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Magic Software Reports Second Quarter 2022 Financial Results with Record Second Quarter Revenues of $137 Million, Reflecting a 15% Year Over Year Growth

Magic Software Enterprises Ltd.
Magic Software Enterprises Ltd.

Operating income for the second quarter increased by 16% year over year to a record second quarter result of $14.7 million; Non-GAAP operating income for the second quarter increased by 10% year over year to a record second quarter result of $17.6 million

OR YEHUDA, Israel, Aug. 11, 2022 (GLOBE NEWSWIRE) -- Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC), 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 ended June 30, 2022.

Summary Results for the Second Quarter 2022 (USD in millions, except per share data)

 

 

 

 

 

 

 

 

 

GAAP

 

 

Non-GAAP

 

 

Q2 2022

Q2 2021

% Change

 

 

Q2 2022

Q2 2021

% Change

Revenues

$

137.0

 

$

119.2

 

15.0

%

 

$

137.0

 

$

119.2

 

15.0

%

Gross Profit

$

36.6

 

$

32.8

 

11.6

%

 

$

38.2

 

$

34.4

 

10.8

%

Gross Margin

 

26.7

%

 

27.5

%

(80)bps

 

 

27.9

%

 

28.9

%

(100)bps

Operating Income

$

14.7

 

$

12.7

 

16.1

%

 

$

17.6

 

$

15.9

 

10.3

%

Operating Margin

 

10.8

%

 

10.7

%

10bps

 

 

12.8

%

 

13.4

%

(60)bps

Net Income (*)

$

9.5

 

$

7.8

 

21.9

%

 

$

11.6

 

$

11.3

 

2.9

%

Diluted EPS

$

0.16

 

$

0.16

 

0.0

%

 

$

0.24

 

$

0.23

 

4.3

%

 

 

 

 

 

 

 

 

(*) Attributable to Magic Software’s shareholders.

 

 

 

 

 

 

(*) Attributable to Magic Software’s shareholders.

Financial Highlights for the Second Quarter Ended June 30, 2022

  • Revenues for the second quarter of 2022 increased by 15.0% to a record second quarter result of $137.0 million, compared to $119.2 million in the same period of the previous year. On a constant currency basis, revenues for the second quarter of 2022 increased by 17.4% compared to the same period of the previous year, with 89% of the growth organic.

  • Operating income for the second quarter of 2022 increased by 16.1% to a record second quarter result of $14.7 million, compared to $12.7 million in the same period of the previous year.

  • Non-GAAP operating income for the second quarter of 2022 increased by 10.3% to a record second quarter of $17.6 million, compared to $15.9 million in the same period of the previous year. On a constant currency basis, Non-GAAP operating income for the second quarter of 2022 increased by 14.5% compared to the same period of the previous year, with 67% of the growth organic.

  • Net income attributable to Magic Software’s shareholders for the second quarter of 2022 increased by 21.9% to $9.5 million, or $0.16 per fully diluted share, compared to $7.8 million, or $0.16 per fully diluted share, in the same period of the previous year.

  • Non-GAAP net income attributable to Magic Software’s shareholders for the second quarter of 2022 increased by 2.8% to $11.6 million, or $0.24 per fully diluted share, compared to $11.3 million, or $0.23 per fully diluted share, in the same period of the previous year.

Summary Results for First Half 2022 (USD in millions, except per share data)

 

 

 

 

 

 

 

 

 

GAAP

 

 

Non-GAAP

 

 

H1 2022

H1 2021

% Change

H1 2022

H1 2021

% Change

Revenues

$

275.7

 

$

226.5

 

21.7

%

 

$

275.7

 

$

226.5

 

21.7

%

Gross Profit

$

74.2

 

$

63.0

 

17.7

%

 

$

77.1

 

$

66.2

 

16.5

%

Gross Margin

 

26.9

%

 

27.8

%

(90)bps

 

 

28.0

%

 

29.2

%

(120)bps

Operating Income

$

30.7

 

$

24.9

 

23.2

%

 

$

36.5

 

$

30.9

 

18.0

%

Operating Margin

 

11.1

%

 

11.0

%

10bps

 

 

13.2

%

 

13.6

%

(40)bps

Net Income (*)

$

19.1

 

$

15.3

 

24.7

%

 

$

24.6

 

$

21.6

 

13.7

%

Diluted EPS

$

0.36

 

$

0.31

 

16.1

%

 

$

0.50

 

$

0.44

 

13.6

%

 

 

 

 

 

 

 

 

(*) Attributable to Magic Software’s shareholders.

