OR YEHUDA, Israel, Nov. 14, 2017 /PRNewswire/ -- Magic Software
Enterprises Ltd. (NASDAQ and TASE: MGIC), a global provider of
end-to-end integration and application development solutions and IT
consulting services, announced today its financial results for the
third quarter and first nine months of 2017.
Financial Highlights for the Third Quarter Ended September 30, 2017
- Revenues for the third quarter increased 21% to $65.7 million compared to $54.5 million in the same period last year.
- Operating income for the third quarter increased 19% to
$7.1 million compared to $6.0 million in the same period last year.
Non-GAAP operating income for the third quarter increased 17% to
$9.1 million compared to $7.7 million in the same period last year.
- Net income attributable to Magic's shareholders for the third
quarter decreased 5% to $3.8 million,
or $0.09 per fully diluted share,
compared to $4.0 million, or
$0.09 per fully diluted share in the
same period last year. Non-GAAP net income attributable to Magic's
shareholders for the third quarter decreased 2% to $5.2 million, or $0.12 per fully diluted share, compared to
$5.3 million, or $0.12 per fully diluted share, in the same period
last year.
Financial Highlights for the Nine-Month Period Ended
September 30, 2017
- Revenues for the first nine months of 2017 increased 31% to
$191.9 million compared to
$146.5 million in the same period
last year.
- Operating income for the first nine months increased 19% to
$19.8 million compared to
$16.5 million in the same period last
year. Non-GAAP operating income for the first nine months of 2017
increased 26% to $26.4 million
compared to $20.9 million in the same
period last year.
- Net income attributable to Magic's shareholders for the first
nine months of 2017 decreased 1% to $11.6
million, or $0.26 per fully
diluted share, compared to $11.8
million, or $0.27 per fully
diluted share in the same period last year. Non-GAAP net income
attributable to Magic's shareholders for the first nine months of
2017 increased 9% to $16.7 million,
or $0.38 per fully diluted share,
compared to $15.3 million, or
$0.34 per fully diluted share, in the
same period last year.
- Cash flow from operating activities for the first nine months
of 2017 amounted to $17.8
million.
- As of September 30, 2017, our net
cash, cash equivalents, short-term bank deposits and
available-for-sale marketable securities, offset by financial
liabilities, amounted to $46.5
million.
- Due to better visibility, the Company is narrowing the expected
range of its revenue guidance for 2017. Full year 2017 revenue is
expected to be in the range of $250 million
to $255 million, up from prior guidance of $245 million to $255 million, reflecting a
revised annual growth rate of 24%-26%.
Guy Bernstein, Chief Executive
Officer of Magic Software Enterprises, said: "We are pleased to
report another quarter with solid year-over-year growth and
profitability powered by strong demand across our entire
portfolio."
"As we continue to invest in our products and services to enable
customers to benefit from the latest technologies, we are confident
that our ever-evolving portfolio, now including our new Magic xpc
iPaaS platform, provides both the solutions and services needed by
enterprises to succeed in today's digital marketplace. As we see
our growth trend successfully moving forward, we remain excited
about our market opportunity."
Conference Call Details
Magic's management will host a conference call on Tuesday, November 14, at 10:00 am Eastern Standard Time (7:00 am Pacific Standard Time, 17:00 Israel
Standard Time) to review and discuss Magic's results.
To participate, please call one of the following
teleconferencing numbers. Please begin placing your calls at least
10 minutes before the conference call commences. If you are unable
to connect using the toll-free numbers, call the international
dial-in number.
NORTH AMERICA:
+1-888-281-1167
UK: 0-800-917-9141
ISRAEL: 03-918-0644
ALL OTHERS: +972-3-918-0644
For those unable to join the live call, a replay of the call
will be available for at least three months, under the Investor
Relations section of Magic's website, www.magicsoftware.com.
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial
measures: Non-GAAP gross profit, Non-GAAP operating income,
Non-GAAP net income attributed to Magic's shareholders and Non-GAAP
basic and diluted earnings per share.
