Magic Reports Strong Performance in the Second Quarter of 2012 with 39% Growth in Non-GAAP Operating Income Year Over Year

  • Or Yehuda, Israel
  • August 8, 2012

Magic Software Enterprises Ltd. (NASDAQ: MGIC), a global provider of software platforms for enterprise mobility, cloud applications, and business integration, announced today its financial results for the first half of 2012.

Financial Highlights for the Six-Month Period Ended June 30, 2012

  • Revenues for the first half of 2012 increased 10% to $58.1 million compared to $52.9 million in the same period last year.
  • Operating income for the first half of 2012 increased 23% to $8.0 million compared to $6.5 million in the same period last year; Non-GAAP operating income for the first half of 2012 increased 50% to $9.0 million compared to $6.0 million in the same period last year.
  • Net income for the first half of 2012 increased 17% to $7.8 million compared to $6.7 million in the same period last year; Non-GAAP net income for the first half of 2012 increased 41% to $8.6 million compared to $6.1 million in the same period last year.
  • Operating cash flow for the first half of 2012 totaled $13 million.
  • Total net cash, cash equivalents and short-term investments as of June 30, 2012, amounted to $43.7 million.

Financial Highlights for the Second Quarter Ended June 30, 2012

  • Second quarter revenues increased 2% to $28 million compared to $27.4 million in the same period last year.
  • Operating income for the second quarter increased 12% to $3.8 million, compared to $3.4 million in the same period last year; Non-GAAP operating income for the second quarter increased 39% to $4.3 million, compared to $3.1 million in the same period last year.
  • Net income for the second quarter increased 2% to $3.6 million compared to $3.5 million in the same period last year. Non-GAAP net income for the second quarter increased 24% to $4.1 million compared to $3.3 million in the same period last year. Net income for the second quarter of 2012 was affected by $0.3 million of expenses related to the devaluation of the Euro versus the US dollar.

Results

  • For the six-month period ended June 30, 2012, total revenues were $58.1 million, with net income of $7.8 million, or $0.21 per fully diluted share. This compares with revenues of $52.9 million and net income of $6.7 million, or $0.18 per fully diluted share, for the same period last year.
  • For the second quarter ended June 30, 2012, total revenues were $28.0 million, with net income of $3.6 million, or $0.1 per fully diluted share. This compares with revenues of $27.4 million and net income of $3.5 million, or $0.1 per fully diluted share for the same period last year.

Comments of Management

Commenting on the results, Guy Bernstein, Chief Executive Officer of Magic Software Enterprises, said: “The first half of 2012 was a very successful period for Magic, with strong performance across the board. We recently extended our mobile offering to include support for the iOS and Android mobile platforms for smartphones and tablets, enhancing the flexibility and future-readiness of our productive and scalable solution for enterprise mobility.”

“Our expectations for stronger demand during the second half of 2012, combined with our continued strong cash position, provide us with a positive outlook towards further growth in 2012,” concluded Mr. Bernstein.

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 and
  • Related tax effect

Magic’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 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.

About Magic Software Enterprises

Magic Software Enterprises (NASDAQ: MGIC) empowers customers and partners around the globe with smarter technology that provides a multichannel user experience of enterprise logic and data.

For more information, visit www.magicsoftware.com.


Press Contact:

Tania Amar | VP Global Marketing

Magic Software Enterprises
tania@magicsoftware.com


Except for any historical information contained herein, matters discussed in this press release might include forward-looking statements that involve a number of risks and uncertainties. Regarding any financial statements, actual results might 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 locally and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in Magic’s most recent annual report and other filings with the Securities and Exchange Commission.
Magic has made every effort to ensure that the information contained in this press release is accurate; however, there are no representations or warranties regarding this information, including warranties of merchantability or fitness for a particular purpose. Magic assumes no responsibility for errors or omissions that may occur in this press release.
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.