASDAQ: TNGO), a leading global provider of communications
lifecycle management (CLM) software and related services, today announced
financial results for its first quarter ended March 31, 2013.

“We are pleased with the company’s execution during the first quarter, which
led to results that exceeded our expectations across each key operating
metric,” stated Al Subbloie, president and CEO of Tangoe. “Our increased
investments in sales and marketing have contributed to an acceleration in new
account wins during recent quarters. In addition, we are seeing increased
cross-sell and up-sell activity within our base of acquired customers.
Tangoe’s continued market share gains are evidence that our strategy is
working, and we believe that we are still at the early stages of a significant
market opportunity.”

First Quarter 2013 Financial Highlights

  *Revenue: Total revenue for the first quarter was $44.9 million, an
    increase of 31% on a year-over-year basis. Recurring technology and
    services revenue was $40.0 million, an increase of 30% on a year-over-year
    basis. Strategic consulting, software licenses and other services revenue
    contributed the remaining $4.8 million of total revenue for the first
    quarter of 2013.
  *Operating Income: GAAP operating income for the first quarter was $0.9
    million,  compared to a GAAP operating income of $0.6 million for the
    first quarter of 2012. Non-GAAP operating income for the first quarter was
    $6.2 million,  compared to $3.6 million for the first quarter of 2012.
  *Net Income: GAAP net income for the first quarter was $1.1 million,
    compared to $0.2 million of net income for the same period last year. GAAP
    diluted income per share for the first quarter was $0.03, based on 40.5
    million weighted-average diluted shares outstanding, compared to income
    per share of $0.00, based on 39.4 million weighted-average diluted shares
    outstanding, for the same period last year.

    Non-GAAP net income for the first quarter was $6.0 million, up 77%
    compared to $3.4 million for the first quarter of 2012. Non-GAAP diluted
    net income per share for the first quarter was $0.15 based on 40.5 million
    weighted-average diluted shares outstanding compared to $0.09 per share
    based on 39.4 million weighted-average diluted shares outstanding for the
    same period last year.
  *Adjusted EBITDA: Adjusted EBITDA  for the first quarter was $6.7 million,
    an increase of 65% compared to $4.1 million for the first quarter of 2012.
    Adjusted EBITDA margin was a 15.0% for the first quarter of 2013, an
    increase compared to an 11.9% margin for the same period last year.
  *Cash and Cash Flow: As of March 31, 2013, Tangoe had cash and cash
    equivalents of $43.6 million, a decrease of $6.7 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 $5.8 million in net cash from operations for the
    first quarter of 2013, compared to $3.5 million during the first quarter
    of 2012. The company generated $5.6 million in unlevered free cash flow
    for the quarter, compared to $3.1 million during the first quarter of
    2012.

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 May 9, 2013, Tangoe is providing guidance for its second quarter and
full year 2013:

  *Second Quarter 2013 Guidance: Total revenue is expected to be in the range
    of $45.6 million to $46.1 million. Adjusted EBITDA is expected to be in
    the range of $7.1 million to $7.3 million. Non-GAAP net income per share
    is expected to be approximately $0.16 based on approximately 40.5 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 first quarter 2013 and business outlook.
To access this call, dial 888.215.7015 (United States), or 913.312.0687
(international), with conference ID #9677389. 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 May 23, 2013, by dialing 877.870.5176 (United
States), or 858.384.5517 (international). The recording access code is
#9677389.

About Tangoe

Tangoe (NASDAQ:TNGO) 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 plus
interest expense, income tax provision, depreciation and amortization,
amortization of marketing agreement intangible assets, stock-based
compensation expense and, for 2013 only, restructuring charge; less
amortization of leasehold interest, interest income and, for 2013 only, other
income. Non-GAAP operating income excludes stock-based compensation expense,
amortization of intangible assets and, for 2013 only, restructuring charge.
Non-GAAP net income excludes stock-based compensation expense, amortization of
intangible assets, amortization of debt discount, and, for 2013 only,
restructuring charge and other income. Unlevered free cash flow is defined as
net cash provided by operating activities plus net interest 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 Annual Report on Form
10-K as filed with the Securities and Exchange Commission on March 18, 2013.
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
                                                     March 31,
                                                     2012           2013
                                                                    
