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Evolving Systems (NASDAQ:EVOL)

Q3 2013 Earnings Call

November 12, 2013 4:30 pm ET

Executives

Daniel J. Moorhead - Principal Accounting Officer, Principal Financial Officer, Vice President of Finance & Administration and Secretary

Thaddeus Dupper - Chairman of the Board, Chief Executive Officer and President

Analysts

Michael Crawford - B. Riley Caris, Research Division

Richard Jeans - Edison Investment Research Limited

Donna Jaegers - D.A. Davidson & Co., Research Division

Warrick Jervis

Operator

Good day, ladies and gentlemen, and welcome to the Evolving Systems 2013 Third Quarter Earnings Call. [Operator Instructions] As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Dan Moorhead, Vice President, Finance and Administration. Please go ahead.

Daniel J. Moorhead

Good afternoon, and welcome to Evolving Systems 2013 third quarter earnings call. I'm Dan Moorhead, Vice President of Finance; and joining me today is Thad Dupper, Chief Executive Officer.

During the course of this call, we will be making forward-looking statements based on current expectations, estimates and projections that are subject to risk. Specifically, our statements about our future revenue, expenses, cash, taxes and the company's growth strategy are forward-looking statements. Listeners should not place undue reliance on these statements. There are many factors that could cause actual results to differ materially from our forward-looking statements. We encourage you to review our publicly filed documents, including our SEC filings, news releases and website for more information about the company.

With that, I’ll now turn the call over to Thad.

Thaddeus Dupper

Thanks, Dan, and good afternoon, everyone. We were pleased with our license and service bookings for the third quarter, which were up 58% over the second quarter as we gained momentum in our orders. This was the most significant highlight of the third quarter and is a critical leading indicator, as you know, for our growth.

On a sequential basis, we saw Dynamic SIM Allocation, or DSA license and service bookings increase 38%. And Tertio Service Activation, or TSA, license and service bookings increased 82%. Additionally, total DSA bookings for 2013 are up 24%, year-to-date over last year.

Another Q3 progress point was in the area of new customer wins, as we added 2 new DSA accounts and 1 new TSA account. In particular, our DSA wins, and we've closed 3 new DSA accounts this year so far, strengthen our position as the leader in the growing market segment of SIM card activation.

As a result of our order flow momentum and year-to-date profitability and cash flows, we're pleased to report our Board of Directors has declared a fourth quarter dividend of $0.10 per share.

I want to spend a few minutes discussing our first use activations, which we refer to as FUAs. As we have discussed on previous calls, we're beginning to enter the next phase with some of our DSA customers, where their initial license allocations have been used up or exhausted as they -- and they'll need to renew or extend their DSA licenses.

To remind you, when we sign a new DSA customer, the initial license agreement includes a negotiated number of SIM activations. Once that limit has been reached, the customer needs to renew their license with the new tranche of activations or FUAs. FUA is one of the elements of our transition to more a recurring revenue model. And to remind you, these FUA license renewals are highly profitable for Evolving Systems.

During the third quarter, one of our customers had to renew their DSA license. It was this license renewal that contributed to our gross margin improvement of 74% from 69% in Q3 last year. This clearly shows how FUAs can improve our profitability.

As we look to 2014, we expect to see more FUA renewals. And with the -- and with that, we expect to see the corresponding impact on our top and bottom lines. And while this FUA renewal did help our margins in Q3, during the quarter we did incur fees for our acquisition of Telespree Communications, a transaction I'll talk about in just a minute.

Despite the impact of these onetime professional fees, adjusted EBITDA margins for the third quarter were 26%, down only slightly from 28% last year. Without those onetime costs, our adjusted EBITDA margins for Q3 this year would have increased.

Looking at the first 9 months of 2013, adjusted EBITDA improved by 11% from the same period a year ago. Overall, adjusted EBITDA margins and gross margins continue to be strong and continue to head in the right direction.

