MAGIC SOFTWARE ENTERPRISES LTD OR YEHUDA, Israel, Aug. 10, 2016 /PRNewswire/ -- Magic Software Enterprises Ltd. (NASDAQ: MGIC; TASE: MGIC), a global provider of mobile and cloud-enabled application and business integration platforms, announced today its financial results for the six months and second quarter ended June 30, 2016.
Financial Highlights for the Second Quarter Ended June 30, 2016
-- Revenues for the second quarter increased 11% to $47.4 million compared
to $42.5 million in the same period last year.
-- Operating income for the second quarter decreased to $5.3 million from
$5.4 million in the same period last year. Non-GAAP operating income for
the second quarter remained constant at $6.5 million compared to the
same period last year.
-- Net income for the second quarter remained constant at $4.1 million, or
$0.09 per fully diluted share, compared to the same period last year.
Non-GAAP net income for the second quarter remained constant at $5.2
million, or $0.12 per fully diluted share, compared to the same period
last year.
Financial Highlights for the Six-Month Period Ended June 30, 2016
-- Revenues for the first half of 2016 increased 11% to $92.0 million
compared to $82.8 million in the same period last year.
-- Operating income for the first half decreased to $10.6 million compared
to $11.2 million in the same period last year. Non-GAAP operating income
for the first half of 2016 remained constant at $13.2 million compared
to the same period last year.
-- Net income for the first half decreased to $7.8 million, or $0.17 per
fully diluted share, from $8.4 million, or $0.19 per fully diluted
share, in the same period last year. Non-GAAP net income for the first
half decreased 3% to $10.0 million, or $0.23 per fully diluted share,
compared to $10.4 million, or $0.24 per fully diluted share in the same
period last year.
-- Operating cash flow for the first half of 2016 amounted to $13.4
million.
-- Total net cash, cash equivalents and short-term investments as of June
30, 2016, amounted to approximately $82 million.
-- Magic is raising its revenue guidance for the 2016 fiscal year to $195
to $200 million, up from prior guidance of $191 to $195 million,
reflecting a revised annual growth rate of 11%-13%.
Guy Bernstein, Chief Executive Officer of Magic Software Enterprises, said:
"We are pleased to report continued double-digit growth during the first half of 2016, confirming that our solutions and technologies are meeting market needs and providing real value to our customers. In addition, we have been gearing up to meet even greater demand during the second half of this year, and to provide improved profitability."
"We are also excited to have executed on our M&A strategy with our recent acquisition of Roshtov's Clicks Development Platform. Following this acquisition, which was finalized during Q3, and our visibility into our second half, we are upping our revenue guidance for the year."
Conference Call Details
Magic's management will host a conference call today, August 10, at 10:00 am Eastern Daylight Time (7:00 am Pacific Daylight Time, 17:00 Israel Daylight 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 5108
ISRAEL: 03-918-0664
ALL OTHERS: +972-3-918-0664
For those unable to join the live call, a replay of the call will be available until November 11, 2016, under the investor relations section of Magic's website.
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 expense;
-- Litigation costs;
-- The related tax, non-controlling interests and redeemable
non-controlling interests effects of the above items.
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, 2015 and subsequent reports and registration statements filed 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.
Press Contact:
Stephanie Myara, PR Manager
Magic Software Enterprises
smyara@magicsoftware.com
MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
U.S. Dollars in thousands (except per share data)
Three months ended Six months ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
Unaudited Unaudited
--------- ---------
Revenues $47,362 $42,505 $92,030 $82,841
Cost of Revenues 31,150 27,503 60,378 52,420
------ ------ ------ ------
Gross profit 16,212 15,002 31,652 30,421
------ ------ ------ ------
Research and development, net 1,212 1,072 2,475 2,276
Selling, marketing and general and
administrative expenses 9,677 8,565 18,593 16,976
Total operating costs and expenses 10,889 9,637 21,068 19,252
------ ----- ------ ------
Operating income 5,323 5,365 10,584 11,169
----- ----- ------ ------
Financial income (expenses), net 156 (69) 237 (978)
Income before taxes on income 5,479 5,296 10,821 10,191
Taxes on income 987 875 2,256 1,330
--- --- ----- -----
Net income $4,492 $4,421 $8,565 $8,861
Change in redeemable non-controlling interests (322) (156) (637) (364)
