ENGLEWOOD, CO -- (Marketwire) -- 03/12/13 -- Evolving Systems, Inc. (NASDAQ: EVOL)

Full year revenue up 38% to $26.2 million

Full year Dynamic SIM Allocation™ (DSA) revenue up 94% to $10.0 million

Net income from continuing operations of $5.6 million vs. loss of $1.0 million in 2011

Adjusted EBITDA from continuing operations of $6.5 million vs. loss of $0.2 million in 2011

Company declares first quarter dividend of $0.08 per share to stockholders of record on March 22, 2013, payable April 12, 2013

Evolving Systems, Inc. (NASDAQ: EVOL), a leading provider of strategic solutions to telecom operators worldwide, today reported strong revenue and profit growth for its fourth quarter and full year ended December 31, 2012.

"Evolving Systems closed 2012 with a strong fourth quarter performance that led to a 38% increase in full year revenue with adjusted EBITDA from continuing operations of $6.5 million," said Thad Dupper, Chairman and CEO. "Last year was a transformational year for Evolving Systems. It was our first full year since the sale of our numbering business in 2011 -- an event that allowed us to focus on our 'activation pure play' strategy, which revolves around our flagship DSA and Tertio® Service Activation (TSA) products. Solid execution of our strategy produced 94% growth in DSA revenue, which at $10.0 million was our highest DSA revenue since its introduction. We also achieved a 17% increase in TSA revenue as carriers upgraded to LTE and 4G technologies. In addition, we returned $4.00 per share to stockholders through a series of dividends during the year. We believe carriers faced with increasingly complex SIM card inventory management and activation issues driven by consumer adoption of smart phones, tablets and connected devices will see the value of our DSA solution. As a result, we are raising this quarter's dividend from $0.05 to $0.08 per share and we remain optimistic about Evolving Systems' future."

Fourth Quarter Highlights

• Revenue increased 39% to $6.9 million from $4.9 million in the fourth quarter last year. License and services revenue grew 73% to $4.6 million from $2.7 million. Customer support revenue was $2.3 million.
  
  
• Operating income increased to $1.8 million -- a $2.4 million positive swing over an operating loss of $0.6 million in the same quarter last year.
  
  
• Net income from continuing operations increased to $1.4 million, up 225% from $0.4 million last year. Diluted net income per share from continuing operations was $0.12, up from $0.04 in the fourth quarter last year.
  
  
• Adjusted EBITDA from continuing operations was $2.0 million, up from $0.2 million in the fourth quarter last year.
  
  
• Balance Sheet: Cash and cash equivalents at December 31, 2012, were $8.8 million. In 2012 the Company returned approximately $44.8 million to stockholders in dividends, which accounts for the lower December 31, 2012, cash and marketable securities balance relative to the 2011 year-end total of $50.7 million.
  
  
• Dividend Update: The Company declared a first quarter dividend of $0.08 per share to stockholders of record on March 22, 2013, payable April 12, 2013.

Full-Year Highlights

• Revenue increased 38% to $26.2 million compared to $19.0 million in 2011. License and services revenue was up 80% to $17.6 million from $9.8 million in 2011. Customer support revenue was down 7% to $8.6 million from $9.3 million in 2011.
  
  
• Operating income increased to $5.6 million, an improvement of $8.4 million over an operating loss of $2.8 million in 2011.
  
  
• Net income from continuing operations increased to $5.6 million, a positive swing of $6.6 million over the year ago net loss from continuing operations of $1.0 million. Diluted net income per share from continuing operations was $0.48 versus a loss of $0.09 last year.
  
  
• Adjusted EBITDA from continuing operations was $6.5 million versus an adjusted EBITDA loss of $0.2 million in 2011.

Bookings and Backlog Highlights

• Q4 bookings totaled $6.2 million versus $7.4 million in the same quarter last year. The 2012 fourth quarter bookings included $3.6 million in license and services and $2.6 million in customer support. DSA license and services bookings in the fourth quarter were $0.9 million while TSA license and services bookings were $2.7 million. Bookings are defined as new, non-cancelable orders expected to be recognized as revenue during the following 12 months.
  
  
• Full year bookings totaled $24.6 million versus $24.0 million in 2011. License and services bookings grew to $16.5 million from $14.8 million. DSA license and services bookings totaled $6.9 million while TSA license and services bookings were $9.6 million.
  
  
• Total backlog at December 31, 2012, was $11.1 million. License and services backlog totaled $6.7 million and was comprised of $3.7 million in DSA and $3.0 million in TSA. Customer support backlog was $4.4 million.

Conference Call
The Company will conduct a conference call and webcast today at 2:30 p.m. Mountain Time. The call-in numbers for the conference call are 1-877-303-6316 for domestic toll free and 650-521-5176 for international callers. The conference ID is 18808504. A telephone replay will be available through March 26, 2013, and can be accessed by calling 1-855-859-2056 or 1-404-537-3406. Conference ID 18808504. To access a live webcast of the call, please visit Evolving Systems' website at www.evolving.com. A replay of the Webcast will be accessible at that website through March 26, 2013.

