ORANGE, Conn.–(BUSINESS WIRE)– Tangoe, Inc. (NASDAQ:TNGO) (“Tangoe” or the “Company”), a leading global provider of IT Expense Management (ITEM) software and related services, today announced that the Company will restate its financial statements for the years 2013 and 2014, all quarters therein, and the first 3 quarters of 2015. This decision was approved by the Company’s Board of Directors, upon the recommendation of the Company’s Audit Committee. Tangoe does not expect to file its annual report on Form 10-K with the SEC as scheduled on March 15, 2016.
Investors should no longer rely upon the Company’s previously released financial statements for the time periods cited above. In addition, investors should no longer rely upon earnings releases for these periods; reports by BDO USA, LLP – the Company’s independent registered public accounting firm (“BDO”) – on such financial statements, including its reports on the Company’s internal controls over financial reporting; and other communications relating to these financial statements. The Company is withdrawing all prior financial guidance for the fourth quarter 2015 and related full year 2015.
The decision to restate these financial statements is based on the Company’s conclusion that it made errors in recognizing revenue, primarily from business activities that are ancillary to the Company’s core business. A majority of the errors relate to non-recurring revenue, including, for example, non-recurring revenue from strategic consulting and bill audit services with contingent fee arrangements. As a result of these corrections, the Company is revising its revenue recognition policies for several categories of revenue. These revisions will better assure that revenue is recognized only when it is fixed or determinable, and when it is consistent with a variety of contract terms, in circumstances that otherwise require complex estimates, analysis or judgments. In some cases, the revisions will result in revenue recognition later in time, sometimes upon collection, as in those cases collectability is not reasonably assured prior to collection.
In summary, for the full periods being restated, the Company currently estimates at least $17.1 million of previously recognized revenue will be affected, against total revenue under review of approximately $70 million and previously reported total revenue of $565.9 million.
- For 2013, the Company currently estimates that at least $3.4 million of previously recognized revenue will be affected, against total revenues under review during this period of approximately $17 million and previously reported total revenue of $188.9 million
- For 2014, the Company currently estimates that at least $9.4 million of previously recognized revenue will be affected, against total revenues under review during this period of approximately $28 million and previously reported total revenue of $212.5 million
- For the first three quarters of 2015, the Company currently estimates that at least $4.3 million of previously recognized revenue will be affected, against total revenues under review during this period of approximately $25 million and previously reported total revenue of $164.5 million
The Company expects that the overall impact on topline revenues will be as described above, and operating income will be adjusted substantially in line with revenue adjustments. The Company also expects that the impact, if any, on operating cash flow for the periods under review will be minimal.
Although the Company cannot at this time estimate when it will complete the restatement and file its restated financial statements and its Form 10-K for the year ended December 31, 2015, it is diligently pursuing completion of the restatement and intends to file the Form 10-K as soon as reasonably practicable.
Because the Company has not yet fully completed its review, the expected financial impact of the restatement described above is preliminary and subject to change. There can be no assurance that the final reported adjustments will not differ materially from the estimated amounts discussed in this press release, or that additional adjustments will not be identified.
The audit committee and management have discussed the matters disclosed in this press release with BDO USA, LLP, the Company’s independent registered public accounting firm.
Tangoe (NASDAQ:TNGO) is a leading global provider of IT Expense Management software and services to a wide range of global enterprises and service providers. The Matrix is Tangoe’s technology and services platform designed to help companies transform the management of IT assets, services, expenses, and usage to create business value, increase efficiency, and deliver a positive impact to the bottom line.
Tangoe is a registered trademark of Tangoe, Inc.
Except for statements of historical fact, the matters discussed herein are “forward-looking statements” within the meaning of the applicable securities laws and regulations. The words “estimates”, “expects” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements, including statements regarding the Company’s intent to restate its prior financial statements and the estimated adjustments of the restated financials, involve risks and uncertainties which may cause actual results to differ materially from those stated here. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the risk that additional information may arise from the Company’s and its audit committee’s internal review, the risk that the process of preparing and auditing the restated financial statements or other subsequent events would require the Company to make additional adjustments and the time and effort required to complete the restatement of its financial statements, as well as other risks described more fully in the Company’s filings with the SEC. Forward-looking statements reflect management’s analysis as of the date hereof. The Company does not undertake to revise these statements to reflect subsequent developments.