 

 

 

 

 

 

Financial Highlights for the First Half Ended June 30, 2022

  • Revenues for the first half ended June 30, 2022 increased by 21.7% to $275.7 million compared to $226.5 million in the same period last year. On a constant currency basis, revenues for the first half period ended June 30, 2022, increased by 22.8% compared to the same period of the previous year, with 78% of the growth organic.

  • Operating income for the first half ended June 30, 2022 increased by 23.2% to $30.7 million compared to $24.9 million in the same period last year.

  • Non-GAAP operating income for the first half ended June 30, 2022, increased by 18.0% to $36.5 million compared to $30.9 million in the same period last year.

  • Net income attributable to Magic Software’s shareholders for the first half ended June 30, 2022 increased by 24.7% to $19.1 million, or $0.36 per fully diluted share, compared to $15.3 million, or $0.31 per fully diluted share, in the same period last year.

  • Non-GAAP net income attributable to Magic Software’s shareholders for the first half ended June 30, 2022 increased by 13.7% to $24.6 million, or $0.50 per fully diluted share, compared to $21.6 million, or $0.44 per fully diluted share, in the same period last year.

  • Cash flow from operating activities for the first half ended June 30, 2022 amounted to $15.7 million compared to $28.0 million in the same period last year. Cash flow from operating activities excluding the impact of payments of deferred and contingent consideration related to acquisitions amounted to $19.4 million for the first half ended June 30, 2022.

  • As of June 30, 2022, Magic’s net cash, cash equivalents, short and long-term bank deposits and marketable securities amounted to $93.9 million.

  • Magic Software has increased its 2022 annual revenue guidance for the second time this year to a range of $545 to $555 million, up from its prior range of $540 to $550 million, which now reflects an annual growth of 13.5% to 14.5%.

Declaration of Dividend for the First Half of 2022

  • In accordance with its dividend distribution policy, the Company’s board of directors declared a semi-annual cash dividend in an amount of 29.0 cents per share and in an aggregate amount of approximately $14.3 million, reflecting approximately 75% of its distributable profits for the first half of 2022.

  • The dividend is payable on September 13, 2022, to all of the Company’s shareholders of record at the close of trading on the NASDAQ Global Select Market on August 30, 2022.

  • In accordance with Israeli tax law, the dividend is subject to withholding tax at source at the rate of 30% (if the recipient of the dividend is at the time of distribution or was at any time during the preceding 12-month period the holder of 10% or more of the Company's share capital) or 25% (for all other dividend recipients) of the dividend amount payable to each shareholder of record, subject to applicable exemptions.

  • The dividend will be paid in US dollars on the ordinary shares of Magic Software Enterprises that are traded both on the Tel Aviv Stock Exchange and the NASDAQ Global Select Market

Guy Bernstein, Chief Executive Officer of Magic Software, said: “ I am very proud that the momentum we saw coming out of 2021 has continued throughout the first half of 2022 as the growing need of enterprises and organizations worldwide to leverage digital technologies and cloud-based platforms is creating high demand for our innovative software solutions and services which together with the outstanding execution by our teams led to another quarter of strong performance recorded across our business. We continue to invest organically and inorganically in our service lines and are excited about the innovative capabilities we are building to drive continued long term profitable growth and shareholder value.”

“Today’s dividend distribution announcement marks Magic Software’s 10th year anniversary of its semi-annual dividend distribution policy, adopted on September 5th, 2012. During these past 10 years Magic Software has distributed a cumulative amount of over $132 million to its shareholders.”

Conference Call Details

Magic Software’s management will host a conference call on Thursday, August 11, 2022 at 10:00 am Eastern Daylight Time (7:00 am Pacific Daylight Time, 17:00 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: +1-888-744-5399

UK: 0-800-917-5108

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;

  • Equity-based compensation expenses;

  • Costs related to acquisition of new businesses;

  • The related tax, non-controlling interests and redeemable non-controlling interest's effects of the above items;

  • Change in valuation of contingent consideration related to acquisitions;

  • Change in value of put options of redeemable non-controlling interests; and

  • 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, 2021, which filed on May 12, 2022, 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:
Asaf Berenstin | Chief Financial Officer
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,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

Unaudited

 

