Magic Software Reports Fourth Quarter and Full Year 2024 Financial Results

OR YEHUDA, Israel, March 11, 2025 (GLOBE NEWSWIRE) -- Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC) (“the Company”), a global provider of IT consulting services and end-to-end integration and application development platforms solutions, announced today its financial results for the fourth quarter and full year ended December 31, 2024. Summary Results for the Fourth Quarter 2024 (USD in millions, except per share data) GAAP Non-GAAP Q4 2024Q4 2023% Change Q4 2024Q4 2023% ChangeRevenues$142.6 $125.5 13.6% $142.6 $125.5 13.6% Gross profit$42.0 $37.0 13.5% $43.2 $38.6 11.9% Gross margin 29.4% 29.4% - 30.3% 30.8% (50) bps Operating income$16.7 $13.0 28.6% $18.8 $17.7 6.1% Operating margin 11.7% 10.3% 140 bps 13.2% 14.1% (90) bps Net income (*)$10.6 $8.5 25.2% $11.5 $11.6 (0.5%) Diluted EPS$0.22 $0.17 29.4% $0.24 $0.24 - (*) Attributable to Magic Software’s shareholders. Financial Highlights for the Fourth Quarter Ended December 31, 2024 Revenues for the fourth quarter of 2024 increased by 13.6% to $142.6 million, compared to $125.5 million in the same period of the previous year. Operating income for the fourth quarter of 2024 increased by 28.6% to $16.7 million, compared to $13.0 million in the same period of the previous year. Non-GAAP operating income for the fourth quarter of 2024 increased by 6.1% to $18.8 million, compared to $17.7 million in the same period of the previous year. Net income attributable to Magic Software’s shareholders for the fourth quarter of 2024 increased by 25.2% to $10.6 million, or $0.22 per fully diluted share, compared to $8.5 million, or $0.17 per fully diluted share, in the same period of the previous year. Non-GAAP net income attributable to Magic Software’s shareholders for the fourth quarter of 2024 decreased by 0.5% to $11.5 million, or $0.24 per fully diluted share, compared to $11.6 million, or $0.24 per fully diluted share, in the same period of the previous year. Summary Results for the Full Year Ended December 31, 2024 (USD in millions, except per share data) GAAP Non-GAAP 12M 202412M 2023% Change 12M 202412M 2023% ChangeRevenues$552.5 $535.1 3.3% $552.5 $535.1 3.3% Gross Profit$157.2 $153.0 2.7% $162.6 $158.4 2.6% Gross Margin 28.4% 28.6% (20) bps 29.4% 29.6% (20) bps Operating Income$61.2 $57.1 7.2% $73.6 $71.8 2.5% Operating Margin 11.1% 10.7% 40 bps 13.3% 13.4% (10) bps Net Income (*)$36.9 $37.0 (0.4%) $45.7 $48.4 (5.7%) Diluted EPS$0.75 $0.75 - $0.93 $0.99 (6.1%) (*) Attributable to Magic Software’s shareholders. Financial Highlights for the Year Ended December 31, 2024 Revenues for the year increased by 3.3% to $552.5 million compared to $535.1 million in 2023. Operating income for the year increased by 7.2% to $61.2 million compared to $57.1 million in the prior year. Non-GAAP operating income for the year increased by 2.5% to $73.6 million compared to $71.8 million in the prior year. Net income attributable to Magic Software’s shareholders for the year decreased by 0.4% to $36.9 million, or $0.75 per fully diluted share, compared to $37.0 million, or $0.75 per fully diluted share, in the prior year. Non-GAAP net income attributable to Magic Software’s shareholders for the year decreased by 5.7% to $45.7 million, or $0.93 per fully diluted share, compared to $48.4 million, or $0.99 per fully diluted share, in the prior year. Cash flow from operating activities for the year ended December 31, 2024, amounted to $74.7 million compared to $69.0 million for the year ended December 31, 2023. As of December 31, 2024, Magic’s cash, cash equivalents and short bank deposits amounted to $112.8 million. Magic is introducing 2025 annual revenue guidance of between $593 million and $603 million (based on current currency exchange rates) reflecting an annual growth of 7.3% to 9.1% compared to prior year. Declaration of Dividend for the Second Half of 2024 In accordance with its dividend distribution policy, the Company’s board of directors declared a semi-annual cash dividend in an amount of 32.7 cents per share and in an aggregate amount of approximately $16.1 million, which together with prior dividend distribution declared on November 18, 2024 and paid on January 8, 2025, amount to $27.6 million, reflecting approximately 75% of its distributable profits for the year. The dividend is payable on May 7, 2025, to all of the Company’s shareholders of record at the close of trading on the NASDAQ Global Select Market on April 22, 2025. In accordance with Israeli