Magic Software Boosts Revenues and Profits in Q1

Published: May 29, 2007

by Timothy Prickett Morgan

Development tool provider Magic Software Enterprises has reported its financial results for the first quarter of 2007 ended March 31, and business has picked up enough to flip the company solidly into the black.

In the first quarter, Magic Software's total revenues came to $16.4 million, up 7 percent from the first quarter of 2006 and even up 1 percent compared to the sales level the company set in the final quarter of 2006. The company had an operating profit of $1.1 million, which was better than the $200,000 operating loss in the year ago period, and brought $1 million to the bottom line. Magic Software said that it had $3.9 million in positive cash flow in the quarter--the highest cash flow it has had in 17 quarters--and ended the quarter with $16.5 million in cash and equivalents.

"We are very pleased with the results of the first quarter," said David Assia, chairman and acting chief executive officer at Magic Software. "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."

As part of that restructuring, Magic Software has hired a new CEO, Eitan Naor, who will begin his duties in July.

In addition to releasing its latest financial results, Magic Software said that it has sought and attained IBM's SOA Specialty designation, a seal of approval that Software Group bestows on SOA tools that meet its technical and business requirements. The designation essentially means that IBM and Magic Software are on the same page when it comes to bringing the SOA style of developing applications to the System i platform.

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