Edgewater Reports Third Quarter 2016 Results

WAKEFIELD, Mass., Nov. 02, 2016 (GLOBE NEWSWIRE) -- Edgewater Technology, Inc. (NASDAQ:EDGW), a leading consulting firm that helps business leaders drive transformational change through its unique selection of business and technology services and specialized product-based solutions, reported financial results for the quarter ended September 30, 2016.

Third Quarter 2016 Financial Results vs. Same Year-Ago Quarter
  • Total revenue was $30.8 million compared to $31.2 million;
  • Service revenue was $27.0 million compared to $27.2 million;
  • Gross profit was $10.6 million, or 34.5% of total revenue, compared to $11.8 million, or 37.7% of total revenue;
  • Gross profit margin related to service revenue was 36.6% compared to 39.9%; 
  • Utilization was 72.9% compared to 71.9%;
  • Net income was $43 thousand, or $0.00 per diluted share, compared to net income of $1.0 million, or $0.08 per diluted share;
  • Cash flow provided by operating activities was $1.1 million compared to $3.3 million; and
  • Adjusted EBITDA (a non-GAAP financial measure) was $2.0 million, or 6.5% of total revenue (see "Non-GAAP Financial Measures" below for further discussion of this non-GAAP term), compared to Adjusted EBITDA of $3.4 million, or 10.8% of total revenue.

First Nine Months of 2016 Financial Results vs. Same Year-Ago Period
  • Total revenue was $96.7 million compared to $88.3 million;
  • Service revenue was $83.8 million compared to $74.5 million;
  • Gross profit was $34.2 million, or 35.4% of total revenue, compared to $29.8 million, or 33.8% of total revenue;
  • Gross profit margin related to service revenue was 37.2% compared to 35.1%; 
  • Utilization was 73.7% compared to 70.7%;
  • Net income was $593,000, or $0.04 per diluted share, compared to net income of $581,000, or $0.04 per diluted share;
  • Cash flow provided by operating activities was $1.2 million compared to $850,000; and
  • Adjusted EBITDA (a non-GAAP financial measure) was $6.8 million, or 7.0% of total revenue (see "Non-GAAP Financial Measures" below for further discussion of this non-GAAP term), compared to Adjusted EBITDA of $5.2 million, or 5.8% of total revenue.

Management Commentary

"As we previously announced, our third quarter 2016 service revenue was essentially flat on a year-over-year quarterly basis," commented Shirley Singleton, Edgewater's chairman, president and CEO. "During the second half of the third quarter, our ability to drive organic service revenue growth was hindered by channel disruption associated with a vendor push to accelerate the adoption of new cloud-based applications, a curtailment of IT spending by customers across all of our service offerings and underperformance in the United Kingdom.  These events combined to cause third quarter 2016 service revenue to fall short of our anticipated service revenue guidance. While we proactively took steps to manage billable consultant headcount and reduce operating expenses, the lower than anticipated service revenue performance also negatively affected our billable consultant utilization and operating performance during the third quarter of 2016.

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