As I do every quarter, I'd like to provide some color on our DSA deployments. As you know, DSA gives carriers unprecedented flexibility over their SIM inventory, as well as providing new levels of personalization during the activation experience. Recently, one of our customers introduced the 4-in-1 SIM bundle. The first SIM is intended for use by the subscriber. And the other 3 SIM cards, provided at no additional cost, are provided so the subscriber can give them to friends and families.

With this promotion, the initial subscriber effectively becomes a micro sales channel for the carrier. And to share with you some of the results of this campaign, this carrier, because of the efficiencies of DSA, was able to put 13 million SIMs into their channel, while one of their competitors only place 2 million SIMs in their channel. As every prepaid carrier will tell you, shelf space with retailers is extremely important and coveted. And the carrier's ability to put out a greater volume of SIMs at dramatically reduced cost gives them significant competitive advantage. The upshot, this carrier has realized double-digit increases in market share this year, and DSA was one of the prime drivers in this market share increase.

And let me share with you another anecdote regarding DSA's business impact. At one of our new DSA customers, the CIO came to us with a challenge. If we could accelerate getting DSA into production sooner than planned, they would pay us an accelerated deployment bonus of $200,000. Having been in the high-tech industry my entire career and selling to carriers for a majority of that time, I can't recall a customer offering this sort of incentive, and it clearly speaks to the business impact DSA will provide this carrier.

And now, for a few comments regarding our recent acquisition of Telespree Communications, which provides cloud-based service activation and multiple broadband enablement solutions.

Earlier, I mentioned how FUAs will help EVOL migrate to more a recurring revenue model. The other important step for EVOL to transition to more of a recurring revenue model will be to migrate our products to assess our cloud-based model.

Today, Telespree generates 100% of their revenue from the SaaS model. And we see the addition of Telespree as an important step for EVOL's transition to more of a cloud-based model. As you know, we have been working to develop a SaaS version of DSA, which will make DSA accessible to a whole new tier of carriers, smaller carriers, those carriers who are not large enough to justify a premise-based version of DSA, but who, nevertheless, would benefit from the capabilities of DSA.

We estimate there are approximately 250 carriers worldwide that would be prime prospects for cloud-based DSA. And importantly, Telespree possesses significant expertise in the area of cloud-based solutions and operations. And this will be of value as we prepare to launch a SaaS version of DSA.

Additional highlights of the acquisition include today, 100% of Telespree's revenues comes from customers in the United States. As you know, prior to this acquisition, 100% of Evolving Systems revenue is from customers outside the U.S. So from a geographic customer footprint, this is a nice fit. Telespree counts Sprint as a major customer and activates over a million phones a quarter for them via their cloud-based activation solution.

The addition of Telespree also expands our solutions for the M2M market with their recently released Dataspree solutions, which provides affordable tracking of containers and trailers, as well as the solution that monitors and tracks temperature-sensitive shipments. And on the IT front, we also like what Telespree adds.

Telespree holds 11 U.S. patents, which brings to 15 the number of patents EVOL owns, 11 of which focus on the connection of SIM-based devices through a wireless network, which is becoming more and more relevant as the expected increase of connected devices materializes.

In summary, our achievements for Q3 include strong license and service bookings, up 58% sequentially; the addition of 3 new accounts, as we continue to expand our market leadership as the new standard in SIM card activation. During the third quarter, we closed a significant DSA-FUA license renewal that contributed to our gross margin increase of 5% to 74%. For Q3, we continue to generate strong profitability and excellent cash flows. And last month, we were active in the M&A arena with the addition of SaaS-based wireless solutions provider, Telespree. As a result, we are well positioned to continue to grow shareholder value as we provide our customers with game-changing solutions that now are both premise- and cloud-based. With that, I will now turn the call over to Dan.

Daniel J. Moorhead

Thanks, Thad. Revenue in the third quarter was $6.1 million versus $6.8 million in Q3 a year ago. License and Services revenue was $3.8 million, compared with $4.7 million last year. Customer Support revenue increased to $2.2 million from $2.1 million.

