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Magic Software Reports Second Quarter and First Half 2024 Financial Results

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Magic Software Enterprises (NASDAQ and TASE: MGIC) reported its financial results for Q2 and H1 2024. Key highlights include:

- Q2 2024 revenues decreased by 1.0% to $136.3 million

- Q2 2024 GAAP operating income decreased by 2.6% to $15 million

- Q2 2024 non-GAAP operating income decreased by 1.2% to $18.2 million

- Q2 2024 GAAP net income decreased by 20% to $9.0 million

- H1 2024 revenues decreased by 4.7% to $267.0 million

- The company reiterated its 2024 annual revenue guidance of $540-$550 million

Despite challenges in the macroeconomic landscape, particularly with North American blue-chip clients, the company remains optimistic about future growth and continued improvement in business performance.

Magic Software Enterprises (NASDAQ e TASE: MGIC) ha riportato i suoi risultati finanziari per il secondo trimestre e il primo semestre del 2024. I principali punti salienti includono:

- I ricavi del Q2 2024 sono diminuiti dell'1,0% a 136,3 milioni di dollari

- L'utile operativo GAAP del Q2 2024 è diminuito del 2,6% a 15 milioni di dollari

- L'utile operativo non-GAAP del Q2 2024 è diminuito dell'1,2% a 18,2 milioni di dollari

- L'utile netto GAAP del Q2 2024 è diminuito del 20% a 9,0 milioni di dollari

- I ricavi del primo semestre del 2024 sono diminuiti del 4,7% a 267,0 milioni di dollari

- L'azienda ha ribadito le previsioni di ricavi annuali per il 2024 tra i 540 e i 550 milioni di dollari

Nonostante le sfide nel panorama macroeconomico, in particolare con i clienti blue-chip nordamericani, l'azienda rimane ottimista riguardo alla crescita futura e al miglioramento continuo delle performance aziendali.

Magic Software Enterprises (NASDAQ y TASE: MGIC) informó sus resultados financieros para el segundo trimestre y el primer semestre de 2024. Los aspectos más destacados incluyen:

- Los ingresos del Q2 2024 disminuyeron un 1.0% a 136.3 millones de dólares

- El ingreso operativo GAAP del Q2 2024 disminuyó un 2.6% a 15 millones de dólares

- El ingreso operativo no-GAAP del Q2 2024 disminuyó un 1.2% a 18.2 millones de dólares

- El ingreso neto GAAP del Q2 2024 disminuyó un 20% a 9.0 millones de dólares

- Los ingresos del primer semestre de 2024 disminuyeron un 4.7% a 267.0 millones de dólares

- La empresa reiteró su guía de ingresos anuales para 2024 de 540 a 550 millones de dólares

A pesar de los desafíos en el panorama macroeconómico, especialmente con clientes de primera clase en América del Norte, la empresa sigue siendo optimista sobre el crecimiento futuro y la mejora continua en el rendimiento del negocio.

매직 소프트웨어 엔터프라이즈 (NASDAQ 및 TASE: MGIC)는 2024년 2분기 및 상반기 재무 결과를 발표했습니다. 주요 내용은 다음과 같습니다:

- 2024년 2분기 매출은 1.0% 감소하여 1억 3,63만 달러에 달했습니다.

- 2024년 2분기 GAAP 운영 수익은 2.6% 감소하여 1500만 달러에 달했습니다.

- 2024년 2분기 비GAAP 운영 수익은 1.2% 감소하여 1820만 달러에 달했습니다.

- 2024년 2분기 GAAP 순이익은 20% 감소하여 900만 달러에 달했습니다.

- 2024년 상반기 매출은 4.7% 감소하여 2억 6,70만 달러에 달했습니다.

- 회사는 2024년 연간 매출 가이던스를 5억 4천만에서 5억 5천만 달러로 재확인했습니다.