Non-GAAP Financial Measures
Evolving Systems reports its financial results in accordance with accounting principles generally accepted in the U.S. (GAAP). In addition, the Company is providing in this news release non-GAAP financial information in the form of net income, diluted net income per share and adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, impairment, stock compensation and gain/loss on foreign exchange transactions.) Management believes these non-GAAP financial measures are useful to investors and lenders in evaluating the overall financial health of the Company in that they allow for greater transparency of additional financial data routinely used by management to evaluate performance. Investors and financial analysts who follow the Company use non-GAAP net income and non-GAAP diluted income per share to compare the Company against other companies. Adjusted EBITDA can be useful for lenders as an indicator of earnings available to service debt. Non-GAAP financial measures should not be considered in isolation from or as an alternative to the financial information prepared in accordance with GAAP.

About Evolving Systems®
Evolving Systems, Inc. (NASDAQ: EVOL) is a provider of software solutions and services to 50 network operators in over 40 countries worldwide. The Company's product portfolio includes market-leading activation products that address subscriber service activation, SIM card activation, mobile broadband activation as well as the activation of connected devices. Founded in 1985, the Company has headquarters in Englewood, Colorado, with offices in the United Kingdom, India and Malaysia. Further information is available on the web at www.evolving.com

CAUTIONARY STATEMENT
This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, based on current expectations, estimates and projections that are subject to risk. Specifically, statements about the Company's revenue and bookings growth, the market for the Company's DSA and TSA products, and the Company's continued ability to pay dividends or post quarterly or annual results that are similar to those described in this press release are forward-looking statements. These statements are based on our expectations and are naturally subject to uncertainty and changes in circumstances. Readers should not place undue reliance on these forward-looking statements, and the Company may not undertake to update these statements. Actual results could vary materially from these expectations. For a more extensive discussion of Evolving Systems' business, and important factors that could cause actual results to differ materially from those contained in the forward-looking statements, please refer to the Company's Form 10-K filed with the SEC on March 12, 2013, as well as other SEC filings, including Forms 10-Q, 10-Q/A, 8-K and press releases.

Consolidated Statements of Operations
(In thousands except per share data)

(Unaudited)                       Three months ended    Twelve months ended
                                     December 31,          December 31,
                                    2012       2011       2012       2011
                                 ---------  ---------  ---------  ---------
Revenue:
  License fees and services      $   4,590  $   2,656  $  17,622  $   9,772
  Customer support                   2,261      2,261      8,625      9,251
                                 ---------  ---------  ---------  ---------
Total revenue                        6,851      4,917     26,247     19,023
                                 ---------  ---------  ---------  ---------
Costs of revenue and operating
 expenses:
  Costs of license fees and
   services, excluding
   depreciation and amortization     1,685      1,670      6,734      5,187
  Costs of customer support
   excluding depreciation and
   amortization                        364        393      1,502      2,232
  Sales and marketing                1,236      1,325      5,070      6,238
  General and administrative           769        834      3,613      3,650
  Product development                  887        621      3,069      2,484
  Depreciation                          44         80        268        342
  Amortization                         101         99        400        560
  Restructuring                          -        531          -      1,100
                                 ---------  ---------  ---------  ---------
Total costs of revenue and
 operating expenses                  5,086      5,553     20,656     21,793
                                 ---------  ---------  ---------  ---------
  Income (loss) from operations      1,765       (636)     5,591     (2,770)
                                 ---------  ---------  ---------  ---------
Other income (expense):
  Interest income                        4          -         60        192
  Interest income, related party         -        526        532        619
  Interest expense                      (3)         -         (3)       (14)
  Other income                           -         62                    62
  Gain on sale of investments            -        221        891        221
  Foreign currency exchange gain
   (loss)                               60        108       (106)       330
                                 ---------  ---------  ---------  ---------
Other income (expense), net             61        917      1,374      1,410
                                 ---------  ---------  ---------  ---------
Income (loss) from continuing
 operations before income taxes      1,826        281      6,965     (1,360)
  Income tax expense (benefit)         389       (162)     1,401       (405)
                                 ---------  ---------  ---------  ---------
Income (loss) from continuing
 operations                          1,437        443      5,564       (955)
  Income from discontinued
   operations, net of tax                -      1,312          -     33,264
                                 ---------  ---------  ---------  ---------
Net income                       $   1,437  $   1,755  $   5,564  $  32,309
                                 =========  =========  =========  =========
Basic income (loss) per common
 share - continuing operations   $    0.13  $    0.04  $    0.49  $   (0.09)
                                 =========  =========  =========  =========
Diluted income (loss) per common
 share - continuing operations   $    0.12  $    0.04  $    0.48  $   (0.09)
                                 =========  =========  =========  =========
Basic income per common share -
 discontinued operations         $       -  $    0.12  $       -  $    3.06
                                 =========  =========  =========  =========
Diluted income per common share
 - discontinued operations       $       -  $    0.12  $       -  $    2.97
                                 =========  =========  =========  =========
Basic income per common share -
 net income                      $    0.13  $    0.16  $    0.49  $    2.97
                                 =========  =========  =========  =========
Diluted income per common share
 - net income                    $    0.12  $    0.16  $    0.48  $    2.88
                                 =========  =========  =========  =========
Weighted average basic shares
 outstanding                        11,368     11,020     11,278     10,871
Weighted average diluted shares
 outstanding                        11,645     11,235     11,529     11,202



