Tangoe
Feb 12, 2014

Tangoe, Inc. Announces Fourth Quarter and Full Year 2013 Financial Results

Full Year Highlights:

ORANGE, Conn.--(BUSINESS WIRE)-- Tangoe, Inc. (NASDAQ: TNGO), a leading global provider of Connection Lifecycle Management (CLM) software and related services, today announced financial results for its fourth quarter and full year ended December 31, 2013.

"The company's fourth quarter performance was highlighted by continued strong growth in customer additions and upsells of our integrated offerings into our expanded customer base," stated Al Subbloie, president and CEO of Tangoe. "During 2013, Tangoe further validated the strength of its strategy as we expanded our scale, customer base, geographic presence and technology leadership. Looking forward, we believe we are well positioned to sustain our momentum and gain market share, which is reflected by our strong 2014 revenue and profitability guidance."

Fourth Quarter 2013 Financial Highlights

Full Year 2013 Financial Highlights

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 12, 2014, Tangoe is providing guidance for its first quarter and full year 2014.

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 2013 and business outlook. To access this call, dial 877.852.6581 (United States), or 719.325.4857 (international), with conference ID #9837067. 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 26, 2014, by dialing 877.870.5176 (United States), or 858.384.5517 (international). The recording access code is #9837067.

About Tangoe

Tangoe (NASDAQ:TNGO) is a leading global provider of Connection Lifecycle Management (CLM) software and services to a wide range of global enterprises and service providers. The company's Connection Lifecycle Management technology, Matrix, is an on-demand suite of software and services designed to turn on, manage, secure, and support various connections in an enterprise's communications lifecycle, including mobile, fixed, machine, cloud, social, and IT. 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 2012 only, other 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 2012 only, other expense, 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," "target," "would" 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 12, 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

Twelve Months Ended

December 31, December 31,
2012 2013 2012 2013
 
Revenue:
Recurring technology and services $ 39,010 $ 44,428 $ 137,979 $ 168,484
Strategic consulting, software licenses and other   4,960     5,599     16,533     20,430  
Total revenue   43,970     50,027     154,512     188,914  
 
Cost of revenue:
Recurring technology and services 18,167 19,583 63,976 76,228
Strategic consulting, software licenses and other   1,792     2,397     6,627     8,750  
Total cost of revenue   19,959     21,980     70,603     84,978  
 
Gross profit 24,011 28,047 83,909 103,936
 
Operating expenses:
Sales and marketing 7,108 9,281 24,840 33,382
General and administrative 7,487 9,016 29,317 34,765
Research and development 4,570 4,914 16,696 19,570
Depreciation and amortization 2,498 2,829 8,666 10,452
Restructuring charge   -     -     -     654  
Income from operations 2,348 2,007 4,390 5,113
 
Other income (expense), net
Interest expense (260 ) (49 ) (943 ) (401 )
Interest income 20 10 80 60
Other (expense) income   (9 )   108     (9 )   1,201  
Income before income tax provision 2,099 2,076 3,518 5,973
Income tax provision   172     343     480     1,011  
Net income $ 1,927   $ 1,733   $ 3,038   $ 4,962  
 
Net income per common share:
Basic $ 0.05   $ 0.05   $ 0.08   $ 0.13  
Diluted $ 0.05   $ 0.04   $ 0.08   $ 0.12  
 
Weighted average number of common shares:
Basic   37,720     38,184     36,492     37,706  
Diluted   40,673     41,272     39,870     40,472  
 
TANGOE, INC.
Consolidated Balance Sheets
(in thousands)
   
December 31, December 31,
2012 2013
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 50,211 $ 43,182
Accounts receivable - net 38,309 43,273
Prepaid expenses and other current assets   3,384     4,537  
Total current assets 91,904 90,992
COMPUTERS, FURNITURE AND EQUIPMENT-NET 3,999 4,317
 
OTHER ASSETS:
Intangible assets-net 44,249 36,637
Goodwill 65,825 65,963
Security deposits and other non-current assets   1,291     935  
TOTAL ASSETS $ 207,268   $ 198,844  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 9,128 $ 9,570
Accrued expenses 12,035 8,871
Deferred revenue-current portion 9,648 9,063
Notes payable-current portion 22,443 1,831
Other current liabilities   305     160  
Total current liabilities 53,559 29,495
 
OTHER LIABILITIES:
Deferred taxes and other non-current liabilities 3,543 3,598
Deferred revenue-less current portion 1,415 1,536
Notes payable-less current portion   131     203  
Total liabilities   58,648     34,832  
 
 
COMMITMENT AND CONTINGENCIES
 
STOCKHOLDERS' EQUITY
Common stock 4 4
Additional paid-in capital 191,581 202,808
Warrants for common stock 10,610 10,610
Accumulated deficit (53,757 ) (48,795 )
Other comprehensive gain (loss)   182     (615 )
Total stockholders' equity   148,620     164,012  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 207,268   $ 198,844  
 
TANGOE, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
   
 
For the Twelve Months Ended
December 31,
2012 2013
 
Operating activities:
Net income $ 3,038 $ 4,962
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of debt discount 801 305
Amortization of leasehold interest (99 ) (99 )
Depreciation and amortization 8,666 10,452
Increase (decrease) in deferred rent liability 19 (47 )
Amortization of marketing agreement intangible assets 174 305
Allowance for doubtful accounts 96 106
Deferred income taxes 183 400
Foreign exchange adjustment 46 (138 )
Restructuring charge - 654
Stock based compensation expense 9,165 13,259
Decrease in fair value of contingent consideration - (1,041 )
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (5,883 ) (5,089 )
Prepaid expenses and other assets 170 (407 )
Other assets (19 ) 191
Accounts payable 1,310 32
Accrued expenses 885 (2,409 )
Deferred revenue   (1,864 )   (23 )
Net cash provided by operating activities   16,688     21,413  
Investing activities:
Purchases of computers, furniture and equipment (1,820 ) (2,643 )
Cash paid in connection with acquisitions, net of cash received   (38,410 )   (20,845 )
Net cash used in investing activities   (40,230 )   (23,488 )
Financing activities:
Net repayment of debt (8,898 ) (1,006 )
Proceeds from repayment of notes receivable 93 -
Proceeds from follow on offering, net of issuance costs 37,729 -
Repurchase of common stock (2,700 ) (8,590 )
Proceeds from exercise of stock options and stock warrants   4,174     4,861  
Net cash provided by (used in) financing activities   30,398     (4,735 )
 
