- Q3 Revenues
Up 8% YOY to $15.8M; non GAAP Net Income Up to $1.9M or $0.06 per share
-
- 9 Mo. Revenues Up 10% to $46.9M; non GAAP Net Income Up to $3.6M or
$0.11 per share -
Or Yehuda, Israel,
November 10, 2008 --
Magic Software Enterprises Ltd.
(NASDAQ: MGIC), a leading provider of
application platform
and
business and process
integration solutions, today announced financial results for
the third quarter ended September 30, 2008.
Financial Results for the
Third Quarter
[
Q3 2008 Financial Statements]
Revenues for the third quarter of 2008 were $15.8 million, an increase
of 8% compared to $14.7 million for the third quarter of 2007. Gross
margin for the third quarter rose to 58% from 52% in the same period of
2007, reflecting an increasing proportion of higher-margin license
sales in the mix of revenues.
On
the basis of U.S. GAAP (Generally Accepted Accounting
Procedures), operating income for the third quarter of 2008 was $1.6
million, an eight-fold increase compared to $0.2 million recorded in
the third quarter of 2007. Net income for the third quarter of 2008
totaled $1.7 million, or $0.05 per share. This compared to net income
of $0.8 million, or $0.02 per share, for the parallel period of 2007,
which included a contribution of $0.7 million, or $0.02 per share, from
discontinued operations.
In accordance with U.S. GAAP, the results of the Company’s
divested subsidiary, Advanced Answers On Demand (AAOD) (sold in the
fourth quarter of 2007) were excluded from the operating results of the
third quarter of 2007, and recorded instead as “Net income
from discontinued operations.”
On
a non-GAAP basis, operating income for the third quarter
was $1.8 million, an increase of 385% compared to operating income of
$0.4 million in the same period of 2007. Net income for the third
quarter was $1.9 million, or $0.06 per share. This compared to net
income of $0.9 million, or $0.03 per share, recorded in the third
quarter of 2007, which included a contribution of $0.7 million, or
$0.02 per share, from discontinued operations.
Results for the
Nine-Month Period
Revenues for the nine month period ended September 30, 2008 were $46.9
million, an increase of 10% compared with $42.8 million recorded in the
first nine months of 2007.
On
the basis of U.S. GAAP, operating income for the nine
month period ended September 30, 2008 more than doubled to $3.1 million
compared to $1.1 million recorded in the same period of 2007. Net
income for the nine month period increased by 32% to $3.4 million, or
$0.11 per share, compared to $2.6 million, or $0.08 per share, recorded
in the parallel period of 2007. Net income for the nine month period of
2007 included a contribution of $1.7 million, or $0.06 per share, from
discontinued operations.
On
a non-GAAP basis, operating income for the nine month
period was $3.3 million, an increase of 190% compared to operating
income of $1.1 million in the same period of 2007. Net income for the
period was $3.6 million, or $0.11 per share, compared to net income of
$2.8 million, or $0.09 per share, in the comparable period of 2007,
which included a contribution of $1.9 million, or $0.06 per share, from
discontinued operations.
Comments of Management
Commenting on the results, Guy Bernstein, Active Chairman of Magic
Software said, “We are pleased to report another strong
quarter for Magic Software, a period during which we achieved on-track
growth in both our top-line and bottom-line results despite the
volatility of the global economy and our target markets.”
“These positive results validate our strategy of developing
cost-effective, value-added solutions that maximize the return of
existing IT investments, making them attractive to customers in all
types of macroeconomic cycles. Now, with good financials and a healthy
balance sheet, we have expanded our strategic avenues and are well
positioned to pursue options for organic and/or inorganic growth. At
the same time, although we are pleased with our financial momentum and
remain optimistic regarding the future, we continue to closely monitor
the economic climate and to consider ways to address the specific needs
of our partners and customers,” concluded Mr. Bernstein.
uniPaaS: Successful
Launch and Initial Adoption
In July, the Company introduced its new flagship uniPaaS platform to
existing ecosystems and top-tier industry players. By
providing an increased level of customer support and mentoring, the
Company has succeeded in securing a significant and growing base of
partners and customers who are now migrating their solutions from
client/server to RIA architecture. The Company has also succeeded in
generating a significant level of interest from new prospects. This is
particularly visible in Japan where the product was first introduced.
Today, a number of top-tier Japanese corporations have adopted Magic
Software’s RIA platform.
Magic
Software’s Added Value: Maximizing Return from Existing
Investments
The underlying concept behind each of Magic Software’s
solutions is to increase the return on existing IT investments,
unlocking revenue potential through better data management, reuse and
re-composition. Magic Software’s groundbreaking uniPaaS
brings state-of-the-art web innovation and cloud computing technology
to markets that continue to deal with traditional platforms and
applications.
Establishing Thought
Leadership in RIA and SaaS Application Platforms
During the quarter, the Company carried out a number of activities
designed to promote Magic Software as the undisputed ”Thought
Leader” of the RIA and SaaS Application Platform environment.
These included:
- - Platinum Sponsor at Gartner Web Innovation Summit in the
US on ways to profit from Web 2.0, SaaS and cloud computing
- - Magic Software Speaking Sessions on RIA and SaaS
Platforms and Application Portfolios in industry conferences
- - Carrying out customer events globally
iBOLT Gaining Momentum
iBOLT automates the process of integrating off-premise and on-premise
applications, enabling accounting, ERP, supply chain management, human
resource management and logistics systems to work together. During the
third quarter, iBOLT’s momentum continued to expand, as
illustrated by the following:
- - License
sales continue to grow as customers become more aware of
the potential of code-free integration to improve the return of
existing IT system investments.
- - Oracle
Open World. New customers continue to be added from the JD
Edwards, Salesforce.com and SAP ERP R3 ecosystems.
- - Dreamforce
2008. The Company received highly positive feedback from
the event, confirming the recognition that integration is critical for
maximizing the value of on-demand CRM solutions.
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’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 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.
Conference Call
Magic Software’s management will also host a conference call
today at 10:00 am EST / 5:00 pm in Israel. To participate in the
conference call, please call the appropriate number listed below at
least five to ten minutes prior to the start of the call:
From the US:
1-888-407-2553
From Canada:
1-866-958-6867
From Israel: 1-800-227-297
All others:
+972-3-918-0685
Callers should reference the Magic Software Earnings Conference Call.
An archive of the online broadcast will be available on the investor
relations part of Magic Software's web-site, from the following day,
at: http://www.magicsoftware.com/40-en/Magic.aspx
A replay of the call will be available from 1:00 p.m. EST on November
11, 2008 through 12:00 p.m. EST on November 18, 2008. To access the
replay, please call:
From the U.S.:
1-877-456-0009
From Canada:
1-866-500-4964
From Israel: 1-800-286-285
All others:
+972-3-925-5929
About Magic Software
Magic Software Enterprises Ltd. (NASDAQ: MGIC) is a leading 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
Enterprises and its products and services, visit www.magicsoftware.com.
Magic Software is a subsidiary of Formula Systems in the Emblaze Group
of companies.
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.
###