Net income attributable to non-controlling interests (82) (167) (152) (128)
--- ---- ---- ----
Net income attributable to Magic's shareholders $4,088 $4,098 $7,776 $8,369
Net earnings per share
Basic $0.09 $0.09 $0.17 $0.19
Diluted $0.09 $0.09 $0.17 $0.19
Weighted average number of shares used in
computing net earnings per share
Basic 44,344 44,240 44,341 44,219
====== ====== ====== ======
Diluted 44,511 44,458 44,502 44,448
====== ====== ====== ======
Summary of Non-GAAP Financial Information
-----------------------------------------
U.S. Dollars in thousands (except per share amounts)
Three months ended Six months ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
Unaudited Unaudited Unaudited Unaudited
--------- --------- --------- ---------
Revenues $47,362 100% $42,505 100% $92,030 100% $82,841 100%
Gross profit 17,479 36.9% 16,281 38.3% 34,158 37.1% 32,812 39.6%
Operating income 6,536 13.8% 6,469 15.2% 13,206 14.3% 13,173 15.9%
Net income attributable to
Magic Software shareholders 5,178 10.9% 5,160 12.1% 10,005 10.9% 10,360 12.5%
Basic earnings per share $0.12 $0.12 $0.23 $0.24
Diluted earnings per share $0.12 $0.12 $0.23 $0.24
MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES
RECONCILIATION OF GAAP AND NON-GAAP RESULTS
U.S. Dollars in thousands (except per share data)
Three months ended Six months ended
June 30, June 30,
-------- --------
2016 2015 2016 2015
---- ---- ---- ----
Unaudited Unaudited
--------- ---------
GAAP gross profit $16,212 $15,002 $31,652 $30,421
Amortization of capitalized software 1,086 990 2,108 2,015
Amortization of other intangible assets 177 281 389 356
Stock-based compensation 4 8 9 20
Non-GAAP gross profit $17,479 $16,281 $34,158 $32,812
======= ======= ======= =======
GAAP operating income $5,323 $5,365 $10,584 $11,169
Gross profit adjustments 1,267 1,279 2,506 2,391
Amortization of other intangible assets 1,101 730 2,225 1,592
Change in valuation of contingent consideration - 22 - 22
Capitalization of software development (1,179) (1,067) (2,208) (2,072)
Stock-based compensation 24 140 99 71
Non-GAAP operating income $6,536 $6,469 $13,206 $13,173
====== ====== ======= =======
GAAP net income attributable to Magic's shareholders $4,088 $4,098 $7,776 $8,369
Operating income adjustments 1,213 1,104 2,622 2,004
Amortization expenses attributed to redeemable non-controlling interests (128) (48) (258) (78)
Deferred taxes on the above items 5 6 (135) 65
--- --- ---- ---
Non-GAAP net income attributable to Magic's shareholders $5,178 $5,160 $10,005 $10,360
====== ====== ======= =======
Non-GAAP basic net earnings per share $0.12 $0.12 $0.23 $0.24
===== ===== ===== =====
Weighted average number of shares used in
computing basic net earnings per share 44,344 44,240 44,341 44,219
------ ------ ------ ------
Non-GAAP diluted net earnings per share $0.12 $0.12 $0.23 $0.24
===== ===== ===== =====
Weighted average number of shares used in
computing diluted net earnings per share 44,514 44,473 44,504 44,463
------ ------ ------ ------
MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in thousands
June 30, December 31,
-------- ------------
2016 2015
---- ----
Unaudited
---------
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $65,827 $62,188
Short-term
bank
deposits 3,055 2,677
Available-
for-sale
marketable
securities 12,645 11,819
Trade
receivables,
net 53,332 52,374
Other
accounts
receivable
and prepaid
expenses 8,962 6,244
Total current
assets 143,821 135,302
------------- ------- -------
LONG-TERM RECEIVABLES:
Severance pay
fund 1,474 1,454
Long-term
deferred tax
assets 2,589 2,823
Other long-
term
receivables 1,857 1,088
----- -----
Total long-
term
receivables 5,920 5,365
------------
PROPERTY AND
EQUIPMENT,
NET 2,535 2,296
IDENTIFIABLE INTANGIBLE ASSETS AND
GOODWILL, NET 101,409 96,883
------- ------
TOTAL ASSETS $253,685 $239,846
======== ========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term
debt $1,154 $13
Trade
payables 6,342 6,331
Accrued
expenses and
other
accounts
payable 18,932 17,921
Deferred
revenues 8,768 4,092
Total current
liabilities 35,196 28,357
------------- ------ ------
NON-CURRENT LIABILITIES:
Long-term
debt 3,095 3,257
Long-term
deferred tax
liability 6,348 5,726
Liabilities
due to
acquisition
activities
and other 1,839 1,039
Accrued
severance
pay 2,457 2,616
----- -----
Total non-
current
liabilities 13,739 12,638
------------ ------ ------
REDEEMABLE
NON-
CONTROLLING
INTEREST 6,649 5,745
EQUITY:
Magic
Software
Enterprises
equity 196,087 191,008
Non-
controlling
interests 2,014 2,098
----- -----
Total equity 198,101 193,106
------------
TOTAL
LIABILITIES,
REDEEMABLE
NON-
CONTROLLING
INTEREST AND
EQUITY $253,685 $239,846
======== ========
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SOURCE Magic Software Enterprises Ltd
