Q1 Fiscal 2018 revenue at $27.9 million,Cloud
Revenues Increased 23% to $7.4 million, and12-month Order Backlog
Up 22%to $77 million, year-over-year
Majesco (NYSE:MJCO), a global provider of core insurance
software and consulting services for insurance business
transformation, today announced its financial results for the
fiscal 2018 first quarter ended June 30, 2017.
“This quarter marked significant progress in our ongoing
transition of our business model towards fast growing cloud. Total
cloud business revenue for the first quarter of the fiscal was $7.4
Million, an increase of 23% from $6.0 Million recorded in the same
quarter of the previous year. In addition, annualized recurring
cloud business revenue grew by 56% to $10.2 million compared to
$6.4 million in the same quarter of the previous year.
“I am excited to announce that we have signed a 10-year cloud
subscription deal with IBM to support Insurance clients. This is
one of the largest deals for Majesco with a potential subscription
value over $35 million. I am also encouraged by the 11 clients that
successfully went into production with different components of
Majesco solutions during the first quarter.
“Fiscal 2018 first quarter revenue of $27.9 million was in line
with expectations. Strong order book closures during the quarter
resulted in a significant uptick in the backlog and signals
positive growth momentum in revenue for the rest of the year. The
12-month order backlog increased by 21% to $77.2 million compared
to previous quarter and 22% to the previous year. Margins for the
quarter have been negatively impacted primarily due to the ramp up
cost to support expected revenue growth in coming quarters.
“The results reflect Majesco’s growing cloud based operating
model that is uniquely positioned to take advantage of evolving
trends within the insurance industry. As we have stated previously,
insurance carriers are shifting their preference from long and
expensive modernization programs to fast, nimble, flexible, and
pay-as-you-grow engagements for modernization and business growth
initiatives. Majesco’s growing revenues from the cloud business
demonstrates that the company is well positioned to answer carriers
changing needs, while capturing more of this market demand,” stated
Ketan Mehta, Majesco’s CEO and Co-Founder.
Financial Highlights
For the first quarter ended June 30, 2017
- Revenue for the first quarter ended
June 30, 2017 were $27.9 million as compared to $32.6 million in
the corresponding quarter of last year. The 14.2% decrease during
the quarter was due to subscription based Cloud programs with lower
implementation revenues replacing a number of on-premise P&C
programs moving from implementation to support mode.
- Gross profit was $11.9 million (42.6%
of revenue) for the first quarter ended June 30, 2017, compared to
$14.8 million (45.3% of revenue) for the quarter ended June 30,
2016. The drop in margin has been primarily due to the decline in
revenue and ramp up of resources to support the revenue growth in
the coming quarters
- Research and development (R&D)
expenses were $3.9 million (14.1% of revenue) during the first
quarter ended June 30, 2017 as compared to $4.5 million (13.9% of
revenue) during the quarter ended June 30, 2016. The decline in
R&D expenses has been primarily due to the lower cost post
consolidation of the Policy Platform.
- SG&A expenses were $10.3 million
(36.9% of revenue) during the first quarter ended June 30, 2017 as
compared to $10.7 million (32.7% of revenue) for the quarter ended
June 30, 2016.
- Adjusted EBITDA for the first quarter
ended June 30, 2017 was $(0.4) million (-1.5% of revenue) as
compared to $1.0 million (3.1% of revenue) for the quarter ended
June 30, 2016.
- Net loss for the first quarter ended
June 30, 2017 was $1.7 million, or $(0.05) per share as compared to
a net loss of $0.6 million, or $(0.02) per share, for the quarter
ended June 30, 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 $10.3 million at June 30, 2017, compared to $14.9 million at
June 30, 2016, and $12.5 million as at March 31, 2017.
- Total debt at June 30, 2017 was $17.7
million, compared to $17.7 million at June 30, 2016 and $12.6
million as at March 31, 2017.
- DSO’s were 82 days at June 30, 2017 as
compared to 67 days in the previous quarter ended March 31,
2017.
Other Highlights
- Key wins during the first quarter of
fiscal 2018 include:
- American Capital Assurance Corporation
selected Majesco P&C Suite, Majesco Distribution Management,
Majesco Business Analytics and Majesco Enterprise Data Warehouse as
their platform for growth.
- Executed a 10-year subscription and
services agreement with IBM to support core processing for
insurance clients. This is a significant deal for Majesco and
represents the growing partnership with IBM to offer a Cloud based
Industry Platform for Insurance. Scale wise, this represents the
largest deal to date for Majesco Cloud business.
- Extended the work with a Tier one
insurer for Commercial Lines Billing.
- Extended the work with a mid-market
insurer to support their product and market expansion.
- Majesco’s customer, Homesite Insurance,
was selected for the Novarica Impact Award for digital
initiative.
- During the quarter three mid-tier
insurers went live with Majesco Policy and start-up Glemham went
live in the UK with Majesco CloudInsurer. Six additional customers
went live for expanded states or products. In addition, a
mid-market insurer successfully upgraded their Majesco Billing to
the newest version.
