Quarterly Report • Nov 10, 2016
Quarterly Report
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| General Information | ||||||
|---|---|---|---|---|---|---|
| Form Type* | 6-K | |||||
| Contact Name | Radmila Chernickina | |||||
| Contact Phone | 866-683-5252 | |||||
| Filer File Number | ||||||
| Filer CIK* | 0000876779 [MAGIC SOFTWARE ENTERPRISES LTD] | |||||
| Filer CCC* | **** | |||||
| Confirming Copy | No | |||||
| Notify via Website only | No | |||||
| Return Copy | No | |||||
| SROS* | NASD | |||||
| Period* | 11-10-2016 | |||||
| (End General Information) |
| Document Information | ||||||
|---|---|---|---|---|---|---|
| File Count* | 2 | |||||
| Document Name 1* | v452735_6k.htm | |||||
| Document Type 1* | 6-K | |||||
| Document Description 1 | Form 6-K | |||||
| Document Name 2* | v452735_ex1-1.htm | |||||
| Document Type 2* | EX-99.1 | |||||
| Document Description 2 | Exhibit 1.1 | |||||
| (End Document Information) | ||||||
| Notifications | |||||
|---|---|---|---|---|---|
| Notify via Website only | No | ||||
| E-mail 1 | [email protected] | ||||
| (End Notifications) |
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 November 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- ________
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:
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: November 10, 2016
Exhibit 1.1 Magic Reports Record-Breaking Third Quarter 2016 Revenues
Operational cash flow for the first nine months of 2016 totaled \$18.4 million
Or Yehuda, Israel, November 10, 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 third quarter and first nine months of 2016.
Financial Highlights for the Third Quarter Ended September 30, 2016
"Our record-breaking top-line Q3 results demonstrate the successful execution of Magic's two-pronged strategy to grow our business both organically and through acquisitions. The growth of our existing activities show that we are providing the software and services that enterprises need to succeed in today's digital world."
"We are accelerating our efforts to enhance our portfolio with improved or additional products and services that appeal to our enterprise customers and bring profitability to our business."
Magic's management will host a conference call today, November 10, at 10:00 am Eastern Standard Time (7:00 am Pacific Standard Time, 17:00 Israel Standard Time) to review and discuss Magic's results.
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: 03-918-0609
For those unable to join the live call, a replay of the call will be available for at least 3 months, under the investor relations section of Magic's website, www.magicsoftware.com.
This press release contains the following non-GAAP financial measures: Non-GAAP gross profit, Non-GAAP operating income, Non-GAAP net income attributed to Magic's shareholders and Non-GAAP basic and diluted earnings per share.
Magic believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Magic's financial condition and results of operations. Magic's management uses these non-GAAP measures to compare the Company's performance to that of prior periods for trend analyses, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. These measures are used in financial reports prepared for management and in quarterly financial reports presented to the Company's board of directors. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.
Management of the Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. Magic urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company's business.
Non-GAAP measures used in this press release are included in the financial tables of this release. These non-GAAP measures exclude the following items:
Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included in the financial tables of this release.
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.
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, 2015 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]
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2016 2015 |
2016 | 2015 | ||||||||
| Unaudited | Unaudited | |||||||||
| Revenues | \$ | 54,475 | \$ | 45,333 | \$ | 146,505 | \$ | 128,174 | ||
| Cost of Revenues | 35,726 | 29,846 | 96,104 | 82,266 | ||||||
| Gross profit | 18,749 | 15,487 | 50,401 | 45,908 | ||||||
| Research and development, net | 1,571 | 1,449 | 4,046 | 3,725 | ||||||
| Selling, marketing and general and | ||||||||||
| administrative expenses | 11,213 | 8,746 | 29,806 | 25,722 | ||||||
| Total operating costs and expenses | 12,784 | 10,195 | 33,852 | 29,447 | ||||||
| Operating income | 5,965 | 5,292 | 16,549 | 16,461 | ||||||
| Financial income (expenses), net | (136) | 389 | 101 | (589) | ||||||
| Other income, net | - | 8 | - | 8 | ||||||
| Income before taxes on income | 5,829 | 5,689 | 16,650 | 15,880 | ||||||
| Taxes on income | 1,044 | 1,201 | 3,300 | 2,531 | ||||||
| Net income | \$ | 4,785 | \$ | 4,488 | \$ | 13,350 | \$ | 13,349 | ||
| Change in redeemable non-controlling interests | (706) | (284) | (1,343) | (648) | ||||||
| Net income attributable to non-controlling interests | (74) | (53) | (226) | (181) | ||||||
