Tangoe
Nov 5, 2015

Tangoe, Inc. Announces Third 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 third quarter ended September 30, 2015.

"While we continued to experience sales execution challenges and remain in a period of product transition, the company has made progress on taking the necessary steps to increase revenue over time," stated Al Subbloie, president and CEO of Tangoe. "During the third quarter, our results were primarily impacted by lower than expected non-recurring revenue. We believe that Tangoe is in a position to grow market share longer-term due to the roll out of our new and enhanced Matrix platform."

Third 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 November 5, 2015, Tangoe is providing guidance for its fourth quarter and full year 2015.

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 third quarter 2015 as well as its business outlook. To access this call, dial 800.475.6890 (United States), or 913.981.4904 (international), with conference ID #9461449. 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 November 19, 2015, by dialing 877.870.5176 (United States), or 858.384.5517 (international). The recording access code is #9461449.

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 expense (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 regarding anticipated recurring revenue growth and 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 August 10, 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

Nine Months Ended
September 30, September 30,
2014 2015 2014 2015
 
Revenue:
Recurring technology and services $     48,184 $     52,638 $     141,252 $     151,491
Strategic consulting, software licenses and other       6,297         3,935         16,297         13,029  
Total revenue       54,481         56,573         157,549         164,520  
 
Cost of revenue:
Recurring technology and services 23,035 25,969 66,633 71,184
Strategic consulting, software licenses and other       2,419         2,223         6,760         6,539  
Total cost of revenue       25,454         28,192         73,393         77,723  
 
Gross profit 29,027 28,381 84,156 86,797
 
Operating expenses:
Sales and marketing 9,494 11,164 29,621 32,373
General and administrative 9,918 11,289 28,550 32,102
Research and development 5,767 6,954 16,690 19,894
Depreciation and amortization       2,347         2,558         7,426         7,051  
Income (loss) from operations 1,501 (3,584 ) 1,869 (4,623 )
 
Other income (expense), net
Interest expense (33 ) (75 ) (81 ) (172 )
Interest income 8 2 26 18
Other income (expense)       94         (151 )       79         (152 )
Income (loss) before income tax provision 1,570 (3,808 ) 1,893 (4,929 )
Income tax provision       635         694         1,628         1,857  
Net income (loss) $     935   $     (4,502 ) $     265   $     (6,786 )
 
Net income (loss) per common share:
Basic $     0.02   $     (0.11 ) $     0.01   $     (0.17 )
Diluted $     0.02   $     (0.11 ) $     0.01   $     (0.17 )
 
Weighted average number of common share:
Basic       38,799         39,314         38,609         39,042  
Diluted       41,109         39,314         41,134         39,042  
 
 
TANGOE, INC.
Consolidated Balance Sheets
(in thousands)
             
December 31, September 30,
2014 2015
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $   51,279 $   36,559
Accounts receivable, net 56,948 60,716
Prepaid expenses and other current assets     5,901       12,472  
Total current assets 114,128 109,747
COMPUTERS, FURNITURE AND EQUIPMENT-NET 5,217 5,803
 
OTHER ASSETS:
Intangible assets-net 28,753 34,455
Goodwill 65,348 75,767
Security deposits and other non-current assets     1,566       1,900  
TOTAL ASSETS $   215,012   $   227,672  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 10,733 $ 11,898
Accrued expenses 8,283 11,328
Deferred revenue-current portion 10,858 11,699
Notes payable-current portion     1,400       2,419  
Total current liabilities 31,274 37,344
 
OTHER LIABILITIES:
Deferred taxes and other non-current liabilities 4,372 4,854
Deferred revenue-less current portion 1,030 461
Notes payable-less current portion     166       2,621  
Total liabilities     36,842       45,280  
 
 
COMMITMENT AND CONTINGENCIES
 
STOCKHOLDERS' EQUITY
Common Stock 4 4
Additional paid-in capital 215,491 227,954
Warrants for common stock 10,610 10,610
Accumulated deficit (45,859 ) (52,645 )
Accumulated other comprehensive loss     (2,076 )     (3,531 )
Total stockholders' equity     178,170       182,392  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $   215,012   $   227,672  
 
 
TANGOE, INC.
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
             
 
For the Nine Months Ended
September 30,
2014 2015
 
Operating activities:
Net income (loss) $   265 $   (6,786 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of debt discount 45 18
Amortization of leasehold interest (74 ) (74 )
Depreciation and amortization 7,426 7,051
Decrease in deferred rent liability (29 ) (12 )
Amortization of marketing agreement intangible assets 332 464
Allowance for doubtful accounts 90 590
Deferred income taxes 733 528
Foreign exchange adjustment 32 -
Loss on disposal of fixed assets - 27
Stock based compensation expense 14,605 13,798
 