- Majesco’s 12-month order backlog at
June 30, 2017 was $77.2 million as compared to $64.0 million at
March 31, 2017 and $63.4 million as at June 30, 2016
Conference Call and Webcast Information
Management of Majesco will conduct a live teleconference to
discuss Majesco’s fiscal 2018 first quarter financial results at
4:30 p.m. ET on Wednesday, July 26, 2017. Anyone interested in
participating should call 887-719-9801 if calling from the U.S., or
719-325-2469 if dialing internationally. A replay will be available
until August 9, 2017, which can be accessed by dialing 844-512-2921
within the U.S. and 412-317-6671 if dialing internationally. Please
use passcode 3330353 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=125535.
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 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, 2017 filed with the SEC on June 16, 2017.
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)
ThreeMonthsendedJune 30,2017
Three Months
endedJune 30,2016
Revenue $ 27,922 $ 32,554 Cost of revenue 16,016
17,802
Gross profit $
11,907 $ 14,752
Operating expenses Research and development expenses $ 3,930
$ 4,528 Selling, general and administrative expenses 10,313
10,659
Total operating expenses $ 14,242
$ 15,187 Income/(Loss) from operations
$ (2,336 ) $ (435
)
Interest income 6 8 Interest expense (121 ) (208 ) Other income
(expenses),net (43 ) (2 )
Income /(Loss) before
provision for income taxes $ (2,495 )
$ (637
)
(Benefit)/Provision for income taxes (844 ) (87 )
Net Income/(Loss) $ (1,650 ) $
(550
)
Earnings (Loss) per share: Basic $ (0.05 ) $ (0.02
)
Diluted $ (0.05 ) $ (0.02
)
Weighted average number of common shares outstanding
Basic 36,509,773
36,451,606 Diluted 36,509,773
36,451,606
Majesco and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(All amounts are in thousands of U.S.
Dollars except per share data and as stated otherwise)
June 30,2017
March 31,2017
ASSETS CURRENT ASSETS Cash and cash equivalents $ 9,452 $
11,635 Short term investments 818 829 Restricted cash 54 53
Accounts receivables, net 13,395 12,227 Unbilled accounts
receivable 11,633 8,563 Deferred income tax assets 2,643 2,018
Prepaid expenses and other current assets
6,230
5,961 Total current assets
44,224
41,286 Property and equipment, net 3,418
3,659 Intangible assets, net 8,213 8,708 Deferred income tax assets
4,106 3,856 Other assets 293 289 Goodwill
32,216 32,216
Total Assets $
92,469 $
90,014 LIABILITIES AND
STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Capital lease
obligation $ 244 $ 310 Loan from bank 7,715 2,561 Accounts payable
2,721 2,923 Accrued expenses and other liabilities 13,213 14,911
Deferred revenue
11,057
10,982 Total current liabilities
34,950 31,687
Capital lease obligation, net of current portion 167 288
Term loan - bank 10,000 10,000 Other
2,226
2,191 Total Liabilities
$ 47,343
$ 44,166
Commitments and contingencies STOCKHOLDERS’
EQUITY Preferred stock, par value $0.002 per share – 50,000,000
shares authorized as of June 30, 2017 and 50,000,000 as of March
31, 2017, NIL shares issued and outstanding as of June 30, 2017 and
March 31, 2017 - - Common stock, par value $0.002 per share –
450,000,000 shares authorized as of June 30, 2017 and 450,000,000
as of March 31, 2017, 36,527,566 shares issued and outstanding as
of June 30, 2017 and 36,508,203 as of March 31, 2017 $ 73 $ 73
Additional paid-in capital 72,074 71,343 Accumulated deficit
(26,932 ) (25,282 ) Accumulated other comprehensive income
(88 ) (286
) Total equity of common stockholder
45,127 45,848
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$ 92,469
$ 90,014
Majesco and Subsidiaries
Reconciliation of U.S. GAAP Net Income
to EBITDA and Adjusted EBITDA
(Unaudited)
Three Months EndedJune
30,
(U.S. dollars; in thousands): 2017 2016
Net Income (Loss) $ (1,650 ) $ (550 )
Add:
Provision (benefit) for income taxes (844 ) (87 ) Depreciation and
amortization 1,268 1,112 Interest expense 121 208
Less:
Interest income
(6
)
(8
)
Other income (expenses), net 43 2
EBITDA $ (1,068 ) $ 677
Add:
Stock based compensation 655 322
Adjusted EBITDA $ (413 ) $ 999 Revenue 27,922 32,554
Adjusted EBITDA as a % of Revenue (1.48 )% 3.07 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170726006139/en/
MajescoCorporate ContactAnn Massey, (973)
461-5190SVP-Financeann.massey@majesco.comorInvestor & Media
ContactSM Berger & CoAndrew Berger, (216)
464-6400andrew@smberger.com
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