- Total net revenues of $101.0 million during FY15
- Access rights renewal revenues were $65.8 million in FY15
- FY15 GAAP operating income of $25.3 million, Adjusted EBITDA of $37.0 million
- FY15 GAAP diluted EPS of $0.79, non-GAAP diluted EPS of $1.43
- Generated $24.3 million in free cash flow during FY15
- Cash and cash equivalents of $78.6 million and no debt as of December 31, 2015
- Repurchased approximately $6.4 million of stock during Q4, $20.0 million in FY15
WEST PALM BEACH, Fla. and NETANYA, Israel, March 15, 2016 (GLOBE NEWSWIRE) -- magicJack VocalTec Ltd. (Nasdaq:CALL), a leading VoIP cloud-based communications company, today announced financial results for the fourth quarter and full year ended December 31, 2015.
“The fourth quarter marked the start to the next chapter in the company’s history,” said Gerald Vento, President and CEO of magicJack VocalTec. “We have a number of growth opportunities that will leverage our core assets as well as open up new complementary markets. Longer-term, our ability to maximize shareholder value will be driven by the execution of these growth initiatives supported by our ongoing free cash flow generation and strong balance sheet.”
Fourth Quarter 2015 Financial Highlights:
- Net revenues: Total net revenues for the fourth quarter of 2015 were $24.6 million. Net revenues from the sales of magicJack devices were $3.8 million and access rights renewal revenues were $15.9 million, and accounted for 65% of total net revenues. Prepaid minute revenues were $1.8 million and access and wholesale charges were $1.6 million during the quarter. Other revenue contributed the remaining $1.4 million of total net revenues during the fourth quarter of 2015.
- Operating income: GAAP operating income for the fourth quarter of 2015 was $7.0 million.
- Adjusted EBITDA: Adjusted EBITDA for the fourth quarter of 2015 was $9.2 million.
- Net income: GAAP net income for the fourth quarter of 2015 was $1.9 million or $0.12 GAAP diluted net income per share based on 15.8 million weighted-average diluted ordinary shares outstanding.
- Non-GAAP net income: Non-GAAP net income for the fourth quarter of 2015 was $6.0 million or $0.38 non-GAAP net income per share based on 15.8 million weighted-average diluted ordinary shares outstanding.
- Cash and free cash flow: As of December 31, 2015, magicJack VocalTec had cash and cash equivalents of $78.6 million and no debt. During the fourth quarter of 2015, the company generated $5.6 million in free cash flow.
Full Year 2015 Financial Highlights:
- Net revenues: Total net revenues for the full year 2015 were $101.0 million. Net revenues from the sales of magicJack devices were $15.9 million and access rights renewal revenues were $65.8 million, and accounted for 65% of total net revenues. Prepaid minute revenues were $8.2 million and access and wholesale charges were $6.0 million during the full year 2015. Other revenue contributed the remaining $5.1 million of total net revenues during the full year 2015.
- Operating income: GAAP operating income for the full year 2015 was $25.3 million, compared to $13.6 million for 2014.
- Adjusted EBITDA: Adjusted EBITDA for the full year 2015 was $37.0 million, compared to $29.6 million for 2014.
- Net income: GAAP net income for the full year 2015 was $13.5 million, compared to $3.8 million for 2014. GAAP net income per diluted share was $0.79 based on 17.0 million weighted-average diluted ordinary shares outstanding for the full year 2015, compared to $0.21 per diluted, based on 17.9 million weighted-average diluted shares outstanding for 2014.
- Non-GAAP net income: Non-GAAP net income for the full year of 2015 was $24.5 million or $1.43 non-GAAP net income per share based on 17.0 million weighted-average diluted ordinary shares outstanding, compared to $19.1 million, or $1.07 non-GAAP net income per share based on 17.9 million weighted-average diluted ordinary shares outstanding for 2014.
- Free cash flow: During the full year 2015, the company generated $24.3 million in free cash flow, compared to $22.8 million for 2014.
A reconciliation of GAAP to non-GAAP measures, as well as the calculation of free cash flow has been provided in the tables included below in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Measures.”
Additional Fourth Quarter 2015 and Recent Highlights:
- As of December 31, 2015, magicJack had an estimated 2.44 million active MJ subscribers, which are defined as device users that are under an active subscription contract.
- magicJack activated 105,000 subscribers during the fourth quarter of 2015. Activations are defined as devices that become activated on to a subscription contract during a given period.
