Edgewater Technology Inc. (EDGW, Financial) filed Quarterly Report for the period ended 2012-09-30.
Edgewater Technology, Inc. has a market cap of $41 million; its shares were traded at around $3.5883 with a P/E ratio of 51.7 and P/S ratio of 0.4.
Revenue. Total revenue decreased by $(883) thousand, or (3.5)%, to $24.2 million for the three-month period ended September 30, 2012, compared to total revenue of $25.0 million in the three-month period ended September 30, 2011. Total revenue increased by $595 thousand, or 0.8%, to $76.6 million for the nine-month period ended September 30, 2012, compared to total revenue of $76.0 million in the nine-month period ended September 30, 2011. With respect to the comparative changes in year-over-year total revenue, service revenue increased by $168 thousand, or 0.8%, and $5.2 million, or 8.9%, in the three- and nine-month periods ended September 30, 2012, respectively. Conversely, software revenue decreased by $(941) thousand and $(2.3) million, in the three- and nine-month periods ended September 30, 2012, respectively.
During the three- and nine- month periods ended September 30, 2012, software revenue totaled $2.0 million and $7.0 million, or 8.4% and 9.2% of total revenue, respectively, compared to software revenue of $3.0 million and $9.3 million, or 11.9% and 12.2%, in the three- and nine- month periods ended September 30, 2011, respectively. Our software revenue is primarily related to our resale of Microsoft Dynamics AX ERP software. We believe that the comparative decrease in 2012 periodic software revenue is the result of extended sales cycles attributable to the hesitancy of customers to launch transformational projects, such as ERP replacement initiatives. We believe this to be directly related to customer concern with respect to uncertainty and instability in the marketplace. Software revenue is expected to fluctuate on a periodic basis dependent upon our customers demand for such third-party off-the-shelf software. We anticipate that revenue generated from software resales will continue to have an influence on our quarterly and annual revenues in future periods.
Selling, General and Administrative (SG&A) Expenses. As a percentage of revenue, SG&A expenses were 31.0% and 31.3% during the three- and nine- month periods ended September 30, 2012, respectively, compared to 26.5% and 31.1% in the comparative 2011 periods. On an absolute dollar-basis, SG&A expenses increased by $852 thousand, or 12.8%, to $7.5 million in the three-month period ended September 30, 2012 compared to SG&A expenses of $6.6 million in the three-month period ended September 30, 2011. SG&A expenses increased by $384 thousand, or 1.6%, to $24.0 million in the nine-month period ended September 30, 2012, compared to SG&A expenses of $23.6 million in the nine-month period ended September 30, 2011.
Net cash provided by operating activities was $4.9 million for the nine-month period ended September 30, 2012, as compared to net cash provided by operating activities of $5.9 million for the nine-month period ended September 30, 2011. The primary components of operating cash flows during the nine-month period ended September 30, 2012 were the collection of accounts receivable, net income from operations of $1.1 million, an increase in accrued payroll and related liabilities of $1.8 million, deferred revenue of $2.3 million, and non-cash charges of $2.2 million (primarily depreciation, amortization and stock-based compensation expense). The primary components of cash flows from operations for the nine-month period ended September 30, 2011 were largely attributable to net income of $2.3 million, the increases of $1.0 million in accounts payable and accrued liabilities, and $702 thousand of accrued payroll and related liabilities. Additionally, the Company reported non-cash charges of $2.8 million (primarily depreciation, amortization, and stock-based compensation).
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Edgewater Technology, Inc. has a market cap of $41 million; its shares were traded at around $3.5883 with a P/E ratio of 51.7 and P/S ratio of 0.4.
