Majesco Announces Record Fourth Quarter and Full Year Fiscal 2019 Results

Company Release - 5/7/2019 4:30 PM ET

Fourth quarter revenue of $36.9M up 11.9% year over year
Full year revenue of $139.9M up 13.7% year over year
Fourth quarter cloud revenue of $16.3M up 54.9% year over year
Full year cloud revenue of $56.8M up 52.6% year over year
Fourth quarter EBITDA of 12% up 9% year over year
Full year EBITDA of 12.3% up more than 200% year over year
Cloud revenue now represents more than 40% of total revenue

MORRISTOWN, N.J.--(BUSINESS WIRE)-- 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, 2018.
  • 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 digital offerings.
  • 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 Exaxe.
  • 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.

Other Highlights

  • 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
Majesco management 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 replay.

In addition, the call will be webcast and will be available on the Company’s website at www.majesco.com or by clicking here.

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.

About Majesco
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
This 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 and as stated otherwise)

 

Three
months
ended
March 31,
2019

Three
months
ended
March 31,
2018

Twelve
months
ended
March 31,
2019

Twelve
months
Ended
March 31,
2018

 
Revenue $ 36,871 $ 32,947 $ 139,860 $ 122,985
Cost of revenue 18,983 17,503 71,373 67,121
Gross profit $ 17,888 $ 15,444 $ 68,487 $ 55,864
 
Operating expenses
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)
Interest income 73 32 104 51
Interest expense (109) (138 ) (450) (516)
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
Net Income/(Loss) $ 1,232 $ 434 $ 6,925 $ (5,001)
 
Earnings (Loss) per share:
Basic $ 0.03 $ 0.01 $ 0.19 $ (0.14)
Diluted $ 0.03 $ 0.01 $ 0.18 $ (0.14)
 
Weighted average number of common shares outstanding
Basic 38,972,051 36,558,001 37,209,999 36,540,199
Diluted 41,216,279 38,913,576 39,273,605 36,540,199
 

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 data and as stated otherwise)

 

March 31,
2019

March 31,
2018

ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 11,329 $ 9,152
Short term investments 28,108 --
Restricted cash 43 53
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 -

Other assets

489 50
Goodwill   34,145   32,216
Total Assets $ 148,040 $ 96,526
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Software hire purchase obligation 442 203
Short term debt - 5,269
Current maturities of long-term borrowings - --
Accounts payable 2,220 2,353
Accrued expenses and other liabilities 30,962 22,032
Deferred revenue   10,988   12,201
Total current liabilities   44,612   42,058
Long term debt - 8,367
Vehicle loan 109 --
Other   4,041   928
Total Liabilities $ 48,762 $ 51,353
 
 
 

STOCKHOLDERS’ EQUITY

Preferred stock, par value $0.002 per share – 50,000,000 shares authorized as of

September 30, 2018 and 50,000,000 as of March 31, 2018, NIL shares issued

and outstanding as of September 30, 2018 and March 31, 2018

-- --
 

Common stock, par value $0.002 per share – 450,000,000 shares authorized as of

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 36,600,457 as of

March 31, 2018

$ 86 $ 73
 
Additional paid-in capital 122,163 75,021
Accumulated deficit (23,792) (30,282)
Accumulated other comprehensive income (412) 361
Non-Controlling Interest 1,233 --
 
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 EBITDA
(Unaudited)
 

Three Months Ended
March 31,

Twelve Months Ended
March 31,

(U.S. dollars; in thousands): 2019     2018 2019     2018
Net Income (Loss) $ 1,232 $ 434 $ 6,925 $ (5,001)
 

Add:

Provision (benefit) for income taxes 1,008 412 3,611 2,055
Depreciation and amortization 1,248 1,106 4,244 4,849
 
Interest expense 109 138 450 516
 

Less:

 
Interest income (73)

(32)

(104) (51)
Other income (expenses), net   111   (92)   (442)   74
EBITDA $ 3,635 $ 1,966 $ 14,685 $ 2,442
 

Add:

 
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 $ 4,423 $ 2,907 $ 17,234 $ 5,695
 
Revenue 36,871 32,947 139,860 122,985
Adjusted EBITDA as a % of Revenue 12.00% 8.82% 12.32% 4.63%
 

Majesco:

Media
Tara Dilzer Alexander
Director, Marketing Communications and Creative Services
+1 718 916 6873
tara.dilzeralexander@majesco.com

Investors
SM Berger & Co
Andrew Berger
+216 464 6400
andrew@smberger.com

Corporate
Ann Massey
SVP-Finance
(973) 461-5190
Ann.massey@majesco.com

Source: Majesco