Total cost of revenue and operating expenses declined by 11% in the third quarter to $4.6 million from $5.2 million in Q3 last year. As Thad mentioned, gross margins increased to 74% from 69%. The company generated operating income of $1.5 million in Q3, a figure that included approximately $200,000 in transaction costs associated with our Telespree acquisition. The year-ago Q3 operating income was $1.7 million.

In the other income expense category, we reported approximately $100,000 in expense for the comparative third quarters, which, in both cases, was primarily comprised of foreign currency exchange losses. GAAP net income in the third quarter was $900,000, with diluted earnings per share of $0.08, compared to GAAP net income of $1.2 million and diluted earnings per share of $0.11 a year ago.

Adjusted EBITDA in the third quarter was $1.6 million versus $1.9 million last year. Evolving Systems generated $1.8 million in cash from operations in Q3, compared with $1.9 million in the same quarter last year.

Nine months results. We reported revenue of $18.5 million through the first 9 months of 2013, compared with revenue of $19.4 million over the same period last year. License and Services revenue was $11.9 million versus $13 million, while customer support revenue was $6.7 million versus $6.4 million a year ago. Total cost of revenue and operating expenses declined to $14 million in the first 9 months from $15.6 million a year ago.

Gross margins increased to 72% from 68% last year. Operating income increased 18% through the first 9 months of the year to $4.5 million from $3.8 million in the same period last year, the improvement attributable to higher gross margins and lower operating expenses.

Other income consisting primarily of foreign currency gains totaled $31,000, and compared with other income of $1.3 million in the first 9 months last year when we reported $1.4 million in gains and interest on marketable securities.

As a reminder, these securities were purchased with the proceeds from the sale of our numbering business in 2011 and sold during the second quarter of 2012. GAAP net income through 9 months was $3 million versus $4.1 million over the same period a year ago, a decrease due primarily to gains on marketable securities. That equates to $0.26 diluted earnings per share versus $0.36 last year.

Adjusted EBITDA through 9 months increased 11% to $5 million from $4.6 million last year. The company generated $7.3 million in cash from operations year-to-date, a 342% increase over $1.6 million in the same period last year. This reflects deliveries and collections on DSA projects during 2013.

Bookings and backlog. We define bookings as new, non-cancelable orders expected to be recognized as revenue during the following 12 months. In the third quarter, total bookings were $7 million, which equaled Q3 last year and increased 14% sequentially from $6.1 million in the second quarter of this year. License and services bookings were $4.7 million, which was down from $5 million a year ago and up 58% from second quarter this year. Customer support bookings for Q3 were $2.3 million, up from $2 million last year.

DSA license and services bookings in Q3 were $2.2 million versus $2.3 million a year ago and up 38% from $1.6 million in the second quarter this year. Likewise, TSA license and services bookings of $2.5 million were down from $2.7 million last year and up 82% from $1.3 million in Q2 this year.

Turning now to the 9 months bookings. Total bookings were $18.8 million, up from $18.4 million in the first 9 months last year. License and services bookings were $11.2 million compared to $13 million last year. Customer Support bookings were $7.6 million, up from $5.5 million last year.

DSA license and services orders were $5.6 million through 9 months compared to $6 million last year. TSA license services orders were $5.6 million this year versus $6.9 million last year. Total backlog at September 30 was $11.4 million compared to $11.6 million at the same time last year, but up sequentially from $10.3 million in Q2 of this year.

License and services backlog totaled $6 million, compared to $7.6 million last year and $5.1 million in Q2. DSA license and services backlog was $3.5 million compared to $4.7 million last year and up from $2.9 million in Q2.

TSA license and services backlog was $2.5 million versus $2.9 million last year and up from $2.2 million in Q2. Customer Support backlog increased to $5.4 million from $4 million last year and $5.2 million in Q2.

