MIND C.T.I. LTD. (Nasdaq:MNDO), a leading provider of convergent
end-to-end prepaid/postpaid billing and customer care product based
solutions for service providers as well as unified communications
analytics and call accounting solutions for enterprises, today
announced results for its third quarter ended September 30, 2017.
The following will summarize our major
achievements in the third quarter of 2017, as well as our business.
Full financial results can be found in the Company News section of
our website at http://www.mindcti.com/company/news/ and in our Form
6-K.
Q3 2017 Financial
Highlights
- Revenues were $4.6 million, compared to $4.5 million in the
third quarter of 2016 and $4.6 million in the second quarter of
2017.
- Operating income was $1.4 million, or 31% of total revenues,
compared to $1.3 million, or 29% of total revenues in the third
quarter of 2016 and $1.2 million, or 27% of total revenues in the
second quarter of 2017.
- Net income was $1.2 million, or $0.06 per share, compared to
$1.1 million, or $0.06 per share in the third quarter of 2016.
- Multiple follow-on orders.
- Cash flow from operating activities was $1.7 million.
- Cash position was $16.9 million as of September 30, 2017.
Nine Months Financial
Highlights
- Revenues were $13.6 million, compared to $13.4 million in the
first nine months of 2016.
- Operating income was $3.6 million, or 26% of total revenues,
compared to $3.4 million, or 26% of total revenues in the first
nine months of 2016.
- Net income was $4.0 million, or $0.21 per share, compared to
$3.3 million, or $0.17 per share in the first nine months of 2016
(net income in the nine months period includes a one-time net
capital gain of $0.9 million)
- Cash flow from operating activities in the first nine months of
2017 was $2.0 million.
As of September 30, 2017 we had 248 employees,
compared with 267 as of September 30, 2016 and 248 as of June 30,
2017.
Monica Iancu, MIND CTI CEO, commented: “For the
last few years, communications service providers encounter major
challenges as the economics of running a network remain complex and
increased data traffic does not necessarily translate into
increased profits. Operators continue to develop new service
offerings to improve revenues and at the same time attempt to
reduce cost, both capex and opex, in order to increase
profitability. Our customers, tier 2 and 3 carriers, are under
severe pressure as they compete against larger operators, with
hefty advertising budgets. Planning ahead for this expected market
shift, we had improved our operating efficiency and
productivity. In parallel, we invested in developing the next
versions of our platforms and we will continue to invest in
expanding our offering.”
Revenue Distribution for Q3
2017Revenues in the Americas represented 76.3%,
revenues in Europe represented 15.2% and revenues in the rest of
the world represented 8.5% of our total revenues.
Revenues from customer care and billing software
totaled $3.8 million, or 82% of total revenues, while revenues from
enterprise call accounting software totaled $0.8 million, or 18% of
our total revenues.
Revenues from licenses were $0.6 million, or 13%
of total revenues, while revenues from maintenance and additional
services were $4.0 million, or 87% of our total revenues.
Follow-on
OrdersWe always strive to maintain the highest
support level possible and to have happy customers. With this in
mind, we adopted the Agile methodology where we assign a dedicated
team to customization tasks. This methodology enables us to better
serve our customers and as always, our follow-on orders reconfirm
their satisfaction.
This quarter’s follow-on orders include an
upgrade to our latest Version 8 (third customer to upgrade to our
new version), agreements to support enhancements related to
deployment of Voice over LTE (VoLTE), support for EMV (credit card
payments, cards with chip), mobile payments, IMS integration for
billing and provisioning as well as specific customizations and
additional professional services.
Fluctuation in
TaxesAs previously mentioned, on a quarterly
basis we incurred high fluctuation in taxes. Taxes include
provisions for income taxes paid in our different locations at very
different tax rates.
Also, as previously mentioned, there is a change
in the Israeli tax legislation, starting 2017. We have applied for
a significantly lower income tax rate, based on incentive plans
approved in 2017 under the Encouragement of Capital Investments
Law. In case we obtain a tax pre-ruling that classifies us in
Israel as a Preferred Technological Enterprise, we expect that our
tax expenses will be significantly lower and that the influence on
our results for the first nine months of 2017 might be up to $0.5
million less in taxes on income expense.
The third quarter financial results do not
reflect our expectations of a lower tax rate, as there is no
certainty that we will obtain such a pre-ruling.
Update on Pursuit of
AcquisitionsAs we previously announced, given our
strong cash position and our experienced organization, we believe
that we are well positioned and have the required resources to
respond to market needs and at the same time focus on targeting
potential acquisitions that could benefit the company's growth. Our
active pursuit is focused on acquisition targets at reasonable
valuations that satisfy the criteria we defined: proven revenues,
complementary technology, geography and expected accretion to
earnings within two to three quarters.
In the last two years, when evaluating
acquisition targets, we faced increased competition from cash-rich
corporations as well as the private equity industry, both sectors
having high liquidity that they allocate to M&A
activities.
The excess of demand for deals has pushed
valuations to highs, making it ever more challenging for us to find
attractive deals.
About MINDMIND C.T.I. Ltd. is
a leading provider of convergent end-to-end billing and customer
care product based solutions for service providers as well as
unified communications analytics and call accounting solutions for
enterprises. MIND provides a complete range of billing applications
for any business model (license, managed service or complete
outsourced billing service) for Wireless, Wireline, Cable, IP
Services and Quad-play carriers. A global company, with over twenty
years of experience in providing solutions to carriers and
enterprises, MIND operates from offices in the United States,
Romania and Israel.
Cautionary Statement for Purposes of the "Safe
Harbor" Provisions of the Private Securities Litigation Reform Act
of 1995: All statements other than historical facts included in the
foregoing press release regarding the Company's business strategy
are "forward-looking statements." These statements are based on
management's beliefs and assumptions and on information currently
available to management. Forward-looking statements are not
guarantees of future performance, and actual results may materially
differ. The forward-looking statements involve risks,
uncertainties, and assumptions, including the risks discussed in
the Company's filings with the United States Securities Exchange
Commission. The Company does not undertake to update any
forward-looking information.
For more information please
contact:Andrea DrayMIND C.T.I. Ltd.Tel:
+972-4-993-6666investor@mindcti.com
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