북미의 우량 고객과 관련된 매크로 경제적 도전에도 불구하고, 회사는 미래 성장과 사업 성과의 지속적인 개선에 대해 낙관적입니다.

Magic Software Enterprises (NASDAQ et TASE: MGIC) a annoncé ses résultats financiers pour le deuxième trimestre et le premier semestre 2024. Les points saillants incluent :

- Les revenus du T2 2024 ont diminué de 1,0 % pour atteindre 136,3 millions de dollars

- Le bénéfice opérationnel GAAP du T2 2024 a diminué de 2,6 % pour atteindre 15 millions de dollars

- Le bénéfice opérationnel non-GAAP du T2 2024 a diminué de 1,2 % pour atteindre 18,2 millions de dollars

- Le bénéfice net GAAP du T2 2024 a diminué de 20 % pour atteindre 9,0 millions de dollars

- Les revenus du premier semestre 2024 ont diminué de 4,7 % pour atteindre 267,0 millions de dollars

- L'entreprise a réaffirmé ses prévisions de revenus annuels pour 2024 entre 540 et 550 millions de dollars

Malgré les défis du paysage macroéconomique, en particulier avec les clients de premier plan nord-américains, l'entreprise reste optimiste quant à la croissance future et à l'amélioration continue de la performance commerciale.

Magic Software Enterprises (NASDAQ und TASE: MGIC) hat seine finanziellen Ergebnisse für das zweite Quartal und das erste Halbjahr 2024 veröffentlicht. Die wichtigsten Höhepunkte sind:

- Die Einnahmen im Q2 2024 sanken um 1,0% auf 136,3 Millionen Dollar

- Das GAAP-Betriebsgewinn im Q2 2024 sank um 2,6% auf 15 Millionen Dollar

- Das Non-GAAP-Betriebsgewinn im Q2 2024 sank um 1,2% auf 18,2 Millionen Dollar

- Der GAAP-Nettoertrag im Q2 2024 sank um 20% auf 9,0 Millionen Dollar

- Die Einnahmen im ersten Halbjahr 2024 sanken um 4,7% auf 267,0 Millionen Dollar

- Das Unternehmen bekräftigte seine jährliche Umsatzprognose für 2024 von 540 bis 550 Millionen Dollar

Trotz der Herausforderungen im makroökonomischen Umfeld, insbesondere mit nordamerikanischen Blue-Chip-Kunden, bleibt das Unternehmen optimistisch hinsichtlich zukünftigen Wachstums und kontinuierlicher Verbesserung der Geschäftsergebnisse.

Positive
  • Revenues for Q2 2024 increased by 8.5% compared to Q4 2023 and 4.2% compared to Q1 2024
  • Non-GAAP operating margin for H1 2024 improved by 40 basis points to 13.6%
  • Cash flow from operating activities for H1 2024 amounted to $41.4 million
  • Cash, cash equivalents, and bank deposits totaled $108.4 million as of June 30, 2024
  • The company maintained its 2024 annual revenue guidance of $540-$550 million
Negative
  • Q2 2024 revenues decreased by 1.0% year-over-year to $136.3 million
  • Q2 2024 GAAP operating income decreased by 2.6% to $15 million
  • Q2 2024 GAAP net income decreased by 20% to $9.0 million
  • H1 2024 revenues decreased by 4.7% year-over-year to $267.0 million
  • Unexpected decline in demand from U.S.-based blue-chip customers negatively impacted Q2 revenues by approximately $16.6 million

Insights

Magic Software's Q2 2024 results show a mixed performance. While revenues slightly decreased by 1.0% to $136.3 million, the company managed to maintain a stable operating margin. The decrease in net income by 20% to $9.0 million is concerning, primarily due to increased interest expenses and currency fluctuations.

However, there are positive signs. The company's revenues increased by 8.5% and 4.2% compared to Q4 2023 and Q1 2024, respectively, indicating a recovery trend. The reiteration of the 2024 revenue guidance of $540-$550 million suggests management's confidence in future growth.