Highlight of Business Operations:
Revenue. The Company derives its service revenue from time and materials-based contracts, fixed-price contracts and retainer-based arrangements. Time and materials-based contracts represented 93.2% and 94.8% of service revenue for the three- and nine-month periods ended September 30, 2012, respectively. Time and materials-based contracts represented 95.7% and 95.0% of service revenue for the three- and nine-month periods ended September 30, 2011, respectively. Revenue under time and materials-based contracts is recognized as services are rendered and performed at contractually agreed upon rates. Fixed-price contracts represented 4.3% and 2.6% of service revenue for the three- and nine-month periods ended September 30, 2012, respectively. Fixed-price contracts represented 2.4% and 2.9% of service revenue for the three- and nine-month periods ended September 30, 2011, respectively. Revenue pursuant to fixed-price contracts is recognized under the proportional performance method of accounting. Retainer-based contracts represented 2.5% and 2.6% of service revenue during the three-and nine- month periods ended September 30, 2012, respectively. Retainer-based contracts represented 1.9% and 2.1% of service revenue during the three- and nine- month periods ended September 30, 2011, respectively. Revenue under retainer-based contracts is recognized ratably over the contract period, as outlined within the respective contracts.Revenue. Total revenue decreased by $(883) thousand, or (3.5)%, to $24.2 million for the three-month period ended September 30, 2012, compared to total revenue of $25.0 million in the three-month period ended September 30, 2011. Total revenue increased by $595 thousand, or 0.8%, to $76.6 million for the nine-month period ended September 30, 2012, compared to total revenue of $76.0 million in the nine-month period ended September 30, 2011. With respect to the comparative changes in year-over-year total revenue, service revenue increased by $168 thousand, or 0.8%, and $5.2 million, or 8.9%, in the three- and nine-month periods ended September 30, 2012, respectively. Conversely, software revenue decreased by $(941) thousand and $(2.3) million, in the three- and nine-month periods ended September 30, 2012, respectively.
During the three- and nine- month periods ended September 30, 2012, software revenue totaled $2.0 million and $7.0 million, or 8.4% and 9.2% of total revenue, respectively, compared to software revenue of $3.0 million and $9.3 million, or 11.9% and 12.2%, in the three- and nine- month periods ended September 30, 2011, respectively. Our software revenue is primarily related to our resale of Microsoft Dynamics AX ERP software. We believe that the comparative decrease in 2012 periodic software revenue is the result of extended sales cycles attributable to the hesitancy of customers to launch transformational projects, such as ERP replacement initiatives. We believe this to be directly related to customer concern with respect to uncertainty and instability in the marketplace. Software revenue is expected to fluctuate on a periodic basis dependent upon our customers demand for such third-party off-the-shelf software. We anticipate that revenue generated from software resales will continue to have an influence on our quarterly and annual revenues in future periods.
Selling, General and Administrative (SG&A) Expenses. As a percentage of revenue, SG&A expenses were 31.0% and 31.3% during the three- and nine- month periods ended September 30, 2012, respectively, compared to 26.5% and 31.1% in the comparative 2011 periods. On an absolute dollar-basis, SG&A expenses increased by $852 thousand, or 12.8%, to $7.5 million in the three-month period ended September 30, 2012 compared to SG&A expenses of $6.6 million in the three-month period ended September 30, 2011. SG&A expenses increased by $384 thousand, or 1.6%, to $24.0 million in the nine-month period ended September 30, 2012, compared to SG&A expenses of $23.6 million in the nine-month period ended September 30, 2011.
Net cash provided by operating activities was $4.9 million for the nine-month period ended September 30, 2012, as compared to net cash provided by operating activities of $5.9 million for the nine-month period ended September 30, 2011. The primary components of operating cash flows during the nine-month period ended September 30, 2012 were the collection of accounts receivable, net income from operations of $1.1 million, an increase in accrued payroll and related liabilities of $1.8 million, deferred revenue of $2.3 million, and non-cash charges of $2.2 million (primarily depreciation, amortization and stock-based compensation expense). The primary components of cash flows from operations for the nine-month period ended September 30, 2011 were largely attributable to net income of $2.3 million, the increases of $1.0 million in accounts payable and accrued liabilities, and $702 thousand of accrued payroll and related liabilities. Additionally, the Company reported non-cash charges of $2.8 million (primarily depreciation, amortization, and stock-based compensation).
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