EVOL - Earnings call transcript Q2 2018

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Operator

Thank you and welcome to Evolving Systems 2018 Second Quarter Results Conference Call.

As you may have seen, our Form 10-Q was filed after market close today, and our press release was just issued. With us, from management, today will be Matthew Stecker, Evolving Systems’ Chairman and Chief Executive Officer; as well as Mark Szynkowski, Evolving Systems’ Senior Vice President of Finance. On today’s call, we will provide an update on the quarter-end and update you on the business activities currently underway.

Before I turn the call over to Matthew, I’d like to remind everyone that the company will be making forward-looking statements based on current expectations, estimates and projections that are subject to risks.

revenue, forward-looking taxes statements. future growth the about are strategy statements expenses, and cash, company’s Specifically, Listeners these statements. not should place undue reliance on are releases statements, could materially There filed the documents to that company. results SEC publicly for factors differ filings, more our to about news review cause our from website we and actual forward-looking including encourage and you our many information over I would like to call Matthew time, the Stecker. this At turn to Matthew?

Matthew Stecker

on news, progress. today call who been our has with the same Thank the been it’s to the just Obviously, and announcement plan time, you, At and to webcast. track really us regard our on a thanks a everyone, joined quarter particularly of the this of has quarter on and internally, change. full CEO of with staying

to looking questions. with So common that And the let several many been all, happy Since am to to today. investors and take of Chief a I’ve there have leading them opportunity role, taking to forward to haven’t had individually I this Executive. few spoken first of I as chance to answer Evolving speak yet. be up just ones I’ll say how the me the speaking I’m

and globally. because company years for in to the Evolving’s spent doing resounding the planning and been I continue as as company Evolving One year, an airplanes position I whether much a here life I’m for The is help enormous different interim role. plan the my I the and paid Executive of here offices my grow. to employees being potential full-time I’m or them, in Chairman I no. stabilize I’ve lot as board asked visiting come, is can answer Since and customers, in and grow. only hotels, a to see ways, is last coming on a of long on this caretaker late

advantage or honing are competitive is competitors. respond hope a to ahead needs the workforce access worldwide, that our to Our part to the impossible geographically carriers really as strength of our difficult operators quickly to even it years spend around introducing diversity of to geographies that it dispersed I DNA. great the is This world. for allows in many

from its be is only future. board and Aside charitable chapter my next and work, of responsibility, pleased of Evolving I’m the part to

As and have common I markets. with emerged. Evolving’s customers, Evolving spoken two largely traveled some themes discrete serves

leader our BLS, software reinforced feedback of a of to in capabilities and leader has not each to these each global telecom SIM into Then year the more detailed honing activation quickly Mark? clear calls, are a of management acquisition discussion the This discussed same us operators. number the we’ve over last supporting. they’re Lumata it I’ll and We the discuss and we to and happy them do we’ll pleasure and turn Szynkowski services the are we that marketing that leader and also for have our customers become In with have tell the us in company. platforms And onboard a and markets, for digital these in operators, numbers. strategy on geographies goal of have Mark the yet to business. we of previous segment. the introducing go

Mark Szynkowski

Matthew. you, Thank afternoon. Good

$X with second service XX% quarter. continue over previous and in model. continue – migrate due total away driven is are Lumata Gross expenses consistent we to by and acquisitions. continuing the million increase the with for directly revenue, in revenue, of revenues approximately Second BLS compared the sales, margins year-over-year largely from and product operating and XXXX overall associated Since to revenue we to XX% continue our expected price. $XX.X of from integrate new increased with approximately license We XX% approximately as to or traditional million, the we the reflect mix $X.X an we total QX second to quarter XX% XXXX, of million of the $X.X one-time quarter additional revenue additional in Lumata margins to BLS from XX% quarter increased Lumata ongoing lower our included revenues investment the year-over-year, revenues operations. or of million Consistent $X.X BLS expenses were were million year-over-year. into

relating $XXX,XXX, terminated second of SSM acquisition expense incurred, mostly dispute settlement quarter, arising completion. to a our during and primarily planned was and from the product costs project legal non-recurring one marketing, to $XXX,XXX staffing the development. in and to related write-off uncollectible expenses sales prior that fees also We related remaining of is to additional of the the investments of The

some our expense charges incurred and, and earn-out an items. exceeded of line the projected through increase BLS targets also other We revenue therefore, had of approximately $XXX,XXX. one-time income year, we for payable

