Technnology management company Edgewater Technology (VARBusiness 500 rank 313), reporting fourth quarter financial results, said a string of acquisitions it made in 2007 will likely result in rising service revenue.
Edgewater experienced revenue growth in the fourth quarter of 2007, the Wakefield, Mass.-based company announced Wednesday.
Service revenue grew at nine percent from the fourth quarter of 2006, and Shirley Singleton, Edgewater's president and chief executive officer, in a conference call with analysts, said that acquisitions related to the company's Corporate Performance Management (CPM) product would likely result in rising first-quarter 2008 service revenue.
In 2007, Edgewater bought technology consultancies Alecian, Vertical Pitch and Lynx Business Intelligence Consulting.
However, in fourth quarter 2007, utilization decreased to 74.5 percent compared to 81.1 percent for the fourth quarter of 2006.
"A decrease in overall utilization is the primary reason for the softer than anticipated results during the fourth quarter of 2007," Singleton said. "While we were able to initiate engagements with a record number of new customers during the fourth quarter, the size of these first-time engagements did not provide enough lift to offset the excess resource capacity."
For the fourth quarter ended Dec. 31, 2007, Edgewater reported service revenue of $15.9 million. For the fiscal year 2007, the company rang up $63.2 million in revenue. Net income, which was favorably impacted by the current quarter tax benefit adjustments, increased to $5.8 million, or $0.44 cents per diluted share, compared to $1.2 million, or $0.10 cents per diluted share, in the fourth quarter of 2006
"Our goal for 2007 was to double the revenue run rate for our Corporate Performance Management offering," said Singleton. "I am pleased to report that we accomplished that goal through strong organic growth, as well as through targeted CPM-related acquisitions. While there is no doubt that the second half slowdown in technical consulting had an impact on our growth this year, total revenue grew by 14 percent with 11 percent of our growth coming from organic business operations and 3 percent of our growth coming from businesses we acquired in the latter half of 2007.''
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