Balance sheet highlights. Cash and cash equivalents as of September 30 were $13.7 million, up from $13.4 million last quarter and up 55% from $8.8 million at 2012 year-end. Our working capital balance at September 30 was $15 million, up from $14.5 million last quarter and $13.9 million at 2012 year end.

Dividend update. As noted in our press release today, the company's Board of Directors declared a fourth quarter dividend of $0.10 per share payable December 13, 2013, to stockholders of record on November 29, 2013.

I'll close with our usual reminder that we remain a company where the receipt or delay on a single order can have a significant impact on our quarterly results. Accordingly, we continue to advise that it's more accurate to judge our performance on an annual rather than quarterly basis. With that, we thank you again for joining us today, and we are now happy to take your questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Mike Crawford from B. Riley & Co.

Michael Crawford - B. Riley Caris, Research Division

Regarding Telespree, have you had a chance to introduce that product to your international channel? I know they've been quite strong in North America, whereas you've been quite strong in emerging markets.

Thaddeus Dupper

Well, we are training our salespeople right now on the Telespree products. So our direct sales are being trained. If by channel, do we mean overturn [ph] in Gemalto? No. But you hit upon an important point, Mike. Their sales force was very small in the U.S. And their products are very well suited for the international market. So one of the things we're very high on is being able to take their technology and their products into our 30-plus Tertio install base and our 16-plus DSA install base. And we think a lot of upside exists in selling Telespree's products and services into the international market. So I think you hit upon a very key point.

Michael Crawford - B. Riley Caris, Research Division

And Thad, what revenue in -- or EBITDA contribution would you expect Telespree to add to your results in 2014?

Thaddeus Dupper

Well, it's a good question, Mike. And right after this call, Dan and I and the rest of the senior team are headed to San Francisco to begin our 2014 strategy sessions. As you know, we've just acquired them a little over 2 weeks ago. So the paint is still very wet on that, and we're going to work on that. So we're working on that as you speak. So we don't have a number that we can share with the public at this point.

Michael Crawford - B. Riley Caris, Research Division

Okay. And then of the 16-plus DSA customers, how many are into FUA now? Is it 1 and almost 2, or is it -- is there an update to that?

Thaddeus Dupper

We think 4 is the number, right, Dan?

Daniel J. Moorhead

Yes, that sounds right.

Thaddeus Dupper

Yes, 4 are in FUA. So we've had one in FUA for a long time. Now we just got the second one. And numbers 3 and 4 are coming right along, I mean, momentarily.

Michael Crawford - B. Riley Caris, Research Division

Okay. So you just got the second one with 2 close to the pike?

Thaddeus Dupper

Yes. We -- number 2 came online in Q3 for FUAs. And customer 3, I don't know if it's Q4 or not, but it's close. And customer 4, I think we're forecast for Q1. Isn't it, Dan?

Daniel J. Moorhead

That might be Q2. But it's coming in, yes, the first half 2014.

Michael Crawford - B. Riley Caris, Research Division

Okay. And then final question relates to your SaaS initiative. So do you see that as entirely additive to what you're doing now, or do you see that as somewhat cannibalistic to what would otherwise could have been a more of a traditional software sale?

Thaddeus Dupper

No, no. We think it's additive. We think there are a number of carriers out there, let's say, in the 5 million subscriber range that is not a good fit for DSA because they’re too small. But we think they'll be a perfect fit for DSA in the cloud, and we think that's additive to our premise-based DSA. So we're very excited about that.

Operator

Our next question comes from the line of Richard Jeans from Edison Investment Research.

Richard Jeans - Edison Investment Research Limited

Could you talk about the -- how the DSA pipeline is in now, particularly -- also in respect to the enterprise-wide customer? And second question would be about how M2M market is looking?

