Majesco (NASDAQ:MJCO), a global provider of cloud insurance platform
software, today announced strong financial results for the fiscal 2019
fourth quarter and full year that ended March 31, 2019.
“We had a great year for revenue, EBITDA and new sales,” stated Adam
Elster, Majesco’s CEO. “Companies of all sizes are turning to Majesco to
partner with us on their digital transformation journey. I am more
excited than ever about the opportunity ahead, the future of Majesco and
the insurance industry. Our relentless focus on delivering innovation
and customer success has fueled our growth and solidified our
leadership. I am excited by our momentum, and as we look to fiscal 2020
we remain committed to leveraging our technology, expertise and
leadership to help insurers modernize, innovate and connect to build the
future of their business – and the future of the insurance industry – at
speed and scale.”
Key Revenue Drivers
Revenue from cloud-based customers was $56.8 million (40.6% of total
revenue) for the year ended March 31, 2019, up 52.6% as compared to
$37.2 million (30.3% of total revenue) during the year ended March 31,
- Total number of cloud customers is now 54.
Total recurring revenue was at $45.8 million (32.8% of total revenue)
for the year ended March 31, 2019, up 38.8% as compared to $33.0
million (26.8% of total revenue) for the year ended March 31, 2018.
Majesco’s 12-month order backlog as of March 31, 2019 was $96.9
million, up 13.5% from $85.4 million on December 31, 2018.
- We added 19 new clients organically for the year ended March 31, 2019.
Fourth Quarter 2019 Financial Results
Revenue was $36.9 million, compared to $32.9 million for the same
period last fiscal year. The 11.9% increase in revenue was driven by
footprint expansion in existing accounts, new logos, and the
acquisition of Exaxe.
Gross profit was $17.9 million (48.5% of revenue), compared to $15.4
million (46.9% of revenue) for same period last fiscal year. The
160-basis point increase in gross profit margin was driven by a higher
margin mix of revenue.
Research and development (R&D) expenses were $5.0 million (13.5% of
revenue), compared to $4.6 million (13.9% of revenue) for the same
period last fiscal year. Investments in R&D were focused on Majesco’s
product roadmap to support next generation insurance solutions and
Selling, general and administrative (SG&A) expenses were $10.5 million
(28.5% of revenue), compared to $10.0 million (30.4% of revenue) for
the same period last fiscal year. The reduction in SG&A as a percent
of revenue reflects improved operating leverage.
Adjusted EBITDA was $4.4 million (12.0% of revenue), compared to $2.9
million (8.8% of revenue) for the same period last fiscal year.
Net income was $1.2 million, or $0.03 per diluted share as compared to
net income of $0.4 million, or $0.01 per diluted share, for the same
period last fiscal year. Net income was significantly higher due to
increases in revenue and profitability.
Fiscal Year 2019 Financial Highlights
Revenue for fiscal 2019 was $139.9 million, compared to $123.0 million
last fiscal year. The 13.7% increase in revenue was driven by
expansion within existing accounts, new logos, and the acquisition of
Gross profit was $68.5 million (49.0% of revenue) for fiscal 2019,
compared to $55.9 million (45.4% of revenue) last fiscal year. The 360
basis point increase in gross profit margin was driven by a higher
margin mix of revenue.
R&D expenses were $19.3 million (13.8% of revenue) for fiscal 2019,
compared to $17.3 million (14.0% of revenue) last fiscal year.
SG&A expenses were $39.1 million (28.0% of revenue) for fiscal 2019,
compared to $41.0 million (33.4% of revenue) last fiscal year. The
decrease in SG&A was driven by improved control of G&A expenses and
higher operating efficiencies.
Adjusted EBITDA for fiscal 2019 was $17.2 million (12.3% of revenue),
compared to $5.7 million (4.6% of revenue) last fiscal year.
Net income for fiscal 2019 was $6.9 million or $0.18 per diluted
share, compared to a net loss of $5.0 million or $(0.14) per share
last fiscal year.
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 Highlights
Majesco had cash and cash equivalents of $39.4 million at March 31,
2019, compared to $14.5 million at December 31, 2018, and $9.2 million
as at March 31, 2018.
Majesco was debt free at March 31, 2019, compared to $13.7 million in
total debt at December 31, 2018, and $13.6 million at March 31, 2018.
The company announced the acquisition of the India based insurance
software business from its parent company, Majesco Limited. The
transaction received shareholder approval on April 30, 2019, and the
acquisition is expected to close in mid-May.
On February 25, 2019, Majesco completed a rights offering pursuant to
which it received approximately $43.5 million in gross proceeds from
the sale of 6,123,463 shares of the company’s common stock to
shareholders who exercised their subscription rights (including both
basic and over-subscriptions) in the rights offering.
