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Magic Software Enterprises Ltd. — Earnings Release 2016
Feb 17, 2016
6900_rns_2016-02-17_e9e45d1d-3c68-4614-b0e0-07095bca1714.pdf
Earnings Release
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Date: 02/17/2016 03:19 AM Client: v432016_MAGIC SOFTWARE ENTERPRISES LTD_6-K
Project: v432016 Form Type: 6-K
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Submission Data File
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----- Start of picture text ----- General InformationForm Type* 6-K Contact Name Chico Kim Contact Phone 866-683-5252Filer File NumberFiler CIK* 0000876779 [MAGIC SOFTWARE ENTERPRISES LTD](CIK/CCC combination is invalid)Filer CCC* *** Confirming Copy No Notify via Website only No Return Copy NoSROS NASDPeriod 02-17-2016(End General Information)Document InformationFile Count 2Document Name 1 v432016_6k.htmDocument Type 1 6-K Document Description 1 Form 6-KDocument Name 2 v432016_ex1-1.htmDocument Type 2 EX-1.1 Document Description 2 Exhibit 99.1(End Document Information)Notifications Notify via Website only No E-mail 1 [email protected](End Notifications)----- End of picture text -----
Date: 02/17/2016 03:19 AM Client: v432016_MAGIC SOFTWARE ENTERPRISES LTD_6-K
Project: v432016 Form Type: 6-K File: v432016_6k.htm Type: 6-K Pg: 1 of 3
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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
F O R M 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2016
MAGIC SOFTWARE ENTERPRISES LTD.
(Name of Registrant)
5 HaPlada Street, Or-Yehuda, Israel 60218
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F �� Form 40-F �
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): �
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): �
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes �� No �
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________
CONTENTS
This report on Form 6-K of MAGIC SOFTWARE ENTERPRISES Ltd. consists of the following documents, which are attached hereto and incorporated by reference herein:
1. Magic Reports Another Year of Record-Breaking Revenue and Operating Results
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MAGIC SOFTWARE ENTERPRISES LTD.
(Registrant)
By /s/Amit Birk Amit Birk VP, General Counsel
Date: February 17, 2016
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EXHIBITS
Exhibit 1.1 Magic Reports Another Year of Record-Breaking Revenue and Operating Results
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Exhibit 1.1
PRESS RELEASE
Magic Reports Another Year of Record-Breaking Revenue and Operating Results
Annual revenues for 2015 reached a record-breaking $176 million; Non-GAAP operating income for the year reached a record-breaking $27.2 million
– Or Yehuda, Israel, February 17, 2016 Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC), a global provider of mobile and cloudenabled application and business integration platforms, announced today its financial results for the fourth quarter and full year ended December 31, 2015.
Financial Highlights for the Fourth Quarter, 2015
-
Revenues for the fourth quarter increased 13% year over year to a record-breaking $47.9 million compared to $42.5 million in the same period last year. Revenues were negatively impacted by the devaluation of the Euro and Japanese Yen against the U.S. Dollar by 13% and 6% respectively. On a constant currency basis, excluding the negative impact from the erosion of foreign exchange rates, revenues for the fourth quarter would have reflected an increase of 15% year over year to a record-breaking $49.1 million.
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Non-GAAP operating income for the fourth quarter increased 5% to $7.4 million, compared to $7.0 million in the same period last year. On a constant currency basis, excluding the negative impact from 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 12% year over year to $7.9 million. Operating income increased 22% to $5.0 million, compared to $4.1 million in the same period last year.
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Non-GAAP net income decreased 2% to $5.6 million or $0.13 per fully diluted share, compared to $5.7 million or $0.13 per fully diluted share, in the same period last year. On a constant currency basis, excluding the negative impact from the erosion of foreign exchange rates (including the devaluation of cash balances denominated mainly in New Israeli Shekels, Euros, and Japanese Yen against the U.S. Dollar), non-GAAP net income would have reflected an increase of 7% year over year to $6.1 million or $0.14 per fully diluted share. Net income for the fourth quarter amounted to $3.7 million or $0.08 per fully diluted share, compared to $2.9 million or $0.07 per fully diluted share, in the same period last year.