Magic believes that these non-GAAP measures of financial results
provide useful information to management and investors regarding
certain financial and business trends relating to Magic's financial
condition and results of operations. Magic's management uses these
non-GAAP measures to compare the Company's performance to that of
prior periods for trend analyses, for purposes of determining
executive and senior management incentive compensation and for
budgeting and planning purposes. These measures are used in
financial reports prepared for management and in quarterly
financial reports presented to the Company's board of directors.
The Company believes that the use of these non-GAAP financial
measures provides an additional tool for investors to use in
evaluating ongoing operating results and trends and in comparing
the Company's financial measures with other software companies,
many of which present similar non-GAAP financial measures to
investors.
Management of the Company does not consider these non-GAAP
measures in isolation or as an alternative to financial measures
determined in accordance with GAAP. The principal limitation of
these non-GAAP financial measures is that they exclude significant
expenses and income that are required by GAAP to be recorded in the
Company's financial statements. In addition, they are subject to
inherent limitations as they reflect the exercise of judgment by
management about which expenses and income are excluded or included
in determining these non-GAAP financial measures. In order to
compensate for these limitations, management presents non-GAAP
financial measures in connection with GAAP results. Magic urges
investors to review the reconciliation of its non-GAAP financial
measures to the comparable GAAP financial measures, which it
includes in press releases announcing quarterly financial results,
including this press release, and not to rely on any single
financial measure to evaluate the Company's business.
Non-GAAP measures used in this press release are included in the
financial tables of this release. These non-GAAP measures exclude
the following items:
- Amortization of purchased intangible assets and other related
costs;
- In-process research and development capitalization and
amortization;
- Equity-based compensation expenses;
- The related tax, non-controlling interests and redeemable
non-controlling interests effects of the above items;
- Increase in valuation of contingent consideration related to
acquisitions;
- Increase in value of put options of redeemable non-controlling
interests.
Reconciliation tables of the most comparable GAAP financial
measures to the non-GAAP financial measures used in this press
release are included in the financial tables of this release.
About Magic Software Enterprises
Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC) is a
global provider of mobile and cloud-enabled application and
business integration platforms.
For more information, visit www.magicsoftware.com.
Forward Looking Statements
Some of the statements in this press release may constitute
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, Section 21E of the Securities and
Exchange Act of 1934 and the United States Private Securities
Litigation Reform Act of 1995. Words such as "will," "expects,"
"believes" and similar expressions are used to identify these
forward-looking statements (although not all forward-looking
statements include such words). These forward-looking statements,
which may include, without limitation, projections regarding our
future performance and financial condition, are made on the basis
of management's current views and assumptions with respect to
future events. Any forward-looking statement is not a guarantee of
future performance and actual results could differ materially from
those contained in the forward-looking statement. These statements
speak only as of the date they were made, and we undertake no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
We operate in a changing environment. New risks emerge from time to
time and it is not possible for us to predict all risks that may
affect us. For more information regarding these risks and
uncertainties as well as certain additional risks that we face, you
should refer to the Risk Factors detailed in our Annual Report on
Form 20-F for the year ended December 31,
2016 and subsequent reports and filings made from time to
time with the Securities and Exchange Commission.
Magic is a registered trademark of Magic Software Enterprises
Ltd. All other product and company names mentioned herein are for
identification purposes only and are the property of, and might be
trademarks of, their respective owners.