 
Effect of exchange rate on cash (52 ) (219 )
 
 
Net increase (decrease) in cash and cash equivalents 6,804 (7,029 )
Cash and cash equivalents, beginning of period   43,407     50,211  
Cash and cash equivalents, end of period $ 50,211   $ 43,182  
 
TANGOE, Inc.
Calculation of Non-GAAP Operating Income (Unaudited)
(in thousands)
                               
Three Months Ended   Twelve Months Ended
December 31,   December 31,
2012   2013   2012   2013
  % of     % of     % of     % of
  Amount Revenue Amount Revenue   Amount Revenue Amount Revenue
Income from operations $ 2,348 5.3 % $ 2,007 4.0 % $ 4,390 2.8 % $ 5,113 2.7 %
 
Add:
Stock based compensation expense 2,626 6.0 % 3,486 7.0 % 9,165 5.9 % 13,259 7.0 %
Restructuring charge - 0.0 % - 0.0 % - 0.0 % 654 0.3 %
Amortization of intangible assets   2,034 4.6 %   2,133 4.3 %     6,744 4.4 %   8,309 4.4 %
Non-GAAP income from operations $ 7,008 15.9 % $ 7,626 15.2 %   $ 20,299 13.1 % $ 27,335 14.5 %
 
TANGOE, Inc.
Reconciliation of Net income to Adjusted EBITDA (Unaudited)
(in thousands)
                               
Three Months Ended   Twelve Months Ended
December 31,   December 31,
2012   2013   2012   2013
  % of     % of     % of     % of
  Amount Revenue Amount Revenue   Amount Revenue Amount Revenue
Net income $ 1,927 4.4 % $ 1,733 3.5 % $ 3,038 2.0 % $ 4,962 2.6 %
Interest expense 260 0.6 % 49 0.1 % 943 0.6 % 401 0.2 %
Other expense (income) 9 0.0 % (108 ) -0.2 % 9 0.0 % (1,201 ) -0.6 %
Interest income (20 ) 0.0 % (10 ) 0.0 % (80 ) -0.1 % (60 ) 0.0 %
Income tax provision 172 0.4 % 343 0.7 % 480 0.3 % 1,011 0.5 %
Depreciation and amortization 2,498 5.7 % 2,829 5.7 % 8,666 5.6 % 10,452 5.5 %
Amortization of marketing agreement intangible assets 55 0.1 % 111 0.2 % 174 0.1 % 305 0.2 %
Amortization of leasehold interest (25 ) -0.1 % (25 ) 0.0 % (99 ) -0.1 % (99 ) -0.1 %
Stock based compensation expense 2,626 6.0 % 3,486 7.0 % 9,165 5.9 % 13,259 7.0 %
Restructuring charge   -   0.0 %   -   0.0 %     -   0.0 %   654   0.3 %
Adjusted EBITDA $ 7,502   17.1 % $ 8,408   16.8 %   $ 22,296   14.4 % $ 29,684   15.7 %
 
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,
  2012   2013 2012   2013
Net income $ 1,927   $ 1,733 $ 3,038   $ 4,962
 
Add:
Stock based compensation expense 2,626 3,486 9,165 13,259
Restructuring charge - - - 654
Amortization of intangible assets 2,034 2,133 6,744 8,309
Amortization of debt discount 231 25 801 305
Other expense (income)   9   (108 )   9   (1,201 )
Non-GAAP net income $ 6,827 $ 7,269   $ 19,757 $ 26,288  
 
 
Non-GAAP net income per share: diluted $ 0.17 $ 0.18   $ 0.50 $ 0.65  
 
Fully diluted weighted average shares outstanding   40,673   41,272     39,870   40,472  
 
TANGOE, Inc.
Stock Based Compensation Expense (Unaudited)
(in thousands)
               
Three Months Ended Twelve Months Ended
December 31, December 31,
    2012   2013 2012   2013
Cost of revenue $ 400   $ 499 $ 1,347   $ 2,108
Sales and marketing 678 1,194 2,133 3,941
General and administrative 1,378 1,556 5,105 6,220
Research and development   170   237   580   990
Total $ 2,626 $ 3,486 $ 9,165 $ 13,259
 
TANGOE, Inc.
Calculation of Unlevered Free Cash Flow (Unaudited)
(in thousands)
               
Three Months Ended Twelve Months Ended
December 31, December 31,
  2012   2013 2012   2013
Net cash provided by operating activities $ 3,153   $ 4,830 $ 16,688   $ 21,413
 
Add:
Interest payments, net 33 21 127 86
 
Subtract:
Capital Expenditures   487   843   1,820   2,643
Unlevered Free Cash Flow $ 2,699 $ 4,008 $ 14,995 $ 18,856

Investor Contact:
ICR, Inc.
Seth Potter, 512-344-0277
investor.relations@tangoe.com
or
Media Contact:
PAN Communications, Inc.
Nikki Festa/Ariel Burch, 617-502-4300
tangoe@pancomm.com

Source: Tangoe, Inc.

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