Revenue:
Recurring technology and services                    $ 30,756       $ 40,048
Strategic consulting, software licenses and           3,391        4,812  
other
Total revenue                                         34,147       44,860 
                                                                    
Cost of revenue:
Recurring technology and services                      14,316         18,755
Strategic consulting, software licenses and           1,458        2,061  
other
Total cost of revenue                                 15,774       20,816 
                                                                    
Gross profit                                           18,373         24,044
                                                                    
Operating expenses:
Sales and marketing                                    5,544          7,392
General and administrative                             6,701          8,127
Research and development                               3,689          4,945
Depreciation and amortization                          1,875          2,489
Restructuring charge                                  -            155    
Income from operations                                 564            936
                                                                    
Other income (expense), net
Interest expense                                       (235   )       (162   )
Interest income                                        17             19
Other income                                          -            563    
Income before income tax provision                     346            1,356
Income tax provision                                  154          231    
Net income                                           $ 192         $ 1,125  
                                                                    
Net income per common share:
Basic                                                $ 0.01        $ 0.03   
Diluted                                              $ 0.00        $ 0.03   
                                                                    
Weighted average number of common share:
Basic                                                 33,826       37,547 
Diluted                                               39,431       40,459 
                                                                             

TANGOE, INC.
Consolidated Balance Sheets
(in thousands)
                                                              
                                                  December 31,     March 31,
                                                  2012             2013
ASSETS                                                             (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents                         $  50,211        $ 43,554
Accounts receivable - net                            38,309          37,785
Prepaid expenses and other current assets           3,384         3,591   
Total current assets                                 91,904          84,930
COMPUTERS, FURNITURE AND EQUIPMENT-NET               3,999           3,762
                                                                   
OTHER ASSETS:
Intangible assets-net                                44,249          41,918
Goodwill                                             65,825          65,505
Security deposits and other non-current             1,291         1,196   
assets
TOTAL ASSETS                                      $  207,268      $ 197,311 
                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable                                  $  9,128         $ 10,626
Accrued expenses                                     12,035          8,045
Deferred revenue-current portion                     9,648           9,032
Notes payable-current portion                        22,443          13,112
Other current liabilities                           305           305     
Total current liabilities                            53,559          41,120
                                                                   
OTHER LIABILITIES:
Deferred rent and other non-current                  3,543           3,542
liabilities
Deferred revenue-less current portion                1,415           1,751
Notes payable-less current portion                  131           53      
Total liabilities                                   58,648        46,466  
                                                                   
                                                                   
COMMITMENT AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock                                         4               4
Additional paid-in capital                           191,581         193,448
Warrants for common stock                            10,610          10,610
Accumulated deficit                                  (53,757 )       (52,632 )
Other comprehensive gain (loss)                     182           (585    )
Total stockholders' equity                          148,620       150,845 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $  207,268      $ 197,311 
                                                                             

TANGOE, Inc.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
                                                               
                                                                    
                                                    For the Three Months Ended
                                                    March 31,
                                                    2012            2013
                                                                    
Operating activities:
Net income                                          $  192          $ 1,125
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of debt discount                          191            136
Amortization of leasehold interest                     (24    )       (24    )
Depreciation and amortization                          1,875          2,489
Increase (decrease) in deferred rent liability         43             (15    )
Amortization of marketing agreement intangible         32             55
assets
Allowance for doubtful accounts                        -              23
Deferred income taxes                                  6              111
Foreign exchange adjustment                            -              (138   )
Stock based compensation expense                       1,624          3,099
Decrease in fair value of contingent                   -              (517   )
consideration
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable                                    190            452
Prepaid expenses and other assets                      -              (198   )
Other assets                                           10             35
Accounts payable                                       928            1,529
Accrued expenses                                       (1,112 )       (2,052 )
Deferred revenue                                      (426   )      (268   )
Net cash provided by operating activities             3,529        5,842  
Investing activities:
Purchases of computers, furniture and equipment        (426   )       (273   )
Cash paid in connection with acquisitions, net        (8,577 )      (8,789 )
of cash received
Net cash used in investing activities                 (9,003 )      (9,062 )
Financing activities:
Repayment of debt                                      (1,544 )       (307   )
Proceeds from repayment of notes receivable            70             -
Repurchase of common stock                             -              (3,235 )
Proceeds from exercise of stock options and           1,396        306    
stock warrants
Net cash used in financing activities                 (78    )      (3,236 )
                                                                    
