OR YEHUDA, Israel, Nov. 4, 2009 (GLOBE NEWSWIRE) -- Magic Software Enterprises Ltd. (Nasdaq:MGIC), a provider of application platforms and business and process integration solutions, today announced its financial results for the third quarter ended September 30, 2009. All references to $ are to U.S. Dollars.
Financial Highlights for the Quarter
- Revenues for the third quarter were $13.5 million compared to $13.6 million in the second quarter of 2009.
- Operating income in the third quarter was $0.8 million compared to $1.0 million in the second quarter of 2009.
- Net income for the third quarter was $0.9 million, compared to $1.1 million in the second quarter of 2009.
- Total cash, cash equivalents and short-term investments as of September 30, 2009 were $37 million, compared to $33 million as of December 31, 2008.
Financial Highlights for the First Nine Months
- Cash flow from operations for the first nine months of 2009 amounted to $4.3 million.
- Revenues reached $40.9 million, compared to $46.9 million for the first nine months of 2008.
- Operating income was $2.5 million, compared to $3.1 million for the first nine months of 2008.
- Net income was $2.7 million, compared to $3.4 million for the first nine months of 2008.
Comments of Management
Guy Bernstein, Chairman of Magic Software, commented on the results: "We are pleased to report an eleventh consecutive quarter of profitability for the company, which comes despite the continuing challenges in the global economy. Notwithstanding these challenges, we have been successful in obtaining new business this year, including twenty new customers in the U.S. alone. While cautiously encouraged by the reviving markets in the U.S. and Japan, we continue to exercise fiscal and operational restraint. To ensure ongoing stability and profitability, we continue to invest in our core growth engines."
Summary of the Quarter
- Eyal Pfeifel has been appointed as the company's new CTO. Eyal brings with him previous Magic Software experience and 20 years in planning and managing large-scale and innovative technology projects.
- The company's U.S. branch continues to gain new customers, and increased revenues and profits this quarter.
- The company's Japanese branch also showed improved revenues and profitability thanks to careful planning, and provides a basis for cautious optimism in the Japanese market recovery.
- The uniPaaS application platform continues to be adopted worldwide. The company is now implementing close to 100 uniPaaS RIA projects in Japan alone.
- Other significant uniPaaS deals include uniPaaS RIA for KLAFS, Europe's leading sauna and spa manufacturer; and Bank Leumi, Israel's leading commercial bank, which is migrating 60 of its applications to uniPaaS.
- The company has won a number of new iBOLT deals, including a SaaS/on-premise integration for Clinical Financial Services in the U.S.; a Lotus Notes integration for MintWave in Japan; a Salesforce.com/SAP R/3 integration for AVL in Austria; and a SAPR/3 integration for KLAFS in Germany. The company also entered into a new partnership agreement with nefos GmbH, a leading consulting partner for Salesforce.com, based in Zurich, Switzerland.
- Magic Software's executives continue to speak at industry events, including the recent Software Business 2009 Conference and the 2009 Quest West Conference.
- Magic Software joined Salesforce.com Foundation's 'Power of Us' partner program.
- The company was ranked 250 among the World's Largest Software Companies by Software Magazine.
- The company's uniPaaS and iBOLT solutions gained significant media coverage in the quarter from specialist IT media publications including IT-Business, banking technology, ebizQ, Channel Pro, ITBusinessEdge, ITWeb, manufacturing.net, SaaS Directory, BCW, Software Mag.com, and Retail Technology. For a full listing of our media coverage read here.
- Magic Software was included in five Gartner and Forrester industry analyst reports this quarter. Magic Software's uniPaaS was recently added to Gartner's Magic Quadrant for Enterprise Application Servers, (Gartner Report, 24 September 2009, Yefim V. Natis, Massimo Pezzini, Kimihiko Iijima).
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 and;
-
Equity-based compensation expense.
Magic Software's management believes that the presentation of non-GAAP measures provide 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 Software believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Magic Software's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Magic Software'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
Magic Software Enterprises Ltd. (Nasdaq:MGIC) is a global provider of multiple-mode application platform solutions -- including Full Client, Rich Internet Applications (RIA) or Software-as-a-Service (SaaS) modes -- and business and process integration solutions. Magic Software has offices in 10 countries and a presence in over 50, as well as a global network of ISV's, system integrators, value-added distributors and resellers, and consulting and OEM partners. The company's award-winning code-free solutions give partners and customers the power to leverage existing IT resources, enhance business agility and focus on core business priorities. Magic Software's technological approach, product roadmap and corporate strategy are recognized by leading industry analysts. Magic Software has partnerships with global IT leaders including SAP AG, salesforce.com, IBM and Oracle. For more information about Magic Software and its products and services, visit www.magicsoftware.com, and for more about our industry related news, business issues and trends, read the Magic Software Blog.
The Magic Software Enterprises Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5524
Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that may involve a number of risks and uncertainties. Actual results may 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 here and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in the Company's most recent annual report and other filings with the Securities and Exchange Commission.
