UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
| Date of Report (Date of earliest event reported): | January 25, 2016 |
| Majesco |
| (Exact Name of Registrant as Specified in its Charter) |
| California | 001-37466 | 77-0309142 |
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 412 Mount Kemble Ave, Suite 110C, Morristown, NJ 07960 |
| (Address of Principal Executive Offices) |
| Registrant's telephone number, including area code | (973) 461-5200 |
| N/A |
| (Former Name or Former Address, if Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
| Item 2.02. | Results of Operations and Financial Condition. |
On January 25, 2016, Majesco issued a press release announcing its financial results for the quarter ended December 31, 2015. A copy of the press release is attached hereto as Exhibit 99.1, which is incorporated herein by reference.
The information furnished in this section of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| 99.1 | Press Release, dated January 25, 2016 |
[Signature on following page.]
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Majesco | ||
| By: | /s/ Ketan Mehta | |
| Ketan Mehta, President and Chief Executive Officer | ||
Date: January 25, 2016
Index to Exhibits
| Exhibit No. | Description | |
| Exhibit 99.1 | Press Release, dated January 25, 2016 |
Exhibit 99.1
Majesco Announces Fiscal 2016 Third Quarter Financial Results
Nine-Month Revenue Up 40.7%
Order Backlog up 16.4% Sequentially
Morristown, NJ – January 25, 2016 - Majesco, a global provider of software, consulting and services for insurance business transformation, today announced its financial results for the fiscal 2016 third quarter ended December 31, 2015.
“The fiscal 2016 third quarter demonstrates our continued success executing our growth oriented business plan, as we announced new wins, successful implementations, expanding customer relationships, enhancements to our partner ecosystem, new talent additions, additional product launches, and new product releases,” commented Ketan Mehta, CEO and Co-Founder. “Third quarter revenue increased 37% versus the same period last year, while we successfully grew backlog by 16% over the fiscal 2016 second quarter, demonstrating Majesco’s growing momentum in the marketplace. I am specifically excited about our momentum with tier 1 carriers and cloud, digital and data businesses.
“In line with our strategic plan, we continued to make aggressive investments in R&D and SG&A during the nine-month period, which increased 68% compared to the same period last year. These investments are creating a foundation for accelerating our growth plans in the next two years.”
Financial Highlights
For the third quarter ended December 31, 2015
| · | Revenue for the third quarter ended December 31, 2015 increased 37.1% to $29.6 million as compared to $21.6 million in the corresponding quarter of last year. On a sequential basis, third quarter revenue increased 5.0% compared to $28.2 million for the quarter ended September 30, 2015. The growth was primarily driven by favourable momentum in Majesco’s P&C business and new customer wins during the year. |
| · | Gross profit was $12.6 million or 42.4% of revenue for the three months ended December 31, 2015, compared to $9.6 million or 44.3% of revenue for the quarter ended December 31, 2014. The 190 basis point reduction in gross margin was primarily due to the increase in salaries and wages effective October 1, 2015 for certain employees and a one-time additional cost provision on account of statutory bonuses in India. |
| · | Research and development expenses were $4.2 million (14.3% of revenue) during the third quarter ended December 31, 2015 as compared to $2.4 million (10.9% of revenue) during the quarter ended December 31, 2014, largely on account of planned product investments in both the P&C and L&A segments. |
| · | SG&A expenses were $10.6 million (35.8% of revenue) during the third quarter ended December 31, 2015 as compared to $5.1 million (23.6% of revenue) during the quarter ended December 31, 2014. The increased SG&A expense for the fiscal 2016 third quarter was primarily due to the higher cost of the Annual Customer Conference held in October 2015 and the on-boarding cost of outsourced staff of Cover-All in India. |
| · | Adjusted EBITDA for the third quarter ended December 31, 2015 was a negative of $1.1 million (-3.7% of revenue) as compared to $2.8 million (13.0% of revenue) during the quarter ended December 31, 2014. |
| · | Net loss for the quarter ended December 31, 2015 was $1.1 million, or ($0.03) per share as compared to net income of $1.4 million, or $0.04 per diluted share for the quarter ended December 31, 2014. |
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.
