Exhibit 99.1
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412 Mt. Kemble Ave, Ste 110C Morristown, NJ 07960, USA |
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+1 973-461-5200 +1-973-605-2942 www.majesco.com |
PRESS RELEASE
Majesco Announces Fiscal 2017 First Quarter Financial Results
First Quarter Revenue up 40.5% Year on Year
Adjusted EBITDA Margin Improved to 3.1% over the Previous Quarter
Morristown, NJ – August 2, 2016 - Majesco, a global provider of core insurance software, consulting and services for insurance business transformation, today announced its financial results for the fiscal 2017 first quarter ended June 30, 2016.
“I am pleased with our continued growth momentum demonstrated by the 40.5% increase in revenue over the same quarter last year, which represents the fourth consecutive quarter of revenue growth. As expected, profitability improved sequentially as we scale our business and we delivered positive adjusted EBITDA margins during the quarter,” commented Ketan Mehta, CEO and Co-Founder.
“I am particularly excited by the June 2016 launch of our CloudInsurer platform, which provides an out-of-the-box repeatable, scalable cloud platform for all insurers. Recent industry research has indicated that Cloud is at an inflection point, where more carriers are selecting cloud based or hosted solutions as compared to on-premise solutions. I expect our cloud platform will become an important driver for new deals in the future.”
Financial Highlights
For the first quarter ended June 30, 2016
| · | Revenue for the first quarter ended June 30, 2016 increased 40.5% to $32.6 million as compared to $23.2 million in the corresponding quarter of last year. The growth was primarily driven by the addition of the Cover-All business and expanding relationships with our current P&C and L&A customer base. |
| · | Gross profit was $14.8 million (45.3% of revenue) for the first quarter ended June 30, 2016, compared to $11.1 million (47.7% of revenue) for the quarter ended June 30, 2015. The decrease in gross margin was primarily due to change in revenue mix. |
| · | Research and development (R&D) expenses were $4.5 million (13.9% of revenue) during the first quarter ended June 30, 2016 as compared to $3.2 million (13.6% of revenue) during the quarter ended June 30, 2015. The increased R&D expense was mainly due to the addition of the Cover-All business and increased investments in P&C and L&A business. |
| · | SG&A expenses were $10.7 million (32.7% of revenue) during the first quarter ended June 30, 2016 as compared to $7.6 million (32.8% of revenue) for the quarter ended June 30, 2015. The increased SG&A expense for the fiscal 2017 first quarter was mainly due to planned investment in our sales & marketing efforts and the addition of the Cover-All business. |
| · | Adjusted EBITDA for the first quarter ended June 30, 2016 was $1.0 million (3.1% of revenue) as compared to $1.2 million (5.2% of revenue) for the quarter ended June 30, 2015. |
| · | Net loss for the first quarter ended June 30, 2016 was $0.6 million, or ($0.02) per share, as compared to net income of $82,000, or $0.00 per share for the quarter ended June 30, 2015. |
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
| · | Majesco had cash and cash equivalents of $14.9 million at June 30, 2016, compared to $9.3 million at June 30, 2015, and $6.2 million at March 31, 2016. |
| · | Total debt at June 30, 2016 was $17.7 million, compared to $11.5 million at June 30, 2015, and $13.8 million at March 31, 2016. |
| · | DSO’s were down to 67 days at June 30, 2016 as compared to 84 days in the previous quarter ended March 31, 2016. |
Operating Highlights
| · | Majesco expanded its relationship with a number of existing client accounts, including a tier 1 and mid-market insurer highlighting progress with our client centric and cross sale strategy. This included the expanding relationship with Homesite, a tier 1 insurer, to support their broadening product portfolio and geographical presence in the U.S. on Majesco’s Cloud platform with ready to use content, including ISO ERC integrated content, for the commercial line of business, and Colorado Farm Bureau Mutual Insurance Co., a mid-market insurer who will upgrade to Majesco Policy for P&C as its strategic enterprise platform |
| · | Majesco announced the release of Majesco CloudInsurer, an out-of-the-box repeatable, scalable cloud platform that leverages Majesco’s experience with cloud customers designed to provide a business platform with broad appeal for all insurers from greenfields, new start-ups and incubators to mid-market and tier 1 insurers. In addition, Majesco announced its expanding partnership ecosystem with the additions of iSIGN and eGain, strengthening the portfolio of offerings to clients and the Majesco CloudInsurer business model. |
| · | The 12-month backlog as on June 30, 2016 was $63.4 million as compared to $71.9 million as on March 31, 2016. The order book for the trailing twelve month period was $152.8 million as compared to $ 156.4 million as at March 31 2016. |
Conference Call and Webcast Information
Management of Majesco will conduct a live teleconference to discuss Majesco’s fiscal 2017 first quarter financial results on Tuesday, August 2, 2016 at 4:30 pm ET. Anyone interested in participating should call 877-340-7912 if calling from the U.S., or 719-325-4842 if calling internationally. A replay will be available until August 16, 2016, which can be accessed by calling 877-870-5176 within the U.S. and 858-384-5517 if calling internationally. Please use passcode 9452085 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=120500
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 stock-based compensation.
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 approximately 150 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 1-973-461-5200.
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, as amended, for the year ended March 31, 2016.