the We of fee mentioned SSM also matter incurred above. legal to a $XXX,XXX related settlement

of part the expenses decreased in a for our relating write-off been liability XXXX was a I to approximately $XXX,XXX in indemnification offset Total of XXXX. XXXX, final from as this $XXX,XXX in claims acquisition QX to already the the approximately XX% had since $XXX,XXX and Finally, mentioned. by due quarter payment recorded nonrecurring Telespree books to that income operating

per was share or year $X.XX the net versus quarter $XXX,XXX or a result, per income recorded a approximately $X.XX share $X.X ago. As million approximately for

same flows QX the we accounts of revenue, increase million in and cash positive XX% approximately year-end balance related marketing and with investment $X.X operations. EBITDA adjusted $X.X XXXX. to reported allowance in With cash decreased from the the of compared of reported expenses last $X.X higher to Working to $XXX,XXX of the million and or end of and to to the at cost receivables quarter compared $XXX,XXX. cash of due continues million we were equivalents, product and down net million, to to cost Contract to the compared acquisitions. an million from $X.X $X.X ended sales as $X second our million capital generate Lastly, company period doubtful sheet, year development of the in respect the

to we like we believe have the the So, our based working make look to and intend and turn the continuing results, year to Matthew and discuss to investments business for other fund to capital and business partnerships. strategic our liquidity back accretive the of I’d support that outlook. coming synergistic in upon we level acquisitions while ample call to

Matthew Stecker

Thanks, Mark.

provide throughout the let the on on team our has working me Beyond quarter. numbers, several initiatives update the been

telecom global We we the customers by our deliver. continue investments really continuing our operator the products through evident and is made of high relationships in solutions strong software from to customers value remain with regions. across different This

managed included multiple quarter. this business renewals customers and Our services support

by a Some Nigeria operators partner Nigerian European business-to-business sales helping our the about our from Evolving’s larger were attract Renewables this our and deals platform South operator business that’s of alone deals this and quarter European into a quarter regions other Three Caribbean, America. and Mediterranean, where worth grow – East count, including overall while and the European Europe, third of over are million. South ecosystem. complementary Southeast CIS span Eastern and Middle regions, including Northern $X Asia, accounted for Scandinavian renewable,

to developed continue relevant and markets. Our both solutions emerging across be

quarter. account strong for our recent for demand this are solutions our which a wins We almost acquisitions, our half of seeing from

to now as quarter, audience. activity on platforms as which Evolution. acquisitions we partnership comments and long investments focus year. well and XXXX be rationalize With finish that will calendar begin sales calling remains these have telecom lot business added have generated America, targeted customer-facing solutions have right, and separate ramp North our We side to we gradually strategy of we global and incrementally, East have see the we in will a we work cycle, Building beyond. that remaining internally we marketing are of investment for is by that profitable to as goal resources continue our the current the of from on mentioned with team. to the during exposing are do strategy intend expenses this our our a the platform project our into to become on this wider operations previously, still up This should and available operators work products, to three ready it the last today. of completion Sales our streamline selling our integrating year to into sales integration regard to As one, teams to new we while strategic we growing global the deliver this a period. and but time Middle we guidance, and overall we we the while fund investments investing new If provide new reiterate we technical these sales a

our seeing marketing profile the of Our in markets. aforementioned investment target already Evolving Systems proliferating is

products have This continuing. in the of trade in For articles the number leading about company our quarter, past trend the a and time publication. a is first appeared

continued leading degree in budget are year. for summer every We to a your to by analyst we you have traditionally can dip look caution briefed been finalize revenues products forward and like activities for that not and the seasonality QX a profile progress. for low this windows. their us we I’d questions. continue but strong into increasing want look closing operator industry I our to our of to to problems solve it’s reflecting our help and you firm I in At Operator? around a the activities. we ways seasonal also that our to globe. on operator them offset the have more uncommon would about It call sales QX, than a updating also Combined, as fully these throughout reflect thank activity, high has point, open support

Operator

Thank And of Insight. Jervis is from Fundamental now Warrick line our the comes open. you. first line [Operator of The Instructions] question

Warrick Jervis

XX, up back curious and I picked the a on go old some the there high-margin I sort have the ago, XX Evolving. business, the And overall just legacy bad days, Is again. to in pipeline? of afternoon. the of Hi, back what’s license for really was side of I the this these business? good Evolving expansions years for outlook activation to was the potential wondering, just

