Majesco Reports Accelerating Momentum of Cloud Subscription Revenue, Record Quarterly EBITDA and Strong Total Sales Growth for Third Quarter Fiscal 2020

Cloud Subscription Revenue of $6.1m up 39% year over year

Third quarter total revenue of $37.2m

Third quarter adjusted EBITDA of $5.0m

Acquisition of InsPro Technologies a U.S. based life and annuity software provider

MORRISTOWN, N.J.--()--Majesco (NASDAQ: MJCO), a global provider of cloud insurance software solutions for insurance business transformation, today announced solid financial results for the fiscal 2020 third quarter that ended December 31, 2019.

Our third quarter financial results reinforce the continuing momentum of our cloud subscription product focus”, said Adam Elster, Majesco’s CEO. “Our product business now represents more than 40% of our total revenue. The number of cloud customers continues to grow with accelerating project go-lives, as our customers are benefitting from dramatically reduced project implementation timelines. These trends clearly demonstrate Majesco’s ability to rapidly deliver time-to-value to our customers while providing a modern platform for insurers to innovate new products and business models. This is the foundation for our long-term growth as we acquire, adopt and expand customers.”

We are thrilled to announce the acquisition of InsPro Technologies, further demonstrating our product focus in the Life and Annuity market. InsPro has strong relationships with top tier customers, an experienced team, and a strong technology footprint. In addition, this acquisition expands our partnership with Capgemini as their existing TPA business is based on this platform,” concluded Mr. Elster.

Industry veteran, John Heidelberger, InsPro Technologies’ Customer Delivery Leader said, “We are delighted to join the Majesco family. We looked long and hard for a partner that shared our view of the digital future for group and individual insurance lines. As a former insurance industry CIO and long-term practitioner, I’m confident our policy processing experience coupled with Majesco’s significant investments in digital solutions will allow us to offer our combined customer base a wider selection of solutions while providing even greater opportunities for our committed team.”

Key Revenue Drivers

  • Revenue from cloud-based customers was $16.3 million (43.8% of total revenue) for the quarter ended December 31, 2019.
  • Total number of cloud customers is now 63.
  • Total product revenue was 41.4% of total revenue for the quarter ended December 31, 2019.
  • Majesco’s 12-month order backlog as of December 31, 2019 was $101.7 million.
  • Two new core platform cloud deals added from existing customers for the quarter ended December 31, 2019.

Third Quarter 2020 Financial Results

  • Revenue was $37.2 million, compared to $35.8 million for the same period last fiscal year.
  • Gross profit was $17.9 million (48.0% of revenue), compared to $17.5 million for the same period last fiscal year.
  • Research and development (R&D) expenses were $4.7 million (12.7% of revenue), compared to $4.9 million for the same period last fiscal year.
  • Selling, general and administrative (SG&A) expenses were $10.0 million (27.0% of revenue), compared to $10.3 million for the same period last fiscal year.
  • Adjusted EBITDA was $5.0 million (13.4% of revenue), compared to $4.8 million for the same period last fiscal year.
  • Net income was $3.9 million, or $0.09 per diluted share.

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.

2020 Financial Results for the Nine Months ended December 31, 2019

  • Revenue was $108.5 million, compared to $104.1 million for the same period last fiscal year.
  • Gross profit was $53.4 million (49.2% of revenue), compared to $50.8 million for the same period last fiscal year.
  • Research and development (R&D) expenses were $14.6 million (13.5% of revenue), compared to $14.4 million for the same period last fiscal year.
  • Selling, general and administrative (SG&A) expenses were $31.7 million (29.2% of revenue), compared to $29.5 million for the same period last fiscal year.
  • Adjusted EBITDA was $12.9 million (11.8% of revenue), compared to $12.6 million for the same period last fiscal year.
  • Net income was $6.1 million, or $0.14 per diluted share.

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 no significant debt and cash equivalents (including short term investments) of $45.5 million at December 31, 2019, compared to net cash of $11.5 million for the same period last fiscal year.

Conference Call and Webcast Information

Majesco management will conduct a live teleconference to discuss Majesco’s fiscal 2020 third quarter at 5:00 pm ET on Monday, February 3, 2020. Anyone interested in participating should call 855-327-6837 if calling from the U.S., or 631-891-4304 if dialing internationally. Please use passcode: 10008458 A replay will be available until Monday, February 17, 2020, which can be accessed by dialing 844-512-2921 within the U.S. and 412-317-6671 if dialing internationally. Please use passcode: 10008458 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 reversal of accrual for contingent liability and mergers and acquisitions expenses.

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 200 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, as amended by Majesco’s Quarterly Report on Form 10-Q.