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 |
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 June 30, | ||||||||||
| 2016 | 2015 | |||||||||
| Revenue | $ | 32,554 | $ | 23,163 | ||||||
| Cost of revenue | 17,802 | 12,107 | ||||||||
| Gross profit | $ | 14,752 | $ | 11,056 | ||||||
| Operating expenses | ||||||||||
| Research and development expenses | $ | 4,528 | $ | 3,151 | ||||||
| Selling, general and administrative expenses | 10,659 | 7,586 | ||||||||
| Restructuring expenses | - | 228 | ||||||||
| Total operating expenses | $ | 15,187 | $ | 10,965 | ||||||
| Income/(Loss) from operations | $ | (435) | $ | 91 | ||||||
| Interest income | 8 | 10 | ||||||||
| Interest expense | (208) | (55) | ||||||||
| Other income (expenses),net | (2) | 136 | ||||||||
| Income/(Loss) before provision for income taxes | $ | (637) | $ | 182 | ||||||
| (Benefit)/Provision for income taxes | (87) | 100 | ||||||||
| Net Income/(Loss) | $ | (550) | $ | 82 | ||||||
| Earnings (Loss) per share: | ||||||||||
| Basic | $ | (0.02) | $ | 0.00 | ||||||
| Diluted | $ | (0.02) | $ | 0.00 | ||||||
| Weighted average number of common shares outstanding | ||||||||||
| Basic | 36,451,606 | 30,836,171 | ||||||||
| Diluted | 36,451,606 | 30,951,441 | ||||||||
Majesco and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(All amounts are in thousands of U.S. Dollars except per share data and as stated otherwise)
| June 30, 2016 | March 31, 2016 | ||||||
| ASSETS | |||||||
| CURRENT ASSETS | |||||||
| Cash and cash equivalents | $ | 14,183 | $ | 5,520 | |||
| Short term investments | 673 | 634 | |||||
| Restricted cash | 256 | 257 | |||||
| Accounts receivables, net | 16,333 | 22,503 | |||||
| Unbilled accounts receivable | 7,528 | 7,379 | |||||
| Deferred income tax assets | 2,138 | 1,847 | |||||
| Prepaid expenses and other current assets | 5,751 | 6,195 | |||||
| Total current assets | 46,862 | 44,335 | |||||
| Property and equipment, net | 3,774 | 3,462 | |||||
| Intangible assets, net | 9,975 | 10,483 | |||||
| Deferred income tax assets | 3,633 | 3,586 | |||||
| Other assets | 536 | 480 | |||||
| Goodwill | 32,279 | 32,275 | |||||
| Total Assets | $ | 97,059 | $ | 94,621 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| CURRENT LIABILITIES | |||||||
| Capital lease obligation | $ | 212 | $ | 159 | |||
| Loan from bank | 7,700 | 6,951 | |||||
| Accounts payable | 4,484 | 3,659 | |||||
| Accrued expenses and other liabilities | |||||||
| Related Parties | - | -- | |||||
| Others | 14,490 | 16,701 | |||||
| Deferred revenue | 11,474 | 11,200 | |||||
| Total current liabilities | 38,360 | 38,670 | |||||
| Capital lease obligation, net of current portion | 36 | 120 | |||||
| Term loan - bank | 10,000 | 6,800 | |||||
| Other | 3,629 | 3,474 | |||||
| Total Liabilities | $ | 52,025 | $ | 49,064 | |||
| Commitments and contingencies | |||||||
| STOCKHOLDERS’ EQUITY | |||||||
| Preferred stock, par value $0.002 per share – 50,000,000 shares authorized as of June 30, 2016 and 50,000,000 as of March 31, 2016, NIL shares issued and outstanding as of June 30, 2016 and March 31, 2016 | - | - | |||||
| Common stock, par value $0.002 per share – 450,000,000 shares authorized as of June 30, 2016 and 450,000,000 as of March 31, 2016, 36,474,004 shares issued and outstanding as of June 30, 2016 and 36,451,357 as of March 31, 2016 | $ | 73 | $ | 73 | |||
| Additional paid-in capital | 69,827 | 69,505 | |||||
| Accumulated deficit | (24,911) | (24,360) | |||||
| Accumulated other comprehensive income | 45 | 339 | |||||
| Total equity of common stockholder | 45,034 | 45,557 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 97,059 | $ | 94,621 | |||
Majesco and Subsidiaries
Reconciliation of U.S. GAAP Net Income to EBITDA and Adjusted EBITDA
(Unaudited)
Three Months Ended June 30, |
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| (U.S. dollars; in thousands): | 2016 | 2015 | |||||
| Net Income (Loss) | $ | (550) | $ | 82 | |||
| Add: | |||||||
| Provision (benefit) for income taxes | (87) | 100 | |||||
| Depreciation and amortization | 1,112 | 883 | |||||
| Interest expense | 208 | 55 | |||||
| Less: | |||||||
| Interest income | 8 | 10 | |||||
| Other income (expenses), net | (2) | 136 | |||||
| EBITDA | $ | 677 | $ | 974 | |||
| Add: | |||||||
| Restructuring costs | - | 228 | |||||
| Stock based compensation | 322 | - | |||||
| Adjusted EBITDA | $ | 999 | $ | 1,202 | |||
| Revenue | 32,554 | 23,163 | |||||
| Adjusted EBITDA as % of Revenue | 3.1% | 5.2% | |||||
Majesco and Subsidiaries
Reconciliation of Selected U.S. GAAP Measures to Non-U.S. GAAP Measures
(Unaudited)
Three Months Ended March 31, |
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| (U.S. dollars; in thousands): | 2016 | 2015 | |||||
| Net Income (Loss) | $ | (550) | $ | 82 | |||
| Restructuring Costs(1) | - | 228 | |||||
| Stock based compensation | $ | 322 | $ | - | |||
| Adjusted Net Income (Loss) | $ | (228) | $ | 310 | |||
| Adjusted Earnings (Loss) per Common Share: | |||||||
| Basic | $ | (0.01) | $ | 0.01 | |||
| Diluted | $ | (0.01) | $ | 0.01 | |||
(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.