MAGIC SOFTWARE ENTERPRISES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share data)
(Unaudited)
Three
Three months months Nine months
ended ended ended
September 30, June 30, September 30,
----------------- -------- -----------------
2009 2008 2009 2009 2008
-------- -------- -------- -------- --------
Revenues 13,504 15,809 13,595 40,869 46,909
Cost of Revenues 6,625 6,648 6,443 19,805 20,216
-------- -------- -------- -------- --------
Gross profit 6,879 9,161 7,152 21,064 26,693
-------- -------- -------- -------- --------
Research and
development, net 358 676 260 957 1,697
Selling, general and
administrative expenses 5,709 6,873 5,937 17,600 21,922
Total operating
expenses, net 6,067 7,549 6,197 18,557 23,619
-------- -------- -------- -------- --------
Operating income 812 1,612 955 2,507 3,074
-------- -------- -------- -------- --------
Financial income
(expenses), net 154 123 (78) 140 482
Other income (expenses),
net (63) 42 286 223 24
-------- -------- -------- -------- --------
Income before taxes on
income 903 1,777 1,163 2,870 3,580
Taxes on income 1 70 76 167 145
-------- -------- -------- -------- --------
Income after taxes on
income 902 1,707 1,087 2,703 3,435
Minority interest -- (1) -- -- (3)
Equity in losses of
affiliates -- -- -- -- (8)
-------- -------- -------- -------- --------
Net income 902 1,706 1,087 2,703 3,424
Basic net earnings per
share 0.03 0.05 0.03 0.08 0.11
Diluted net earnings per
share 0.03 0.05 0.03 0.08 0.11
Weighted average number
of shares used in
computing net earnings
per share
Basic 31,894 31,829 31,894 31,894 31,727
======== ======== ======== ======== ========
Diluted 32,169 32,159 32,009 32,038 32,039
======== ======== ======== ======== ========
MAGIC SOFTWARE ENTERPRISES LTD.
RECONCILIATION BETWEEN GAAP AND NON-GAAP
STATEMENTS OF OPERATIONS FOR COMPARATIVE PURPOSES
U.S. dollars in thousands (except per share data)
Three months Nine months
ended ended
September 30, September 30,
(Unaudited) (Unaudited)
--------------- ---------------
2009 2008 2009 2008
------- ------- ------- -------
GAAP operating income 812 1,612 2,507 3,074
Amortization of intangibles 950 767 2,700 1,817
Capitalization of software
development (771) (421) (2,356) (2,031)
Stock-based compensation 64 (168) 189 412
------- ------- ------- -------
Total adjustments to GAAP 243 178 533 198
------- ------- ------- -------
Non-GAAP operating income 1,055 1,790 3,040 3,272
======= ======= ======= =======
GAAP net income 902 1,706 2,703 3,424
Total adjustments to GAAP as above 243 178 533 198
Non-GAAP net income 1,145 1,884 3,236 3,622
======= ======= ======= =======
Non-GAAP basic net earnings per
share 0.04 0.06 0.10 0.11
======= ======= ======= =======
Weighted average number of shares
used in computing basic net
earnings per share 31,894 31,829 31,894 31,727
======= ======= ======= =======
Non-GAAP diluted net earnings per
share 0.04 0.06 0.10 0.11
======= ======= ======= =======
Weighted average number of shares
used in computing diluted net
earnings per share 32,276 32,159 32,115 32,039
======= ======= ======= =======
MAGIC SOFTWARE ENTERPRISES LTD.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
September 30,
2009 December 31,
(Unaudited) 2008
-------------- --------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 20,392 27,309
Short-term bank deposits 12,557 1,810
Available for sale marketable
securities 3,905 3,469
Trade receivable, net 11,935 13,140
Other accounts receivable and
prepaid expenses 2,567 1,933
Current assets of discontinued
operation 32 31
-------------- --------------
Total current Assets 51,388 47,692
-------------- --------------
LONG-TERM INVESTMENTS:
Severance pay fund 385 316
Long-term lease deposits 267 235
-------------- --------------
Total long-term investments 652 551
Property and equipment, net 4,911 5,436
Goodwill 16,900 16,829
Other intangible assets, net 10,311 10,656
-------------- --------------
TOTAL ASSETS 84,162 81,164
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term credit and current
maturities of long term loans 76 147
Trade payables 2,845 2,988
Deferred revenues 3,664 1,643
Accrued expenses and other
accounts payable 6,616 8,691
Current liabilities of
discontinued operation 391 372
-------------- --------------
Total current liabilities 13,592 13,841
-------------- --------------
Long-term loans 17 33
Accrued severance pay 598 535
-------------- --------------
Total non-current Liabilities 615 568
-------------- --------------
SHAREHOLDERS' EQUITY 69,955 66,755
-------------- --------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 84,162 81,164
============== ==============