- During the quarter ended December 31, 2015, magicJack’s average monthly churn was 2.7%.
- During the quarter ended December 31, 2015, magicJack VocalTec Ltd. repurchased 608,613 shares of common stock at an average price of $10.57 per share as part of its stock repurchase program.
- Taking into account shares repurchased through December 31, 2015, the company repurchased a total of over 2.3 million shares at an average price of $8.59, which represents the full $20.0 million authorized amount under its stock repurchase program.
Quarterly Conference Call:
magicJack VocalTec will host a conference call today at 5:00 p.m. EDT to review the company's financial results for the fourth quarter and full year 2015. To access this call, dial 1-877-723-9509 (United States), or 1-718-325-4798 (international), with conference ID #1831134. A live webcast of the conference call will be accessible from the investor relations page of magicJack VocalTec’s website at http://www.vocaltec.com and a recording will be archived and accessible at http://www.vocaltec.com/events.cfm. A recording of this conference call will also be available through March 29, 2016, by dialing 1-877-870-5176 (United States), or 1-858-384-5517 (international). The recording access code is #1831134.
About magicJack VocalTec Ltd.
magicJack VocalTec Ltd. (Nasdaq:CALL), the inventor of magicJack and a pioneer in Voice over IP (VoIP) technology and services, is a leading cloud communications company. With its easy-to-use, low cost solution for telecommunications, the Company has sold more than 11 million award-winning magicJack devices, now in its fifth generation, has millions of downloads of its free calling app, and holds more than 30 technology patents. magicJack is the largest-reaching CLEC (Competitive Local Exchange Carrier) in the United States in terms of area codes available and number of states in which it is certified.
Non-GAAP Measures
The GAAP measures shown in this release exclude various items detailed further below.
- magicJack defines adjusted net revenues as net revenues minus the impact of certain tax matters.
- magicJack defines adjusted EBITDA as GAAP operating income excluding: depreciation and amortization, share-based compensation, impairment of intangible assets, transaction related expenses, severance payments, provision for device returns, transition costs related to introduction of a new device, a reversal of unused price protection accrual, the net change to provision for bad debt expense, write-down of inventory component, a legal settlement and certain tax matters.
- magicJack defines non-GAAP net income as GAAP net income excluding: share-based compensation, impairment of intangible asset, transaction related expenses, severance payments, provision for device returns, transition costs related to introduction of a new device, a reversal of unused price protection accrual, the net change to provision for bad debt expense, write-down of inventory component, a legal settlement, gain on investments, increase (decrease) in tax valuation allowance, foreign currency revaluations on tax assets and net uncertain tax positions.
- magicJack defines free cash flow as net cash provided by operating activities minus capital expenditures.
Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included with the financial information included in this press release. These measures are not in accordance with, or an alternative for, GAAP and may be different from non-GAAP measures used by other companies. Management believes that the presentation of non-GAAP results, when shown in conjunction with corresponding GAAP measures, provides useful information to management and investors regarding financial and business trends related to the company's results of operations. Further, management believes that these non-GAAP measures improve management's and investors' ability to compare the company's financial performance with other companies in the technology industry. Because these items vary significantly between companies, it is useful to compare results excluding these amounts as identified below.
Forward Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this press release, including statements about our projected cash flows, strategy, future operations, new product introductions and customer acceptance, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. These factors include, among other things: changes to our business resulting from increased competition; our ability to develop, introduce and market innovative products, services and applications; our ability to expand our network of retail partners and to increase sales of magicJack devices; our ability to successfully integrate the magicJack GO and magicJack Express devices with our mobile app; our ability to successfully monetize our mobile app and market it globally; delays in development we may experience with respect to magicJack devices or our mobile app; our customer turnover rate and our customer acceptance rate; changes in general economic, business, political and regulatory conditions; availability and costs associated with operating our network and our ability to control costs; potential liability resulting from pending or future litigation, or from changes in the laws, regulations or policies; the degree of legal protection afforded to our products; changes in the composition or restructuring of us or our subsidiaries and the successful completion of acquisitions, divestitures and joint venture activities; and the various other factors discussed in the “Risk Factors” section of our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission. Such factors, among others, could have a material adverse effect upon our business, results of operations and financial condition. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
magicJack® is a registered trademark of magicJack VocalTec Ltd. All other product or company names mentioned are the property of their respective owners.