Thaddeus Dupper

Yes. So our DSA pipeline continued to be very strong. We put a lot of effort and energy into it. One of the comments I will make is we have a production DSA customer and a DSA prospect in the Philippines. And let me just make a comment that all Evolving Systems employees' hearts go out to the people suffering in the Philippines. And we're working hard with our existing customer and trying to have dialogue with our prospect customer. As you know, we do business around the world, and we're very, very cognizant about world events. Sometimes those world events do affect our funnel. With regard to M2M, we're making progress in that area. And one of the key steps we think is the technology that Telespree is going to bring us. As you saw, I cited the Dataspree product, which is one of their M2M offers out of the cloud, I might add, and that's something that -- again, I'm flying to San Francisco this evening. We'll be talking about it in the coming days in terms of how we can bring that into the international market. So we feel good about our DSA funnel. We're making progress in the M2M space, and we think both will contribute, of course, DSA more than M2M, significantly in 2014.

Richard Jeans - Edison Investment Research Limited

And the Telespree, this was -- is it an initial consideration, is it -- was it $1 million cash, plus $0.5 million earnout?

Thaddeus Dupper

I'll let Dan answer that. But...

Daniel J. Moorhead

Yes, it was the $1 million in -- well, it's a little -- it ended up being a little less than $1 million in cash. So it was 800k in cash and about -- I think it was $750,000, $760,000 in stock. And then there's a back-half payment on the 1-year anniversary of 500k.

Operator

Our next question comes from the line of Donna Jaegers from D.A. Davidson.

Donna Jaegers - D.A. Davidson & Co., Research Division

On Telespree, Thad, can you just -- I think, in the 8-K, it talked about the earnout and what you might pay, but it didn't really give sales numbers for Telespree just in this year. Can you sort of give us a run rate? Because I think the chat board had a decimal point off on what they we're looking for as far as revenue.

Thaddeus Dupper

Yes, I never comment on chat board postings. But I'm reluctant to do that until we have these meetings in terms of seeing what we have and where we're going. With regard to the earnout, I feel very comfortable sharing with you what that was. And Dan, correct me if I'm wrong, but I believe it's a 3-year earnout with any revenue in excess of $2.3 million?

Daniel J. Moorhead

Correct.

Thaddeus Dupper

We pay 34% of that of any revenue over $2.3 million per annum for 3 years.

Donna Jaegers - D.A. Davidson & Co., Research Division

Okay. And so then that $2.3 million, that -- am I to understand that they're -- I know you don't want to commit to any revenues, where they're at now, but they're less than $5 million right now. Is that correct?

Thaddeus Dupper

I would say it's less than $5 million. But that's about as far as we go.

Donna Jaegers - D.A. Davidson & Co., Research Division

Okay. All right. On -- how much do you think you can accelerate your DSA SaaS product with the help of Telespree?

Thaddeus Dupper

Well, I think we can accelerate it, but we can also do it better. And what I mean by that is the operational experience that the Telespree team has, they're supporting 12 customers out of the cloud today. They've been doing that for a number of years. So our team is a very good premise installation team. So before we launch DSA in the cloud, we're going to be able to leverage that multi-year experience in that team's operational prowess, if you will. So that our first step with DSA in the cloud, I believe, is going to be better step as a result of this tie-up with Telespree.

Donna Jaegers - D.A. Davidson & Co., Research Division

Great. And then can you -- you guys haven't made any acquisitions since you bought Tertio a long time ago, and I think that was just as you joined the company. So can you sort of give us a little more of your track record on M&A as far as you helped with the Tertio acquisition and how you helped that develop in the TSA? And then what are your plans going forward as far as M&A?

Thaddeus Dupper

Right. Well, I joined in March 2004. And then in October of that year, we acquired TSE, which was a Colorado-based LNP test tool company. And then in November, a month later, we did the large Tertio acquisition. And to be honest, the negotiation around Tertio was really led by my predecessor, Stephen Gartside. But I was involved with the integration, as we all were, in depth. Our management team today has 2 -- 3 U.K.-based executives on the team, as well as an Indian-based executive. So we think we integrated Tertio very well. And you really don't have to go any further than to look at the website in terms of the makeup of our management team being so balanced between the U.S., the U.K. and India. So I think we're well equipped to integrate this company. It's a smaller company. It's nowhere near the size of Tertio when we did that. Tertio was basically a 50-50 percent revenue acquisition when we did it. This is much smaller. Even though it's smaller, though, we think it's very key. Again, when you think about the cloud experience, the breadth of product they bring to us, the U.S. customer base, and then again, as I said, that important patent portfolio.