                                                                    
Effect of exchange rate on cash                        11             (201   )
                                                                    
                                                                    
Net decrease in cash and cash equivalents              (5,541 )       (6,657 )
Cash and cash equivalents, beginning of period        43,407       50,211 
Cash and cash equivalents, end of period            $  37,866      $ 43,554 
                                                                             

TANGOE, Inc.
Calculation of Non-GAAP Operating Income (Unaudited)
(in thousands)
                                                            
                                   Three Months Ended
                                   March 31,
                                   2012                  2013
                                             % of                % of
                                  Amount      Revenue     Amount      Revenue
Income from operations             $ 564       1.7   %     $ 936       2.1   %
                                                                       
Add:
Stock based compensation             1,624     4.8   %       3,099     6.9   %
expense
Restructuring charge                 -         0.0   %       155       0.3   %
Amortization of intangibles         1,378     4.0   %      2,024     4.5   %
Non-GAAP income from               $ 3,566     10.4  %     $ 6,214     13.9  %
operations
                                                                       

TANGOE, Inc.
Reconciliation of Net income to Adjusted EBITDA (Unaudited)
(in thousands)
                                                            
                               Three Months Ended
                               March 31,
                               2012                    2013
                                           % of                  % of
                              Amount        Revenue     Amount        Revenue
Net income                     $ 192         0.6   %     $ 1,125       2.5   %
Interest expense                 235         0.7   %       162         0.4   %
Other income                     -           0.0   %       (563  )     -1.3  %
Interest income                  (17   )     0.0   %       (19   )     0.0   %
Income tax provision             154         0.5   %       231         0.5   %
Depreciation and                 1,875       5.5   %       2,489       5.5   %
amortization
Amortization of marketing
agreement intangible             32          0.1   %       55          0.1   %
assets
Amortization of leasehold        (24   )     -0.1  %       (24   )     -0.1  %
interest
Stock based compensation         1,624       4.8   %       3,099       6.9   %
expense
Restructuring charge            -          0.0   %      155        0.3   %
Adjusted EBITDA                $ 4,071      11.9  %     $ 6,710      15.0  %
                                                                             

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
                                                       March 31,
                                                      2012       2013
Net income                                             $ 192      $ 1,125
                                                                    
Add:
Stock based compensation expense                         1,624        3,099
Restructuring charge                                     -            155
Amortization of intangibles                              1,378        2,024
Amortization of debt discount                            191          136
Other income                                            -           (563   )
Non-GAAP net income                                    $ 3,385      $ 5,976  
                                                                    
                                                                    
Non-GAAP net income per share: diluted                 $ 0.09       $ 0.15   
                                                                    
Fully diluted weighted average shares                   39,431      40,459 
outstanding
                                                                             

TANGOE, Inc.
Stock Based Compensation Expense (Unaudited)
(in thousands)
                                      
                               Three Months Ended
                               March 31,
                            2012      2013
Cost of revenue                $ 250     $ 554
Sales and marketing              366         813
General and administrative       915         1,472
Research and development        93         260
Total                          $ 1,624     $ 3,099
                                           

TANGOE, Inc.
Calculation of Unlevered Free Cash Flow (Unaudited)
(in thousands)
                                                     
                                              Three Months Ended
                                              March 31,
                                             2012      2013
Net cash provided by operating activities     $ 3,529   $ 5,842
                                                          
Add:
Interest payments, net                          36          21
                                                          
Subtract:
Capital Expenditures                           426        273
Unlevered Free Cash Flow                      $ 3,139     $ 5,590
                                                            

Contact:

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