Magic Reports Second Quarter 2015 Results with Revenues Increasing 5% Year over Year to $42.5 Million, and Non-GAAP Operating Income Increasing 7% Year over Year to $6.5 Million

Revenues for the second quarter increased 11% year over year to a record-breaking result of $45.2 million on a constant currency basis; Operating cash flow for the first half of 2015 totaled approximately $14.0 million

Tuesday, August 11, 2015, Or Yehuda, Israel

Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC), a global provider of software platforms for enterprise mobilitycloud applications, and business integration, announced today its financial results for the six months and second quarter ended June 30, 2015.
 

Financial Highlights for the Second Quarter Ended June 30, 2015

  • Revenues for the second quarter increased 5% year over year to $42.5 million from $40.6 million in the same period last year. Reported revenues were negatively impacted by the devaluation of the New Israeli Shekel, Euro and Japanese Yen against the U.S Dollar by 12%, 19% and 20%, respectively. Excluding the negative impact from the erosion of foreign exchange rates, revenues for the second quarter would have reflected an increase of 11% year over year to a record-breaking result of $45.2 million.
  • Non-GAAP operating income for the second quarter increased 7% to $6.5 million, compared to $6.0 million in the same period last year. Excluding the impact of erosion of foreign exchange rates (mainly resulting from the devaluation of the Euro and Japanese Yen versus the U.S Dollar), non-GAAP operating income would have reflected an increase of 16% year over year to $7.0 million. Non-GAAP operating margin increased by 40 basis points to 15.2%, up from 14.8% in same period last year. Operating income for the second quarter increased 5% to $5.4 million, compared to $5.1 million in the same period last year.
  • Non-GAAP net income for the second quarter increased 9% to $5.2 million, or $0.12 per fully diluted share, compared to $4.7 million, or $0.11 per fully diluted share in the same period last year. Excluding the impact of the erosion of foreign exchange rates (including the negative impact of devaluation of cash balances denominated mainly in Euros, Japanese Yen and New Israeli Shekels following the devaluation of foreign currencies against the US Dollar amounting to $0.5 million), non-GAAP net income would have reflected an increase of 20% year over year to $5.7 million, or $0.13 per fully diluted share. Net income for the second quarter increased 6% to $4.1 million, or $0.09 per fully diluted share, compared to $3.9 million, or $0.09 per fully diluted share, in the same period last year.

 

Financial Highlights for the Six-Month Period Ended June 30, 2015

  • Revenues for the first half of 2015 increased 2% to $82.8 million compared to $81.6 million in the same period last year. Reported revenues were negatively impacted by the devaluation of the New Israeli Shekel, Euro and Japanese Yen against the U.S Dollar by 12%, 19% and 18%, respectively. Excluding the negative impact from the erosion of foreign exchange rates, revenues for the first half would have reflected an increase of 8% year over year to $88.0 million.
  • Non-GAAP operating income for the first half of 2015 increased 6% to $13.2 million compared to $12.4 million in the same period last year. Excluding the impact of the erosion of foreign exchange rates (mainly resulting from the devaluation of the Euro and Japanese Yen versus the U.S Dollar), non-GAAP operating income would have reflected an increase of 15% year over year to $14.3 million. Non-GAAP operating margin for the first half of 2015 increased by 70 basis points to 15.9%, up from 15.2% in same period last year. Operating income for the first half increased to $11.2 million from $11.1 million in the same period last year.
  • Non-GAAP net income for the first half increased 7% to $10.4 million, or $0.24 per fully diluted share, compared to $9.7 million, or $0.23 per fully diluted share in the same period last year. Excluding the impact of the erosion of foreign exchange rates (including the negative impact of devaluation of cash balances denominated mainly in Euros, Japanese Yen and New Israeli Shekels following the devaluation of foreign currencies against the US Dollar amounting to $2.0 million), non-GAAP net income would have reflected an increase of 28% year over year to $12.4 million, or $0.28 per fully diluted share. Net income for the first half increased to $8.4 million, or $0.19 per fully diluted share, from $8.3 million, or $0.20 per fully diluted share, in the same period last year.
  • Operating cash flow for the first half of 2015 totaled approximately $14.0 million.
  • Total net cash, cash equivalents and short-term investments as of June 30, 2015, amounted to $84.2 million.
 

 

Comments of Management

Guy Bernstein, Chief Executive Officer of Magic Software Enterprises, said, “We are experiencing continued growth for our professional services along with solid demand for our software products, mainly reflecting organic growth. In fact, excluding the negative impact from currency fluctuations, we would have produced record-breaking revenues for the second quarter.

“Additionally, in the second quarter we delivered a new major version of our flagship Magic xpa Application Platform, with mobility and performance enhancements to meet the growing need for rapid cross-platform development.”

Magic is providing the following guidance for its 2015 fiscal year:

Revenues between $166 million to $173 million for the full-year 2015, on a constant currency basis. This guidance, when measured based on 2014 foreign currency exchange rates, represents full year 2015 revenue of approximately $175 to $182 million, reflecting management growth expectations of between 7% to 11%.

 

Conference Call Details

Magic’s Management will host an interactive conference today, August 11, at 10:00 am Eastern Time (7:00 am Pacific Time, 17:00 Israel Time). On the call, management will review and discuss the results, and will also be available to answer investors’ questions.

To participate, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, call the international dial-in number.

NORTH AMERICA: 1.888.668.9141

UK: 0 800 917 5108

ISRAEL: 03.918.0650

INTERNATIONAL: +972.3.918.0650

For those unable to listen to the live call, a replay of the call will be available for three months from the day after the call under the investor relations section of Magic’s website.

 

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.

 

Forward Looking Statements

Some of the statements in this press release may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934 and the United States Private Securities Litigation Reform Act of 1995. Words such as "will," "expects," "believes" and similar expressions are used to identify these forward-looking statements (although not all forward-looking statements include such words). These forward-looking statements, which may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of management’s current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking statement. These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment. New risks emerge from time to time and it is not possible for us to predict all risks that may affect us. For more information regarding these risks and uncertainties as well as certain additional risks that we face, you should refer to the Risk Factors detailed in our Annual Report on Form 20-F for the year ended December 31, 2013 and subsequent reports and registration statements filed from time to time with the Securities and Exchange Commission.

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.

 

Press Contact:

Stephanie Myara, PR Manager

Magic Software Enterprises

Tel: +972 (0)3 538 9352

smyara@magicsoftware.com