Investors should monitor the company's ability to manage costs and improve profitability in the face of macroeconomic challenges. The robust cash position of $108.4 million provides financial stability and potential for strategic investments.

Magic Software's performance reflects the broader tech industry trends. The unexpected decline in demand from U.S.-based blue-chip customers, resulting in a $16.6 million revenue impact, highlights the volatility in IT services sector. This aligns with the current trend of tech companies tightening budgets and reassessing their digital transformation initiatives.

Despite challenges, Magic Software's focus on digital and cloud transformation positions it well for future growth. The improving business momentum and robust pipeline mentioned by the CEO suggest that the company's services remain relevant in the evolving tech landscape.

The company's ability to navigate these headwinds while maintaining a stable operating margin demonstrates operational resilience. However, the tech sector's ongoing fluctuations may continue to impact short-term performance.

Magic Software's results reflect the current market dynamics in the IT consulting and integration services sector. The slight revenue decline amid macroeconomic challenges is not uncommon in the industry. However, the company's ability to maintain its gross margin at 28.5% (GAAP) and 29.4% (non-GAAP) demonstrates resilience.

The geographical diversification of Magic Software's business helps mitigate risks, as evidenced by the constant currency calculations showing potential revenue growth. The company's focus on cultivating cutting-edge capabilities aligns with market demands for innovative digital solutions.

Investors should note the positive cash flow of $41.4 million from operations, indicating strong underlying business fundamentals. This, combined with the improving trend in quarterly revenues, suggests potential for recovery and growth as market conditions stabilize.

OR YEHUDA, Israel, Aug. 14, 2024 (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 second quarter and first half ended June 30, 2024.

Summary Results for the Second Quarter 2024 (USD in millions, except per share data)

        
 GAAP  Non-GAAP 
 Q2 2024Q2 2023% Change Q2 2024Q2 2023% Change
Revenues$136.3 $137.6 (1.0%) $136.3 $137.6 (1.0%)
Gross profit$38.8 $40.3 (3.6%) $40.1 $41.6 (3.7%)
Gross margin 28.5%  29.3% (80) bps  29.4%  30.3% (90) bps
Operating income$15.0 $15.4 (2.6%) $18.2 $18.4 (1.2%)
Operating margin 11.0%  11.2% (20) bps  13.4%  13.4% -
Net income (*)$9.0 $11.3 (20.0%) $11.7 $13.5 (13.6%)
Diluted EPS$0.18 $0.23 (21.7%) $0.24 $0.28 (14.3%)
        
(*) Attributable to Magic Software’s shareholders.    
        

