Tangoe
May 7, 2015

Tangoe, Inc. Announces First Quarter 2015 Financial Results

 

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 first quarter ended March 31, 2015.

"We continued to enhance our market leadership position during the first quarter with the launch and rollout of new Matrix Connection Lifecycle Management software and services," stated Al Subbloie, president and CEO of Tangoe. "During the quarter, our total revenues were below expectations primarily due to quarter-to-quarter variability of non-recurring revenue, which is the less strategic component of our business. We remain optimistic about the company's future which is supported by continued expansion within our large and growing customer base, expanding relationships with key strategic alliance partners, and the strength of our new customer adds."

Subbloie added, "We are very excited about our pending acquisition of IBM's Rivermine TEM Division, which we expect will improve the overall scale of our company, as well as increase our global customer base and spend under management. We also expect the acquisition will further accelerate the expansion of our global presence and bolster our relationship with IBM. We anticipate the acquisition to be accretive during 2016."

First Quarter 2015 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 May 7, 2015, Tangoe is providing guidance for its second quarter and full year 2015 both including and excluding the expected financial impact from the expected acquisition of IBM's Rivermine TEM Division.

Quarterly Conference Call

Tangoe will host a conference call today at 5:00 p.m. EDT to review the company's financial results for the first quarter 2015 as well as its business outlook. To access this call, dial 888.417.8516 (United States), or 719.457.2648 (international), with conference ID #5523598. 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 21, 2015, by dialing 877.870.5176 (United States), or 858.384.5517 (international). The recording access code is #5523598.

About Tangoe

Tangoe (NASDAQ:TNGO) is a leading global provider of Connection Lifecycle Management software and services to a wide range of global enterprises and service providers. The company's Connection Lifecycle Management platform, Matrix, is an on-demand suite of software and services designed to turn on, track, manage, secure, and support various connections in an enterprise's connection lifecycle, including mobile, fixed, machine-to-machine, cloud software and services, enterprise social, and IT connections. 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, income tax provision, depreciation and amortization, amortization of marketing agreement intangible assets, stock-based compensation expense and, for 2015 only, other expense; less amortization of leasehold interest, interest income and, for 2014 only, other income. Non-GAAP operating income excludes stock-based compensation expense and amortization of intangible assets. Non-GAAP net income excludes stock-based compensation expense, amortization of intangible assets, amortization of debt discount, 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," "pending," "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 anticipated acquisition of IBM's Rivermine TEM Division, which is subject to the satisfaction of certain conditions to closing, and 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 16, 2015. 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,
          2014           2015  
                 
Revenue:                
Recurring technology and services       $ 45,999         $ 48,916  
Strategic consulting, software licenses and other         4,395           4,553  
Total revenue         50,394           53,469  
                 
Cost of revenue:                
Recurring technology and services         21,398           21,630  
Strategic consulting, software licenses and other         2,334           2,245  
Total cost of revenue         23,732           23,875  
                 
Gross profit         26,662           29,594  
                 
Operating expenses:                
Sales and marketing         9,945           10,374  
General and administrative         8,788           10,103  
Research and development         5,129           6,127  
Depreciation and amortization         2,607           2,052  
Income from operations         193           938  
                 
Other income (expense), net                
Interest expense         (37 )         (64 )
Interest income         9           9  
Other income (expense)         13           (2 )
Income before income tax provision         178           881  
Income tax provision         445           629  
Net (loss) income       $ (267 )       $ 252  
                 
Net (loss) income per common share:                
Basic       $ (0.01 )       $ 0.01  
Diluted       $ (0.01 )       $ 0.01  
                 
Weighted average number of common share:                
Basic         38,364           38,724  
Diluted         38,364           40,715  
               
TANGOE, INC.
Consolidated Balance Sheets
(in thousands)
               
        December 31,     March 31,
          2014         2015  
ASSETS             (Unaudited)
CURRENT ASSETS:              
Cash and cash equivalents       $ 51,279       $ 52,543  
Accounts receivable         56,948         58,695  
Prepaid expenses and other current assets         5,901         10,769  
Total current assets         114,128         122,007  
COMPUTERS, FURNITURE AND EQUIPMENT-NET         5,217         5,280  
               
OTHER ASSETS:              
Intangible assets-net         28,753         27,063  
Goodwill         65,348         64,857  
Security deposits and other non-current assets         1,566         1,480  
TOTAL ASSETS       $ 215,012       $ 220,687  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
CURRENT LIABILITIES:              
Accounts payable       $ 10,733       $ 9,584  
Accrued expenses         8,283         8,931  
Deferred revenue-current portion         10,858         10,925  
Notes payable-current portion         1,400         2,288  
Total current liabilities         31,274         31,728  
               
OTHER LIABILITIES:              
Deferred taxes and other non-current liabilities         4,372         4,529  
Deferred revenue-less current portion         1,030         797  
Notes payable-less current portion         166         2,555  
Total liabilities         36,842         39,609  
               