Fourth quarter and full year 2015 financial tables follow:
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
| (In thousands except per share data) | ||||||||||||||||||
| (Unaudited) | Quarter | Quarter | Twelve Months | Twelve Months | ||||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||||
| 31-Dec-15 | 31-Dec-14 | 31-Dec-15 | 31-Dec-14 | |||||||||||||||
| Net revenues | $ | 24,631 | $ | 25,716 | $ | 100,962 | $ | 116,322 | ||||||||||
| Cost of revenues | 7,781 | 8,650 | 34,142 | 42,541 | ||||||||||||||
| Gross profit | 16,850 | 17,066 | 66,820 | 73,781 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Marketing | 2,469 | 5,204 | 9,409 | 20,434 | ||||||||||||||
| General and administrative | 6,250 | 7,191 | 27,547 | 33,912 | ||||||||||||||
| Research and development | 1,103 | 1,258 | 4,521 | 5,871 | ||||||||||||||
| Total operating expenses | 9,822 | 13,653 | 41,477 | 60,217 | ||||||||||||||
| Operating income | 7,028 | 3,413 | 25,343 | 13,564 | ||||||||||||||
| Other income (expense): | ||||||||||||||||||
| Gains on investments | - | - | - | 37 | ||||||||||||||
| Interest and dividend income | 3 | 9 | 26 | 117 | ||||||||||||||
| Interest expense | - | (38 | ) | (57 | ) | (192 | ) | |||||||||||
| Other income (expense), net | 2 | - | - | 4 | ||||||||||||||
| Total other income (expense) | 5 | (29 | ) | (31 | ) | (34 | ) | |||||||||||
| Income before income taxes | 7,033 | 3,384 | 25,312 | 13,530 | ||||||||||||||
| Income tax expense (benefit) | 5,094 | 7,186 | 11,802 | 9,745 | ||||||||||||||
| Net income (loss) | $ | 1,939 | $ | (3,802 | ) | $ | 13,510 | $ | 3,785 | |||||||||
| Earnings (loss) per ordinary share: | ||||||||||||||||||
| Basic | $ | 0.12 | $ | (0.21 | ) | $ | 0.80 | $ | 0.21 | |||||||||
| Diluted | $ | 0.12 | $ | (0.21 | ) | $ | 0.79 | $ | 0.21 | |||||||||
| Weighted average ordinary shares outstanding: | ||||||||||||||||||
| Basic | 15,715 | 17,841 | 16,975 | 17,831 | ||||||||||||||
| Diluted | 15,771 | 17,841 | 17,045 | 17,868 | ||||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS INFORMATION | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| As of | As of | |||||||
| ASSETS | 31-Dec-15 | 31-Dec-14 | ||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 78,589 | $ | 75,945 | ||||
| Marketable securities, at fair value | 367 | 367 | ||||||
| Accounts receivable, net of allowance for doubtful accounts and billing adjustments | 2,925 | 3,903 | ||||||
| Inventories | 5,723 | 5,635 | ||||||
| Deferred costs | 2,097 | 2,765 | ||||||
| Deferred tax assets, current | - | 13,341 | ||||||
| Prepaid income taxes | 2,747 | 12,513 | ||||||
| Deposits and other current assets | 2,655 | 1,170 | ||||||
| Total current assets | 95,103 | 115,639 | ||||||
| Property and equipment, net | 3,302 | 3,564 | ||||||
| Intangible assets, net | 6,687 | 9,473 | ||||||
| Goodwill | 32,304 | 32,304 | ||||||
| Deferred tax assets, non-current | 30,689 | 32,510 | ||||||
| Deposits and other non-current assets | 751 | 743 | ||||||
| Total Assets | $ | 168,836 | $ | 194,233 | ||||
| LIABILITIES AND CAPITAL EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 1,086 | $ | 2,879 | ||||
| Income tax payable | - | 9,197 | ||||||
| Accrued expenses and other current liabilities | 6,284 | 8,406 | ||||||
| Deferred revenue, current portion | 52,554 | 56,445 | ||||||
| Total current liabilities | 59,924 | 76,927 | ||||||
| Deferred revenue, net of current portion | 50,146 | 54,782 | ||||||
| Other non-current liabilities | 11,098 | 13,438 | ||||||
| Total Capital Equity | 47,668 | 49,086 | ||||||