Donna Jaegers - D.A. Davidson & Co., Research Division

Right. And as far as further M&A, you're going to take baby steps and get Telespree right, or should we expect a whole surge of bolt-ons?

Thaddeus Dupper

Well, I would say, we definitely want to get Telespree right. So we're all committed to that. But I will say the M&A market is very active. And there are many companies the size of Telespree out there and we get called almost weekly by a variety of companies out there. And where we see opportunity, we'll take advantage of it. Dan has done a fantastic job with the balance sheet and the P&L, where we have no debt, we're still in a strong cash position. You've heard our ability to collect cash and generate cash is pretty good. So if the opportunity presents itself, we'd still be a buyer. This hasn't depleted our resources by any means.

Donna Jaegers - D.A. Davidson & Co., Research Division

Okay. And then just a quick question for you, Dan. The bookings in the quarter, I mean, they came in a little lighter than what I was expecting, especially given all the announcements about Bharti Airtel in India. Did anything slip out of the quarter or is -- can you give us some -- I mean, obviously, the funnel still sounds pretty good except, obviously, for the Philippine typhoon that might hold things back there?

Thaddeus Dupper

Well, Donna, before we turn it over to Dan, this is Thad. Things always slip out of the quarter. So let me just set that ground rule. But we like the number. 4.7, up from 3.0 in the prior quarter, while we're doing M&A. We feel pretty good about that performance and the fact that we added 3 new accounts. So again, we think the headlines are it was a good quarter. One of the orders came in about 500K smaller than we thought, which is the second phase that will come later. So it could have been better. But as I said at the beginning, the quarter could always be better and things always slip. Now we try to pick them up in the next quarter. But Dan, anything you'd like to add to that?

Daniel J. Moorhead

No. I would just to say -- I would kind of build on what you said with -- sometimes, they come in as phased projects, and part of the phase of one of them slipped to another project, so it will come in later. But overall, we thought it was a good quarter.

Thaddeus Dupper

How big was that phase of slip? Can you put a number on it?

Daniel J. Moorhead

It was about 500k, yes.

Donna Jaegers - D.A. Davidson & Co., Research Division

And then just, Dan, one other quick question for you on the -- typically, you guys called out when you're repatriating dollars back to pay the dividend. There's an EPS hit on that. Can you talk to that? And that $0.08 announced this quarter, was there any hit because of the tax penalty on that?

Daniel J. Moorhead

Yes, there's always a weight because our effective tax rate were showing in the P&L is usually 32% to 34% and our cash rate, about 10 points lower than that. So for the quarter, we showed, what, taxes of 436k. So it's a couple cents. So -- but it's always going to be that. So we're always going to have an effective tax rate on the P&L in the low 30s, but our cash rate, at least until we use all of our NOLs, is going to be in the low 20%. So you've got about a 10% delta most of the time.

Thaddeus Dupper

But moving the dividend from $0.05 to $0.10 probably cost us, what, $0.01 or so a quarter in taxes. Would you say that?

Daniel J. Moorhead

Yes, there's a lot of factors that go into it. So it would get really complicated to go into all of it. But I would agree, there's -- part of it that we have to bring cash back from the U.K. to pay the U.S. dividend.

Operator

[Operator Instructions] Our next question comes from the line of Jason Burke [ph], private investor.

Unknown Attendee

Thad, can you just quickly go over the carriers that are in reload mode next year and just an update on that, and if you could try to help quantify what kind of effect that might have for you next year?

