Name: Symbolic Logic, Inc. Q3 2021 Earnings Call
Start: 2021-11-10T00:00:00.000Z

Executive Summary

Q3 2021 revenue was $7.0M with diluted EPS of $0.01; gross margin (ex D&A) improved to 70.2% while adjusted EBITDA rose to $1.0M, continuing the streak of positive adjusted EBITDA .
No Q3 earnings call due to pending sale of substantially all assets; closing is expected in 2021, and the company anticipates a debt-free balance sheet with approximately $37.5M in cash and equivalents at closing .
Q3 net income ($0.1M) declined versus Q2 ($1.0M), which benefited from PPP loan forgiveness and a French R&D tax credit; operating expenses were flat year-over-year in Q3 .
Strategic catalyst: the PartnerOne transaction (aggregate purchase price $40M including $37.5M cash at closing and $2.5M escrow) and subsequent capital allocation decisions by a newly formed investment committee (options include acquisitions and/or returning cash to shareholders) .

What Went Well and What Went Wrong

Continued positive adjusted EBITDA and improved gross margins driven by higher-margin managed services and new projects: “strong revenues and… positive adjusted EBITDA” with gross margin (ex D&A) up to ~70.2% in Q3 .
Cash and working capital remained healthy: cash was $3.6M and working capital $5.9M; receivables and unearned revenue dynamics support ongoing operations .
Strategic clarity: pending sale to PartnerOne with anticipated ~$37.5M cash at closing and investment committee formed to maximize value, including potential acquisitions or returning cash to shareholders .

Q3 net income was modest ($0.1M) and down versus Q2 ($1.0M), with Q2 aided by non-recurring PPP forgiveness and R&D tax credit; Q3 also recorded foreign currency exchange loss .
License revenue continues to be minimal (preference for managed services), limiting upside from higher-margin perpetual licenses; services remain ~99% of YTD revenue .
No Q3 earnings call or forward guidance due to transaction, reducing investor visibility near-term .

Metric	Q1 2021	Q2 2021	Q3 2021
Revenue ($USD Millions)	$6.460	$6.994	$6.974
Diluted EPS ($USD)	$(0.08)	$0.08	$0.01
Operating Income ($USD Millions)	$(0.170)	$0.350	$0.559
Net Income ($USD Millions)	$(0.916)	$0.953	$0.075
Adjusted EBITDA ($USD Millions)	$0.327	$0.732	$1.008
Gross Profit Margin % (ex D&A)	65.3%	68.8%	70.2%

Segment revenue breakdown:

Segment Revenue ($USD Millions)	Q1 2021	Q2 2021	Q3 2021
License Fees	$0.178	$0.008	$0.028
Services	$6.282	$6.986	$6.946

KPIs and balance sheet drivers:

KPI ($USD Millions unless noted)	Q1 2021	Q2 2021	Q3 2021
Cash and Cash Equivalents	$4.292	$4.896	$3.581
Contract Receivables, net	$4.741	$4.739	$5.100
Unbilled Work-in-Progress	$3.593	$4.183	$3.799
Unearned Revenue	$5.043	$5.540	$4.647
Working Capital ($USD Millions)	$5.1	$5.6	$5.9

Notes:

Q2 net income included PPP loan forgiveness and a French R&D tax credit to be refunded in future years, inflating EPS versus a normalized quarter .
Q3 recorded foreign currency exchange loss, limiting net income .
Services comprised ~99% of year-to-date revenue due to managed services preference .

Metric	Period	Previous Guidance	Current Guidance	Change
Financial Guidance (Revenue/EPS)	FY/Q3 2021	None provided	None provided; no Q3 call due to transaction	Maintained lack of guidance
Transaction Closing Timeline	FY 2021	N/A	Expected to close in 2021	New
Cash & Equivalents at Closing	Post-transaction	N/A	~$37.5M expected at closing	New
Earnings Call Schedule	Q3 2021	Held calls in Q1/Q2	No Q3 call	Lowered communication
Capital Allocation Framework	Post-transaction	N/A	Investment committee evaluating acquisitions and/or returning cash	New

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Digital engagement platform (Evolution) and CVML/loyalty	Emphasis on unified platform, machine learning, gamified loyalty, and higher engagement; strong industry alignment post-pandemic	Continues; narrative focused on operational continuity and managed services margins	Positive continuity
SIM lifecycle logistics/digital sales channels	Detailed strategy to streamline end-to-end SIM lifecycle, enable digital sales force, reduce costs, and drive subscriber engagement	Not discussed (no call)	Stable focus
Macro/pandemic impact and remote work	Pandemic-driven digitization as secular trend; India team resilience and remote operations highlighted	“Successfully manage through telework” and continued service levels	Structural digitization
Regulatory/legal/investor topics	Shelf registration context and crypto in loyalty tokens discussed; PPP forgiveness and R&D credit noted	Transaction disclosures; proxy and go‑shop/no‑shop processes	Shift to transaction execution
Margin mix/managed services	Gross margin uplift tied to managed services and new projects	Gross margin improved further in Q3	Improving margins
Capital allocation post-sale	N/A	Board formed investment committee to evaluate acquisitions and/or returning cash	New catalyst

“We… continue to report strong revenues and maintain our stretch of quarters with positive adjusted EBITDA… The business will continue to operate normally through the closing of the pending transaction.” — Matthew Stecker, CEO .
“At the closing of the pending transaction, we anticipate… a debt free balance sheet with approximately $37.5 million in cash and cash equivalents. The Board of Directors has established an investment committee to evaluate options… including… returning cash to shareholders.” — Matthew Stecker, CEO .
Q2 CFO detail: net income benefited from PPP loan forgiveness and a French R&D tax credit; services revenue ~99% YTD and margin uplift from managed services .

Investor topics addressed previously included shelf registration magnitude and context; management emphasized no intent to raise outsized amounts and baby-shelf constraints .
Crypto in loyalty: management expects tokenization in loyalty programs over time, not for commercial settlements with current conservative customers .
Q3: No earnings call; no new Q&A or guidance clarifications due to pending transaction .

Wall Street consensus estimates via S&P Global were unavailable for EVOL for Q3 2021 (SPGI/Capital IQ mapping error prevented retrieval). As a result, comparisons to consensus for revenue/EPS/EBITDA could not be performed. Values would have been retrieved from S&P Global if available.

Q3 delivered stable revenue and improved gross margin (ex D&A) with continued positive adjusted EBITDA; the operational model emphasizes recurring managed services, supporting margin quality .
Q2 EPS/NI were flattered by non-recurring PPP forgiveness and R&D tax credit; Q3 results reflect more normalized profitability and FX headwinds .
Services dominate revenue (~99% YTD), implying high recurrence but limited license uplift; managed services mix continues to drive margin expansion .
Near-term trading catalyst is transaction closure and proxy approval; post-close, the company is expected to be debt-free with ~$37.5M cash, and an investment committee may pursue acquisitions or capital returns, which could re-rate the equity depending on the strategy .
Working capital and billing dynamics (unearned revenue, unbilled WIP) remain supportive; cash was lower in Q3 versus Q2 due to collections timing and project stages, but overall liquidity is adequate .
With no Q3 call or guidance amid the pending sale, investor focus should remain on transaction execution milestones (go‑shop expired; no superior bid) and the definitive proxy timeline .
For modeling, treat Q2’s net income as non-recurring due to PPP/R&D items; base run-rate on Q3 margin/expense levels and services-led revenue composition .