Matthew Stecker

your how good activation of problems operators, prepaid saw deal solutions the we of have remain time. surge we this world news our legacy the that relevant. many the Warrick, news distribute Operators The Evolving strategy. highly look tended away Dynamic with in question. industry. and in SIM, is around Thanks the things that Hey than products really bad when changed good to products prepaid, become of ago, multilevel is The prepaid more at we’ve who is over had to unique kind portfolio through a around Matthew. into standards challenge move for have There’s decade real move our a has and that news like a from some

buy must right we So hit had that soft compared don’t decade that kind special a every of now to world surefire a around operator flavor. ago, have that the

the – in way During of it’s state-of-the-art in like we app. nuanced right? deliver on the solution of we solutions They people SIM basically a) And have to those value, incrementally. help we’re industry solution this was probably tickets are we for and Today, gotten fast the combination a as sell that has of an a them to based at acting of a) the more fighting best had ago, our that’s, when number the industry lot and that core is them taking help think products – we days, a right? But the really Today, but their as was foundation, with a kind activation. C+. a management Our numbering percentages same So streamline. really, helping decade we’ve and could. margin, more when better, it is of

in teams the news really technology. operators that the solve selling from the transition the to our leader that use the good helped still experience fact And the They is in love with those the we we’ve distributing licenses work done so space. licenses that And acknowledge what problems. we’re to is with the conjunction

with a much character, a recording of set we’ll to more tend them time. instead hit over onetime of now products of have bundle and that managed the license big a grow services frequently changed small operator. Well, our from new So licenses sell so really usually –

is software the So still there.

anymore in because leaders for even XX business still We’re be and want call years. it’s us. We legacy to business doing a it this it active we very don’t a since

We cool products. new have some

detailed to that that’s countries Smart right – know-your-customer on multi-levered allows activation really have the some lines. fingerprints called identification turn need have people collect leading SIMs spot where program they and it We Dealer to edge, activate new in in to order rules that up level

wouldn’t in that with all. So relevant of market think to it. we we space. second market acquisitions that But bring now, But away I from stayed it in at again, moving the as

we just continue as have every We’re it. out to still there. for And we operator to pitch here serve leader the

Warrick Jervis

great. another have Okay, And question. I then

you You product? geography? but said like process you you’re that? the aligning sales It integrating those by of various geography, sounds talk Are in forces. the can to by Or

Matthew Stecker

Sure, answer is Warrick. The geography.

the a people the people So cross-training our the year a acquisitions can that working from come products. marketing the – have the and who sell on has for legacy – been in the sales can we’ve while so for that been products people been activation around sell that

So and they’re geographies as so organized where region. other our been, entirely haven’t well probably seat as are in North some in putting by America geography investments new we back a again

Warrick Jervis

you. Okay, great. Thank

Operator

Okay, great. Thank you. [Operator Instructions].

Jerry [ph], of a next comes investor. private the Our from Binmaski question line

line now sir. is Your open,

Unidentified Analyst

phone with eSIM And them would affect this coming of next Yes. cards yours. was how I question business wondering just A and their possibility Apple. your line. regarding out in The the customers

Matthew Stecker

for of by Thank really fact in eSIM question. interesting kind preview with a that last in they capability. given It’s has question. the Apple that And an the Watch, built the of us a Apple you this generation

handle activations use are architecture. Watch that one Apple customer more eSIM new We helping than today, the

products eSIM an updated framework. have support to already So our been

are you it – a just We gives flavor.

we that are in business We’re the to know right us already. they one tend partners have reach eSIM. They we’re and of where expertise because specific the doing to

not So its roll to whether no to I inside is as into generation have going of information handsets. or next eSIM Apple

ready and it’s think it’s to move I I embrace. move smart think a a

clearly of like with they’ve would kind Apple done go they think to where Watch. they’ve what indicated by I the

Unidentified Analyst

you Thank very great. much. Okay,

Operator

you. And no this at Thank time. questions showing I’m further

And will questions, any see to question follow-up all will we week. Jervis. We Mr. by now be talk throughout call. close the – have Management I able by Warrick if the with means a investors do

sir. open, now is line Your

Warrick Jervis

the margins. you. Thank wondering about just I gross was

they’re lower So consumer engagement. in the

XX% quarter, XX% was it do going anticipate this What last think I you quarter. forward?