| Total Liabilities and Capital Equity | $ | 168,836 | $ | 194,233 | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | Twelve Months | Twelve Months | ||||||
| Ended | Ended | |||||||
| 31-Dec-15 | 31-Dec-14 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 13,510 | $ | 3,785 | ||||
| Provision for doubtful accounts and billing adjustments | 81 | 444 | ||||||
| Share-based compensation | 5,268 | 7,190 | ||||||
| Depreciation and amortization | 3,585 | 4,823 | ||||||
| Impairment of intangible assets | - | 2,464 | ||||||
| (Decrease) increase of uncertain tax position | (1,789 | ) | 14,166 | |||||
| Deferred income tax provision (benefit) | 12,863 | (4,423 | ) | |||||
| Interest expense - non-cash | 57 | 192 | ||||||
| Gains on investments | - | (37 | ) | |||||
| Fair value loss on common equity put options | - | - | ||||||
| Changes in operating assets and liabilities | (8,211 | ) | (3,579 | ) | ||||
| Net cash provided by operating activities | 25,364 | 25,025 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of investments | - | - | ||||||
| Proceeds from sales of investments | - | 9,094 | ||||||
| Purchases of property and equipment | (1,024 | ) | (2,213 | ) | ||||
| Acquisition of intangible assets | - | (485 | ) | |||||
| Net cash (used in) provided by investing activities | (1,024 | ) | 6,396 | |||||
| Cash flows from financing activities: | ||||||||
| Purchase of treasury stock | (20,000 | ) | - | |||||
| Payment of other current liabilities | (1,500 | ) | (1,500 | ) | ||||
| Repurchase of shares to settle withholding liability | (198 | ) | - | |||||
| Proceeds from exercise of ordinary share options | 2 | 27 | ||||||
| Payment of other non-current liabilities | - | - | ||||||
| Net cash used in financing activities | (21,696 | ) | (1,473 | ) | ||||
| Net increase in cash and cash equivalents | 2,644 | 29,948 | ||||||
| Cash and cash equivalents, beginning of period | 75,945 | 45,997 | ||||||
| Cash and cash equivalents, end of period | $ | 78,589 | $ | 75,945 | ||||
| RECONCILIATION OF NET REVENUES TO ADJUSTED NET REVENUES | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| (Unaudited) | Quarter | Quarter | Twelve Months | Twelve Months | ||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||
| 31-Dec-15 | 31-Dec-14 | 31-Dec-15 | 31-Dec-14 | |||||||||||||
| Net revenues | $ | 24,631 | $ | 25,716 | $ | 100,962 | $ | 116,322 | ||||||||
| Certain tax matters | (309 | ) | - | (309 | ) | - | ||||||||||
| Non-GAAP net revenues | $ | 24,322 | $ | 25,716 | $ | 100,653 | $ | 116,322 | ||||||||
| RECONCILIATION OF OPERATING INCOME TO ADJUSTED EBITDA | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| (Unaudited) | Quarter | Quarter | Twelve Months | Twelve Months | ||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||
| 31-Dec-15 | 31-Dec-14 | 31-Dec-15 | 31-Dec-14 | |||||||||||||
| GAAP Operating income | $ | 7,028 | $ | 3,413 | $ | 25,343 | $ | 13,564 | ||||||||
| Depreciation and amortization | 708 | 1,012 | 3,585 | 4,823 | ||||||||||||
| Share-based compensation | 1,362 | 1,476 | 5,268 | 7,190 | ||||||||||||
| Impairment of intangible asset | - | - | - | 2,464 | ||||||||||||
| Transaction related expenses | 79 | 603 | 738 | 603 | ||||||||||||
| Severance payments | - | - | 1,331 | - | ||||||||||||
| Provision for device returns | - | 153 | (52 | ) | 740 | |||||||||||
| Transition costs related to introduction of new device | - | 110 | 5 | 468 | ||||||||||||
| Reversal of unused price protection accrual | - | - | - | (123 | ) | |||||||||||
| Net change to provision for bad debt expense | 1 | (12 | ) | 75 | (129 | ) | ||||||||||
| Write-down of inventory component | 375 | - | 375 | - | ||||||||||||