Consolidated Balance Sheets

(In thousands)                                   December 31,  December 31,
ASSETS                                               2012          2011
                                                 ------------  ------------
Current Assets:
  Cash and cash equivalents                      $      8,844  $     34,290
  Short-term restricted cash                               53            50
  Contract receivables, net                             4,803         4,540
  Unbilled work-in-progress, net                        4,802         1,361
  Prepaid and other current assets                      1,133         1,259
  Interest receivable, long-term investments,
   related parties                                          -           357
                                                 ------------  ------------
    Total current assets                               19,635        41,857
Long-term investments, related party                        -        16,448
Property and equipment, net                               211           369
Amortizable intangible assets, net                        204           584
Goodwill                                               16,510        15,782
Long-term restricted cash                                   -             2
Long-term deferred income taxes                            27             -
Other long-term assets                                      6             -
                                                 ------------  ------------
    Total assets                                 $     36,593  $     75,042
                                                 ============  ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of capital lease obligations   $          4  $          8
  Accounts payable and accrued liabilities              3,833         3,657
  Income taxes payable                                    308           848
  Dividends payable                                         -        22,271
  Unearned revenue                                      1,596         3,401
                                                 ------------  ------------
    Total current liabilities                           5,741        30,185
Long-term liabilities:
  Capital lease obligations, net                           16             -
  Deferred income taxes                                     -           145
                                                 ------------  ------------
    Total liabilities                                   5,757        30,330
Stockholders' equity:
  Common stock                                             11            11
  Additional paid-in capital                           91,957        90,062
  Treasury stock                                       (1,253)       (1,253)
  Accumulated other comprehensive loss                 (3,297)       (4,247)
  Unrealized losses on investments, related
   parties, net                                             -          (284)
  Accumulated deficit                                 (56,582)      (39,577)
                                                 ------------  ------------
    Total stockholders' equity                         30,836        44,712
                                                 ------------  ------------
  Total liabilities and stockholders' equity     $     36,593  $     75,042
                                                 ============  ============



Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands except per share data)
(Unaudited)

                                  Three months ended    Twelve months ended
                                     December 31,          December 31,
                                    2012       2011       2012       2011
                                 ---------  ---------  ---------  ---------
Non-GAAP net income and income
 per share:
GAAP net income                  $   1,437  $   1,755  $   5,564  $  32,309
Amortization of intangible
 assets                                101         99        400        560
Stock-based compensation
 expense**                              59        109        264        592
Restructuring                            -        531          -      1,100
Income tax adjustment for non-
 GAAP*                                 (31)      (233)      (127)      (675)
                                 ---------  ---------  ---------  ---------
Non-GAAP net income                  1,566      2,261      6,101     33,886
Non-GAAP discontinued operations         -     (1,312)         -    (33,283)
                                 ---------  ---------  ---------  ---------
Non-GAAP net income from
 continuing operations           $   1,566  $     949  $   6,101  $     603
                                 =========  =========  =========  =========

Diluted net income per share
  GAAP                           $    0.12  $    0.16  $    0.48  $    2.88
  Non-GAAP                       $    0.13  $    0.20  $    0.53  $    3.02
  Non-GAAP continuing operations $    0.13  $    0.08  $    0.53  $    0.05
  Shares used to compute diluted
   EPS                              11,645     11,235     11,529     11,202

                                  Three months ended    Twelve months ended
                                     December 31,          December 31,
                                    2012       2011       2012       2011
                                 ---------  ---------  ---------  ---------
Adjusted EBITDA:

Net income                       $   1,437  $   1,755  $   5,564  $  32,309
  Depreciation**                        44         80        268        446
  Amortization of intangible
   assets                              101         99        400        560
  Stock-based compensation
   expense**                            59        109        264        592
  Restructuring                          -        531          -      1,100
  Interest expense and other
   (benefit), net                      (61)      (917)    (1,374)    (1,410)
  Gain on sale of numbering,
   net**                                 -          -          -    (30,496)
  Income tax expense (benefit)**       389       (162)     1,401       (385)
                                 ---------  ---------  ---------  ---------
Adjusted EBITDA                      1,969      1,495      6,523      2,716
Adjusted EBITDA discontinued
 operations                              -     (1,312)         -     (2,911)
                                 ---------  ---------  ---------  ---------
Adjusted EBITDA continuing
 operations                      $   1,969  $     183  $   6,523  $    (195)
                                 =========  =========  =========  =========

*The estimated income tax for non-GAAP net income is adjusted by the amount of additional expense that the Company would accrue if it used non-GAAP results instead of GAAP results in the calculation of its tax liability, taking into account in which tax jurisdiction each of the above adjustments would be made and the tax rate in that jurisdiction.

**These amounts may differ from the face of the Company's Consolidated Statements of Operations as part of these expenses (benefits) are included in the income from discontinued operations line item.