For the nine-month period ended December 31, 2015
| · | Revenue for the nine-month period ended December 31, 2015 increased 40.7% to $81.0 million as compared to $57.6 million in the corresponding nine-month period last year. |
| · | Gross profit was $36.0 million or 44.5% of revenue for the nine months ended December 31, 2015, compared to $23.4 million or 40.7% of revenue for the nine months ended December 31, 2014. The 380 basis point improvement in gross margin was primarily due to good revenue momentum in Majesco’s P&C and L&A businesses. |
| · | Research and development expenses were $11.6 million (14.4% of revenue) for the nine-month period ended December 31, 2015 as compared to $7.9 million (13.7% of revenue) for the corresponding period last year. |
| · | SG&A expenses were $27.7 million (34.2% of revenue) for the nine-month period ended December 31, 2015 as compared to $15.6 million (27.1% of revenue) for the corresponding period last year. |
| · | Adjusted EBITDA for the nine-month period ended December 31, 2015 was $0.2 million (0.2% of revenue) as compared to $1.7 million (3.0% of revenue) during the corresponding nine-month period ended December 31, 2014. |
| · | Net loss for the nine-month period ended December 31, 2015 was $2.0 million, or ($0.06) per share as compared to net income of $0.3 million, or $0.01 per diluted share for the corresponding nine-month period ended December 31, 2014. |
Balance Sheet
| · | Majesco had cash and cash equivalents of $9.7 million at December 31, 2015, compared to $5.9 million at September 30, 2015. |
| · | Total debt at December 31, 2015 was $12.0 million, compared to $9.7 million at September 30, 2015. Debt, net of cash, was lower by $1.5 million at $2.3 million as of December 31, 2015. |
Operating Highlights
| · | The company added four new clients during the quarter and expanded its relationship with existing client accounts that included two tier 1 clients. |
| · | During the quarter, Maine Mutual Group selected Majesco P&C Suite to replace their core systems as a foundation to transform their business. They selected Majesco Business Analytics to provide their business intelligence and analytics platform. They will deploy the entire solution portfolio on Majesco Cloud. |
| · | One tier 1 customer went live on the Majesco Digital-Connect platform |
| · | 12-month backlog at December 31, 2015 was $63.0 million as compared to $54.1 million at September 30, 2015 up 16.4% reflecting strong growth momentum. |
| · | Total employee headcount increased to 2,133 at December 31, 2015 as compared to 2,062 at September 30, 2015. |
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| · | Majesco also announced the additions of Blueprint and Appulate to the company’s partnership ecosystem to strengthen the portfolio offerings to clients. |
Conference Call and Webcast Information
Management of Majesco will conduct a live teleconference to discuss Majesco’s fiscal 2016 third quarter financial results on Tuesday, January 26, 2016 at 8:30 a.m. ET. Anyone interested in participating should call 888-572-7033 if calling from the U.S., or 719-325-2455 if calling internationally. A replay will be available until February 9, 2016, which can be accessed by calling 877-870-5176 within the U.S. and 858-384-5517 if calling internationally. Please use passcode 541700 to access the replay.
In addition, the call will be webcast and will be available on the Company’s website at www.majesco.com or by visiting http://public.viavid.com/index.php?id=117953.
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 one-time non-recurring one-time costs related to the merger with Cover-All Technologies and the listing of the Majesco common stock on the NYSE-MKT in connection with the merger and an one-time provision for reversal of accrued revenue in respect of a project in the India Asia Pacific geography which could potentially be terminated by a client.
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 supplementally.
About Majesco
Majesco enables insurance business transformation for over 146 global customers by providing technology solutions which include software products, consulting and IT services. Our customers are carriers from the Property and Casualty, Life, Annuity and Group insurance segments worldwide. Majesco delivers proven software solutions and IT services in the core insurance areas such as policy administration, billing, claims, distribution and analytics.
For more information, please visit us on the web at www.majesco.com, or call 1-800-249-9540.
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Cautionary Language Concerning Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the “safe harbor” 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 and which you should review, including those statements under “Item 1A – Risk Factors” in Majesco’s Annual Report on Form 10-K for the year ended March 31, 2015.
