Magic Posts Mad Profit Surge, Declares FY11 ‘Best Ever’

February 27, 2012 Alex Woodie

This is a great time to be Magic Software Enterprises. The application development and integration tool maker, which was all but written off several years ago, continued its comeback recently when it announced its financial results for 2011, which were the company’s best ever.

For the fourth quarter ended December 31, Magic reported a 22 percent increase in revenue, to $30.5 million, and a 42 percent increase in net income, to $4.4 million. For fiscal year 2011, the company reported a 28 percent increase in revenue, to $113.3 million, and a whopping 60 percent in net income, to $15 million.

“I am pleased to report that 2011 was Magic’s most successful year ever,” Magic CEO Guy Bernstein stated in a press release. “Our record-breaking financial results have been consistently impressive, with unprecedented double-digit growth for the ninth consecutive quarter, reflecting excellent growth in all our regional centers of activity.”

Just three years ago, the future was not nearly as rosy as it is now for the Israeli company. The company was coming off a 2006 restructuring that saw it lay off employees and sell off its application business, and revenues were about half of what they are now. The company’s stock, which is traded on the NASDAQ and Tel-Aviv stock markets, was trading for just over $1, and Magic was struggling to separate itself in a crowded field of application development and integration tool makers.

Eventually, the focus on two products–the uniPaaS rich Internet application (RIA) framework and the iBolt integration tool–started to resonate, and the sales began to add up. Investors responded positively, as MGIC increased by about 800 percent from early 2009 to early 2011, when it traded for more than $9 per share. Today, it’s off a bit, but still trading above $7 per share, giving the company a market capitalization of $240 million.

Magic’s financial success has resulted in its stock being elevated to the NASDAQ Global Select Market, a segment within the NASDAQ Global Market reserved for companies with the most solid financials and corporate governance. It’s also been added to the TASE TA-100 Index in Israel.

On the technology side, Magic plans to expand its offering in the mobile and cloud segments in 2012. In January, it joined the JDE Alliance, which will open new sales opportunities among JD Edwards customers.