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (9,167 ) (4,768 )
Prepaid expenses and other current assets (1,260 ) (1,210 )
Other assets (357 ) 128
Accounts payable (204 ) 1,206
Accrued expenses and other current liabilities (323 ) 3,198
Deferred revenue     90       (1,037 )
Net cash provided by operating activities     12,204       13,121  
Investing activities:
Purchases of computers, furniture and equipment (2,699 ) (2,804 )
Cash paid in connection with acquisitions, net of cash received     (881 )     (22,541 )
Net cash used in investing activities     (3,580 )     (25,345 )
Financing activities:
Borrowings of debt 177 608
Repayment of debt (658 ) (1,578 )
Repurchase of common stock (4,000 ) (2,000 )
Proceeds from exercise of stock options and stock warrants     1,897       855  
Net cash used in financing activities     (2,584 )     (2,115 )
 
Effect of exchange rate on cash (304 ) (381 )
 
Net increase (decrease) in cash and cash equivalents 5,736 (14,720 )
Cash and cash equivalents, beginning of period     43,182       51,279  
Cash and cash equivalents, end of period $   48,918   $   36,559  
 
 
TANGOE, INC.
Calculation of Non-GAAP Operating Income (Unaudited)
(in thousands)
                                                             
Three Months Ended Nine Months Ended
September 30, September 30,
2014       2015 2014       2015
    % of     % of     % of     % of
    Amount Revenue Amount Revenue Amount Revenue Amount Revenue
Income (loss) from operations $   1,501 2.8 % $   (3,584 ) -6.3 % $   1,869 1.2 % $   (4,623 ) -2.8 %
 
Add:
Stock based compensation expense 4,750 8.7 % 4,000 7.1 % 14,605 9.3 % 13,798 8.4 %
Amortization of intangibles     1,780 3.3 %     1,840   3.3 %     5,736 3.6 %     5,079   3.1 %
Non-GAAP income from operations $   8,031 14.7 % $   2,256   4.0 % $   22,210 14.1 % $   14,254   8.7 %
 
 
TANGOE, INC.
Reconciliation of Net Income (loss) to Adjusted EBITDA (Unaudited)
(in thousands)
                                                             
Three Months Ended Nine Months Ended
September 30, September 30,
2014       2015 2014       2015
    % of     % of     % of     % of
  Amount

  Revenue  

Amount

  Revenue  

Amount

  Revenue  

Amount

  Revenue  

Net income (loss) $   935 1.7 % $   (4,502 ) -8.0 % $   265 0.2 % $   (6,786 ) -4.1 %
Interest expense 33 0.1 % 75 0.1 % 81 0.1 % 172 0.1 %
Other (income) expense (94 ) -0.2 % 151 0.3 % (79 ) -0.1 % 152 0.1 %
Interest income (8 ) 0.0 % (2 ) 0.0 % (26 ) 0.0 % (18 ) 0.0 %
Income tax provision 635 1.2 % 694 1.2 % 1,628 1.0 % 1,857 1.1 %
Depreciation and amortization 2,347 4.3 % 2,558 4.5 % 7,426 4.7 % 7,051 4.3 %
Amortization of marketing agreement intangible assets 113 0.2 % 154 0.3 % 332 0.2 % 464 0.3 %
Amortization of leasehold interest (25 ) 0.0 % (25 ) 0.0 % (74 ) 0.0 % (74 ) 0.0 %
Stock based compensation expense     4,750   8.7 %     4,000   7.1 %     14,605   9.3 %     13,798   8.4 %
Adjusted EBITDA $   8,686   15.9 % $   3,103   5.5 % $   24,158   15.3 % $   16,616   10.1 %
 
 
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 Nine Months Ended
September 30, September 30,
  2014         2015 2014         2015
Net income (loss) $   935   $   (4,502 ) $   265   $   (6,786 )
 
Add:
Stock based compensation expense 4,750 4,000 14,605 13,798
Amortization of intangibles 1,780 1,840 5,736 5,079
Amortization of debt discount 9 6 45 18
Other (income)expense     (94 )     151       (79 )     152  
Non-GAAP net income $   7,380   $   1,495   $   20,572   $   12,261  
 
 
Non-GAAP net income per share: diluted $   0.18   $   0.04   $   0.50   $   0.30  
 
Fully diluted weighted average shares outstanding     41,109       41,133       41,134       41,280  
 
TANGOE, INC.  
Stock Based Compensation Expense (Unaudited)
(in thousands)
                                   
Three Months Ended Nine Months Ended
September 30, September 30,
  2014         2015 2014       2015
Cost of revenue $     641   $     526 $     3,338 $     1,990
Sales and marketing 1,275 1,207 4,013 3,875
General and administrative 2,069 1,740 5,204 6,029
Research and development       765       527       2,050       1,904
Total $     4,750 $     4,000 $     14,605 $     13,798
 
 
TANGOE, INC.
Calculation of Unlevered Free Cash Flow (Unaudited)
(in thousands)
                                   
Three Months Ended Nine Months Ended
September 30, September 30,
  2014         2015 2014       2015
Net cash provided by operating activities $     6,280   $     2,393 $     12,204 $     13,121
 
Add:
Interest payments, net 12 122 23 194
 
Subtract:
Capital Expenditures       648       1,004       2,699       2,804
Unlevered Free Cash Flow $     5,644 $     1,511 $     9,528 $     10,511
 
 

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

Source: Tangoe, Inc.

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