Magic Reports Strong Performance in the Second Quarter of 2012 with 39% Growth in Non-GAAP Operating Income Year Over Year
Company Reports Solid Cash Position with $13 Million Operating Cash Flow for the First Half of 2012 and $44 Million in Total Net Cash as of June 30, 2012
OR YEHUDA, Israel, August 8, 2012 /PRNewswire/ --
Magic Software Enterprises Ltd. (NASDAQ: MGIC), a global provider of software platforms for enterprise mobility, cloud applications, and business integration, announced today its financial results for the first half of 2012.
Financial Highlights for the Six-Month Period Ended June 30, 2012
- Revenues for the first half of 2012 increased 10% to $58.1 million compared to $52.9 million in the same period last year.
- Operating income for the first half of 2012 increased 23% to $8.0 million compared to $6.5 million in the same period last year; Non-GAAP operating income for the first half of 2012 increased 50% to $9.0 million compared to $6.0 million in the same period last year.
- Net income for the first half of 2012 increased 17% to $7.8 million compared to $6.7 million in the same period last year; Non-GAAP net income for the first half of 2012 increased 41% to $8.6 million compared to $6.1 million in the same period last year.
- Operating cash flow for the first half of 2012 totaled $13 million.
- Total net cash, cash equivalents and short-term investments as of June 30, 2012, amounted to $43.7 million.
Financial Highlights for the Second Quarter Ended June 30, 2012
- Second quarter revenues increased 2% to $28 million compared to $27.4 million in the same period last year.
- Operating income for the second quarter increased 12% to $3.8 million, compared to $3.4 million in the same period last year; Non-GAAP operating income for the second quarter increased 39% to $4.3 million, compared to $3.1 million in the same period last year.
- Net income for the second quarter increased 2% to $3.6 million compared to $3.5 million in the same period last year. Non-GAAP net income for the second quarter increased 24% to $4.1 million compared to $3.3 million in the same period last year. Net income for the second quarter of 2012 was affected by $0.3 million of expenses related to the devaluation of the Euro versus the US dollar.
Results
- For the six-month period ended June 30, 2012, total revenues were $58.1 million, with net income of $7.8 million, or $0.21 per fully diluted share. This compares with revenues of $52.9 million and net income of $6.7 million, or $0.18 per fully diluted share, for the same period last year.
- For the second quarter ended June 30, 2012, total revenues were $28.0 million, with net income of $3.6 million, or $0.1 per fully diluted share. This compares with revenues of $27.4 million and net income of $3.5 million, or $0.1 per fully diluted share for the same period last year.
Comments of Management
Commenting on the results, Guy Bernstein, Chief Executive Officer of Magic Software Enterprises, said: "The first half of 2012 was a very successful period for Magic, with strong performance across the board. We recently extended our mobile offering to include support for the iOS and Android mobile platforms for smartphones and tablets, enhancing the flexibility and future-readiness of our productive and scalable solution for enterprise mobility."
"Our expectations for stronger demand during the second half of 2012, combined with our continued strong cash position, provide us with a positive outlook towards further growth in 2012," concluded Mr. Bernstein.
Non-GAAP Financial Measures
This release includes non-GAAP operating income, net income, basic and diluted earnings per share and other non-GAAP financial measures. These non-GAAP measures exclude the following items:
- Amortization of purchased intangible assets
- In-process research and development capitalization and amortization
- Equity-based compensation expense and
- Related tax effect
Magic's management believes that the presentation of non-GAAP measures provides useful information to investors and management regarding financial and business trends relating to the Company's financial condition and results of operations as well as the net amount of cash generated by its business operations after taking into account capital spending required to maintain or expand the business.
These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Magic believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Magic's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Magic's results of operations in conjunction with the corresponding GAAP measures. Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.
About Magic Software Enterprises
Magic Software Enterprises (NASDAQ: MGIC) empowers customers and partners around the globe with smarter technology that provides a multichannel user experience of enterprise logic and data.
For more information, visit http://www.magicsoftware.com.
Except for any historical information contained herein, matters discussed in this press release might include forward-looking statements that involve a number of risks and uncertainties. Regarding any financial statements, actual results might vary significantly based upon a number of factors including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product conditions, both locally and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in Magic's most recent annual report and other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
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.