MAGIC SOFTWARE
ENTERPRISES LTD. AND ITS SUBSIDIARIES
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
U.S. Dollars in
thousands (except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
|
|
September
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Unaudited
|
|
Unaudited
|
Revenues
|
$ 65,661
|
|
$ 54,475
|
|
$ 191,901
|
|
$ 146,505
|
Cost of
Revenues
|
44,327
|
|
35,726
|
|
130,106
|
|
96,104
|
Gross
profit
|
21,334
|
|
18,749
|
|
61,795
|
|
50,401
|
Research and
development, net
|
1,669
|
|
1,571
|
|
5,192
|
|
4,046
|
Selling, marketing
and general and
|
|
|
|
|
|
|
|
administrative expenses
|
12,569
|
|
11,213
|
|
36,828
|
|
29,806
|
Total operating
costs and expenses
|
14,238
|
|
12,784
|
|
42,020
|
|
33,852
|
Operating
income
|
7,096
|
|
5,965
|
|
19,775
|
|
16,549
|
Financial income
(expenses), net
|
(343)
|
|
(136)
|
|
(1,165)
|
|
101
|
Income before
taxes on income
|
6,753
|
|
5,829
|
|
18,610
|
|
16,650
|
Taxes on
income
|
2,133
|
|
1,044
|
|
4,967
|
|
3,300
|
Net
income
|
$
4,620
|
|
$
4,785
|
|
$
13,643
|
|
$
13,350
|
Net income
attributable to redeemable non-controlling interests
|
(772)
|
|
(706)
|
|
(1,644)
|
|
(1,343)
|
Net income
attributable to non-controlling interests
|
(49)
|
|
(74)
|
|
(353)
|
|
(226)
|
Net income
attributable to Magic's shareholders
|
$
3,799
|
|
$
4,005
|
|
$
11,646
|
|
$
11,781
|
|
|
|
|
|
|
|
|
Net earnings per
share
|
|
|
|
|
|
|
|
Basic
|
$
0.09
|
|
$
0.09
|
|
$
0.26
|
|
$
0.27
|
Diluted
|
$
0.09
|
|
$
0.09
|
|
$
0.26
|
|
$
0.27
|
|
|
|
|
|
|
|
|
Weighted average
number of shares used in
|
|
|
|
|
|
|
|
computing net earnings per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
44,450
|
|
44,350
|
|
44,423
|
|
44,344
|
|
|
|
.
|
|
|
|
|
Diluted
|
44,609
|
|
44,530
|
|
44,587
|
|
44,511
|
Summary of
Non-GAAP Financial Information
|
|
|
|
|
|
U.S. Dollars in
thousands (except per share amounts)
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ 65,661
|
|
100%
|
|
$ 54,475
|
|
100%
|
|
$ 191,901
|
|
100%
|
|
$ 146,505
|
|
100%
|
Gross
profit
|
|
22,794
|
|
34.7%
|
|
20,099
|
|
36.9%
|
|
66,429
|
|
34.6%
|
|
54,257
|
|
37.0%
|
Operating
income
|
|
9,069
|
|
13.8%
|
|
7,735
|
|
14.2%
|
|
26,428
|
|
13.8%
|
|
20,941
|
|
14.3%
|
Net income
attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Magic's shareholders
|
|
5,227
|
|
8.0%
|
|
5,332
|
|
9.8%
|
|
16,705
|
|
8.7%
|
|
15,337
|
|
10.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
per share
|
|
$
0.12
|
|
|
|
$
0.12
|
|
|
|
$
0.38
|
|
|
|
$
0.35
|
|
|
Diluted
earnings per share
|
|
$
0.12
|
|
|
|
$
0.12
|
|
|
|
$
0.38
|
|
|
|
$
0.34
|
|
|
MAGIC SOFTWARE
ENTERPRISES LTD. AND ITS SUBSIDIARIES
|
|
|
|
|
|
|
|
RECONCILIATION OF
GAAP AND NON-GAAP RESULTS
|
|
|
|
|
|
|
|
U.S. Dollars in
thousands (except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
Unaudited
|
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross
profit
|
|
|
|
$
21,334
|
|
$
18,749
|
|
$
61,795
|
|
$
50,401
|
Amortization of
capitalized software and acquired technology
|
|
1,307
|
|
1,169
|
|
4,142
|
|
3,277
|
Amortization of other
intangible assets
|
|
|
152
|
|
178
|
|
486
|
|
567
|
Stock-based
compensation
|
|
|
1
|
|
3
|
|
6
|
|
12
|
Non-GAAP gross
profit
|
|
|
$
22,794
|
|
$
20,099
|
|
$
66,429
|
|
$
54,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
