Magic Continues Growth Streak with Record Q3 2013 Non-GAAP Operating Income of $6.0 Million, an Increase of 31% Year over Year; Revenues for Q3 2013 Grew 9% Year over Year to $35.6 Million Non-GAAP operating income for the first nine months increased 17% to a record $15.9 million; Revenues for the first nine months increased 14% year over year to $103.8 million

OR YEHUDA, Israel, Nov. 6, 2013 /PRNewswire/ -- Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC), a global provider of mobile and cloud-enabled application and business integration platforms, announced today its financial results for the third quarter and first nine months of 2013.

Financial Highlights for the Third Quarter Ended September 30, 2013

  • Revenues for the third quarter increased 9% year over year to $35.6 million from $32.6 million.
  • Non-GAAP operating income for the third quarter increased 31% to $6.0 million, compared to $4.6 million in the same period last year; Operating income increased 21% to $5.0 million, compared to $4.1 million in the same period last year.
  • Non-GAAP net income for the third quarter increased 23% to $5.5 million, compared to $4.5 million in the same period last year; Net income increased 2% to $4.2 million (or $0.11 per fully diluted share) compared to $4.1 million (or $0.11 per fully diluted share) in the same period last year. The increase in net income was negatively impacted by tax expenses recorded with respect to utilization of deferred tax assets. In accordance with U.S. generally accepted accounting principles, the Company records deferred tax expenses on utilization of carry-forward tax losses.

Financial Highlights for the Nine-Month Period Ended September 30, 2013

  • Revenues for the first nine months of 2013 increased 14% to $103.8 million compared to $90.7 million in the same period last year.
  • Non-GAAP operating income for the first nine months of 2013 increased 17% to $15.9 million compared to $13.6 million in the same period last year; Operating income for the first nine months of 2013 increased 13% to $13.7 million compared to $12.2 million in the same period last year.
  • Non-GAAP net income for the first nine months of 2013 increased 3% to $13.5 million compared to $13.1 million in the same period last year; Net income for the first nine months of 2013 decreased 6% to $11.2 million (or $0.30 per fully diluted share), compared to $11.9 million (or $0.32 per fully diluted share) in the same period last year. The decrease in net income was mainly attributable to tax expenses recorded with respect to utilization of deferred tax assets.
  • Operating cash flow for the first nine months of 2013 totaled $13.1 million.
  • Total cash, cash equivalents and short-term investments as of September 30, 2013, amounted to $39.2 million, with no debt.

Comments of Management

Guy Bernstein, Chief Executive Officer of Magic Software Enterprises, said, "We are pleased to report another record quarter with strong year-over-year growth across all areas of our business and all regions. We are seeing great interest in the recent enhancements we have made to enrich our enterprise mobility, integration and services offerings. We are committed to maximizing our opportunities by continuing to strengthen our positions in these growth markets now and in the years to come."

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
  • Unwinding of discount in connection with liabilities due to acquisitions
  • Related tax effects of the above items

Magic Software'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 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.

Refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.

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.

Press Contact:

Tania Amar, VP Global Marketing 
Magic Software Enterprises 
Tel: +972 (0)3 538 9300 
tania@magicsoftware.com

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. 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 


Nine months ended 


September 30,


September 30,


2013


2012


2013


2012


Unaudited


Unaudited

Revenues

35,596


32,578


103,766


90,650

Cost of Revenues

20,733


19,583


61,588


52,601

Gross profit 

14,863


12,995


42,178


38,049

Research and development, net

979


892


2,781


2,134

Selling, marketing and general and








    administrative expenses

8,914


7,981


25,719


23,765

Total operating costs and expenses

9,893


8,873


28,500


25,899

Operating income 

4,970


4,122


13,678


12,150

Financial expenses, net

(74)


15


(594)


(183)

Other income, net

-


69


-


136

Income before taxes on income

4,896


4,206


13,084


12,103

Taxes on income

357


(25)


1,134


42

Net income

4,539


4,231


11,950


12,061

Change in redeemable non-controlling interests

(208)


-


(401)


-

Net income attributable to non-controlling interests 

(142)


(116)


(359)


(131)

Net income attributable to Magic's shareholders 

4,189


4,115


11,190


11,930









Net earnings per share








Basic 

0.11


0.11


0.30


0.33

Diluted

0.11


0.11


0.30


0.32









Weighted average number of shares used in 








     computing net earnings per share
















        Basic

36,877


36,541


36,877


36,485




.