Financial Highlights for the Full Year Ended December 31, 2015
- Revenues for the twelve-month period of 2015 increased 7% to a record $176.0 million, compared to $164.3 million in the same period last year. Revenues were negatively impacted by the devaluation of the New Israeli Shekel, Euro and Japanese Yen against the U.S. Dollar by 9%, 17% and 13%, respectively. On a constant currency basis, excluding the negative impact from the erosion of foreign exchange rates, revenues for the twelve-month period of 2015 would have reflected an increase of 13% year over year to a record $185.0 million.
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Non-GAAP operating income for 2015 increased 5% to $27.2 million, compared to $25.9 million in the same period last year. On a constant currency basis, excluding the negative impact from 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 13% year over year to $29.2 million. Operating income for the twelve-month period of 2015 increased 3% to $21.4 million compared to $20.7 million in the same period last year.
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Non-GAAP net income for the twelve-month period of 2015 increased 6% to $21.7 million or $0.49 per fully diluted share, compared to $20.5 million or $0.47 per fully diluted share in the same period last year. On a constant currency basis, excluding the negative impact from the erosion of foreign exchange rates (including the devaluation of cash balances denominated mainly in New Israeli Shekels, Euros, and Japanese Yen against the U.S. Dollar amounting to $0.9 million), non-GAAP net income would have reflected an increase of 21% year over year to $24.7 million or $0.56 per fully diluted share. Net income for the twelve-month period of 2015 increased 4% to $16.2 million or $0.36 per fully diluted share, compared to $15.5 million or $0.36 per fully diluted share in the same period last year.
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Total cash, cash equivalents and short-term investments as of December 31, 2015, amounted to $77 million.
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Operating cash flow for the year ended December 31, 2015 totaled $18.0 million.
Comments of Management
Guy Bernstein, Chief Executive Officer of Magic Software Enterprises, said, “I’m very pleased to report our sixth consecutive year of record-breaking revenues and operating results. We achieved these excellent results despite the significant impact of the erosion of foreign currency exchange rates on our top and bottom line. We were able to exceed our guidance thanks to the strength of our portfolio and our global customer base.”
“Magic’s software solutions and services are becoming increasingly relevant during 2016 as businesses accelerate their digital transformation initiatives. We continue to invest in our products to enable our customers to innovate and increase competitiveness by mobilizing and optimizing business processes across backend systems and by modernizing existing business-critical applications. We remain committed to enhancing our portfolio with strategic acquisitions and are on track for another year of profitable solid growth,” added Bernstein.
Magic is providing the following guidance for its 2016 fiscal year:
Revenues between $191 million to $195 million for the full-year 2016, on a constant currency basis.
Conference Call Details
Magic’s Management will host an interactive conference today, February 17, at 10:00 am Eastern Standard Time (7:00 am Pacific Standard Time, 17:00 Israel Standard Time). On the call, management will 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.
- From North America: +1-888-407-2553
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From UK: 0-800-917-5108
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From Israel: 03-918-0610
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All others: +972-3-918-0610
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.
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 and other related costs;
-
In-process research and development capitalization and amortization;
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Equity-based compensation expense;
-
Change in valuation of contingent consideration;
-
Litigation costs
-
The 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 nonGAAP 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 the Company’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the Company’s results of operations in conjunction with the corresponding GAAP measures.
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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.