Matthew Stecker

being We don’t an interesting it’s issue said, concern. that projections, but

are there to that give come have them that level two a to impacting As And our calls lower think is seen, previous some tried – things competitive businesses of kind you’ve they they we the at year and expect the we’ve historically are. stabilize are One margins. guidance bought from It’s margins marketing down. space. that we I last

each trying You’re really spell just we’re through case. in to case, a business discrete squeezed. And

them, strategic They once recurring And really tend of are have to for they a last years. to tend those us, revenue. lot for However, relationships. many we enter

margins. what our market, mix down brought has – just So marketing margin been by has digital the being by different lower being in side a

In of our addition, a now we are in base. growing customer cycle

them is Our use some in in these are but operators the new stated strategy and using geography. not convincing more involves get cost to it the services of who XXX, on to involve XXX to try to that, cases, days be our to taking discounting, it people to the

our over customers. intimate main very the competitors do our is advantages work of the is One that with we that

activation not their plans. in sensitive to reluctant marketing physically use are And they’re geography. or people in with directly involved either that pipeline most their We’re their

Again, just while the because margins of historic long back down levels. the are margins issue promote to – So And a we when to growing, literally gotten new business the good some region. in we to a geography, good to at really we remain in have long-term, for do increase who investing is want but in stay doing need term, and investing customers before in that to lowest not in the those ground, cost expect and we as guidance the the possible this we we’re we trying are to on We’ve contractors. people will at sales. news where invest do their

Warrick Jervis

Okay. question. And another

directly engagement, their ad the are you I contract the someone using you forth. an their other to the And the tie buying advertising a to there’s think mean, through data out I does actually process those – for this a the like and or with if obviously, – you’re carrier. features can so On not digital plans promotion service I to mean, carriers going adding and that, into deliver an upselling related or – going from work it to component. sounds But carrier or so that that’s broker an within renewing how advertisement or ads? and

Matthew Stecker

Thanks, work would question. the on again, of relationship just XX% that that with I starters, for do say, the the is focused the carrier. customer’s for we changing

get on up, to keeping So we to – upselling of everything the populate customer to partnerships. is, categories they operators almost And their while start while to on. to do do start get often they is as to – a more, plan, marketing operators seen customers digital do entirely as reason reasons what focused one retention advertise that the is that as partnerships, we get sometimes start hardware, more the retail but have selling that as one into start into help caveat and – product into are customer to video-on-demand, they having people those adding we to these

don’t we advertise carriers while won’t we So Coke. help typically –

We new that pushing service with video-on-demand handset will chain the they’re with new they their the carriers the advertise movie theater help have. or relationship

Warrick Jervis

Okay.

underlying guess, not the very location, So, driven – location necessarily okay… customer so I or but it’s and not the demographic by – information specific

Matthew Stecker

it’s have access actually area it’s information. just customer enormous today, mean I’m I for saying an mean an an going growth. I to – finish to area into we

to to we’ve help an advertisers, opportunity with to exploring carrier upsell us some our use something its that party we is future use customers. of not the the largest There keenly make available data third been to for So in services. carrier it

Warrick Jervis

kind mean, guys? EPI – with into all you of then are some the of collecting tie specific who data? the in how the I do All do intelligent tie the guys sidelines world that right. – And of you network

Matthew Stecker

leave I and on general, you have case-by-case the in can systems basis. collect that from data we a to we get to let us. But owned back then primary

the become lots But the from have over in rationalize databases with we harvest different tend network that expert starting years there the the everything data people that infrequent. the that it with at – with HLR looked information usually then out. and There reference, moving purposes. we work multiple customer sources. and itself. So that for of a not we – people are different will to moving partners call kinds out the viewing carriers natively source of it’s to have. primarily the data us work the from to ask tend using We It’s to not infrequent But EPI data and other

Warrick Jervis

Okay.

Okay, great. Thank you very much.

Matthew Stecker

you Thank your for questions.

Operator

you. Investor day. and Relations today’s Thank further further participating we questions, links if you will on Management the to Thank the And through you contact free our us call. communicating any disconnect. have you. great Everyone, forward no look you with be progress for does close And will and by throughout with conclude the program, talk to means, all developments able all to in have investors we conference. week. This feel and with a now the website questions, may

Symbolic Logic (EVOL) 14 Aug 182018 Q2 Earnings call transcript