OR YEHUDA, Israel, May 14 /PRNewswire-FirstCall/ -- Magic Software Enterprises Ltd. (Nasdaq: MGIC), a leading provider of state-of-the-art business integration and application development technology, reported today its results for the quarter ended March 31, 2007.
OR YEHUDA, Israel, May 14 /PRNewswire-FirstCall/ — Magic Software Enterprises Ltd. (Nasdaq: MGIC), a leading provider of state-of-the-art business integration and application development technology, reported today its results for the quarter ended March 31, 2007.
Financial Highlights — Total revenues were $16.4 million, a 7% increase over Q1 2006 and 1% over Q4 2006 — Operating income was $1.1 million vs. operating losses of $0.2 million in Q1 2006 and Q4 2006 — Magic Software sustained profitability with net income of over $1.0 million — In Q1 2007, the company reported a positive free cash flow of $3.9 million, the highest level in seventeen quarters — Cash and cash equivalents, including short-term marketable securities, reached $16.5 million at March 31, 2007
First quarter of 2007 results reflect the company's sustained profitability for a second consecutive quarter and its continued revenue growth.
Total revenue for the first quarter ended March 31, 2007 was $16.4 million, an increase of 1% from the $16.2 million reported in the fourth quarter of 2006 and a 7% increase compared to the $15.3 million reported in the first quarter of 2006.
Gross profit for the first quarter of 2007 was $8.7 million, compared to $8.9 million in the last quarter of 2006 and $8.5 million in the first quarter of 2006.
Net profit for the first quarter of 2007 amounted to $1.0 million, compared to a net profit of $0.03 million in the fourth quarter of 2006 and a net loss of $0.2 million reported in the comparable quarter of 2006.
In the first quarter of 2007, North America, Europe and Japan accounted for 41%, 36% and 14% of total revenue, respectively. The rest of the world accounted for 9% of total revenue in the first quarter of 2007.
"We are very pleased with the results of the first quarter," said David Assia, Chairman and acting CEO of Magic Software Enterprises. "By achieving profitability for a second consecutive quarter we have proved that Magic is back on the right track. Despite the challenges involved in the restructuring we implemented in 2006, we managed to grow our revenues this quarter compared to the first quarter of 2006 and even exceeded our revenues in the fourth quarter of 2006, which is typically our strongest quarter in terms of revenue. The positive cash flow of $3.9 million we're reporting also contributes to our positive outlook towards the future."
Assia added, "In 2006 we announced a major restructuring plan designed to increase the company's profitability by focusing on the marketing and sales of our flagship products. We are also welcoming the arrival of Eitan Naor, our new CEO, and are confident that Eitan's leadership and vision will enable us to achieve our growth and profitability goals."
Accomplishments and Operational Highlights:
Below are some key accomplishments since Magic Software Enterprises' last earnings report:
— A special edition of Magic's iBOLT integration suite, aimed at the needs of a large community of SAP R/3 and mySAP enterprise customers, was recently introduced. — The company signed an agreement with a major medical center for expanding an integration project with a SAP-based health information system using iBOLT Special Edition for SAP R/3. — Magic Software continues to increase its foot print in the SAP SME market with over 160 installations of its iBOLT Special Edition for SAP Business and over 190 SAP Business Partners. — Magic Software continues to make inroads amongst users of Oracle JD Edwards software running on the IBM System i platform. The company recently recruited seven new system integration partners who will implement projects for JD Edwards users using a special edition of Magic's iBOLT integration suite called JDE Connect(TM). — The company continues to strengthen its relationship with IBM, with a special focus on the System i market. Magic Software has become a SOA Specialty partner of IBM – one of few partners that have reached this level of partnership with IBM. — Magic Software has donated to the University of Nebraska $1 million in business process and development software in support of a worldwide hub for advanced teaching and remote access by other universities on IBM's premier "all-in-one" System i business computing platform. — Eitan Naor, the newly appointed CEO of Magic Software, will join the company within the next month.
Magic Software's management will host a conference call on May 14, 2007 to discuss the company's first quarter financial results. The conference call will begin at 11:00 am EDT / 16:00 GMT / 18:00 in Israel.
To participate in the conference call, please call the appropriate number listed below at least five minutes prior to the start of the call:
From the US: 1 888 642 5032
From Israel: 03 918 0688
Callers should reference the Magic Software first quarter 2007 Earnings Conference Call.