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, 2014 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 [email protected]
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Summary of Non-GAAP Financial Information
U.S. Dollars in thousands, except per share amounts
| Three months endedDecember 31,20152014Unaudited | Twelve months endedDecember 31,20152014Unaudited | |
|---|---|---|
| Revenues | $ 47,856$ 42,518 | $ 176,030$ 164,304 |
| Gross profit | 18,82818,190 | 68,32768,898 |
| Operating income | 7,3737,023 | 27,17225,881 |
| Net income attributable to | ||
| Magic Software shareholders | 5,6335,737 | 21,74220,454 |
| Basic earnings per share | 0.130.13 | 0.490.47 |
| Diluted earnings per share | 0.130.13 | 0.490.47 |
Summary of Pro-Forma Non-GAAP Financial Information on a Constant Currency Basis
U.S. Dollars in thousands, except per share amounts
| Three months endedDecember 31,20152014Unaudited | Twelve months endedDecember 31,20152014Unaudited | |
|---|---|---|
| Revenues | $ 49,095$ 42,518 | $ 184,973$ 164,304 |
| Gross profit | 19,73318,190 | 73,40868,898 |
| Operating income | 7,8787,023 | 29,23825,881 |
| Net income attributable to | ||
| Magic Software shareholders | 6,1385,737 | 24,71720,454 |
| Basic earnings per share | 0.140.13 | 0.560.47 |
| Diluted earnings per share | 0.140.13 | 0.560.47 |
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MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME U.S. dollars in thousands (except per share data)
| Three months endedDecember 31,20152014Unaudited | Three months endedDecember 31,20152014Unaudited | Twelve months endedDecember 31,20152014Unaudited | Twelve months endedDecember 31,20152014Unaudited | |
|---|---|---|---|---|
| 2015Unaudited | ||||
| Revenues | $ 47,856 | $ 42,518 | $ 176,030 | $ 164,304 |
| Cost of Revenues | 30,955 | 25,467 | 113,221 | 99,727 |
| Gross profit | 16,901 | 17,051 | 62,809 | 64,577 |
| Research and development, net | 1,163 | 1,226 | 4,888 | 4,750 |
| Selling, marketing and general and | ||||
| administrative expenses | 10,765 | 11,751 | 36,487 | 39,101 |
| Total operating costs and expenses | 11,9284,973 | 12,9774,074 | 41,37521,434 | 43,85120,726 |
| Operating income | ||||
| Financial expenses, net | (96) | (840) | (685) | (1,786) |
| Other income, net | - | - | 8 | (67) |
| Income before taxes on income | 4,877 | 3,234 | 20,757 | 18,873 |
| Taxes on income | 1,150 | 171 | 3,681 | 2,307 |
| Net income | $3,727 | $3,063 | $17,076 | $16,566 |
| Change in redeemable non-controlling interests | 9 | (106) | (639) | (425) |
| Net income attributable to non-controlling interests | (58) | (21) | (239) | (621) |
| Net income attributable to Magic's shareholders | $3,678 | $2,936 | $16,198 | $15,520 |
| Net earnings per share | ||||
| Basic | $ 0.08 | $ 0.07 | $ 0.37 | $ 0.36 |
| Diluted | $ 0.08 | $ 0.07 | $ 0.36 | $ 0.36 |
| Weighted average number of shares used in | ||||
| computing net earnings per share | ||||
| Basic | 44,295 | 44,172 | 44,248 | 43,288 |
| . | ||||
| Diluted | 44,456 | 44,440 | 44,452 | 43,305 |
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MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES RECONCILIATION OF GAAP AND NON-GAAP RESULTS U.S. dollars in thousands (except per share data)
| FTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIESIATION OF GAAP AND NON-GAAP RESULTSin thousands (except per share data) | FTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIESIATION OF GAAP AND NON-GAAP RESULTSin thousands (except per share data) | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Three monthsDecember | ended31,2014d | Twelve montDecembe | hs endedr 31,2014ted | ||||||
| 2015Unaudite | 2015Unaudi | ||||||||