Financial Highlights for the Second Quarter Ended June 30, 2024

  • Revenues for the second quarter of 2024 decreased by 1.0% to $136.3 million, compared to $137.6 million in the same period of the previous year. On a constant currency basis (calculated based on average currency exchange rates for the three months ended June 30, 2023), revenues for the second quarter of 2024 would have increased by 0.4% to $138.1 million. As described in the pre-announcement of our third quarter results on November 8, 2023, in the third quarter of 2023, we experienced a substantial and unexpected decline in demand for our professional services from several of our important U.S.-based blue-chip customers which, without any advance notification, decided to immediately suspend significant parts of their active time-and-materials-based projects. This reduced demand had a negative impact on our second quarter revenues compared to the same period of the previous year of approximately $16.6 million. Compared to the fourth quarter of 2023 and the first quarter of 2024, revenues for the second quarter increase by 8.5% and 4.2%, respectively.
  • Operating income for the second quarter of 2024 decreased by 2.6% to $15 million, compared to $15.4 million in the same period of the previous year. On a constant currency basis (calculated based on average currency exchange rates for the three months ended June 30, 2023), operating income for the second quarter of 2024 would have amounted to $15.3 million, a decrease of 0.9% compared to the same of the previous year.
  • Non-GAAP operating income for the second quarter of 2024 decreased by 1.2% to $18.2 million, compared to $18.4 million in the same period of the previous year. On a constant currency basis (calculated based on average currency exchange rates for the three months ended June 30, 2023), non-GAAP operating income for the second quarter of 2024 would have amounted to $18.5 million, compared to $18.4 million in the same period of the previous year.
  • Net income attributable to Magic Software’s shareholders for the second quarter of 2024 decreased by 20% to $9.0 million, or $0.18 per fully diluted share, compared to $11.3 million, or $0.23 per fully diluted share, in the same period of the previous year. The decrease in net income attributable to Magic Software’s shareholders was primarily attributable to the increase in interest expenses resulting from the increase in our overall financial debt and negative impact of foreign currency exchange rates fluctuation recorded with respect to monetary assets and liabilities denominated in foreign currency.
  • Non-GAAP net income attributable to Magic Software’s shareholders for the second quarter of 2024 decreased by 13.6% to $11.7 million, or $0.24 per fully diluted share, compared to $13.5 million, or $0.28 per fully diluted share, in the same period of the previous year. 

Summary Results for the First Half 2024 (USD in millions, except per share data)

        
 GAAP  Non-GAAP 
 H1 2024H1 2023% Change H1 2024H1 2023% Change
Revenues$267.0 $280.0 (4.7%) $267.0 $280.0 (4.7%)
Gross Profit$75.5 $79.2 (4.6%) $78.4 $81.8 (4.1%)
Gross Margin 28.3%  28.3% -  29.4%  29.2% 20 bps
Operating Income$29.5 $30.8 (4.3%) $36.4 $36.9 (1.5%)
Operating Margin 11.0%  11.0% -  13.6%  13.2% 40 bps
Net Income (*)$17.8 $21.4 (16.7%) $23.0 $26.4 (12.9%)
Diluted EPS$0.36 $0.44 (18.2%) $0.47 $0.54 (13.3%)
        
(*) Attributable to Magic Software’s shareholders.    
     

Financial Highlights for the First Half Ended June 30, 2024

  • Revenues for the first half period ended June 30, 2024 decreased by 4.7% to $267.0 million compared to $280.0 million in the same period of the previous year. On a constant currency basis (calculated based on average currency exchange rates for the six months ended June 30, 2023), revenues for the first half period ended June 30, 2024 would have amounted to $271.5 million a decrease of 3.6% compared to the same period of the previous year.  
  • Operating income for the first half ended June 30, 2024 decreased by 4.3% to $29.5 million compared to $30.8 million in the same period of the previous year. On constant currency basis, (calculated based on average currency exchange rates for the six months ended June 30, 2023), operating income for the first half period ended June 30, 2024 would have amounted to $30.1 million, a decrease of 2.3% compared to the same period of the previous year.
  • Non-GAAP operating income for the first half ended June 30, 2024, decreased by 1.5% to $36.4 million compared to $36.9 million in the same period of the previous year. On constant currency basis, (calculated based on average currency exchange rates for the six months ended June 30, 2023), Non-GAAP operating income for the first half period ended June 30, 2024 would have amounted to $37 million compared to $36.9 million in the same period of the previous year.
  • Net income attributable to Magic Software’s shareholders for the first half period ended June 30, 2024 decreased by 16.7% to $17.8 million, or $0.36 per fully diluted share, compared to $21.4 million, or $0.44 per fully diluted share, in the same period last year.
  • Non-GAAP net income attributable to Magic Software’s shareholders for the first half period ended June 30, 2024 decreased by 12.9% to $23.0 million, or $0.47 per fully diluted share, compared to $26.4 million, or $0.54 per fully diluted share, in the same period last year.
  • Cash flow from operating activities for the first half period ended June 30, 2024 amounted to $41.4 million compared to $42.6 million in the same period last year.  
  • As of June 30, 2024, Magic’s cash, cash equivalents and short and long-term bank deposits amounted to $108.4 million.  
  • Magic is reiterating 2024 annual revenue guidance of between $540 million and $550 million.

