Edgewater Technology, Inc. (EDGW) has reported 95.81 percent plunge in profit for the quarter ended Sep. 30, 2016. The company has earned $0.04 million in the quarter, compared with $1.03 million for the same period last year.
Revenue during the quarter went down marginally by 1.15 percent to $30.83 million from $31.18 million in the previous year period. Gross margin for the quarter contracted 318 basis points over the previous year period to 34.52 percent. Total expenses were 97.78 percent of quarterly revenues, up from 92.83 percent for the same period last year. That has resulted in a contraction of 495 basis points in operating margin to 2.22 percent.
Operating income for the quarter was $0.68 million, compared with $2.24 million in the previous year period.
However, the adjusted EBITDA for the quarter stood at $2 million compared with $3.38 million in the prior year period. At the same time, adjusted EBITDA margin contracted 436 basis points in the quarter to 6.48 percent from 10.84 percent in the last year period.
"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 chief executive officer. "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."
Operating cash flow improves significantly
Edgewater Technology, Inc. has generated cash of $1.18 million from operating activities during the nine month period, up 38.59 percent or $0.33 million, when compared with the last year period.
The company has spent $0.42 million cash to meet investing activities during the nine month period as against cash outgo of $7.70 million in the last year period.
The company has spent $0.64 million cash to carry out financing activities during the nine month period as against cash inflow of $0.91 million in the last year period.
Cash and cash equivalents stood at $12.15 million as on Sep. 30, 2016, down 41.60 percent or $8.65 million from $20.80 million on Sep. 30, 2015.
Working capital drops significantly
Edgewater Technology, Inc. has witnessed a decline in the working capital over the last year. It stood at $19.42 million as at Sep. 30, 2016, down 33.07 percent or $9.60 million from $29.02 million on Sep. 30, 2015. Current ratio was at 1.88 as on Sep. 30, 2016, down from 2.32 on Sep. 30, 2015.
Days sales outstanding went up to 81 days for the quarter compared with 80 days for the same period last year.
At the same time, days payable outstanding was almost stable at 3 days for the quarter, when compared with the previous year period.
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