Magic Software Enterprises Ltd. — Investor Presentation 2017

Nov 14, 2017

Magic Software Enterprises Ltd.

November 2017

Guy Bernstein - CEO

Safe Harbor Statement

Certain statements made in this presentation may be forward-looking in nature (within the meaning of the "safe harbor" provisions of the US Private Securities Litigation Reform Act of 1995). These statements are based on the current expectations or beliefs of the company's management and are subject to various known and unknown risks that could cause actual results to differ materially from those described in the forward-looking statements, including, but not limited to, product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development, the effect of the Company's accounting policies, increasing competition, our ability to integrate companies and businesses acquired by us and certain other risk factors, including those that are set forth from time to time in the Company's filings with the United States Securities Exchange Commission, which may cause the actual results, performance and achievements of the Company to be materially different from any future results, performance and achievements implied by such forward-looking statements.

Unique Development Tools

Technology

Proven productivity

Negligible maintenance

Scalable & robust

Platform agnostic

Seamless integration

Future proof

Management change

To end -to -end solutions

High Level Projects Management Unique Professional Services Generic Staffing

and focus on our integration technology

From pure technology player

Experienced Global Integration House with Unique Supporting Technologies & Expertise

Growth Through Acquisitions

Provide New Solutions to New Ecosystems

Acquire New Partners and Customers With Our New Offerings

Increase Penetration in our Existing Customer Base with our New Technology

Improve and Focus on Cross-Selling

Proven M&A Capabilities

Completed more than 15 Acquisitions since 2010

• Acquired targets at value
• Generated Significant Revenue Growth
• Drove Margin Expansion

Complementary Technology

Expand Services Offering and Leverage Customer Relationships

Capture Better Margin through Vertical Integration

Customer Acquisition

Revenues ~25% Growth ~\$250M EBITDA ~30% Growth ~\$40M

ISRAELI INTEGRATORS

	MARKET RANGE	MAGIC
REVENUE GROWTH	6.8% - 12.4%	24%
GROSS MARGIN	14.4% - 21.5%	34.6%
EBITDA MARGIN	5.7% - 11.7%	14.2%
NET DEBT (NIS MILLIONS)	14.8 – 233.0	NONE

Double digit Revenue & EBITDA Growth over the past 8 years

Looking Forward…......

Asaf Bernstein - CFO

Revenues - 3rd Quarter, 2017

21% Business Segments 0% - SW Solutions \$19.4m

Q3-2017 \$65.7M Q3-2016 \$54.4m 32% - IT Professional Services From \$35.1m to \$46.3m

30% SW Solutions

70% IT Professional Services

Operating Income - 3rd Quarter, 2017

Services

Q3-2017 \$9.1M Q3-2016 \$7.7m

21% - IT Professional Services From \$4.1m to \$5.0m

Revenues - 9 Months 2017

70%

Services

9 months-2017 \$191.9M 9 months-2016 \$146.5m 43% - IT Professional Services From \$94.3m to \$134.6m

Operating Income – 9 Months, 2017

Services

9 months-2017 \$26.4M 9 months-2016 \$20.9m

28% - IT Professional Services From \$11.7m to \$15.1m

Net Income

Revenues – Continued Growth

Analysis (USD million)

2016 2017

EMPLOYEES

Admin 122 ROW 132	S&M 133 EU 127	R&D 206 IL 843	PS 1,238 US 597	1,699 Employees	Dec 2016
Admin 120 ROW 126	S&M 130 EU 124	R&D 190 IL 900	PS 1,560 US 850	2,000 Employees	Sep 2017

Revenues by Geography – 9 Months 2017

Revenue by Geography- 9 Months 2017

Focus on North America, Europe and Israel

Cash flow from operating activities

\$17.8 Million

Cash flow derived from Operating activities, for the 9 month period ending September 30, 2017, amounted to \$17.8m (compared to \$21.8m in the respective period).

Cash flow derived from Operating activities in 2017 was impacted by an increase of \$12m in Magic working capital compared to an increase of \$4m in the respective period.

	30/9/2017	30/9/2016
Equity attributable to Magic Share Holders (USD millions)	205	198
Current Ratio	3.45	3.25

Dividend

Attractive dividend policy of up to 75% of net annual profits (reflecting 3% dividend yield)

Thank you.