Unaudited

Revenues

 

$

136,978

 

 

$

119,155

 

 

$

275,683

 

 

$

226,453

 

Cost of Revenues

 

 

100,385

 

 

 

86,351

 

 

 

201,512

 

 

 

163,460

 

Gross profit

 

 

36,593

 

 

 

32,804

 

 

 

74,171

 

 

 

62,993

 

Research and development, net

 

 

2,596

 

 

 

2,363

 

 

 

4,935

 

 

 

4,559

 

Selling, marketing and general and administrative expenses

 

 

19,687

 

 

 

17,729

 

 

 

38,667

 

 

 

33,514

 

Increase (decrease) in valuation of contingent consideration

 

 

 

 

 

 

 

 

related to acquisitions

 

 

(423

)

 

 

18

 

 

 

(106

)

 

 

18

 

Total operating costs and expenses

 

 

21,860

 

 

 

20,110

 

 

 

43,496

 

 

 

38,091

 

Operating income

 

 

14,733

 

 

 

12,694

 

 

 

30,675

 

 

 

24,902

 

Financial expenses, net

 

 

(219

)

 

 

(1,304

)

 

 

(1,791

)

 

 

(2,450

)

Income before taxes on income

 

 

14,514

 

 

 

11,390

 

 

 

28,884

 

 

 

22,452

 

Taxes on income

 

 

3,625

 

 

 

2,304

 

 

 

6,831

 

 

 

4,574

 

Net income

 

$

10,889

 

 

$

9,086

 

 

$

22,053

 

 

$

17,878

 

Net income attributable to redeemable non-controlling interests

 

 

(786

)

 

 

(830

)

 

 

(1,739

)

 

 

(1,561

)

Net income attributable to non-controlling interests

 

 

(616

)

 

 

(476

)

 

 

(1,209

)

 

 

(994

)

Net income attributable to Magic's shareholders

 

$

9,487

 

 

$

7,780

 

 

$

19,105

 

 

$

15,323

 

 

 

 

 

 

 

 

 

 

Net earnings per share attributable to Magic's shareholders :

 

 

 

 

 

 

 

Net Income attributable to Magic Shareholder's

 

 

9,487

 

 

 

7,780

 

 

 

19,105

 

 

 

15,323

 

Accretion of redeemable non-controlling interests

 

 

(1,487

)

 

 

-

 

 

 

(1,487

)

 

 

-

 

Net Income attributable to Magic Shareholder's after

 

 

 

 

 

 

 

 

accretion of redeemable non-controlling interests

 

$

8,000

 

 

$

7,780

 

 

$

17,618

 

 

$

15,323

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares used in

 

 

 

 

 

 

 

 

computing net earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

49,093

 

 

 

49,055

 

 

 

49,085

 

 

 

49,045

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

49,123

 

 

 

49,091

 

 

 

49,130

 

 

 

49,086

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per share attributable

 

 

 

 

 

 

 

 

to Magic's shareholders

 

$

0.16

 

 

$

0.16

 

 

$

0.36

 

 

$

0.31

 

 

 

 

 

 

 

 

 

 

Net earnings per share attributable to Magic's shareholders :

 

 

 

 

 

 

 

 

excluding of accretion of redeemable non-controlling interest

 

 

 

 

 

 

 

 

Basic

 

$

0.16

 

 

$

0.16

 

 

$

0.36

 

 

$

0.31

 

Diluted

 

$

0.16

 

 

$

0.16

 

 

$

0.36

 

 

$

0.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

Unaudited

 

Unaudited

 

Unaudited

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

136,978

 

100

%

 

$

119,155

 

100

%

 

$

275,683

 

100

%

 

$

226,453

 

100

%

Gross profit

 

 

38,175

 

27.9

%

 

 

34,440

 

28.9

%

 

 

77,093

 

28.0

%

 

 

66,153

 

29.2

%

Operating income

 

 

17,557

 

12.8

%

 

 

15,911

 

13.4

%

 

 

36,467

 

13.2

%

 

 

30,895

 

13.6

%

Net income attributable to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Magic's shareholders

 

 

11,649

 

8.5

%

 

 

11,326

 

9.5

%

 

 

24,556

 

8.9

%

 

 

21,594

 

9.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.24

 

 

 

$

0.23

 

 

 

$

0.50

 

 

 

$

0.44

 

 

Diluted earnings per share

 