CONSOLIDATED STATEMENTS OF INCOME
U.S. dollars in thousands (except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2012 2011 2012 2011
--------- --------- --------- ---------
Unaudited Unaudited
--------------------- ---------------------
Revenues 28,030 27,380 58,072 52,868
Cost of Revenues 16,101 16,318 33,018 31,474
--------- --------- --------- ---------
Gross profit 11,929 11,062 25,054 21,394
--------- --------- --------- ---------
Research and development, net 336 454 1,242 820
Selling, marketing and general and
administrative expenses 7,790 7,205 15,784 14,040
Total operating costs and expenses 8,126 7,659 17,026 14,860
--------- --------- --------- ---------
Operating income 3,803 3,403 8,028 6,534
--------- --------- --------- ---------
Financial income (expenses) , net (234) 149 (198) 251
Other income, net 67 62 67 73
--------- --------- --------- ---------
Income before taxes on income 3,636 3,614 7,897 6,858
Taxes on income 23 - 67 43
--------- --------- --------- ---------
Net income 3,613 3,614 7,830 6,815
Net income attributable to
non-controlling interests (9) (67) (15) (155)
--------- --------- --------- ---------
Net income attributable to
Magic Shareholders 3,604 3,547 7,815 6,660
Earnings per share (basic) 0.10 0.10 0.21 0.18
========= ========= ========= =========
Earnings per share (diluted) 0.10 0.10 0.21 0.18
========= ========= ========= =========
Number of shares used in computing
earnings per share (basic) 36,503 36,299 36,458 36,192
========= ========= ========= =========
Number of shares used in computing
earnings per share (diluted) 37,170 37,144 37,170 37,109
========= ========= ========= =========
MAGIC SOFTWARE ENTERPRISES LTD.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
U.S. dollars in thousands (except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2012 2011 2012 2011
---------- -------- ---------- --------
Unaudited Unaudited
--------------------- ---------------------
GAAP operating income 3,803 3,403 8,028 6,534
Amortization of capitalized software
and other intangible assets 1,471 880 2,893 1,763
Capitalization of software development (1,091) (1,304) (2,213) (2,593)
Stock-based compensation 143 144 297 308
---------- -------- ---------- --------
Total adjustments to GAAP 523 (280) 977 (522)
---------- -------- ---------- --------
Non-GAAP operating income 4,326 3,123 9,005 6,012
---------- -------- ---------- --------
GAAP net income 3,604 3,547 7,815 6,660
Amortization of capitalized software
and other intangible assets 1,471 880 2,893 1,763
Capitalization of software development (1,091) (1,304) (2,213) (2,593)
Stock-based compensation 143 144 297 308
Taxes on the above items (63) - (157) -
---------- -------- ---------- --------
Total adjustments to GAAP 460 (280) 820 (522)
---------- -------- ---------- --------
Non-GAAP net income 4,064 3,267 8,635 6,138
========== ======== ========== ========
Non-GAAP earnings per share (basic) 0.11 0.09 0.24 0.17
========== ======== ========== ========
Weighted average number of shares used in
computing earnings per share (basic) 36,503 36,299 36,458 36,192
---------- -------- ---------- --------
Non-GAAP earnings per share (diluted) 0.11 0.09 0.23 0.17
========== ======== ========== ========
Weighted average number of shares used in
computing earnings per share (diluted) 37,286 37,247 37,293 37,210
---------- -------- ---------- --------
MAGIC SOFTWARE ENTERPRISES LTD.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
June 30, December 31,
----------------------------
2012 2011
------------ --------------
Unaudited
------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 42,400 28,711
Short-term bank deposits 397 2,170
Available-for-sale marketable securities 878 1,241
Trade receivables, net 23,685 24,946
Other accounts receivable and prepaid expenses 5,563 6,401
------------ --------------
Total current Assets 72,923 63,469
------------ --------------
LONG-TERM RECEIVABLES:
Severance pay fund 360 351
Other Long-term receivables 3,572 3,824
------------ --------------
Total other long-term receivables 3,932 4,175
PROPERTY AND EQUIPMENT, NET 1,908 2,029
IDENTIFIABLE INTANGIBLE ASSETS AND
GOODWILL, NET 65,672 66,512
------------ --------------
TOTAL ASSETS 144,435 136,185
============ ==============
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term credit and current maturities
of long term loans - 4
Trade payables 3,894 3,545
Accrued expenses and other accounts payable 13,416 16,797
Deferred tax liability 2,368 2,359
Deferred revenues 9,421 5,092
------------ --------------
Total current liabilities 29,099 27,797
------------ --------------
NON CURRENT LIABILITIES:
Long-term loans 25 9
Deferred tax Liabilities 720 296
Liability due to acquisition activities - 1,350
Accrued severance pay 1,083 1,087
------------ --------------
Total non-current Liabilities 1,828 2,742
------------ --------------
EQUITY:
Magic Shareholders' equity 113,003 105,156
Non-controlling interests 505 490
------------ --------------
Total equity 113,508 105,646
TOTAL LIABILITIES AND EQUITY 144,435 136,185
============ ==============
Press Contact:
Tania Amar | VP Global Marketing
Magic Software Enterprises
[email protected]
SOURCE Magic Software Enterprises Ltd
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