tax law, the dividend is subject to withholding tax at source at the rate of 30% (if the recipient of the dividend is at the time of distribution or was at any time during the preceding 12-month period the holder of 10% or more of the Company’s share capital) or 25% (for all other dividend recipients) of the dividend amount payable to each shareholder of record, subject to applicable exemptions. The dividend will be paid in US dollars on the ordinary shares of Magic Software Enterprises that are traded both on the Tel Aviv Stock Exchange and the NASDAQ Global Select Market. Guy Bernstein, Chief Executive Officer of Magic Software, said: "We are pleased to report strong results for the fourth quarter and full-year 2024, reflecting continued growth in Israel and stability in the U.S. market. Over the past year, we successfully navigated a dynamic business environment, adapting to market shifts through innovation and operational resilience. Our continued investment in cutting-edge digital and cloud transformation solutions has reinforced our position as a trusted partner for our clients. With a strengthening demand environment in the U.S. and a solid pipeline of opportunities, we are confident in our ability to sustain momentum and drive long-term profitability, delivering lasting value to our shareholders.” “We are pleased to formally announce the signing of a Memorandum of Understanding for the commencement of a strategic business transaction involving the merger of Magic into Matrix I.T (TASE: MTRX), Israel’s leading IT Services company. This transaction, to the extent completed, constitutes a significant milestone in the history of both companies and represents a transformational event for the company. This Merger represents a transformative opportunity for both Magic and Matrix, creating a stronger and more diversified company, with enhanced capabilities to serve customers worldwide, drive innovation, and generate long-term value for shareholders. Magic remains committed to a seamless integration process, ensuring continued operational excellence and business continuity throughout the transition. The combined entity’s aggregate market value is expected to be $2.1 billion (approximately 7.7 billion ILS), a valuation that would place it among the largest publicly traded IT services companies in the U.S and in Europe. Had the Companies already merged in 2024, the combined entity would have reported the following results in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board: Revenues: $2.1 billion. Gross profit: approximately $382 million (Gross margin: 18.6%).Operating income: approximately $183 million (Operating margin: 8.9%).Net income attributable to non-controlling interests: approximately $110.6 million (Net margin: 5.4%). The combined entity is expected to operate in approximately 50 countries, serve around 6,000 active clients, and employ over 15,000 employees. We look forward to a promising future for the merged company, to the extent completed, and are excited to embark on this new chapter together." Conference Call Details Magic Software’s management will host a conference call on Wednesday, March 12, 2025, at 11:00 am Eastern Daylight Time (17:00 Israel Daylight Time) to review and discuss Magic Software’s results. To participate, please call one of the following teleconferencing numbers. Please begin placing your calls at least 5 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: +1-866-652-8972 UK: 0-800-917-9141 ISRAEL: 03-918-0650 ALL OTHERS: +972-3-918-0650 For those unable to join the live call, a replay of the call will be available in the Investor Relations section of Magic Software’s website, www.magicsoftware.com. Non-GAAP Financial Measures This press release contains the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP operating income, non-GAAP net income attributable to Magic Software’s shareholders and non-GAAP basic and diluted earnings per share. Magic Software 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 Software’s financial condition and results of operations. Magic Software’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 together with GAAP results. Magic Software 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: Amortization of purchased intangible assets and other related costs;In-process research and development capitalization and amortization;Cost of share-based payment;Costs related to acquisition of new businesses; The related tax, non-controlling interests’ effects of the above items;Change in valuation of contingent consideration related to acquisitions;Change in deferred tax assets on carry forward tax losses. Reconciliation 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. About Magic Software Enterprises Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC) is a global provider of end-to-end integration and application development platforms solutions and IT consulting services. For more information, visit www.magicsoftware.com. Forward Looking Statements 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,” “look forward”, “expect,” “believe,” “guidance” 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 based on 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, 2023, which filed on May 13, 2024, and subsequent reports and filings made 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: Ronen PlatkevitzMagic Software Enterprisesir@magicsoftware.com MAGIC SOFTWARE ENTERPRISES LTD. CONDENSED CONSOLIDATED STATEMENTS OF INCOME U.S. Dollars in thousands (except per share data) Three months ended Year ended December 31, December 31, 2024 2023 2024 2023 Unaudited UnauditedRevenues $142,582 $125,545 $552,520 $535,052 Cost of Revenues 100,627 88,585 395,342 382,065 Gross profit 41,955 36,960 157,178 152,987 Research and development, net 3,988 2,703 12,661 10,328 Selling, marketing and general and administrative expenses 21,267 21,274 83,280 85,551 Total operating expenses 25,255 23,977 95,941 95,879 Operating income 16,700 12,983 61,237 57,108 Financial expenses, net (1,999) (1,899) (6,242) (4,616)Income before taxes on income 14,701 11,084 54,995 52,492 Taxes on income 2,286 1,724 11,328 9,934 Net income $ 12,415 $ 9,360 $ 43,667 $ 42,558 Share of loss of a company accounted for at equity, net (108) (56) (376) (56)Net income attributable to non-controlling interests (1,685) (821) (6,408) (5,471)Net income attributable to Magic's shareholders $ 10,622 $ 8,483 $ 36,883 $ 37,031 Weighted average number of shares used in computing net earnings per share Basic 49,099 49,099 49,099 49,096 Diluted 49,099 49,099 49,099 49,098 Basic and diluted earnings per share attributable to Magic's shareholders $0.22 $0.17 $0.75 $0.75 MAGIC SOFTWARE ENTERPRISES LTD. RECONCILIATION OF GAAP AND NON-GAAP RESULTS U.S. Dollars in thousands (except per share data) Three months ended Year ended December 31, December 31, 2024 2023 2024 2023 Unaudited Unaudited GAAP gross profit $ 41,955 $ 36,960 $ 157,178 $ 152,987 Amortization of capitalized software and acquired technology 949 1,222 4,214 4,288 Amortization of other intangible assets 315 447 1,250 1,173 Non-GAAP gross profit $ 43,219 $ 38,629 $ 162,642 $ 158,448 GAAP operating income $ 16,700 $ 12,983 $ 61,237 $ 57,108 Gross profit adjustments 1,264 1,669 5,464 5,461 Amortization of other intangible assets 2,219 1,888 7,810 7,988 Increase (decrease) in valuation of contingent (1,136) (142) consideration related to acquisitions (488) 240 Capitalization of software development (443) (842) (2,650) (3,183)Costs related to acquisitions 268 152 602 372 Cost of share-based payment (119) 1,967 1,597 3,798 Non-GAAP operating income $ 18,753 $ 17,675 $ 73,572 $ 71,784 GAAP net income attributable to Magic's shareholders $ 10,622 $ 8,483 $ 36,883 $ 37,031 Operating income adjustments 2,053 4,692 12,335 14,676 Expenses attributed to non-controlling interests (477) (709) (1,791) (1,713)and redeemable non-controlling interests Increase in valuation of consideration 529 34 761 290 related to acquisitions Deferred taxes on the above items (1,187) (899) (2,538) (1,879)Non-GAAP net income attributable to Magic's shareholders$ 11,540 $ 11,601 $ 45,650 $ 48,405 Non-GAAP basic and diluted net earnings per share $0.24 $0.24 $0.93 $0.99 Weighted average number of shares used in computing basic net earnings per share 49,099 49,099 49,099 49,096 Weighted average number of shares used in computing diluted net earnings per share 49,099 49,099 49,099 49,098 Summary of Non-GAAP Financial Information U.S. Dollars in thousands (except per share data) Three months ended Year ended December 31, December 31, 2024 2023 2024 2023 Unaudited Unaudited Unaudited Unaudited Revenues$142,582 100.0% $125,545 100.0% $552,520 100% $535,052 100%Gross profit 43,219 30.3% 38,629 30.8% 162,642 29.4% 158,448 29.6%Operating income 18,753 13.2% 17,675 14.1% 73,572 13.3% 71,784 13.4%Net income attributable to Magic's shareholders 11,540 8.1% 11,601 9.2% 45,650 8.3% 48,405 9.0% Basic and diluted earnings per share$0.24 $0.24 $0.93 $0.99 MAGIC SOFTWARE ENTERPRISES LTD. CONDENSED CONSOLIDATED BALANCE SHEETS U.S. Dollars in thousands December 31, December 31, 2024 2023 Unaudited Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents$112,779 $105,943 Short-term bank deposits 51 751 Trade receivables, net 139,569 131,098 Other accounts receivable and prepaid expenses 23,800 18,833 Total current assets 276,199 256,625 LONG-TERM ASSETS: Deferred tax assets 4,895 6,729 Right-of-use assets 24,707 25,718 Other long-term receivables and Investments in companies accounted for at equity 9,261 8,623 Property and equipment, net 7,467 7,988 Intangible assets and goodwill, net 217,802 216,723 Total long term assets 264,132 265,781 TOTAL ASSETS$540,331 $522,406 LIABILITIES AND EQUITY CURRENT LIABILITIES: Short-term debt$23,169 $28,941 Trade payables 28,920 28,415 Dividend payable to Magic Software shareholders 11,587 - Accrued expenses and other accounts payable 58,042 41,492 Current maturities of lease liabilities 4,818 4,406 Liability in respect of business combinations 2,654 6,656 Put options of non-controlling interests 20,066 18,252 Deferred revenues and customer advances 21,031 13,537 Total current liabilities 170,287 141,699 LONG TERM LIABILITIES: Long-term debt 36,125 52,267 Deferred tax liability 7,848 11,610 Long-term lease liabilities 22,040 23,101 Long-term liability in respect of business combinations 1,781 1,049 Put options of non-controlling interests - 620 Accrued severance pay, net 1,181 1,116 Total long term liabilities 68,975 89,763 EQUITY: Magic Software Enterprises shareholders' equity 277,190 265,981 Non-controlling interests 23,879 24,963 Total equity 301,069 290,944 TOTAL LIABILITIES AND EQUITY$540,331 $522,406 MAGIC SOFTWARE ENTERPRISES LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. Dollars in thousands Year ended December 31, 2024 2023 UnauditedCash flows from operating activities: Net income$ 43,291 $ 42,502 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 20,823 20,553 Cost of share-based payment 1,607 3,798 Change in deferred taxes, net (1,564) (3,238)Payments of deferred and contingent consideration related to acquisitions (922) (6,572)Capital gain on sale of fixed assets 7 (42)Amortization of premium and accrued interest on debt instruments at fair value through other comprehensive income (27) (114)Effect of exchange rate on of cash and cash equivalents held (82) in currencies other than the functional currency 285 Changes in value of short-term and long-term loans from banks and others and deposits, net (676) 1,533 Working capital adjustments: Trade receivables (4,339) 18,426 Other current and long-term accounts receivable (4,990) (5,586)Trade payables 677 858 Accrued expenses and other accounts payable 13,279 (7,190)Deferred revenues 7,609 3,779 Net cash provided by operating activities 74,693 68,992 Cash flows from investing activities: Payments for business acquisitions, net of cash acquired (Appendix A) (12,507) (14,244)Loans to related party - 909 Proceeds from sale of property, plant and equipment 45 54 Payments to former shareholders of consolidated company - (583)Cash paid in conjunction with deferred payments and contingent liabilities related to business combinations (6,631) (11,320)Purchase of property and equipment (1,535) (1,618)Change in marketable securities 585 (1,243)Change in short-term and long-term deposits 482 4,110 Capitalization of software development (2,650) (3,183)Investment in a company accounted for at equity (198) (498)Net cash used in investing activities (22,409) (27,616) Cash flows from financing activities: Exercise of employees’ stock options - 22 Dividend paid to non-controlling interests (7,870) (4,055)Dividend to Magic’s shareholders (10,016) (30,798)Repayment of long-term loans from banks and others (33,695) (20,994)Receipt of long-term loans from banks and others 12,603 49,465 Repayment of lease liabilities (6,029) (5,690)Purchase of non-controlling interest (314) - Proceeds from sale of non-controlling interest 176 - Cash paid due to exercise of put option by non-controlling interests - (5,243)Net cash used in financing activities (45,145) (17,293) Effect of exchange rate changes on cash and cash equivalents (303) (1,202) Increase in cash and cash equivalents 6,836 22,881 Cash and cash equivalents at the beginning of the period 105,943 83,062 Cash and cash equivalents at end of the period$ 112,779 $ 105,943

Magic Software Reports Fourth Quarter and Full Year 2024 Financial Results

FAQ

Why Bullish?

How important is it?

Why Long Term?

Related Companies

Related News