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 Contacts:
| Corporate Contact | Investor & Media Contact |
| Ann Massey | SM Berger & Co |
| SVP-Finance | Andrew Berger |
| (973) 461-5190 | (216) 464-6400 |
| ann.massey@majesco.com | andrew@smberger.com |
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Majesco and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(All amounts are in thousands of U.S. Dollars except per share data and as stated otherwise)
Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Revenue | $ | 29,625 | $ | 21,609 | $ | 80,996 | $ | 57,565 | ||||||||
| Cost of revenue | 17,068 | 12,033 | 44,952 | 34,123 | ||||||||||||
| Gross profit | $ | 12,558 | $ | 9,576 | $ | 36,045 | $ | 23,442 | ||||||||
| Operating expenses | ||||||||||||||||
| Research and development expenses | $ | 4,244 | $ | 2,366 | $ | 11,633 | $ | 7,868 | ||||||||
| Selling, general and administrative expenses | 10,602 | 5,095 | 27,684 | 15,575 | ||||||||||||
| Restructuring expenses | - | 605 | 465 | 1,075 | ||||||||||||
| Total operating expenses | $ | 14,845 | $ | 8,066 | $ | 39,781 | $ | 24,518 | ||||||||
| Income/(Loss) from operations | $ | (2,288 | ) | $ | 1,510 | $ | (3,737 | ) | $ | (1,076 | ) | |||||
| Interest income | 3 | 12 | 13 | 31 | ||||||||||||
| Interest expense | (113 | ) | (33 | ) | (241 | ) | (60 | ) | ||||||||
| Other income (expenses),net | (22 | ) | 372 | 353 | 874 | |||||||||||
| Income /(Loss) before provision for income taxes | $ | (2,420 | ) | $ | 1,861 | $ | (3,612 | ) | $ | (231 | ) | |||||
| (Benefit)/Provision for income taxes | (1,290 | ) | 494 | (1,588 | ) | (513 | ) | |||||||||
| Net Income/(Loss) | $ | (1,130 | ) | $ | 1,367 | $ | (2,024 | ) | $ | 282 | ||||||
| Net Income/(Loss) Attributable to Non-controlling interests | $ | - | $ | 3 | $ | - | $ | 15 | ||||||||
| Net Income/(Loss) Attributable to Majesco | $ | (1,130 | ) | $ | 1,364 | $ | (2,024 | ) | $ | 267 | ||||||
| Earnings (Loss) per share: | ||||||||||||||||
| Basic | $ | (0.03 | ) | $ | 0.05 | $ | (0.06 | ) | $ | 0.01 | ||||||
| Diluted | $ | (0.03 | ) | $ | 0.05 | $ | (0.06 | ) | $ | 0.01 | ||||||
| Weighted average number of common shares outstanding | ||||||||||||||||
| Basic | 36,451,357 | 30,575,000 | 34,593,291 | 30,575,000 | ||||||||||||
| Diluted | 36,451,357 | 30,575,000 | 34,593,291 | 30,575,000 | ||||||||||||
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Majesco and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(All amounts are in thousands of U.S. Dollars except per share data and as stated otherwise)
December 31, 2015 | March 31, 2015 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 8,864 | $ | 6,262 | ||||
| Short term investments | 869 | 270 | ||||||
| Restricted cash | 370 | 305 | ||||||
| Accounts receivables, net | 13,812 | 7,758 | ||||||
| Unbilled accounts receivable | 6,338 | 5,615 | ||||||
| Deferred income tax assets | 1,335 | 2,168 | ||||||
| Prepaid expenses and other current assets | 3,690 | 2,911 | ||||||
| Total current assets | 35,284 | 25,289 | ||||||
| Property and equipment, net | 2,160 | 1,173 | ||||||
| Intangible assets, net | 10,985 | 3,434 | ||||||
| Deferred income tax assets | 4,358 | 2,182 | ||||||
| Other assets | 414 | 271 | ||||||
| Goodwill | 32,273 | 14,196 | ||||||
| Total Assets | $ | 85,476 | $ | 46,545 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Capital lease obligation | $ | 138 | $ | 17 | ||||
| Loan from bank | 9,383 | 1,470 | ||||||
| Accounts payable | 1,998 | 442 | ||||||
