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 the fourth quarter and
year ended December 31, 2017.
The following will summarize our business in the
fourth quarter of 2017 and provide a more detailed review of the
financial results for the quarter and for the full year. 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.
Financial Highlights of Q4
2017
- Revenues of $4.5 million, compared to $4.7 million in the
fourth quarter of 2016.
- Operating income was $1.1 million, compared to $1.8 million in
the fourth quarter of 2016.
- Net income of $1.6 million (including a one-time decrease of $
0.7 million in taxes on income) or $0.08 per share, compared to
$0.9 million or $0.05 per share in the fourth quarter of 2016.
- Cash flow from operating activities was $0.8 million, compared
to $0.9 million in the fourth quarter of 2016.
Financial Highlights of Full
Year 2017
- Revenues of $18.1 million, same as in 2016.
- Operating income was $4.7 million, or 25.9% of revenue,
compared to $5.2 million, or 28.8% of revenue, in 2016.
- Net income of $5.6 million, or $0.29 per share, compared to
$4.2 million or $0.22 per share in 2016. Net income in 2017
includes a one-time net capital gain of $0.9 million and the
decrease in taxes on income.
- Cash flow from operating activities was $2.7 million, compared
to $5.2 million in 2016.
- Cash position of approximately $17.6 million as of December 31,
2017.
As of December 31, 2017, we had 240 employees,
compared to 262 as of December 31, 2016.
Monica Iancu, MIND CTI’s President and Chief Executive Officer
commented: “We are challenged by the shrinking number of tier 3
telecom providers, mainly rural carriers, new LTE operators and
MVNO’s, as they are not able to successfully compete with large
carriers in their existing markets, nor to successfully develop
presence in new and emerging markets. In 2017, one long-term major
SaaS customer and some small customers under maintenance agreements
decided to exit their business and we expect that this will bear a
negative impact on our 2018 revenues and profitability. During our
over twenty years of operation, we have experienced similar market
trend changes and we executed successfully in shifting our focus
towards new opportunities.
“We continue to generate significant revenues
from our existing customer base and we are active in a number of
presale processes. As previously mentioned, we invested
significantly in the new version of MINDBill, that was released in
2017 and we successfully completed the first installation of this
new version and secured additional sales of upgrades that will be
completed in 2018. We believe that our comprehensive product-based
billing platform and agile delivery fit perfectly with multi-play
service providers as they target digital transformation. We intend
to continue to invest in enhancing our offering to include
omni-channel engagement and business analytics.”
Revenue Distribution for Q4
2017Revenues in the Americas represented 73%,
revenues in Europe represented 13% and revenues in Israel
represented 7% of our total revenues.
Revenues from our customer care and billing
software totaled $3.7 million, or 82% of total revenues, while
revenues from our enterprise call accounting software were $0.8
million, or 18% of total revenues.
Revenues from licenses were $0.6 million, or 13%
of total revenues, while revenues from maintenance and additional
services were $3.9 million, or 87% of total revenues.
Revenue Distribution for Full
Year 2017Revenues in the Americas represented
73%, revenues in Europe represented 17% and revenues in Israel
represented 5% of our total revenues.
Revenues from our customer care and billing
software totaled $14.9 million, or 82% of total revenues, compared
with $14.6 million, or 81% of total revenues in 2016, while
revenues from our enterprise call accounting software were $3.2
million, or 18% of total revenue, compared with $3.5 million or 19%
of total revenues in 2016.
Revenues from licenses were $2.5 million, or 14%
of total revenues, compared with $3.9 million, or 22% of total
revenues in 2016, while revenues from maintenance and additional
services were $15.6 million, or 86%, compared with $14.2 million or
78% of total revenues in 2016.
Follow-on Orders in Q4
2017Similar to all other quarters, our valued
customers showed their appreciation for our technology and support.
These valued customers continue to invest in upgrades to grow their
businesses and improve processes resulting in follow-on orders.
This quarter’s follow-on orders include
integrations within our billing and provisioning platform to
various additional technologies as well as specific customizations
and additional professional services.
Another follow-on order is with an existing
customer in South Africa and includes the migration to the MINDBill
Version 8, license upgrade and maintenance renewal over a
three-year period. The motivation of migrating to the Version 8 is
for bringing on board additional product lines of business with the
myriad rating schemes available in Version 8 enabling the
additional business units to differentiate their offerings to
standout in the market.
Dividend DistributionSince July
2003, when we first adopted a dividend policy, according to which
we declare, subject to specific Board approval and applicable law,
a dividend distribution once per year, we have distributed 14
annual dividends and one special dividend. We continue to believe
that our annual dividends enhance shareholders value and we plan to
continue with annual distributions.
Taking into consideration our dividend policy
and the remaining cash after the distribution, our Board declared
on February 22, 2018 a gross dividend of $0.30 per share. The
record date for the dividend will be March 8, 2018 and the payment
date will be March 22, 2018. Tax will be withheld at a rate of
20%.
Taxes on
IncomeAs previously mentioned, taxes include
provisions for income taxes paid in our different locations
(Romania, Israel, the United States and the United Kingdom) 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
and recently obtained a tax pre-ruling that classifies us in Israel
as a “Preferred Technological Enterprise” and thus our tax rate in
Israel will be 7.5% compared to the standard 24% on the pre-tax
income recorded in Israel.
The present financial results reflect the tax
benefit in Israel.
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 our 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 a few quarters.
Lately we have reached different phases in such
processes and although we previously mentioned that the excess of
demand for deals has pushed valuations to new highs, making it ever
more challenging for us to find attractive deals, we are cautiously
more optimistic as we see more potential targets.
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 CTI Ltd.Tel:
+972-4-993-6666investor@mindcti.com
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