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Q4 2012 Earnings Call
February 13, 2013 05:00 PM ET
Gary Martino - President and CFO
Al Subbloie - CEO
Tom Ernst - Deutsche Bank
David Lynn - Barclays
Terry Tillman - Raymond James
Tom Roderick - Stifel Nicolaus
Joel Fishbein - Lazard Capital Markets
Richard Baldry - Wunderlich Securities
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Thank you. I would now like to turn the call over to Gary Martino, Chief Financial Officer. Please go ahead.
Thank you. Good afternoon and welcome to the Tangoe fourth quarter and full year 2012 earnings call. We’ll be discussing the results announced in our Press Release issued after the market closed today. Again, I’m Gary Martino, Chief Financial Officer of Tangoe. With me on the call is Al Subbloie, Tangoe’s Chief Executive Officer.
During the call we will make statements related to our business that maybe considered forward-looking statements under Federal Securities Laws. These statements reflect our views only as of today and should not be reflected upon as representing our views as of any subsequent date.
These statements reflect our current views regarding the future and are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For discussion of material risks and other important factors that could affect our results, please refer to those contained in our most recent quarterly report on Form 10-Q which is on file with the SEC.
Also during the course of today’s call, we’ll refer to certain non-GAAP financial measures. There is a reconciliation schedule showing GAAP versus non-GAAP results currently available in our Press Release issued after the close of the market today, which is located on our website at www.tangoe.com.
With that, I’ll turn the call over to Al, and then I will come back a bit later to provide some further details regarding our financials and our forward looking outlook. Al?
Thanks Gary. I’d like to thank everyone for joining us on the call today. We remain pleased with our Company’s continued high level of execution, which contributed to better than expected fourth quarter revenue and a strong finish to a record year for Tangoe.
During 2012, we further validated the strength of our business strategy which was focused on delivering a combination of strong organic growth, complimented by strategic M&A within our fragmented market opportunity.
Over the course of the year, we significantly increased the scale of Tangoe, expanded our industry leading product offering and enhanced our leadership position in the CLM market. Looking ahead to 2013, we believe Tangoe is well positioned to continue gaining market share as a result of our growing pipeline of opportunities and the significant expansion in our global distribution resources.
As Gary will detail in a moment, we continue to expect Tangoe to deliver a combination of strong organic growth and margin expansion during the 2013, and we have slightly increased the preliminary 2013 revenue guidance we shared on our last call.
From a longer term perspective, we have never felt better about Tangoe’s market position and ability to be the primary winner in the multibillion dollar CLM market opportunity. With that background, let me review our summary level financial results for the fourth quarter.
Total revenues increased 51% year-over-year to $44 million and were above the high-end of our guidance range. Recurring revenue was up 51% year-over-year due in part to the ongoing expansion in our sales resources, the strengthening of our market leadership position and our high renewal rates which remained in the mid 90% range. Our strong renewal rates continue to be driven by our ability to deliver a strong return on investment to our customers and to offer innovative products that our customers and partners demand.
From profitability perspective, adjusted EBITDA for the fourth quarter increased 103% year-over-year to $7.5 million and as a percentage of revenue was over 17% a record for the company. Across the board, it was a strong and better than expected finish to the year.
We continue to see strong demand for our communications lifecycle management solutions as market share gains were driven by a combination of new account wins, up and cross selling traction with existing customer, momentum with our strategic alliance partners, geographic expansion and solid execution of our acquisition integrations.
Now, I’d like to provide an update on some of our key accomplishments during the fourth quarter. We increased total spend under management to $23.8 billion which was up 42% year-over-year and 5% on a sequential basis from last quarter.
The strong growth of our spend under management was driven by a combination of moving deployments into production with both new and existing customers and the high renewal rates I just referenced.
We again experienced strong new customer activity adding 39 new logos during the fourth quarter, compared to 22 during the same period last year. In addition, for the full year 2012, we added a 145 new logos, an increase of 51% compared to the 96 added during the 2011.
As a remainder, last quarter we increased our customer ad performance goal to a range of 25 to 35 from our previous range of 20 to 30, primarily due to the expansion in our sale resources, which continues to be on track with the anticipated growth we mentioned on the Q3 call.