A replay of the conference call will be available approximately 48 hours after the call ends, and will be available for three months, at http://www.magicsoftware.com/investors.
About Magic Software Enterprises
Magic Software Enterprises (NASDAQ: MGIC) has been a leader in enterprise application development, deployment and integration technology for more than two decades. Magic Software is a subsidiary of Formula Systems Ltd., a company effectively controlled by Emblaze Ltd. The company's service-oriented platform is used by companies worldwide to develop, maintain, and deploy both legacy and new business solutions, while integrating these applications across both internal and external, heterogeneous environments. Magic Software's platform-independent methodology lets companies achieve agility by quickly assembling composite applications, allowing programmers to create services and architects and business analysts to orchestrate and reuse these services to enable business processes. Through partnerships with industry leaders such as IBM and SAP and more than 2500 ISVs worldwide, Magic Software technology is used by more than 1.5 million customers around the globe.
For more information on Magic Software Enterprises and its products and services, visit www.magicsoftware.com.
Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that may involve a number of risks and uncertainties. Actual results may 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 here and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in the Company's most recent annual report and other filings with the Securities and Exchange Commission.
Company Contact: Ziv Zviel VP Finance Magic Software Enterprises Ltd. +972-3-538 9219 Ziv_Zviel@magicsoftware.com Consolidated Balance Sheets (US Dollars in Thousands) March 31, December 31, 2007 2006 Assets Current assets Cash and cash equivalents $ 11,782 $ 8,162 Short term deposits 68 69 Short term marketable securities 4,613 4,649 16,463 12,880 Accounts receivables Trade receivables 13,631 12,231 Other receivables and prepaid expenses 3,881 2,853 Inventory 290 328 Total current assets 34,265 28,292 Severance pay fund 2,078 2,176 Long term deposits 562 566 Investments in affiliated companies 223 223 Fixed assets, net 6,440 6,554 Goodwill 21,654 21,624 Other assets, net 10,775 10,863 Total assets $ 75,997 $ 70,298 Liabilities Current liabilities Short-term bank credit $ 4,051 $ 4,514 Trade payables 3,747 3,491 Accrued expenses and other liabilities 16,066 11,671 Total current liabilities 23,864 19,676 Long-term loans 355 233 Accrued severance pay 2,406 2,499 Minority interests 132 131 Shareholders' equity Share capital 835 832 Capital surplus 105,222 105,016 Treasury stock (6,773) (6,773) Accumulated deficit (50,312) (51,316) Total shareholders' equity $ 48,972 $ 47,759 Total liabilities and shareholders' equity $ 75,729 $ 70,298 Consolidated Statement of Operations (US Dollars in Thousands) Three months Three months Three months ended March ended December ended March 2007 2006 2006 Revenues Software sales $ 3,572 $ 3,627 $ 4,846 Applications 1,892 1,817 1,406 Maintenance and Support 3,938 3,731 3,486 Consultancy & other services 6,950 7,014 5,528 Total revenues $ 16,352 $ 16,189 $ 15,266 Cost of revenues Software sales $ 970 $ 707 822 Applications 779 569 876 Maintenance and Support 681 898 941 Consultancy & other services 5,236 5,129 4,151 Total cost of revenues $ 7,666 $ 7,303 $ 6,790 Gross profit $ 8,686 $ 8,886 $ 8,476 Research & development, net 1,067 828 865 Sales, marketing, and 6,211 7,617 7,286 general & administrative expenses Depreciation 355 419 488 Restructuring expenses — 269 — Operating profit (loss) $ 1,053 $ (247) $ (163) Financial income (expenses), net 128 $ 124 (72) One time gain — 278 — Income (loss) before taxes $ 1,181 $ 155 $ (235) Taxes on income 187 84 47 Income (loss) before $ 994 71 $ (282) minority Interest Minority interests in — (37) 56 (income) losses of subsidiaries Equity gain (loss) 10 (4) 57 Net income (loss) $ 1,004 $ 30 $ (169) Earnings (loss) per share, basic $ 0.03 $ 0.00 $ (0.01) Earnings (loss) per share, diluted $ 0.03 $ 0.00 $ (0.01) Weighted avg. shares outstanding (000's) 31,306 31,285 31,094 Diluted weighted avg. shares 31,990 31,793 31,094 outstanding (000's)
SOURCE Magic Software Enterprises Ltd.