-- The fourth quarter was the Company's best quarter of the year in the
categories of revenue and profitability.
-- License and services orders in the fourth quarter were also at a
quarterly high for 2008, representing strength in the Company's core
solutions of service activation and number portability.
-- The Company entered 2009 with its largest license and services order
backlog in five years.
-- In the fourth quarter Evolving Systems successfully completed a proof
of concept trial with a tier 1 wireless carrier for the Company's newest
solution, Dynamic SIM Allocation™ (DSA).
-- Large customer support contracts that were up for renewal in Q4 were
renewed, although the Company experienced some pricing pressures in line
with current economic conditions.
Strategy for 2009
-- Invest in product development. The Company expects to continue to
invest in new product development to enhance its current core solutions
portfolio and provide carrier customers with best-in-class options to
improve their operating efficiencies and reduce their costs. DSA will
continue to be an important area of investment for the Company. DSA is a
cutting-edge solution that gives GSM carriers a simplified, efficient, and
cost-effective way to activate phones while providing a better end user
experience. DSA also enables GSM carriers to delay expensive network
upgrades by extending the life of their existing network. DSA extends the
Company's core offerings beyond the traditional Operations Support Systems
space, creating an opportunity for Evolving Systems to help carriers
differentiate themselves in an increasingly competitive marketplace. In
other new product activity, the Company is in the process of porting its
traditional Numbering Solutions products to run under the Linux operation
system, a move that is generating orders from our customer base.
-- Invest in emerging markets. Our emerging markets initiative, begun
over three years ago, has proven to be very successful. In 2008,
approximately 32% of the Company's new license and services orders were
derived from emerging markets, up from approximately 13% three years ago.
This improvement stems from our transition to a global organization with
the ability to compete for business anywhere in the world. We believe the
emerging markets, where GSM is the communications technology of choice,
will continue to represent an excellent growth opportunity for Evolving
Systems. In addition, the emerging markets provide the Company with
geographic and currency diversity that mitigates the financial impact from
downturns in any given market area.
-- Strengthen the balance sheet. The Company strengthened its balance
sheet considerably in 2008, reducing its long-term debt obligations and
preferred stock balance by approximately $10 million. The improvements
include a $4.4 million reduction in senior, subordinated and capital lease
debt obligations and the conversion of the remaining $5.6 million preferred
stock balance to common stock. In addition, the Company closed a $10.0
million debt refinancing that lowered the average interest rate and
improved financial flexibility with more favorable covenants. Year-over-
year interest expense savings from 2007 to 2008 totaled approximately 30%.
We will continue to focus on strengthening our balance sheet in 2009.
-- Operating hedge against currency fluctuations. Evolving Systems is a
global company with the majority of its employees and many of its carrier
customers located overseas. As a result, approximately 50% of the
Company's revenue is transacted in non-dollar denominated currencies. When
the dollar strengthens, the Company's revenue, when converted to U.S.
dollars, is reduced. At the same time, with more than 60% of the Company's
operating expenses originating overseas, the strengthening dollar
conversely lowers expenses outside of the U.S., more than offsetting the
impact of reduced revenue. The net effect of the Company's global
footprint and customer base is that it creates an "operational hedge" that
provides some defense against currency fluctuations for the company's
bottom line results.
"Our 2008 results, including the introduction of important and innovative
products, the addition of new customers and significant improvement of our
balance sheet, are clear signs that our strategy is sound. As a result,
for 2009 we will continue to target these key initiatives with an added
emphasis and investment around our Dynamic SIM Allocation product," said
Dupper. "Given these challenging economic times it is even more important
that Evolving Systems remains focused on execution with the goals of
continuing to produce steady revenue, solid cash flow and profitability, an
improved balance sheet and robust license and services order flow. We
believe we are well positioned to meet not only the challenges but also the
opportunities that will emerge from this economy."
About Evolving Systems
Evolving Systems, Inc. (Contact Information: Investor Relations Jay Pfeiffer Pfeiffer High Investor Relations, Inc. 303.393.7044 Press Relations Sarah Hurp Marketing Manager Evolving Systems +44 1225 478060