Guy Bernstein, Chief Executive Officer of Magic Software, said: “I am pleased to report that our performance in the first half of 2024 has been increasingly improving, underscoring the positive momentum that continues to drive our business forward. While we operate in a dynamic macroeconomic landscape, which has presented challenges for some of our North American blue-chip clients, particularly in the face of softer demand and budget constraints, we remain optimistic about the future. Our business is constantly improving, and our pipeline is robust as the vast majority of our customers continue to recognize the unique value we bring, increasingly choosing us as their preferred partner for their innovative digital and cloud transformation initiatives. We are confident that this momentum driven by our ongoing efforts to cultivate cutting-edge capabilities will continue to build throughout the year and propel us toward sustained, long-term profitability and enduring value to our esteemed shareholders.”

“The State of Israel is currently enduring a challenging period, marked by uncertainty regarding the ongoing war and its potential consequences. However, our strong client relationships, robust financial foundation, and the substantial cash flow we generate enable us to continue investing in future growth, even amid economic, political, and security turbulence”

Conference Call Details

Magic Software’s management will host a conference call on Thursday, August 14, 2024, at 10:30 am Eastern Daylight Time (17:30 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 Platkevitz
Magic Software Enterprises
ir@magicsoftware.com

        
MAGIC SOFTWARE ENTERPRISES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
U.S. Dollars in thousands (except per share data)
        
 Three months ended  Six months ended
 June 30, June 30,
 2024 2023 2024 2023
 Unaudited Unaudited
Revenues$136,250 $137,583 $266,970 $280,023
Cost of Revenues 97,407  97,278  191,428  200,833
Gross profit  38,843  40,305  75,542  79,190
Research and development, net 2,847  2,425  5,640  4,964
Selling, marketing and general and administrative expenses 20,835  22,431  40,009  43,595
Increase (decrease) in valuation of contingent consideration related to acquisitions 121  -  427  (165)
Total operating expenses 23,803  24,856  46,076  48,394
Operating income  15,040  15,449  29,466  30,796
Financial expenses, net 1,235  316  2,879  1,015
Income before taxes on income 13,805  15,133  26,587  29,781
Taxes on income 3,040  2,455  5,769  5,268
Net income$ 10,765 $ 12,678 $ 20,818 $ 24,513
Share of loss of companies accounted for at equity, net (85)  -  (149)  -
Net income attributable to non-controlling interests (1,647)  (1,384)  (2,839)  (3,111)
Net income attributable to Magic's shareholders $ 9,033 $ 11,294 $ 17,830 $ 21,402
        
        
Weighted average number of shares used in computing net earnings per share       
        
Basic 49,099  49,093  49,099  49,093
        
Diluted 49,099  49,133  49,099  49,133
        
Basic and diluted earnings per share attributable to Magic's shareholders$0.18 $0.23 $0.36 $0.44
        


MAGIC SOFTWARE ENTERPRISES LTD.
RECONCILIATION OF GAAP AND NON-GAAP RESULTS
U.S. Dollars in thousands (except per share data)
        
 Three months ended  Six months ended
 June 30, June 30,
 2024 2023 2024 2023
 Unaudited Unaudited
        
GAAP gross profit$ 38,843 $ 40,305 $ 75,542 $ 79,190
Amortization of capitalized software and acquired technology 1,127  1,096  2,234  2,071
Amortization of other intangible assets 121  244  624  489
Non-GAAP gross profit$ 40,091 $ 41,645 $ 78,400 $ 81,750
        