income
|
|
|
$
7,096
|
|
$
5,965
|
|
$
19,775
|
|
$
16,549
|
Gross profit
adjustments
|
|
|
1,460
|
|
1,350
|
|
4,634
|
|
3,856
|
Amortization of other
intangible assets
|
|
|
1,698
|
|
1,570
|
|
4,876
|
|
3,795
|
Increase (decrease)
in valuation of contingent consideration related to
acquisitions
|
(380)
|
|
-
|
|
64
|
|
-
|
Capitalization of
software development
|
|
|
(813)
|
|
(1,169)
|
|
(2,953)
|
|
(3,377)
|
Stock-based
compensation
|
|
|
8
|
|
19
|
|
32
|
|
118
|
Non-GAAP operating
income
|
|
|
$
9,069
|
|
$
7,735
|
|
$
26,428
|
|
$
20,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
attributable to Magic's shareholders
|
|
$
3,799
|
|
$
4,005
|
|
$
11,646
|
|
$
11,781
|
Operating income
adjustments
|
|
|
1,973
|
|
1,770
|
|
6,653
|
|
4,392
|
Amortization expenses
attributed to redeemable non-controlling interests
|
(627)
|
|
(325)
|
|
(1,392)
|
|
(583)
|
Deferred taxes on the
above items
|
|
|
82
|
|
(118)
|
|
(202)
|
|
(253)
|
Non-GAAP net
income attributable to Magic's shareholders
|
|
$
5,227
|
|
$
5,332
|
|
$
16,705
|
|
$
15,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP basic net
earnings per share
|
|
|
$
0.12
|
|
$
0.12
|
|
$
0.38
|
|
$
0.35
|
Weighted average
number of shares used in
|
|
|
|
|
|
|
|
|
|
computing basic net earnings per share
|
|
|
44,450
|
|
44,350
|
|
44,423
|
|
44,344
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted net
earnings per share
|
|
|
$
0.12
|
|
$
0.12
|
|
$
0.38
|
|
$
0.34
|
Weighted average
number of shares used in
|
|
|
|
|
|
|
|
|
|
computing diluted net earnings per share
|
|
|
44,610
|
|
44,535
|
|
44,589
|
|
44,514
|
MAGIC SOFTWARE
ENTERPRISES LTD. AND ITS SUBSIDIARIES
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
U.S. Dollars in
thousands
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
2017
|
|
2016
|
|
Unaudited
|
|
|
|
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash equivalents
|
$
77,174
|
|
$
75,314
|
Short-term bank deposits
|
26
|
|
2
|
Available-for-sale
marketable securities
|
11,766
|
|
12,506
|
Trade receivables,
net
|
77,176
|
|
62,047
|
Other accounts receivable
and prepaid expenses
|
7,984
|
|
8,487
|
Total current
assets
|
174,126
|
|
158,356
|
|
|
|
|
LONG-TERM
RECEIVABLES:
|
|
|
|
Severance pay fund
|
2,837
|
|
2,568
|
Long-term deferred tax assets
|
3,755
|
|
3,548
|
Other long-term receivables
|
3,156
|
|
1,680
|
Total long-term
receivables
|
9,748
|
|
7,796
|
|
|
|
|
PROPERTY AND
EQUIPMENT, NET
|
3,506
|
|
3,065
|
IDENTIFIABLE
INTANGIBLE ASSETS AND
|
|
|
|
GOODWILL, NET
|
147,204
|
|
147,182
|
|
|
|
|
TOTAL
ASSETS
|
$
334,584
|
|
$
316,399
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Short-term debt
|
$
9,734
|
|
$
5,645
|
Trade
payables
|
8,020
|
|
8,393
|
Accrued expenses and other
accounts payable
|
22,605
|
|
20,290
|
Liabilities due to
acquisition activities
|
3,040
|
|
6,478
|
Deferred
revenues
|
7,019
|
|
3,882
|
Total current
liabilities
|
50,418
|
|
44,688
|
|
|
|
|
NON-CURRENT
LIABILITIES:
|
|
|
|
Long-term debt
|
32,697
|
|
29,756
|
Long-term deferred tax
liability
|
12,388
|
|
12,494
|
Liabilities due to
acquisition activities
|
978
|
|
3,379
|
Accrued severance
pay
|
3,752
|
|
3,443
|
Total non-current
liabilities
|
49,815
|
|
49,072
|
|
|
|
|
REDEEMABLE
NON-CONTROLLING INTERESTS
|
28,981
|
|
25,998