| Legal settlement | - | - | 675 | - | ||||||||||||
| Certain tax matters | (309 | ) | - | (309 | ) | - | ||||||||||
| Adjusted EBITDA | $ | 9,244 | $ | 6,755 | $ | 37,034 | $ | 29,600 | ||||||||
| RECONCILIATION OF NET INCOME TO NON-GAAP NET INCOME | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| (Unaudited) | Quarter | Quarter | Twelve Months | Twelve Months | ||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||
| 31-Dec-15 | 31-Dec-14 | 31-Dec-15 | 31-Dec-14 | |||||||||||||
| GAAP Net income | $ | 1,939 | $ | (3,802 | ) | $ | 13,510 | $ | 3,785 | |||||||
| Share-based compensation | 1,362 | 1,476 | 5,268 | 7,190 | ||||||||||||
| Impairment of intangible asset | - | - | - | 2,464 | ||||||||||||
| Transaction related expenses | 79 | 603 | 738 | 603 | ||||||||||||
| Severance payments | - | - | 1,331 | - | ||||||||||||
| Provision for device returns | - | 153 | (52 | ) | 740 | |||||||||||
| Transition costs related to introduction of new device | - | 110 | 5 | 468 | ||||||||||||
| Reversal of unused price protection accrual | - | - | - | (123 | ) | |||||||||||
| Net change to provision for bad debt expense | 1 | (12 | ) | 75 | (129 | ) | ||||||||||
| Write-down of inventory component | 375 | - | 375 | - | ||||||||||||
| Legal settlement | - | - | 675 | - | ||||||||||||
| Gain on investments | - | - | - | (37 | ) | |||||||||||
| Increase (decrease) in tax valuation allowance | 1,463 | (1,339 | ) | 1,314 | (1,339 | ) | ||||||||||
| Foreign currency revaluations on tax assets | (347 | ) | 4,326 | 353 | 4,326 | |||||||||||
| Uncertain tax positions, net | 1,111 | 1,196 | 864 | 1,196 | ||||||||||||
| Non-GAAP Net income | $ | 5,983 | $ | 2,711 | $ | 24,456 | $ | 19,144 | ||||||||
| GAAP earnings (loss) per ordinary share – Diluted | $ | 0.12 | $ | (0.21 | ) | $ | 0.79 | $ | 0.21 | |||||||
| Share-based compensation | 0.09 | 0.08 | 0.31 | 0.40 | ||||||||||||
| Impairment of intangible asset | - | - | - | 0.14 | ||||||||||||
| Transaction related expenses | 0.01 | 0.03 | 0.04 | 0.03 | ||||||||||||
| Severance payments | - | - | 0.08 | - | ||||||||||||
| Provision for device returns | - | 0.01 | (0.00 | ) | 0.04 | |||||||||||
| Transition costs related to introduction of new device | - | 0.01 | 0.00 | 0.03 | ||||||||||||
| Reversal of unused price protection accrual | - | - | - | (0.01 | ) | |||||||||||
| Net change to provision for bad debt expense | 0.00 | (0.00 | ) | 0.00 | (0.01 | ) | ||||||||||
| Write-down of inventory component | 0.02 | - | 0.02 | - | ||||||||||||
| Legal settlement | - | - | 0.04 | - | ||||||||||||
| Gain on investments | - | - | - | (0.00 | ) | |||||||||||
| Release of tax valuation allowance | 0.09 | (0.08 | ) | 0.08 | (0.07 | ) | ||||||||||
| Foreign currency revaluations on tax assets | (0.02 | ) | 0.24 | 0.02 | 0.24 | |||||||||||
| Uncertain tax positions, net | 0.07 | 0.07 | 0.05 | 0.07 | ||||||||||||
| Non-GAAP Net income per share – Diluted | $ | 0.38 | $ | 0.15 | $ | 1.43 | $ | 1.07 | ||||||||
| Weighted average ordinary shares outstanding - Diluted: | 15,771 | 17,841 | 17,045 | 17,868 | ||||||||||||
| RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| (Unaudited) | Quarter | Quarter | Twelve Months | Twelve Months | ||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||
| 31-Dec-15 | 31-Dec-14 | 31-Dec-15 | 31-Dec-14 | |||||||||||||
| Net cash provided by operating activities | $ | 6,033 | $ | 1,519 | $ | 25,364 | $ | 25,025 | ||||||||
| Less: Capital expenditures | (476 | ) | (302 | ) | (1,024 | ) | (2,213 | ) | ||||||||
| Free cash flow | $ | 5,557 | $ | 1,217 | $ | 24,340 | $ | 22,812 | ||||||||