        
GAAP operating income$ 15,040 $ 15,449 $ 29,466 $ 30,796
Gross profit adjustments 1,248  1,340  2,858  2,560
Amortization of other intangible assets 2,083  1,666  3,597  3,730
Increase (decrease) in valuation of contingent consideration related to acquisitions 121  -  427  (165)
Capitalization of software development (735)  (723)  (1,483)  (1,434)
Costs related to acquisitions 158  107  302  181
Cost of share-based payment 304  609  1,195  1,231
Non-GAAP operating income$ 18,219 $ 18,448 $ 36,362 $ 36,899
        
        
GAAP net income attributable to Magic's shareholders$ 9,033 $ 11,294 $ 17,830 $ 21,402
Operating income adjustments 3,179  2,999  6,896  6,103
Amortization expenses attributed to non-controlling interests and redeemable non-controlling interests (396)  (377)  (848)  (524)
Changes in unsettled fair value of contingent consideration related to acquisitions 52  68  166  203
Deferred taxes on the above items (166)  (444)  (1,065)  (791)
Non-GAAP net income attributable to Magic's shareholders$ 11,702 $ 13,540 $ 22,979 $ 26,393
        
        
Non-GAAP basic and diluted net earnings per share$0.24 $0.28 $0.47 $0.54
Weighted average number of shares used in computing basic net earnings per share 49,099  49,093  49,099  49,093
Weighted average number of shares used in computing diluted net earnings per share 49,099  49,137  49,099  49,137
        


Summary of Non-GAAP Financial Information
U.S. Dollars in thousands (except per share data)
                
 Three months ended  Six months ended
 June 30, June 30,
 2024 2023 2024 2023
 Unaudited Unaudited Unaudited Unaudited
                
Revenues$136,250 100% $137,583 100% $266,970 100% $280,023 100%
Gross profit 40,091 29.4%  41,645 30.3%  78,400 29.4%  81,750 29.2%
Operating income 18,219 13.4%  18,448 13.4%  36,362 13.6%  36,899 13.2%
Net income attributable to               
Magic's shareholders 11,702 8.6%  13,540 9.8%  22,979 8.6%  26,393 9.4%
                
Basic and diluted earnings per share$0.24   $0.28   $0.47   $0.54  
                


MAGIC SOFTWARE ENTERPRISES LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in thousands
 June 30, December 31,
 2024 2023
 Unaudited  
    
ASSETS   
CURRENT ASSETS:   
Cash and cash equivalents$107,642 $105,943
Short-term bank deposits 722  751
Trade receivables, net 132,827  131,098
Other accounts receivable and prepaid expenses 20,391  18,833
Total current assets 261,582  256,625
    
LONG-TERM ASSETS:   
Deferred tax assets 7,232  6,729
Right-of-use assets 25,023  25,718
Other long-term receivables and Investments in companies accounted for at equity 7,805  8,623
Property and equipment, net 7,517  7,988
Intangible assets and goodwill, net 217,805  216,723
Total long term assets 265,382  265,781
    
TOTAL ASSETS$526,964 $522,406
    
LIABILITIES AND EQUITY   
    
CURRENT LIABILITIES:   
Short-term debt$25,888 $28,941
Trade payables 29,591  28,415
Dividend payable to Magic Software shareholders 10,016  -
Accrued expenses and other accounts payable 45,269  41,492
Current maturities of lease liabilities 4,409  4,406
Liability in respect of business combinations 2,116  6,656
Put options for non-controlling interests 19,520  18,252
Deferred revenues and customer advances 20,949  13,537
Total current liabilities 157,758  141,699
    
LONG TERM LIABILITIES:   
Long-term debt 38,968  52,267
Deferred tax liability 10,971  11,610
Long-term lease liabilities 22,489  23,101
Long-term liability in respect of business combinations 1,609  1,049
Put options of non-controlling interests -  620
Emolyee benefit liabilities 1,111  1,116
Total long term liabilities 75,148  89,763
    