|
|
|
|
|
EQUITY:
|
|
|
|
Magic
Software Enterprises equity
|
205,114
|
|
196,218
|
Non-controlling interests
|
256
|
|
423
|
Total
equity
|
205,370
|
|
196,641
|
|
|
|
|
TOTAL LIABILITIES,
REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY
|
$ 334,584
|
|
$
316,399
|
MAGIC SOFTWARE
ENTERPRISES LTD. AND ITS SUBSIDIARIES
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
|
|
U.S. Dollars in
thousands
|
|
|
|
|
For the Nine
months ended
|
|
September
30,
|
|
2017
|
|
2016
|
|
Unaudited
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
$
13,643
|
|
$
13,350
|
Adjustments to
reconcile net income from operations to
|
|
|
|
net cash
provided by operating activities:
|
|
|
|
Depreciation and
amortization
|
10,308
|
|
8,456
|
Stock-based
compensation
|
39
|
|
131
|
Amortization of
marketable securities premium and accretion of discount
|
154
|
|
173
|
Gains reclassified
into earnings from marketable securities
|
416
|
|
-
|
Increase in trade
receivables, net
|
(11,568)
|
|
(1,542)
|
Increase in other
long-term and short-term accounts receivable and prepaid
expenses
|
(1,279)
|
|
(306)
|
Decrease in trade
payables
|
(535)
|
|
(676)
|
Change in value of
loans and deposits, net
|
3,068
|
|
-
|
Increase (decrease)
in accrued expenses and other accounts payable
|
1,083
|
|
(875)
|
Increase in deferred
revenues
|
2,658
|
|
2,897
|
Change in deferred
taxes, net
|
(198)
|
|
225
|
Net cash provided by
operating activities
|
17,789
|
|
21,833
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Capitalized software
development costs
|
(2,953)
|
|
(3,377)
|
Purchase of property
and equipment
|
(1,177)
|
|
(734)
|
Cash paid in
conjunction with acquisitions, net of acquired cash
|
(5,819)
|
|
(25,719)
|
Proceeds from
maturity of marketable securities
|
3,225
|
|
1,643
|
Investment in
marketable securities
|
(2,589)
|
|
(2,234)
|
Proceeds from
short-term bank deposits
|
-
|
|
5,904
|
Repayment of
short-term loan granted to a related-party
|
1,183
|
|
-
|
Change in loans to
employees and other deposits, net
|
-
|
|
(49)
|
Investment in
short-term bank deposit
|
(26)
|
|
(5,802)
|
Net cash used in
investing activities
|
(8,156)
|
|
(30,368)
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from
exercise of options by employees
|
427
|
|
40
|
Dividend
paid
|
(9,360)
|
|
(7,747)
|
Dividend paid to
non-controlling interests in subsidiaries
|
(536)
|
|
(358)
|
Dividend paid to
redeemable non-controlling interests in subsidiaries
|
(2,886)
|
|
-
|
Purchase of
non-controlling interest
|
-
|
|
(352)
|
Change in Short-term
and long-term loan from banks, net
|
3,419
|
|
1,003
|
Net cash used in
financing activities
|
(8,936)
|
|
(7,414)
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
1,163
|
|
(306)
|
|
|
|
|
Increase (decrease)
in cash and cash equivalents
|
1,860
|
|
(16,255)
|
Cash and cash
equivalents at the beginning of the year
|
75,314
|
|
62,188
|
Cash and cash
equivalents at the end of the period
|
$
77,174
|
|
$
45,933
|
Press Contact:
Shefi Yemini, IR
Representative
Magic Software Enterprises
syemini@magicsoftware.com
View original
content:http://www.prnewswire.com/news-releases/magic-delivers-record-breaking-revenues-of-66-million-for-the-third-quarter-of-2017-with-21-year-over-year-growth-300555294.html
SOURCE Magic Software Enterprises Ltd