        Diluted

37,405


37,062


37,240


37,129









 

 

MAGIC SOFTWARE ENTERPRISES LTD.










RECONCILIATION BETWEEN GAAP AND NON-GAAP 








STATEMENTS OF INCOME FOR COMPARATIVE PURPOSES







U.S. dollars in thousands (except per share data)


















































Three months ended 


Nine months ended 






September 30,


September 30,






2013


2012


2013


2012






Unaudited


Unaudited













GAAP operating income



4,970


4,122


13,678


12,150

Amortization of capitalized software and other intangible assets

1,982


1,418


5,510


4,311

Capitalization of software development



(1,066)


(1,131)


(3,566)


(3,344)

Stock-based compensation



70


143


255


440

Total adjustments to GAAP



986


430


2,199


1,407

Non-GAAP operating income



5,956


4,552


15,877


13,557

























GAAP net income 




4,189


4,115


11,190


11,930

Amortization of capitalized software and other intangible assets

1,982


1,418


5,510


4,311

Capitalization of software development



(1,066)


(1,131)


(3,566)


(3,344)

Stock-based compensation



70


143


255


440

Unwinding of discount in connection with liabilities due to acquisitions

50


-


265


-

Amortization expenses attributed to redeemable non-controlling interests 

(55)


-


(115)


-

Deferred taxes on the above items



334


(62)


(3)


(219)

Total adjustments to GAAP 



1,315


368


2,346


1,188

Non-GAAP net income



5,504


4,483


13,536


13,118

























Non-GAAP basic net earnings per share 



0.15


0.12


0.37


0.36

Weighted average number of shares used in










   computing basic net earnings per share 



36,877


36,541


36,877


36,485













Non-GAAP diluted net earnings per share 



0.15


0.12


0.36


0.35

Weighted average number of shares used in










   computing diluted net earnings per share



37,437


37,129


37,287


37,234













 

 

 

MAGIC SOFTWARE ENTERPRISES LTD.




CONSOLIDATED BALANCE SHEETS




U.S. dollars in thousands









September 30,


December 31,


2013


2012


Unaudited







ASSETS




CURRENT ASSETS:




     Cash and cash equivalents 

38,300


37,744

     Available-for-sale marketable securities

861


890

     Trade receivables, net

30,595


28,367

     Other accounts receivable and  prepaid expenses

6,258


6,696

Total current assets

76,014


73,697





LONG-TERM RECEIVABLES:




    Severance pay fund

410


351

    Other long-term receivables

3,381


2,287

Total long-term receivables

3,791


2,638





PROPERTY AND EQUIPMENT, NET 

1,889


1,898

IDENTIFIABLE INTANGIBLE ASSETS AND 




    GOODWILL, NET

79,516


74,721





TOTAL ASSETS

161,210


152,954









LIABILITIES AND EQUITY








CURRENT LIABILITIES:




     Trade payables 

3,597


4,722

     Accrued expenses and other accounts payable  

17,526


17,188

     Deferred tax liabilities

2,857


3,422

     Deferred revenues 

7,447


4,160

Total current liabilities

31,427


29,492





NON CURRENT LIABILITIES:




     Long term liabilities

1,874


750

     Liability due to acquisition activities

1,389


1,192

     Accrued severance pay     

1,271


1,245

Total non-current liabilities

4,534


3,187





Redeemable non- controlling interest

2,344


1,914





EQUITY:




   Magic Shareholders' equity

121,971


117,786

   Non-controlling interests

934


575

Total equity

122,905


118,361





TOTAL LIABILITIES AND EQUITY

161,210


152,954

 

SOURCE Magic Software Enterprises Ltd



RELATED LINKS
http://www.magicsoftware.com

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