| Net income attributable to Magic's shareholders | \$ | 4,005 | \$ | 4,151 | \$ | 11,781 | \$ | 12,520 | ||
| Net earnings per share | ||||||||||
| Basic | \$ | 0.09 | \$ | 0.09 | \$ | 0.27 | \$ | 0.28 | ||
| Diluted | \$ | 0.09 | \$ | 0.09 | \$ | 0.27 | \$ | 0.28 | ||
| Weighted average number of shares used in computing net earnings per share |
||||||||||
| Basic | 44,350 | 44,256 | 44,344 | 44,232 | ||||||
| Diluted | 44,530 | 44,457 | 44,511 | 44,451 |
U.S. Dollars in thousands (except per share amounts)
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |||||||||||
| Unaudited | Unaudited | Unaudited | Unaudited | |||||||||||
| Revenues | \$ | 54,475 | 100% \$ | 45,333 | 100% \$ | 146,505 | 100% \$ | 128,174 | 100% | |||||
| Gross profit | 20,099 | 36.9% | 16,687 | 36.8% | 54,257 | 37.0% | 49,499 | 38.6% | ||||||
| Operating income | 7,735 | 14.2% | 6,626 | 14.6% | 20,941 | 14.3% | 19,799 | 15.4% | ||||||
| Net income attributable to | ||||||||||||||
| Magic Software shareholders | 5,332 | 9.8% | 5,749 | 12.7% | 15,337 | 10.5% | 16,109 | 12.6% | ||||||
| Basic earnings per share | \$ | 0.12 | \$ | 0.13 | \$ | 0.35 | \$ | 0.36 | ||||||
| Diluted earnings per share | \$ | 0.12 | \$ | 0.13 | \$ | 0.34 | \$ | 0.36 |
| Three months ended September 30, |
Nine months ended September 30, |
||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | ||||||
| Unaudited | Unaudited | ||||||||
| GAAP gross profit | \$ | 18,749 | \$ | 15,487 | \$ | 50,401 | \$ | 45,908 | |
| Amortization of capitalized software and acquired technology | 1,169 | 1,023 | 3,277 | 3,038 | |||||
| Amortization of other intangible assets | 178 | 171 | 567 | 527 | |||||
| Stock-based compensation | 3 | 6 | 12 | 26 | |||||
| Non-GAAP gross profit | \$ | 20,099 | \$ | 16,687 | \$ | 54,257 | \$ | 49,499 | |
| GAAP operating income | \$ | 5,965 | \$ | 5,292 | \$ | 16,549 | \$ | 16,461 | |
| Gross profit adjustments | 1,350 | 1,200 | 3,856 | 3,591 | |||||
| Amortization of other intangible assets | 1,570 | 1,078 | 3,795 | 2,670 | |||||
| Change in valuation of contingent consideration | - | - | - | 22 | |||||
| Capitalization of software development | (1,169) | (982) | (3,377) | (3,054) | |||||
| Stock-based compensation | 19 | 38 | 118 | 109 | |||||
| Non-GAAP operating income | \$ | 7,735 | \$ | 6,626 | \$ | 20,941 | \$ | 19,799 | |
| GAAP net income attributable to Magic's shareholders | \$ | 4,005 | \$ | 4,151 | \$ | 11,781 | \$ | 12,520 | |
| Operating income adjustments | 1,770 | 1,334 | 4,392 | 3,338 | |||||
| Amortization expenses attributed to redeemable non-controlling interests | (325) | (41) | (583) | (119) | |||||
| Deferred taxes on the above items | (118) | 305 | (253) | 370 | |||||
| Non-GAAP net income attributable to Magic's shareholders | \$ | 5,332 | \$ | 5,749 | \$ | 15,337 | \$ | 16,109 | |
| Non-GAAP basic net earnings per share | \$ | 0.12 | \$ | 0.13 | \$ | 0.35 | \$ | 0.36 | |
| Weighted average number of shares used in | |||||||||
| computing basic net earnings per share | 44,350 | 44,256 | 44,344 | 44,232 | |||||
| Non-GAAP diluted net earnings per share | \$ | 0.12 | \$ | 0.13 | \$ | 0.34 | \$ | 0.36 | |
| Weighted average number of shares used in computing diluted net earnings per share |
44,535 | 44,458 | 44,514 | 44,461 |
U.S. Dollars in thousands
| September 30, | December 31, | |||
|---|---|---|---|---|
| 2016 | 2015 | |||
| Unaudited | ||||
| ASSETS | ||||
| CURRENT ASSETS: | ||||
| Cash and cash equivalents | \$ | 45,933 | \$ | 62,188 |
| Short-term bank deposits | 2,565 | 2,677 | ||
| Available-for-sale marketable securities | 12,349 | 11,819 | ||
| Trade receivables, net | 59,916 | 52,374 | ||
| Other accounts receivable and prepaid expenses | 7,255 | 6,244 | ||
| Total current assets | 128,018 | 135,302 | ||
| LONG-TERM RECEIVABLES: | ||||
| Severance pay fund | 1,883 | 1,454 | ||
| Long-term deferred tax assets | 2,896 | 2,823 | ||
| Other long-term receivables | 1,945 | 1,088 | ||
| Total long-term receivables | 6,724 | 5,365 | ||
| PROPERTY AND EQUIPMENT, NET | 3,174 | 2,296 | ||
| IDENTIFIABLE INTANGIBLE ASSETS AND | ||||
| GOODWILL, NET | 146,196 | 96,883 | ||
| TOTAL ASSETS | ||||
| \$ | 284,112 | \$ | 239,846 | |
| LIABILITIES AND EQUITY | ||||
| CURRENT LIABILITIES: | ||||
| Short-term debt | \$ | 1,054 | \$ | 13 |
| Trade payables | 6,353 | 6,331 | ||
| Accrued expenses and other accounts payable | 17,442 | 17,283 | ||
| Liabilities due to acquisition activities | 7,417 | 638 | ||
| Deferred revenues | 7,122 | 4,092 | ||
| Total current liabilities | 39,388 | 28,357 | ||
| NON-CURRENT LIABILITIES: | ||||
| Long-term debt | 3,054 | 3,257 | ||
| Long-term deferred tax liability | 13,502 | 5,726 | ||
| Liabilities due to acquisition activities | 1,520 | 1,039 | ||
| Accrued severance pay | 3,005 | 2,616 | ||
| Total non-current liabilities | 21,081 | 12,638 | ||
| REDEEMABLE NON-CONTROLLING INTERESTS | 23,986 | 5,745 | ||
| EQUITY: | ||||
| Magic Software Enterprises equity | 197,520 | 191,008 | ||
| Non-controlling interests | 2,137 | 2,098 | ||
| Total equity | 199,657 | 193,106 | ||
| TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY | \$ | 284,112 | \$ | 239,846 |
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