    
EQUITY:   
Magic Software Enterprises shareholders' equity 268,944  265,981
Non-controlling interests 25,114  24,963
Total equity 294,058  290,944
    
TOTAL LIABILITIES AND EQUITY$526,964 $522,406
    


MAGIC SOFTWARE ENTERPRISES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. Dollars in thousands
    
 Six months ended June 30,
 2024 2023
 Unaudited Unaudited
Cash flows from operating activities:   
    
Net income$ 20,669 $ 24,513
Adjustments to reconcile net income to net cash provided  by operating activities:   
Depreciation and amortization 10,106  9,917
Cost of share-based payment 1,195  1,231
Change in deferred taxes, net (1,559)  (2,257)
Payments of deferred and contingent consideration related to acquisitions -  (40)
Capital gain on sale of fixed assets -  (5)
Amortization of premium and accrued interest on debt instruments  at fair value through other comprehensive income -  (49)
Effect of exchange rate on of cash and cash equivalents held  in currencies other than the functional currency 389  906
Changes in value of short-term and long-term loans from banks and others and deposits, net (1,089)  499
Working capital adjustments:   
Trade receivables 100  17,315
Other current and long-term accounts receivable (2,071)  (8,423)
Trade payables 1,941  (1,333)
Accrued expenses and other accounts payable 3,794  (4,072)
Deferred revenues 7,904  4,439
Net cash provided by operating activities  41,379  42,641
    
Cash flows from investing activities:   
    
Capitalized software development costs (1,483)  (1,434)
Purchase of property and equipment (618)  (625)
Payments for business acquisitions, net of cash acquired (10,248)  (15,585)
Payments of deferred and contingent consideration related to acquisitions (7,238)  (17,330)
Proceeds from sale of property and equipment -  10
Redemption of marketable securities 968  -
Investment in long-term deposits 503  (528)
Investment in short-term bank deposits (670)  -
Proceeds from repayment of loan receivables -  541
Proceeds from short-term bank deposits 688  3,532
Investment in a company accounted for at equity (123)  -
Net cash used in investing activities  (18,221)  (31,419)
    
Cash flows from financing activities:   
    
Proceeds from sale of non-controlling interest 174  -
Dividend to Magic's shareholders -  (14,739)
Dividend paid to non-controlling interests (2,210)  (2,733)
Repayment of lease liabilities (2,956)  (2,720)
Purchase of redeemable non-controlling interest -  (5,073)
Purchase of non-controlling interest (314)  -
Short-term and long-term loans received 10,707  49,463
Repayment of short-term and long-term loans (25,018)  (10,742)
Net cash (used in) provided by financing activities  (19,617)  13,456
    
Effect of exchange rate changes on cash and cash equivalents (1,842)  (3,121)
    
Increase (decrease) in cash and cash equivalents 1,699  21,557
Cash and cash equivalents at the beginning of the period 105,943  83,062
Cash and cash equivalents at end of the period$ 107,642 $ 104,619
    

FAQ

What were Magic Software's (MGIC) Q2 2024 revenue and earnings?

Magic Software reported Q2 2024 revenues of $136.3 million, a 1.0% decrease year-over-year. GAAP net income was $9.0 million or $0.18 per fully diluted share, a 20% decrease from the previous year.

How did Magic Software's (MGIC) H1 2024 financial results compare to H1 2023?

For H1 2024, Magic Software's revenues decreased by 4.7% to $267.0 million compared to H1 2023. GAAP net income decreased by 16.7% to $17.8 million, or $0.36 per fully diluted share.

What is Magic Software's (MGIC) revenue guidance for 2024?

Magic Software reiterated its 2024 annual revenue guidance of between $540 million and $550 million.

How much cash does Magic Software (MGIC) have as of June 30, 2024?

As of June 30, 2024, Magic Software's cash, cash equivalents, and short and long-term bank deposits amounted to $108.4 million.

Magic Software Enterprises Ltd

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