Magic Follows Up 2012 Success With Q1 2013 Momentum
July 8, 2013 Dan Burger
Magic Software Enterprises turned in its best year ever in 2012, and the momentum is continuing in the first quarter of this year. In the quarter ended in March, Magic Software amassed $33.4 million in revenues, an 11 percent increase over the year-ago period.
Non-GAAP operating income for the first quarter increased 12 percent to $5.2 million, compared to $4.7 million in the same period last year. Operating income increased 10 percent to $4.6 million, compared to $4.2 million in the same period last year.
Magic’s use of non-GAAP numbers goes against generally accepted accounting principles (GAAP). Non-GAAP numbers generally make a better financial story. Non-GAAP figures do not include amortization of purchased intangible assets, in-process research and development capitalization and amortization, equity-based compensation expense and related tax effect. It should be noted that non-GAAP financial measures are not in accordance with generally accepted accounting principles, but they are often an indicator of the relative strength of the underlying business.
Non-GAAP net income for the first quarter decreased 7 percent to $4.2 million, compared to $4.6 million in the same period last year. Net income decreased 16 percent to $3.5 million compared to $4.2 million in the same period last year. The decrease in net income was reported as mainly attributable to tax expenses recorded with respect to utilization of deferred tax assets; in accordance with U.S. accounting principles, the company records deferred tax expenses on utilization of carry-forward tax losses.
Operating cash flow for the quarter amounted to $6.0 million. Total cash, cash equivalents and short-term investments as of March 31, 2013, amounted to $37.6 million.
In a statement accompanying the financial report, Guy Bernstein, CEO at the company, said Magic is building on its positive year-end report from 2012 with solid growth in 2013. He noted the double-digit growth in operations and referenced momentum for software sales and professional services engagements. Improvements in the European markets, increasing demand for migration services, and additional large-scale projects were also referenced without specific numbers provided.
“Looking ahead, we expect to continue to execute our growth strategy by enhancing our application development and integration platforms and expanding our professional services offerings to better serve increasing business needs for enterprise mobility and cloud computing,” Bernstein said.
In a statement back in February, Bernstein described the financial success of 2012 as attributable to a “strong performance across our products and professional services in all regions” and noted that his company’s “strong cash position has enabled us to continue to make important growth investments in our product portfolio.”
There have been no announcements since that time with regard to product portfolio investments or the introduction of product enhancements.