Thaddeus Dupper

Yes, I mean, they are large. They are carriers that we've closed DSA projects with probably 1 year or 2 ago. They've moved into production and they've been in production probably for over a year as they used that initial tranche that I talked about. But they're large carriers. Three of them are very large. One of them is a smaller carrier, but their FUAs come in at a nice clip. Again, all the FUAs are virtually 100% gross margin. And the other thing that I would say, just to add color to the comments I made, is that we expect 2014 to be a bigger year for FUA revenue than 2013 was. And the fact that you can see how they can move the margin -- and I've made a comment on last quarter's call that the revenue contribution is nice that FUAs provide. But the adjusted EBITDA contribution they provide is a couple of times greater because, again, it's 100% margin revenue.

Unknown Attendee

And I don't want to dig too far, but just as a percentage, if you were to compare this fiscal year to next fiscal year, what percentage of your revenue would you expect it to be?

Thaddeus Dupper

A higher percentage.

Operator

Our next question comes from the line of Warrick Jervis, private investor.

Warrick Jervis

So if I look back, and I've been around this name for quite a while. I used to be with Trailhead Asset Management. Now I'm a private investor. If I look back a couple of years, the whole company seemed to be for sale, and you sold the numbering business. And I assume that's because you did not get an adequate price on the DSA and activation. And so now you're going on the offensive making an acquisition. I just want a little perspective on how it is to be a relatively small player in the software business in the big telecom market. And if you just can tell me what the strategy is here. Is it to grow this into something very substantial, or are you still for sale?

Thaddeus Dupper

At the high level, we're a publicly traded company, and the board will always respect the judiciary [ph] responsibility. So if the phone rings with an offer that the board deems in the best interest of the shareholders, obviously, we seriously consider that. But drilling down on your question in a little more detail. We are a small software company focused on the telecom sector, but we are a leader in the space of SIM activation. And we think that's an emerging space. And we expect to be a big player in this emerging space. Now, one is not mutually exclusive from the other, meaning our acquisition of Telespree is a good move for the company. We think it broadens our product. It fits nicely with our customer base, and it helps us on the IT front as well. So we think it was a good move. Now, we may add other companies to Evolving Systems, but I wouldn't read that as any sort of declaration about whether or not we're for sale or not. We're a publicly traded company. But we're also not waiting for Godot, to use a line, where we're just going to wait around for somebody to call us to acquire us. We have a strategy. We're executing it, and Dan, what is this, our 23rd consecutive EBITDA positive quarter?

Daniel J. Moorhead

It's 22nd.

Thaddeus Dupper

22nd. So we're going to continue to run the railroad, which we're pretty good at. If we see opportunities to broaden our product set, we're going to do that. And whether or not somebody comes along to buy Evolving Systems, we really have no comment on other than if the phone rings, you can count on us to answer it. But we're not waiting. Our strategy is not waiting. Our strategy is to move forward, to grow the company. And what you're seeing now is organically grow it and acquisitively grow it. And we're going to consider all our options as we go forward.

Warrick Jervis

And you don't need to be specific, but do you see other areas where you could expand that are complementary to what you're doing now?

Thaddeus Dupper

Oh, absolutely. I mean, as I've said before, we get called quite frequently from smaller companies that are for sale. And we're always on the lookout for adjacent spaces that could make DSA even more robust or help us enter an adjacent space. One of the things that I think you can count on is our focus is around the wireless space. So the companies we'd be most interested in are those that focus on the wireless segment and would have to do with service activation, broadband enablement, perhaps upsell during the activation experience. That would be another area that we're keen on.

Operator

[Operator Instructions] And this does conclude the question-and-answer session of today's program. I'd like to hand the program back to management for any further remarks.

Thaddeus Dupper

Well, thank you for joining us for our Q3 results. And we look forward to sharing our Q4 and year-end results with you in the early spring. Thank you very much.

Operator

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

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Source: Evolving Systems Management Discusses Q3 2013 Results - Earnings Call Transcript

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