$

0.24

 

 

 

$

0.23

 

 

 

$

0.50

 

 

 

$

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,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

 

Unaudited

 

Unaudited

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

36,593

 

 

$

32,804

 

 

$

74,171

 

 

$

62,993

 

Amortization of capitalized software and acquired technology

 

1,118

 

 

 

1,481

 

 

 

2,256

 

 

 

2,850

 

Amortization of other intangible assets

 

 

464

 

 

 

155

 

 

 

666

 

 

 

310

 

Non-GAAP gross profit

 

$

38,175

 

 

$

34,440

 

 

$

77,093

 

 

$

66,153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income

 

$

14,733

 

 

$

12,694

 

 

$

30,675

 

 

$

24,902

 

Gross profit adjustments

 

 

1,582

 

 

 

1,636

 

 

 

2,922

 

 

 

3,160

 

Amortization of other intangible assets

 

 

2,280

 

 

 

1,723

 

 

 

4,382

 

 

 

3,303

 

Increase in valuation of contingent consideration related to acquisitions

 

 

(423

)

 

 

18

 

 

 

(106

)

 

 

18

 

Capitalization of software development

 

 

(734

)

 

 

(798

)

 

 

(1,605

)

 

 

(1,622

)

Costs related to acquisitions

 

 

49

 

 

 

482

 

 

 

59

 

 

 

487

 

Stock-based compensation

 

 

70

 

 

 

156

 

 

 

140

 

 

 

647

 

Non-GAAP operating income

 

$

17,557

 

 

$

15,911

 

 

$

36,467

 

 

$

30,895

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income attributable to Magic's shareholders

 

$

9,487

 

 

$

7,780

 

 

$

19,105

 

 

$

15,323

 

Operating income adjustments

 

 

2,824

 

 

 

3,217

 

 

 

5,792

 

 

 

5,993

 

Expenses attributed to non-controlling interests

 

 

 

 

 

 

 

 

and redeemable non-controlling interests

 

 

(168

)

 

 

(168

)

 

 

(320

)

 

 

(333

)

Changes in unsettled fair value of contingent consideration

 

 

 

 

 

 

 

 

related to acquisitions

 

 

(122

)

 

 

731

 

 

 

722

 

 

 

1,168

 

Deferred taxes on the above items

 

 

(372

)

 

 

(234

)

 

 

(743

)

 

 

(557

)

Non-GAAP net income attributable to Magic's shareholders

$

11,649

 

 

$

11,326

 

 

$

24,556

 

 

$

21,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP basic net earnings per share

 

$

0.24

 

 

$

0.23

 

 

$

0.50

 

 

$

0.44

 

Weighted average number of shares used in computing basic

 

 

 

 

 

 

 

net earnings per share

 

 

49,093

 

 

 

49,055

 

 

 

49,085

 

 

 

49,045

 

 

 

 

 

 

 

 

 

 

Non-GAAP diluted net earnings per share

 

$

0.24

 

 

$

0.23

 

 

$

0.50

 

 

$

0.44

 

Weighted average number of shares used in computing diluted

 

 

 

 

 

 

 

net earnings per share

 

 

49,138

 

 

 

49,135

 

 

 

49,146

 

 

 

49,135

 

 

 

 

 

 

 

 

 

 

 

MAGIC SOFTWARE ENTERPRISES LTD.

 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

U.S. Dollars in thousands

 

 

 

 

 

 

 

 

June 30,

 

December 31,

 

2022

 

2021

 

Unaudited

 

 

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

88,253

 

$

88,090

Short-term bank deposits

 

3,021

 

 

5,586

Marketable securities

 

1,049

 

 

1,142

Trade receivables, net

 

143,350

 

 

142,071

Other accounts receivable and prepaid expenses

 

11,124

 

 

9,890

Total current assets

 

246,797

 

 

246,779

 

 

 

 

LONG-TERM ASSETS:

 

 

 

Severance pay fund

 

1,520

 

 

3,646

Deferred tax assets

 

2,445

 

 

8,091

Operating lease right-of-use assets

 

24,104

 

 

24,299

Other long-term receivables

 

4,347

 

 

3,384

Other long-term deposits

 

1,586

 

 

1,781

Property and equipment, net

 

6,836

 

 

5,872

Identifiable intangible assets and goodwill, net

 

206,811

 

 

198,193

Total long-term assets

 

247,649

 