               
COMMITMENT AND CONTINGENCIES              
               
STOCKHOLDERS' EQUITY              
Common Stock         4         4  
Additional paid-in capital         215,491         219,180  
Warrants for common stock         10,610         10,610  
Accumulated deficit         (45,859 )       (45,607 )
Other comprehensive loss         (2,076 )       (3,109 )
Total stockholders' equity         178,170         181,078  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $ 215,012       $ 220,687  
                 
TANGOE, INC.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
                 
                 
        For the Three Months Ended
        March 31,
          2014           2015  
                 
Operating activities:                
Net (loss) income       $ (267 )       $ 252  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:                
Amortization of debt discount         25           7  
Amortization of leasehold interest         (24 )         (24 )
Depreciation and amortization         2,607           2,052  
(Decrease) increase in deferred rent liability         (31 )         71  
Amortization of marketing agreement intangible assets         108           161  
Allowance for doubtful accounts         30           90  
Deferred income taxes         307           131  
Stock based compensation expense         4,197           5,024  
Loss on disposal of fixed assets         -           17  
Changes in assets and liabilities, net of acquisitions:                
Accounts receivable         (1,593 )         (2,002 )
Prepaid expenses and other current assets         (1,035 )         (1,458 )
Other assets         (340 )         86  
Accounts payable         183           (1,120 )
Accrued expenses and other current liabilities         (807 )         852  
Deferred revenue         (283 )         (138 )
Net cash provided by operating activities         3,077           4,001  
Investing activities:                
Purchases of computers, furniture and equipment         (1,218 )         (794 )
Net cash used in investing activities         (1,218 )         (794 )
Financing activities:                
Borrowings of debt         177           -  
Repayment of debt         (276 )         (226 )
Repurchase of common stock         -           (2,000 )
Proceeds from exercise of stock options and stock warrants         1,172           665  
Net cash provided by (used in) financing activities         1,073           (1,561 )
                 
                 
Effect of exchange rate on cash         (35 )         (382 )
                 
                 
Net increase in cash and cash equivalents         2,897           1,264  
Cash and cash equivalents, beginning of period         43,182           51,279  
Cash and cash equivalents, end of period       $ 46,079         $ 52,543  
                 
TANGOE, INC.
Calculation of Non-GAAP Operating Income (Unaudited)
(in thousands)
                 
    Three Months Ended
    March 31,
    2014   2015
        % of       % of
    Amount   Revenue   Amount   Revenue
Income from operations   $ 193   0.4 %   $ 938   1.8 %
                 
Add:                
Stock based compensation expense     4,197   8.3 %     5,024   9.4 %
Amortization of intangibles     2,036   4.0 %     1,489   2.8 %
Non-GAAP income from operations   $ 6,426   12.8 %   $ 7,451   13.9 %
                 
                 
TANGOE, INC.
Reconciliation of Net (loss) income to Adjusted EBITDA (Unaudited)
(in thousands)
                 
    Three Months Ended
    March 31,
    2014   2015
        % of       % of
    Amount   Revenue   Amount   Revenue
Net (loss) income   $ (267 )   -0.5 %   $ 252     0.5 %
Interest expense     37     0.1 %     64     0.1 %
Other (income) expense     (13 )   0.0 %     2     0.0 %
Interest income     (9 )   0.0 %     (9 )   0.0 %
Income tax provision     445     0.9 %     629     1.2 %
Depreciation and amortization     2,607     5.2 %     2,052     3.8 %
Amortization of marketing agreement intangible assets     108     0.2 %     161     0.3 %
Amortization of leasehold interest     (24 )   0.0 %     (24 )   0.0 %
Stock based compensation expense     4,197     8.3 %     5,024     9.4 %
Adjusted EBITDA   $ 7,081     14.1 %   $ 8,151     15.2 %
                 
         
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,
    2014   2015
Net (loss) income   $ (267 )   $ 252
         
Add:        
Stock based compensation expense     4,197       5,024
Amortization of intangibles     2,036       1,489
Amortization of debt discount     25       7
Other (income) expense     (13 )     2
Non-GAAP net income   $ 5,978     $ 6,774
         
         
Non-GAAP net income per share: diluted   $ 0.15     $ 0.17
         
Fully diluted weighted average shares outstanding     40,969       40,715
         
         
TANGOE, INC.
Stock Based Compensation Expense (Unaudited)
(in thousands)
         
    Three Months Ended
    March 31,
    2014   2015
Cost of revenue   $ 1,488   $ 910
Sales and marketing     1,256     1,367
General and administrative     1,035     2,066
Research and development     418     681
Total   $ 4,197   $ 5,024
         
TANGOE, INC.
Calculation of Unlevered Free Cash Flow (Unaudited)
(in thousands)
         
    Three Months Ended
    March 31,
    2014   2015
Net cash provided by operating activities   $ 3,077   $ 4,001
         
Add:        
Interest payments, net     9     15
         
Subtract:        
Capital Expenditures     1,218     794
Unlevered Free Cash Flow   $ 1,868   $ 3,222
         

 

Investor Contact:
ICR, Inc.
Seth Potter, 646-277-1230
investor.relations@tangoe.com
or
Media Contact:
Tangoe, Inc.
Shannon Cortina, 732-637-2010
shannon.cortina@tangoe.com

Source: Tangoe, Inc.

 

 

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