Tangoe, Inc. Announces Fourth Quarter and Full Year 2012 Financial Results

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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

ORANGE, Conn.--(BUSINESS WIRE)-- Tangoe, Inc. (NAS: 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 EBITDAfor 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 EBITDAfor 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,
2011201220112012
 
Revenue:
Recurring technology and services$25,778$39,010$93,671$137,979
Strategic consulting, software licenses and other 3,463  4,960  11,270  16,533 
Total revenue 29,241  43,970  104,941  154,512 
 
Cost of revenue:
Recurring technology and services12,39718,16744,81463,976
Strategic consulting, software licenses and other 1,532  1,792  5,165  6,627 
Total cost of revenue 13,929  19,959  49,979  70,603 
 
Gross profit15,31224,01154,96283,909
 
Operating expenses:
Sales and marketing4,8747,10816,64824,840
General and administrative4,9227,48717,77729,317
Research and development3,1424,57011,86016,696
Depreciation and amortization1,1712,4984,5518,666
Restructuring charge -  -  1,549  - 
Income from operations1,2032,3482,5774,390
 
Other income (expense), net:
Interest expense(184)(260)(3,047)(943)
Interest income24204580
Other expense-(9)-(9)
Increase in fair value of warrants for redeemable convertible preferred stock -  -  (1,996) - 
Income (loss) before income tax provision1,0432,099(2,421)3,518
Income tax provision 140  172  534  480 
Net income (loss)9031,927(2,955)3,038
Preferred dividends--(2,168)-
Accretion of redeemable convertible preferred stock -  -  (37) - 
Income (loss) applicable to common stockholders$903 $1,927 $(5,160)$3,038 
 
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,
20112012
ASSETS(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents$43,407$50,211
Accounts receivable25,31138,309
Prepaid expenses and other current assets 2,503  3,384 
Total current assets71,22191,904
COMPUTERS, FURNITURE AND EQUIPMENT-NET3,3343,999
 
OTHER ASSETS:
Intangible assets-net28,80044,249
Goodwill36,26665,825
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 expenses7,06112,035
Deferred revenue-current portion9,0519,648
Notes payable-current portion7,90422,443
Other current liabilities 1,079  305 
Total current liabilities31,70053,559
 
OTHER LIABILITIES:
Deferred rent and other non-current liabilities1,6593,543
Deferred revenue-less current portion2,6241,415
Notes payable-less current portion 8,290  131 
Total liabilities 44,273  58,648 
 
 
COMMITMENT AND CONTINGENCIES
 
STOCKHOLDERS' EQUITY
Common Stock34
Additional paid-in capital142,905191,581
Warrants for common stock10,61010,610
Less: notes receivable for purchase of common stock(93)-
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) Read Full Story

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