| Accrued expenses and other liabilities | ||||||||
| Related Parties | - | 3,520 | ||||||
| Others | 14,601 | 8,739 | ||||||
| Deferred revenue | 5,973 | 4,826 | ||||||
| Total current liabilities | 32,093 | 19,014 | ||||||
| Capital lease obligation, net of current portion | 162 | 31 | ||||||
| Term loan - bank | 2,625 | 3,000 | ||||||
| Other | 4,498 | 3,944 | ||||||
| Total Liabilities | $ | 39,378 | $ | 25,989 | ||||
| Commitments and contingencies | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, par value $0.002 per share – 50,000,000 shares authorized as of December 31, 2015 and March 31, 2015, NIL shares issued and outstanding as of December 31, 2015 and March 31, 2015 | - | - | ||||||
| Common stock, par value $0.002 per share – 450,000,000 shares authorized as of December 31, 2015 and March 31, 2015, 36,451,357 shares issued and outstanding as of December 31, 2015 and 30,575,000 as of March 31, 2015 | $ | 73 | $ | 61 | ||||
| Additional paid-in capital | 68,178 | 39,049 | ||||||
| Accumulated deficit | (22,821 | ) | (20,798 | ) | ||||
| Accumulated other comprehensive income | (333 | ) | 2,244 | |||||
| Total equity of common stockholder | 46,998 | 20,556 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 85,476 | $ | 46,545 | ||||
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Majesco and Subsidiaries
Reconciliation of U.S. GAAP Net Income to EBITDA and Adjusted EBITDA
(Unaudited)
Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
| (U.S. dollars; in thousands): | 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Net Income (Loss) | $ | (1,130 | ) | $ | 1,367 | $ | (2,024 | ) | $ | 282 | ||||||
| Add: | ||||||||||||||||
| Provision (benefit) for income taxes | (1,290 | ) | 494 | (1,588 | ) | (513 | ) | |||||||||
| Depreciation and amortization | 992 | 533 | 2,945 | 1,599 | ||||||||||||
| Interest expense | 113 | 33 | 241 | 60 | ||||||||||||
| Less: | ||||||||||||||||
| Interest income | (3 | ) | (12 | ) | (13 | ) | (31 | ) | ||||||||
| Other income (expenses), net | 22 | (372 | ) | (353 | ) | (874 | ) | |||||||||
| EBITDA | $ | (1,296 | ) | $ | 2,043 | $ | (792 | ) | $ | 523 | ||||||
| Add: | ||||||||||||||||
| Restructuring costs | - | 605 | 465 | 1,075 | ||||||||||||
| Stock based compensation | 215 | 151 | 504 | 151 | ||||||||||||
| Adjusted EBITDA | $ | (1,081 | ) | $ | 2,799 | $ | 177 | $ | 1,749 | |||||||
| Revenue | 29,625 | 21,609 | 80,996 | 57,565 | ||||||||||||
| Revenue as % of adjusted EBITDA | -3.65 | 12.95 | % | 0.22 | % | 3.04 | % | |||||||||
Majesco and Subsidiaries
Reconciliation of Selected U.S. GAAP Measures to Non-U.S. GAAP Measures
(Unaudited)
Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
| (U.S. dollars; in thousands): | 2015 | 2014 | 2015 | 2014 | ||||||||||||
| Net Income (Loss) | $ | (1,130 | ) | $ | 1,367 | $ | (2,024 | ) | $ | 282 | ||||||
| Reorganization Costs(1) | - | 605 | 465 | 1,075 | ||||||||||||
| Total One-Time Costs | $ | - | 605 | $ | 465 | 1,075 | ||||||||||
| Adjusted Net Income | $ | (1,130 | ) | 1,972 | $ | (1,559 | ) | 1,357 | ||||||||
| Adjusted Earnings (Loss) per Common Share: | ||||||||||||||||
| Basic | $ | (0.03 | ) | $ | 0.05 | $ | (0.05 | ) | $ | 0.04 | ||||||
| Diluted | $ | (0.03 | ) | $ | 0.05 | $ | (0.05 | ) | $ | 0.04 | ||||||
(1)Costs related to the merger with Cover-All Technologies and the listing of the Majesco common stock on the NYSE-MKT in connection with the merger.
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