{ "docId": "019dd923-622b-71dc-a6dc-95d02b976161", "docSlug": "4b852ffa1ce3", "documentTitle": "Edgewater Technology, Inc. (EDGW)", "authorId": "21_Ancora", "authorName": "Jim Chadwick", "documentKindSlug": "conference-presentation", "documentKindLabel": "Conference presentation", "sourceTypeSlug": "activist_investor", "sourceTypeLabel": "Activist investor", "presentationDate": "2017-01-24 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 21, "pageCount": 35, "prevPage": 20, "nextPage": 22, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 8, "notes": "Uses direct quotes from CEO and CFO to undermine management credibility.", "elementsJson": [ "headline_text", "paragraph", "bullet_list" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622b-71dc-a6dc-95d02b976161/21", "deckHref": "/decks/019dd923-622b-71dc-a6dc-95d02b976161", "deckJsonHref": "/decks/019dd923-622b-71dc-a6dc-95d02b976161.json", "deckAnchorHref": "/decks/019dd923-622b-71dc-a6dc-95d02b976161#slide-21", "components": [ { "bbox": null, "kind": "callout", "text": "Management's \"rosy\" commentary in its recent investor presentation flies in the face of the Company's recent results.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-0395-748f-955f-f00bf6dd0ede", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.9, "x": 0.05, "y": 0.31 }, "kind": "list", "text": "\"The story of the quarter is one of service revenue miss as it was essentially flat on a year-over-year basis. Our core offerings were affected primarily by channel disruption associated with cloud adoption. We did see some spending pull back late in the quarter and then we also saw some underperformance in the U.K. So we're trying to be very transparent here to tell you why the miss.\" – CEO Shirley Singleton", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "03ba000f-b5f2-477a-b251-a9384027ce56", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.9, "x": 0.05, "y": 0.44 }, "kind": "list", "text": "Gross Margin Declines: \"Total gross margin in the third quarter of 2016 was 35% compared to 38% in the year ago quarter, while gross margin related to service revenue in the third quarter of 2016 was 37% compared to 40% in the third quarter of 2015. The year-over-year change in both total gross margin and service gross margin during the third quarter of 2016 were primarily attributable to the current year increase in project and personnel cost and a decline in the software revenue margin contribution due to the change in the comparative quarterly software revenue mix.\" – CFO Tim Oakes", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "35ca3471-92e6-4bb1-9ed3-e10ce651da95", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.4, "x": 0.05, "y": 0.27 }, "kind": "list", "text": "Commentary from November 2, 2016 Earnings Call / Press Release:", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "5a8a86c8-a685-46f2-9647-5e2bfcd0859a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.9, "x": 0.05, "y": 0.63 }, "kind": "list", "text": "EPS and Net Income: Net income for the third quarter of 2016 was $43,000 or $0.00 per diluted share compared to net income of $1 million or $0.08 per diluted share during the third quarter of 2015. The change in periodic net income is in large part attributable to the previously discussed flat year-over-year third quarter 2016 service revenue combined with the increases in projects and personnel costs. – CFO Tim Oakes", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e1aa952c-2551-4f1f-b28b-5418d5d90917", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.07, "w": 0.9, "x": 0.05, "y": 0.15 }, "kind": "paragraph", "text": "Management's \"rosy\" commentary in its recent investor presentation flies in the face of the Company's recent results. Days prior to announcing the termination of the strategic process, management preannounced an earnings miss and continued execution errors.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c05edef2-3705-4e94-ae93-9e18e0b9fb02", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"The story of the quarter is one of service revenue miss as it was essentially flat on a year-over-year basis. Our core offerings were affected primarily by channel disruption associated with cloud adoption. We did see some spending pull back late in the quarter and then we saw some underperformance in the U.K. So we're trying to be very transparent here to tell you why the miss.\" — CEO Shirley Singleton; \"Total gross margin in the third quarter of 2016 was 35% compared to 38% in the year ago quarter, while gross margin related to service revenue in the third quarter of 2016 was 37% compared to 40% in the third quarter of 2015. The year-over-year change in both total gross margin and service gross margin during the third quarter of 2016 were primarily attributable to the current year increase in project and personnel cost and a decline in the software revenue margin contribution due to the change in the comparative quarterly software revenue mix.\" — CFO Tim Oakes; \"Net income for the third quarter of 2016 was $43,000 or $0.00 per diluted share compared to net income of $1 million or $0.08 per diluted share during the third quarter of 2015. The change in periodic net income is in large part attributable to the previously discussed flat year-over-year third quarter 2016 service revenue combined with the increases in projects and personnel costs.\" — CFO Tim Oakes", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-0395-748f-955f-f763b73ac1df", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.18, "x": 0.05, "y": 0.06 }, "kind": "title", "text": "RECENT RESULTS", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "478c2f08-b04f-4005-8809-325fbd1e67e4", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "ceo-quote-contradiction", "slug": null, "matchId": "12d0fe29-688d-4da3-96ea-5ff4340f2e7d", "evidence": "Uses management's own quotes to highlight a gap between their narrative and actual financial results.", "confidence": 0.9 } ], "arcBeats": [ { "to": 24, "from": 15, "beatId": "370c35c6-ef07-4efe-ba1a-20bb40a219a3", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Agitate (Make it worse)", "beatSlug": "problem-agitate-solution-agitate-make-it-worse", "evidence": "The document then agitates the problem by highlighting excessive executive compensation and poor corporate governance", "position": 1, "confidence": 0.8, "parentBeatName": "Development", "parentBeatSlug": "development" } ], "loops": [ { "to": 24, "from": 15, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "204b94dc-a68d-40c7-ae8b-c0891be10ef9", "evidence": "The document highlights the negative consequences of inaction, including continued underperformance", "position": 2, "objective": "To highlight the cost of inaction", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.6, "description": "Quantify what happens if the audience does nothing" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }