Year on Year Revenue up 7.5%
Profitability Improves with Adjusted EBITDA
Margin at 5.0%
Cloud Business grows 17.3%
Majesco, a global provider of core insurance software and
consulting services for insurance business transformation, today
announced its financial results for the fiscal 2017 fourth quarter
and fiscal year ended March 31, 2017.
“During Fiscal 2017, we experienced a distinct shift in
preference by insurance carriers for fast, nimble and flexible
engagements along with pay as you grow model as opposed to long and
expensive modernization programs,” stated Ketan Mehta, CEO and
Co-Founder. “At Majesco, we have taken proactive steps to lead this
trend and transition our traditional on-premise business model to a
cloud based operating model. Our year-over-year revenue increased
by 7.5%. Our cloud business grew by 17.3% during the year and four
out of our last six platform deals were on the cloud. “While we
transformed our business and invested in developing a market
leading cloud based business platform, we proactively managed our
financial model and improved adjusted EBITDA for the fifth
consecutive quarter. Adjusted EBITDA increased by 450 basis points
from 0.5% of revenue for the fiscal year ended March 31, 2016 to
5.0% of revenue for the fiscal year ended March 31, 2017.
“I am also pleased that during the year, 15 of our clients
successfully went into production on our platform. The growth
opportunity in the insurance technology market is significant and
the investments we made during fiscal 2017 improved our
competitiveness. As a result, we are optimistic to reaccelerate the
deal momentum in fiscal 2018,” concluded Mr. Mehta.
Financial Highlights
For the fourth quarter ended March 31, 2017
- Revenue for the fourth quarter ended
March 31, 2017 decreased to $28.2 million as compared to $32.3
million in the corresponding quarter of last year. The 12.7%
decrease during the quarter was due a number of traditional P&C
programs moving from implementation to support mode, subscription
based programs with lower implementation revenues replacing them
and the reprioritization of a large program in L&A in September
2016.
- Gross profit was $13.4 million (47.6%
of revenue) for the fourth quarter ended March 31, 2017, compared
to $14.4 million (44.7% of revenue) for the quarter ended March 31,
2016. The increase in gross profit margin was due to improved
operating efficiencies and year end incentive provisions.
- Research and development (R&D)
expenses were $4.2 million (15.0% of revenue) during the fourth
quarter ended March 31, 2017 as compared to $4.6 million (14.3% of
revenue) during the quarter ended March 31, 2016.
- SG&A expenses were $9.4 million
(33.5% of revenue) during the fourth quarter ended March 31, 2017
as compared to $10.5 million (32.6% of revenue) for the quarter
ended March 31, 2016.
- Adjusted EBITDA for the fourth quarter
ended March 31, 2017 was $1.6 million (5.7% of revenue) as compared
to a negative $0.4 million (1.3% of revenue) for the quarter ended
March 31, 2016.
- Net loss for the fourth quarter ended
March 31, 2017 was $0.8 million, or $(0.02) per share as compared
to a net loss of $1.5 million, or $(0.04) per share, for the
quarter ended March 31, 2016.
EBITDA and Adjusted EBITDA are non-GAAP measures. Reconciliation
tables of EBITDA and Adjusted EBITDA as used in this press release
to GAAP are included in the financial section of this press
release.
For the fiscal year ended March 31, 2017
- Revenue for the fiscal year ended March
31, 2017 increased 7.5% to $121.8 million as compared to $113.3
million in the corresponding period of last year. The growth was
primarily driven by the addition of Cover-All business and revenues
from expanding relationships with P&C customers through upsell
and cross sell opportunities.
- Gross profit was $58.3 million (47.9%
of revenue) for the fiscal year ended March 31, 2017, compared to
$50.5 million (44.5% of revenue) for the fiscal year ended March
31, 2016. The increase in gross margin was primarily due to the
combination of a higher revenue base and improved operating
efficiencies.
- Research and development (R&D)
expenses were $17.2 million (14.1% of revenue) during the fiscal
year ended March 31, 2017 as compared to $16.3 million (14.4% of
revenue) during the fiscal year ended March 31, 2016. The increased
expense was in line with the company’s R&D roadmap for both
P&C and L&A business.
- SG&A expenses were $41.3 million
(33.9% of revenue) during the fiscal year ended March 31, 2017 as
compared to $38.2 million (33.7% of revenue) for the fiscal year
ended March 31, 2016.
- Adjusted EBITDA for the fiscal year
ended March 31, 2017 was $6.1 million (5.0% of revenue) as compared
to $0.6 million (0.5% of revenue) for the fiscal year ended March
31, 2016.
- Net loss for the fiscal year ended
March 31, 2017 was $0.9 million, or ($0.02) per share, as compared
to net loss of $3.6 million, or $(0.10) per share, for the fiscal
year ended March 31, 2016.
EBITDA and Adjusted EBITDA are non-GAAP measures. Reconciliation
tables of EBITDA and Adjusted EBITDA as used in this press release
to GAAP are included in the financial section of this press
release.
Balance Sheet
- Majesco had cash and cash equivalents
of $12.5 million at March 31, 2017, compared to $6.2 million at
March 31, 2016, and $19.5 million as at December 31, 2016.
- Total debt at March 31, 2017 was $12.6
million, compared to $13.8 million at March 31, 2016 and $17.2
million as at December 31, 2016.
- DSO’s were 67 days at March 31, 2017 as
compared to 69 days in the previous quarter ended December 31,
2016.
Other Highlights
- Some of the key wins of the Company
during the fourth quarter of 2017 were as follows:
- The IMT Group selected Majesco Billing
in the Cloud as their enterprise solution supporting all personal
and commercial lines of business.
- A tier 1 insurer expanded their focus
from commercial to personal property lines of business for their
direct business on Majesco CloudInsurer.
- A tier 2 specialty insurer renewed its
application management services agreement with Majesco for three
years to support a number of key operational systems.
- A tier 1 insurer selected Majesco as
their strategic partner for the multi-year modernization program
where the insurer will leverage Majesco’s enterprise consulting
services and the business transformation framework, application
development & management services and the technical reference
architecture, and testing services with the automation test
framework and testing repository to support the vision laid out by
the company for their underwriting and policy platform.
- The strategic relationship with IBM has
successfully kicked off the inception work with a Tier 1 insurer
specifically on the platform as a service insurance initiative that
IBM announced in October 2016.
- Our customer, New York Life, was
selected as a Celent Model Insurer for the Digital and omni-channel
category for their implementation of Majesco DigitalConnect and
Majesco Rating, for their Group Membership Association Division
(GMAD).
- The 12-month order backlog at March 31,
2017 was $64.0 million as compared to $62.1 million at December 31,
2016.
Conference Call and Webcast Information
Management of Majesco will conduct a live teleconference to
discuss Majesco’s fiscal 2017 fourth quarter and full year
financial results at 4:30 p.m. ET on Tuesday, May 2, 2017. Anyone
interested in participating should call 888-208-1814 if calling
from the U.S., or 719-457-2600 if dialing internationally. A replay
will be available until May 16, 2017, which can be accessed by
dialing 844-512-2921 within the U.S. and 412-317-6671 if dialing
internationally. Please use passcode 1483283 to access the
replay.
In addition, the call will be webcast and will be available on
the Company’s website at www.majesco.com or by visiting
http://public.viavid.com/index.php?id=124021.
Use of Non-GAAP Financial Measures
In evaluating our business, we consider and use EBITDA as a
supplemental measure of operating performance. We define EBITDA as
earnings before interest, taxes, depreciation and amortization. We
present EBITDA because we believe it is frequently used by
securities analysts, investors and other interested parties as a
measure of financial performance. We define Adjusted EBITDA as
EBITDA before one-time non-recurring costs related to the merger
with Cover-All Technologies and the listing of the Majesco common
stock on the NYSE-MKT in connection with the merger, and
stock-based compensation.
The terms EBITDA and Adjusted EBITDA are not defined under U.S.
generally accepted accounting principles, or U.S. GAAP, and are not
a measure of operating income, operating performance or liquidity
presented in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA
have limitations as an analytical tool, and when assessing
Majesco’s operating performance, investors should not consider
EBITDA or Adjusted EBITDA in isolation, or as a substitute for net
income (loss) or other consolidated income statement data prepared
in accordance with U.S. GAAP. Among other things, EBITDA and
Adjusted EBITDA do not reflect our actual cash expenditures. Other
companies may calculate similar measures differently than Majesco,
limiting their usefulness as comparative tools. We compensate for
these limitations by relying on U.S. GAAP results and using EBITDA
and Adjusted EBITDA only supplementally.
About Majesco
Majesco enables insurance business transformation for
approximately 150 global customers by providing technology
solutions which include software products, consulting and IT
services. Our customers are carriers from the Property and
Casualty, Life, Annuity and Group insurance segments worldwide.
Majesco delivers proven software solutions and IT services in the
core insurance areas such as policy administration, billing,
claims, distribution and analytics.
For more information, please visit us on the web at
www.majesco.com, or call 1-973-461-5200.
Cautionary Language Concerning Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act. These forward-looking statements
are made on the basis of the current beliefs, expectations and
assumptions of management, are not guarantees of performance and
are subject to significant risks and uncertainty. These
forward-looking statements should, therefore, be considered in
light of various important factors, including those set forth in
Majesco’s reports that it files from time to time with the
Securities and Exchange Commission (SEC) and which you should
review, including those statements under “Item 1A – Risk Factors”
in Majesco’s Annual Report on Form 10-K for the fiscal year ended
March 31, 2016 filed with the SEC on May 23, 2016 as amended.
Important factors that could cause actual results to differ
materially from those described in forward-looking statements
contained in this press release include, but are not limited to:
integration risks; changes in economic conditions, political
conditions, trade protection measures, licensing requirements and
tax matters; technology development risks; intellectual property
rights risks; competition risks; additional scrutiny and increased
expenses as a result of being a public company; the financial
condition, financing requirements, prospects and cash flow of
Majesco; loss of strategic relationships; changes in laws or
regulations affecting the insurance industry in particular;
restrictions on immigration; the ability and cost of retaining and
recruiting key personnel; the ability to attract new clients and
retain them and the risk of loss of large customers; continued
compliance with evolving laws; customer data and cybersecurity
risk; and Majesco’s ability to raise capital to fund future
growth.
These forward-looking statements should not be relied upon as
predictions of future events and Majesco cannot assure you that the
events or circumstances discussed or reflected in these statements
will be achieved or will occur. If such forward-looking statements
prove to be inaccurate, the inaccuracy may be material. You should
not regard these statements as a representation or warranty by
Majesco or any other person that we will achieve our objectives and
plans in any specified timeframe, or at all. You are cautioned not
to place undue reliance on these forward-looking statements, which
speak only as of the date of this presentation. Majesco disclaims
any obligation to publicly update or release any revisions to these
forward-looking statements, whether as a result of new information,
future events or otherwise, after the date of this press release or
to reflect the occurrence of unanticipated events, except as
required by law.
Majesco and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
(All amounts are in thousands of US
Dollars except per share data and as stated otherwise)
ThreeMonthsendedMarch 31,2017
Three Months endedMarch 31,2016
Twelve
Months
ended
March 31, 2017
Twelve Months ended
March 31, 2016
Revenue $ 28,156 $ 32,306 $ 121,768 $ 113,302 Cost of revenue
14,760 17,880 63,461 62,832
Gross profit $ 13,396 $ 14,426
$ 58,307 $ 50,470
Operating expenses Research and development expenses $ 4,225
$ 4,634 $ 17,236 $ 16,267 Selling, general and administrative
expenses 9,439 10,521 41,309 38,205 Restructuring costs -
- - 465
Total operating expenses
$ 13,666 $ 15,155 $
58,546 $ 54,936 Income/(Loss)
from operations $ (267) $ (730
) $ (239) $ (4,466) Interest
income 14 11 41 24 Interest expense (127) (355 ) (612) (596) Other
income (expenses),net (238) (64) (15)
289
Income /(Loss) before provision for income taxes
$ (618) $ (1,137 ) $
(825) $ (4,749) (Benefit)/Provision for income
taxes 181 402 97 (1,186)
Net
Income/(Loss) $ (799) $
(1,538 ) $ (922 ) $
(3,562) Earnings (Loss) per share:
Basic $ (0.02) $ (0.04 ) $ (0.02 ) $ (0.10) Diluted $ (0.02) $
(0.04 ) $ (0.02 ) $ (0.10)
Weighted average number of
common shares outstanding Basic 36,498,141
36,451,357 36,477,774 35,054,518 Diluted 36,498,141
36,451,357 36,477,774 35,054,518
Majesco and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(All amounts are in thousands of U.S.
Dollars except per share data and as stated otherwise)
March 31,
2017
March 31,
2016
ASSETS CURRENT ASSETS Cash and cash equivalents $ 11,635 $
5,520 Short term investments 829 634 Restricted cash 53 257
Accounts receivables, net 12,489 22,503 Unbilled accounts
receivable 8,563 7,379 Deferred income tax assets 2,018 1,847
Prepaid expenses and other current assets
5,961
6,195 Total current assets
41,548
44,335 Property and equipment, net 3,659
3,462 Intangible assets, net 8,708 10,483 Deferred income tax
assets 3,856 3,586 Other assets 289 480 Goodwill
32,216 32,275
Total Assets $
90,276 $
94,621 LIABILITIES AND
STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Capital lease
obligation $ 310 $ 159 Loan from bank 2,561 6,951 Accounts payable
2,923 3,659 Accrued expenses and other liabilities 15,173 16,701
Deferred revenue
10,982
11,200 Total current liabilities
31,949 38,670
Capital lease obligation, net of current portion 288 120
Term loan - bank 10,000 6,800 Other
2,190
3,474 Total Liabilities
$ 44,427
$ 49,064
Commitments and contingencies STOCKHOLDERS’
EQUITY Preferred stock, par value $0.002 per share – 50,000,000
shares authorized as of March 31, 2017 and 50,000,000 as of March
31, 2016, NIL shares issued and outstanding as of March 31, 2017
and March 31, 2016 - - Common stock, par value $0.002 per share –
450,000,000 shares authorized as of March 31, 2017 and 450,000,000
as of March 31, 2016, 36,508,203 shares issued and outstanding as
of March 31, 2017 and 36,451,357 as of March 31, 2016 $ 73 $ 73
Additional paid-in capital 71,343 69,505 Accumulated deficit
(25,281 ) (24,360 ) Accumulated other comprehensive income
(286 ) 339
Total equity of common stockholder
45,849 45,557
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$ 90,276
$ 94,621
Majesco and Subsidiaries
Reconciliation of U.S. GAAP Net Income
to EBITDA and Adjusted EBITDA
(Unaudited)
Three Months Ended
March 31,
Twelve Months Ended
March 31,
(U.S. dollars; in thousands): 2017 2016
2017 2016 Net Income (Loss) $ (799 ) $ (1,538
) $ (922 ) $ (3,562 )
Add:
Provision (benefit) for income taxes 181 402 97 (1,187 )
Depreciation and amortization 1,254 898 4,720 3,843 Interest
expense 127 355 612 596
Less:
Interest income (14 )
(11
)
(41 ) (24 ) Other income (expenses), net 237
64 15 (289 ) EBITDA $ 986 $ 168
$ 4,481 $ (624 )
Add:
Stock based compensation 618 244 1,578 748 Reorganization Costs (1)
- - - 465
Adjusted EBITDA $ 1,604 $ 412 $ 6,059 $ 589
Revenue 28,156 32,306 121,768 113,302 Adjusted EBITDA
as a % of Revenue 5.70 % 1.28 % 4.98 % 0.52 %
Majesco and Subsidiaries
Reconciliation of Selected U.S. GAAP
Measures to Non-U.S. GAAP Measures
(Unaudited)
Three Months Ended
March 31,
Twelve Months Ended
March 31,
(U.S. dollars; in thousands): 2017 2016
2017 2016 Net Income (Loss) $ (799 ) $ (1,538
) $ (922 ) $ (3,562 ) Reorganization Costs (1)
-
-
- 465 Total One-Time Costs $ -
- $ - 465 Adjusted Net
Income $ (799 ) (1,538 )) $ (922 ) (3,097 )
Adjusted Earnings (Loss) per Common Share: Basic $ (0.02 ) $ (0.04
) $ (0.02 ) $ (0.09 ) Diluted $ (0.02 ) $ (0.04 ) $ (0.02 ) $ (0.09
)
(1)Costs related to the merger with Cover-All Technologies and
the listing of the Majesco common stock on the NYSE-MKT in
connection with the merger.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170502006640/en/
Majesco:CorporateAnn Massey,
973-461-5190SVP-Financeann.massey@majesco.comorInvestors &
MediaSM Berger & CoAndrew Berger,
216-464-6400andrew@smberger.com
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