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Symbolic Logic, Inc. (EVOL)·Q2 2021 Earnings Summary

Executive Summary

  • Q2 2021 delivered solid top-line and profitability: revenue $6,994k, operating income $350k, net income $953k, and adjusted EBITDA $732k; gross margin expanded to ~68.8% as mix skewed to services and managed services .
  • Year-over-year, revenue rose by ~$0.7M vs Q2 2020 and adjusted EBITDA improved, while operating expenses increased on higher product development and G&A investment .
  • Cash increased to $4,896k driven by positive operating cash flow; unearned revenue rose to $5,540k on annual support billings and upfront project milestones, supporting visibility into 2H execution .
  • Narrative/catalysts: accelerating demand for its unified customer engagement platform (Evolution), strengthening SIM lifecycle/logistics opportunity, and an amicable resolution of the former-CEO dispute; note that Q2 net income benefited from PPP loan forgiveness and a foreign R&D tax credit (non-recurring) .

What Went Well and What Went Wrong

What Went Well

  • Revenue growth and margin expansion: Q2 revenue $6,994k (+$700k YoY) and gross margin ~68.8% (vs ~65.4% in Q2 2020) on higher-margin work and managed services mix .
  • Continued profitability and cash build: operating income $350k, adjusted EBITDA $732k, net income $953k; cash and equivalents rose to $4,896k with lower receivables and higher unearned revenue .
  • Strategic momentum: management highlighted strong interest in Evolution (single platform for ML-driven, gamified loyalty and customer journeys) as a competitive advantage post-pandemic (“our phone has been ringing”) .

What Went Wrong

  • Opex drifted higher: total operating expenses rose to ~$4.5M on increased product development staffing and higher professional fees, pressuring operating leverage QoQ .
  • License revenue minimal: license fees were just $8k, with ~99% of YTD revenue from services; while recurring mix is good for visibility, limited license contribution caps operating leverage from upfront software deliveries .
  • GAAP net income included non-recurring tailwinds (PPP loan forgiveness and foreign R&D tax credit), making underlying profitability less robust than headline net income suggests .

Financial Results

P&L Summary (chronological: Q4 2020 → Q1 2021 → Q2 2021)

MetricQ4 2020Q1 2021Q2 2021
Revenue ($USD Thousands)6,964 6,460 6,994
Income from Operations ($USD Thousands)469 (170) 350
Net Income ($USD Thousands)587 (916) 953
Diluted EPS ($)0.05 (0.08) 0.08
Adjusted EBITDA ($USD Thousands)826 327 732
Gross Margin % (ex-D&A)—65.3% 68.8%
Operating Expenses ($USD Millions)4.1 4.4 4.5

Year-over-Year Comparison (Q2 2020 → Q2 2021)

MetricQ2 2020Q2 2021
Revenue ($USD Thousands)6,329 6,994
Income from Operations ($USD Thousands)294 350
Net Income (Loss) ($USD Thousands)(48) 953
Diluted EPS ($)(0.00) 0.08
Adjusted EBITDA ($USD Thousands)586 732
Gross Margin % (ex-D&A)65.4% 68.8%

Revenue Mix (License vs. Services)

Metric ($USD Thousands)Q4 2020Q1 2021Q2 2021
License Fees358 178 8
Services6,606 6,282 6,986
Total Revenue6,964 6,460 6,994

Balance Sheet and Operating KPIs

KPIDec 31, 2020Mar 31, 2021Jun 30, 2021
Cash & Cash Equivalents ($USD Thousands)2,763 4,292 4,896
Contract Receivables ($USD Thousands)5,681 4,741 4,739
Unbilled Work-in-Progress ($USD Thousands)3,365 3,593 4,183
Unearned Revenue ($USD Thousands)3,713 5,043 5,540
Working Capital ($USD Millions)5.5 5.1 5.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q3-Q4 2021—No formal numerical guidance providedMaintained “no guidance” posture
MarginsFY/Q3-Q4 2021—No formal numerical guidance providedMaintained
OpExFY/Q3-Q4 2021—No formal numerical guidance providedMaintained
OI&E / TaxQ3 2021+—No formal numerical guidance; Q2 included PPP forgiveness and foreign R&D tax creditQualitative color only
Dividends——None discussed—