 

245,266

 

 

 

 

TOTAL ASSETS

$

494,446

 

$

492,045

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

Short-term debt

$

19,701

 

$

17,032

Trade payables

 

22,986

 

 

24,711

Accrued expenses and other accounts payable

 

41,165

 

 

45,173

Current maturities of operating lease liabilities

 

3,463

 

 

3,943

Liabilities due to acquisition activities

 

6,163

 

 

6,635

Deferred revenues and customer advances

 

13,223

 

 

10,771

Total current liabilities

 

106,701

 

 

108,265

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

Long-term debt

 

36,778

 

 

20,155

Deferred tax liability

 

13,017

 

 

18,112

Long-term operating lease liabilities

 

21,165

 

 

20,970

Long-term liabilities due to acquisition activities

 

18,564

 

 

13,892

Accrued severance pay

 

2,383

 

 

4,551

Total long-term liabilities

 

91,907

 

 

77,680

 

 

 

 

REDEEMABLE NON-CONTROLLING INTERESTS

 

28,367

 

 

30,432

 

 

 

 

EQUITY:

 

 

 

Magic Software Enterprises equity

 

257,250

 

 

265,248

Non-controlling interests

 

10,221

 

 

10,420

Total equity

 

267,471

 

 

275,668

 

 

 

 

TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING

 

 

 

INTERESTS AND EQUITY

$

494,446

 

$

492,045

 

 

 

 

 

MAGIC SOFTWARE ENTERPRISES LTD.

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 

 

U.S. Dollars in thousands

 

 

 

 

Six months ended June 30,

 

 

2022

 

 

 

2021

 

 

Unaudited

 

Unaudited

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

$

22,053

 

 

$

17,878

 

Adjustments to reconcile net income to net cash provided

 

 

 

by operating activities:

 

 

 

Depreciation and amortization

 

8,337

 

 

 

6,995

 

Stock-based compensation

 

140

 

 

 

647

 

Change in deferred taxes, net

 

(1,163

)

 

 

(591

)

Amortization of marketable securities premium

 

 

 

and accretion of discount

 

93

 

 

 

28

 

Net change in operating assets and liabilities:

 

 

 

Trade receivables, net

 

(5,011

)

 

 

(6,542

)

Other long-term and short-term

 

 

 

accounts receivable and prepaid expenses

 

(2,411

)

 

 

422

 

Trade payables

 

(4,164

)

 

 

4,189

 

Exchange rate of loans

 

(1,210

)

 

 

(210

)

Accrued expenses and other accounts payable

 

(1,991

)

 

 

1,364

 

Payments of deferred and contingent consideration

 

 

 

related to acquisitions

 

(3,748

)

 

 

-

 

Effect of exchange rate on cash and cash equivalents held in

 

 

 

currencies other than the functional currency

 

1,662

 

 

 

-

 

Deferred revenues

 

3,075

 

 

 

3,861

 

Net cash provided by operating activities

 

15,662

 

 

 

28,041

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capitalized software development costs

 

(1,605

)

 

 

(1,622

)

Purchase of property and equipment

 

(2,206

)

 

 

(688

)

Cash paid in conjunction with acquisitions, net of acquired cash

 

(12,289

)

 

 

(6,831

)

Purchase of intangible asset

 

(219

)

 

 

-

 

Proceeds from (Investment in) short-term bank deposits

 

2,565

 

 

 

(7

)

Net cash used in investing activities

 

(13,754

)

 

 

(9,148

)

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Payments of deferred and contingent consideration related to acquisitions

 

(4,616

)

 

 

(4,694

)

Dividend paid

 

(10,604

)

 

 

(10,300

)

Dividend paid to non-controlling interests

 

(188

)

 

 

(778

)

Dividend paid to redeemable non-controlling interests

 

(1,900

)

 

 

(607

)

Short-term and long-term loans received

 

26501

 

 

 

15,368

 

Repayment of short-term and long-term loans

 

(4,841

)

 

 

(2,985

)

Net cash provided by (used in) financing activities

 

4,352

 

 

 

(3,996

)

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(6,097

)

 

 

(250

)

 

 

 

 

Increase in cash and cash equivalents

 

163

 

 

 

14,647

 

Cash and cash equivalents at the beginning of the period

 

88,090

 

 

 

88,127

 

Cash and cash equivalents at end of the period

$

88,253

 

 

$

102,774