Conference Call and Webcast Information
will conduct a live teleconference to discuss Majesco’s fiscal 2019
fourth quarter and full year financial results at 8:00 a.m. ET on
Wednesday, May 8, 2019. Anyone interested in participating should call
888-256-1007 if calling from the U.S., or 323-994-2093 if dialing
internationally. A replay will be available until May 22, 2019, which
can be accessed by dialing 844-512-2921 within the U.S. and 412-317-6671
if dialing internationally. Please use passcode: 7826361 to access the
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, a
one-time reversal of accrual for contingent liability and one-time
transaction costs related to the Exaxe acquisition.
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 as supplemental.
Majesco (NASDAQ:MJCO) provides technology,
expertise, and leadership that helps insurers modernize, innovate and
connect to build the future of their business – and the future of
insurance – at speed and scale. Our platforms connect people and
businesses to insurance in ways that are innovative, hyper-relevant,
compelling and personal. Over 190 insurance companies worldwide in P&C,
L&A and Group Benefits are transforming their businesses by modernizing,
optimizing or creating new business models with Majesco. Our
market-leading solutions include CloudInsurer™ P&C Core Suite (Policy,
Billing, Claims); CloudInsurer™ L&A and Group Core Suite (Policy,
Billing, Claims); Digital1st Insurance™ with Digital1st eConnect™,
Digital1st EcoExchange™ and Digital1st Platform™ – a cloud-native,
microservices and open API platform; Distribution Management, Data and
Analytics and an Enterprise Data Warehouse. For more details on Majesco,
please visit www.majesco.com.
Cautionary Language Concerning Forward-Looking Statements
press release contains forward-looking statements within the meaning of
the “safe harbour” 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, 2018
filed with the SEC on June 22, 2018.
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
|Cost of revenue||18,983||17,503||71,373||67,121|
|Research and development expenses||$||4,984||$||4,582||$||19,289||$||17,250|
|Selling, general and administrative expenses||10,516||10,002||39,148||41,021|
|Exceptional Item – M&A Expenses||2||—||444||—|
|Total operating expenses||$||15,501||$||14,584||$||58,881||$||58,271|
|Income/(Loss) from operations||$||2,387||$||860||$||9,606||$||(2,407)|
|Gain on reversal of accrual contingent liability||—||—||835||—|
|Other income (expenses), net||(111)||92||442||(74)|
|Income /(Loss) before provision for income taxes||$||2,240||$||846||$||10,537||$||(2,946)|
|(Benefit)/Provision for income taxes||1,008||412||3,611||2,055|
|Earnings (Loss) per share:|
|Weighted average number of common shares outstanding|
See accompanying notes to the Consolidated Financial Statements.
|Majesco and Subsidiaries|
|Consolidated Balance Sheets (Unaudited)|
(All amounts are in thousands of U.S. Dollars except per share
|Cash and cash equivalents||$||11,329||$||9,152|
|Short term investments||28,108||—|
|Accounts receivables, net||16,933||19,103|
|Unbilled accounts receivable||17,916||9,997|
|Prepaid expenses and other current assets||15,171||9.494|
|Total current assets||89,501||47,799|
|Property and equipment, net||2,787||2,755|
|Intangible assets, net||12,937||6,535|
|Deferred income tax assets||7,637||7,171|
|Unbilled accounts receivable||543||–|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Software hire purchase obligation||442||203|
|Short term debt||–||5,269|
|Current maturities of long-term borrowings||–||—|
|Accrued expenses and other liabilities||30,962||22,032|
|Total current liabilities||44,612||42,058|
|Long term debt||–||8,367|
Preferred stock, par value $0.002 per share – 50,000,000 shares
September 30, 2018 and 50,000,000 as of March 31, 2018, NIL shares
and outstanding as of September 30, 2018 and March 31, 2018
Common stock, par value $0.002 per share – 450,000,000 shares
September 30, 2018 and 450,000,000 as of March 31, 2018, 42,846,273
shares issued and outstanding as of September 30, 2018 and
March 31, 2018
|Additional paid-in capital||122,163||75,021|
|Accumulated other comprehensive income||(412)||361|
|Total equity of common stockholder||99,278||45,173|
|TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY||$||148,040||$||96,526|
|Majesco and Subsidiaries|
Reconciliation of U.S. GAAP Net Income to EBITDA and Adjusted
Three Months Ended
Twelve Months Ended
|(U.S. dollars; in thousands):||2019||2018||2019||2018|
|Net Income (Loss)||$||1,232||$||434||$||6,925||$||(5,001)|
|Provision (benefit) for income taxes||1,008||412||3,611||2,055|
|Depreciation and amortization||1,248||1,106||4,244||4,849|
|Other income (expenses), net||111||(92)||(442)||74|
|Exceptional Items – M&A Costs||2||—||444||—|
|Stock based compensation||787||941||2,941||3,253|
|Reversal of accrual for contingent liability||—||—||(835)||—|
|Adjusted EBITDA as a % of Revenue||12.00%||8.82%||12.32%||4.63%|