Earnings Call Themes & Trends

TopicQ4 2020 (Q-2)Q1 2021 (Q-1)Q2 2021 (Current)Trend
AI/Tech, Gamification, Digital EngagementLaunched Secure SMS, OTA activation; leadership in gamification to drive app engagement and ARPU retention Emphasis on accelerated digitization and loyalty/CVM under pandemic behavior shifts Evolution platform central to strategy (ML, real-time journeys, gamified loyalty); exploring crypto tokens in loyalty programs Expanding scope and ambition in engagement tech
SIM Lifecycle / LogisticsDynamic SIM allocation and remote activation as key use cases; 5G build-outs a portfolio attach opportunity —Deep dive on end-to-end SIM lifecycle efficiencies (ordering, distribution, activation, digital dealer) Stronger focus; clear solution messaging
Macro/PandemicOperated efficiently, debt-free; pandemic backdrop acknowledged Severe COVID impact in India team acknowledged; resilient delivery Pandemic continued to slow traditional biz dev, but backlog/mix supported results Managing through macro headwinds
Product PerformanceNew activation-side offerings (Secure SMS/OTA) Sales org reorg, marketing efficiency Rising demand for Evolution platform; services-led growth Consistent execution, growing interest
Regulatory/Legal—Recorded contingent liability related to former CEO litigation ($0.3M) Dispute amicably resolved; charitable donation noted Overhang removed
R&D execution / OpExLower T&E; shift to product development Higher product dev costs; shift of delivery staff to product dev Higher OpEx on product dev and G&A Investing for product roadmap

Management Commentary

  • “Second quarter revenue was $7 million... The company has generated positive cash flow from operations... Second quarter operating profit was $0.4 million with a net income of $1 million... adjusted EBITDA... was positive $0.7 million.” — Matthew Stecker, CEO .
  • On Evolution platform: “Built to capture customer data... 360 degree profile... manage real time context-driven decisions using machine learning... gamified loyalty and rewards.” .
  • On SIM lifecycle opportunity: “With increased competition... reduce the cost of managing the SIM lifecycle end to end while simultaneously providing upgraded subscriber experiences... a digitized cost effective approach…” .
  • On legal resolution/crypto vision: “We have amicably resolved our dispute with our former President and CEO... [and] it’s fairly obvious that an evolution from points to digital currencies is going to happen in the loyalty space... we will be issuing crypto tokens in the future.” .

Q&A Highlights

  • The accessible transcript concluded as management opened the line for questions; detailed Q&A content was not included in the available record .
  • Clarifications made in prepared remarks included: (a) PPP loan forgiveness and a foreign R&D tax credit contributed to Q2 net income ; (b) Shelf registration size was a placeholder; no intention to raise $100M, and “baby shelf” rules would cap raises near ~$10M at that time ; (c) Crypto is envisioned within loyalty tokens over time, not as near-term settlement currency for core billing .

Estimates Context

  • Neither the Q2 press release nor the earnings call referenced sell-side consensus or compared results to Street expectations; we did not identify S&P Global consensus estimates for EVOL in this period, so no estimate-vs-actual table is presented -.

Key Takeaways for Investors

  • Services-driven model with rising managed services mix is lifting gross margins (68.8% in Q2) and supporting recurring visibility; watch for sustainability as license revenue remains de minimis .
  • Underlying profitability improved, but Q2 GAAP net was aided by one-time PPP forgiveness and a foreign R&D tax credit; adjusted EBITDA of $732k is a cleaner operating pulse .
  • Cash climbed to $4,896k with strong unearned revenue of $5,540k; this pre-billed activity points to execution into 2H, a potential setup for sustained EBITDA .
  • Demand signals for Evolution (ML-driven, gamified loyalty) and SIM lifecycle solutions (including digital dealer) appear constructive post-pandemic, suggesting pipeline strength if conversion holds .
  • Near-term focus: monitor OpEx discipline (product development and professional fees) vs growth payback, and watch for any normalization in OI&E/tax as one-offs roll off .
  • Medium-term: the amicable legal resolution removes a governance overhang; strategic commentary around loyalty tokens hints at product innovation optionality if customer adoption emerges .
  • No formal guidance; absent Street estimates, stock moves likely key off qualitative pipeline/color and sustained margin/EBITDA delivery quarter-to-quarter .

Appendices

Other Relevant Press Releases in Q2 2021

  • Aside from the Q2 earnings press release (Exhibit 99.1), no additional EVOL press releases in the June–August 2021 window were found in the document set searched -.

Prior Two Quarters’ Earnings Materials (for trend analysis)

  • Q1 2021 press release and financials (May 13, 2021) -; Q1 transcript (May 14, 2021) -.
  • Q4/Year-end 2020 press release and financials (Mar 17, 2021) -; Q4 transcript (Mar 18, 2021) -.