| GAAP gross | profit | $ | 16,901 | $ | 17,051 | $ | 62,809 | $ | 64,577 |
| Amortization | of capitalized software | 986 | 981 | 4,024 | 3,922 | ||||
| Amortization | of other intangible assets | 935 | 148 | 1,462 | 369 | ||||
| Stock-based | compensation | 6 | 10 | 32 | 30 | ||||
| Non-GAAP | gross profit | $ | 18,828 | $ | 18,190 | $ | 68,327 | $ | 68,898 |
| GAAP opera | ting income | $ | 4,973 | $ | 4,074 | $ | 21,434 | $ | 20,726 |
| Gross profit a | djustments | 1,927 | 1,139 | 5,518 | 4,321 | ||||
| Amortization | of other intangible assets | 1,072 | 988 | 3,742 | 3,629 | ||||
| Change in va | luation of contingent consideration | - | 131 | 22 | (1,610) | ||||
| Capitalizatio | n of software development | (1,032) | (1,021) | (4,086) | (4,267) | ||||
| Litigation an | d other acquisition costs | 341 | 1,553 | 341 | 1,553 | ||||
| Stock-based | compensation | 92 | 159 | 201 | 1,529 | ||||
| Non-GAAP | operating income | $ | 7,373 | $ | 7,023 | $ | 27,172 | $ | 25,881 |
| GAAP net in | come attributable to Magic's shareholders | $ | 3,678 | $ | 2,936 | $ | 16,198 | $ | 15,520 |
| Operating inc | ome adjustments | 2,400 | 2,949 | 5,738 | 5,155 | ||||
| Amortization | expenses attributed to redeemable non-controlling interests | (262) | 123 | (381) | (149) | ||||
| Deferred taxe | s on the above items | 18721,742 | |||||||
| (183)5,633 | (271)5,737 | (72)20,454 | |||||||
| Non-GAAP | net income attributable to Magic's shareholders | $ | $ | $ | $ | ||||
| Non-GAAP b | asic net earnings per share | 0.13 | 0.13 | 0.49 | 0.47 | ||||
| Weighted ave | rage number of shares used in | 44,248 | |||||||
| computing | basic net earnings per share | 44,295 | 44,172 | 43,288 | |||||
| Non-GAAP d | iluted net earnings per share | 0.13 | 0.13 | 0.49 | 0.4743,334 | ||||
| Weighted ave | rage number of shares used in | 44,456 | 44,461 | 44,460 | |||||
| computing | diluted net earnings per share | ||||||||
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MAGIC SOFTWARE ENTERPRISES LTD. AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands
| December 31,2015Unaudited | December 31,2014 | |
|---|---|---|
| ASSETS | ||
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $ 62,188 | $ 72,515 |
| Short-term bank deposits | 2,677 | - |
| Available-for-sale marketable securities | 11,819 | 11,915 |
| Trade receivables, net | 52,483 | 40,358 |
| Other accounts receivable and prepaid expenses | 7,665 | 3,973 |
| Total current assets | 136,832 | 128,761 |
| LONG-TERM RECEIVABLES: | ||
| Severance pay fund | 1,454 | 1,426 |
| Deferred taxes and other long-term receivables | 2,490 | 3,959 |
| Total long-term receivables | 3,944 | 5,385 |
| PROPERTY AND EQUIPMENT, NET | 2,296 | 2,005 |
| IDENTIFIABLE INTANGIBLE ASSETS AND | ||
| GOODWILL, NET | 96,883 | 88,033 |
| TOTAL ASSETS | $ 239,955 | $ 224,184 |
| LIABILITIES AND EQUITY | ||
| CURRENT LIABILITIES: | ||
| Short-term debt | $ 13 | $ 2,853 |
| Trade payables | 6,032 | 3,861 |
| Accrued expenses and other accounts payable | 17,963 | 15,013 |
| Deferred tax liabilities | 888 | 760 |
| Deferred revenues | 4,628 | 3,431 |
| Total current liabilities | 29,524 | 25,918 |
| NON-CURRENT LIABILITIES: | ||
| Long-term debt | 3,257 | 490 |
| Deferred taxes and other long-term liabilities | 3,973 | 4,086 |
| Liabilities due to acquisition activities | 1,734 | 474 |
| Accrued severance pay | 2,616 | 2,562 |
| Total non-current liabilities | 11,580 | 7,612 |
| REDEEMABLE NON-CONTROLLING INTEREST | 5,745 | 2,930 |
| EQUITY: | ||
| Magic Software Enterprises equity | 191,008 | 185,065 |
| Non-controlling interests | 2,098 | 2,659 |
| Total equity | 193,106 | 187,724 |
| TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND EQUITY | $ 239,955 | $ 224,184 |