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
December 31,
2019

 

 

Three months
ended
December 31,
2018

 

Nine months
ended
December 31,
2019

 

Nine months
ended
December 31,
2018

Revenue

 

 

 

$

 

37,175

 

 

 

$

 

 

35,820

 

 

$

 

108,534

 

 

$

 

 

104,117

 

Cost of revenue

 

 

 

 

19,323

 

 

 

 

 

18,293

 

 

 

55,130

 

 

 

 

53,340

 

Gross profit

 

 

 

$

 

17,852

 

 

 

$

 

 

17,527

 

 

$

 

53,404

 

 

$

 

 

50,777

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

 

$

 

4,712

 

 

 

$

 

 

4,850

 

 

$

 

14,639

 

 

$

 

 

14,381

 

Selling, general and administrative expenses

 

 

 

 

10,027

 

 

 

 

 

10,303

 

 

 

31,729

 

 

 

 

29,484

 

Total operating expenses

 

 

 

$

 

14,739

 

 

 

$

 

 

15,153

 

 

$

 

46,368

 

 

$

 

 

43,865

 

Income from operations

 

 

 

$

 

3,113

 

 

 

$

 

 

2,374

 

$

 

7,036

 

 

$

 

 

6,912

 

Interest income

 

 

 

 

141

 

 

 

 

 

7

 

 

 

491

 

 

 

 

32

 

Interest expense

 

 

 

 

(79

)

 

 

 

(114

 

)

 

(269

)

 

 

 

(342

)

Other income (expenses), net

 

 

 

 

138

 

 

 

 

 

(57

)

 

 

578

 

 

 

 

553

 

Gain on reversal of accrual contingent liability

 

 

 

 

1,359

 

 

 

 

 

---

 

 

1,359

 

 

 

 

835

 

Income before provision for income taxes

 

 

 

$

 

4,672

 

 

 

$

 

 

2,210

 

$

 

9,195

 

 

$

 

 

7,990

 

Provision for income taxes

 

 

 

 

797

 

 

 

 

 

483

 

 

3,130

 

 

 

 

2,543

 

Net Income

 

 

 

$

 

3,875

 

 

 

$

 

 

1,727

 

$

 

6,065

 

 

$

 

 

5,447

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

$

 

0.09

 

 

$

 

 

0.05

 

$

 

0.14

 

 

$

 

 

0.15

 

Diluted

 

 

 

$

 

0.09

 

 

$

 

 

0.04

 

$

 

0.14

 

 

$

 

 

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

43,102,144

 

 

 

 

 

36,664,718

 

 

 

42,992,839

 

 

 

 

36,633,300

 

Diluted

 

 

 

 

45,294,983

 

 

 

 

 

38,725,682

 

 

 

45,167,708

 

 

 

 

38,814,422

 

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)

 

 

 

 

December 31,
2019

 

March 31,
2019

ASSETS

 

 

 

CURRENT ASSETS

 

 

 

Cash and cash equivalents...........................................................................

$

19,996

 

 

$

11,329

 

Short term investments..............................................................................

 

25,542

 

 

 

28,108

 

Restricted cash...........................................................................................

 

42

 

 

 

43

 

Accounts receivables, net............................................................................

 

26,259

 

 

 

17,366

 

Unbilled accounts receivable.......................................................................

 

14,579

 

 

 

17,916

 

Prepaid expenses and other current assets....................................................

 

13,985

 

 

 

15,598

 

Total current assets........................................................................................

 

100,403

 

 

 

90,360

 

Property and equipment, net.......................................................................

 

2,195

 

 

 

3,026

 

Right of use asset, net

 

3,964

 

 

 

--

 

Intangible assets, net..................................................................................

 

10,518

 

 

12,969

 

Deferred income tax assets.........................................................................

 

6,957

 

 

 

7,816

 

Unbilled accounts receivable, net of current portion

 

2,710

 

 

 

543

 

Other assets...............................................................................................

 

187

 

 

489

 

Goodwill....................................................................................................

 

34,144

 

 

 

34,145

 

Total Assets...................................................................................................

$

161,078

 

 

$

149,348

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES

 

 

 

Loan from bank-receivable and vehicle loan..................................................

 

53

 

 

 

442

 

Lease liability……………………………………………………………………………………………………

 

1,977

 

 

 

--

 

Accounts payable.......................................................................................

 

2,233

 

 

 

2,327

 

Accrued expenses and other current liabilities..............................................

 

27,382

 

 

 

34,871

 

Deferred revenue.......................................................................................

 

18,172

 

 

 

10,988

 

Total current liabilities...................................................................................

 

49,817

 

 

 

48,628

 

Vehicle loan

 

52

 

 

 

109

 

Lease liability, net of current portion

 

2,026

 

 

 

--

 

Consideration payable on Exaxe acquisition

 

2,931

 

 

2,951

 

Other liabilities...........................................................................................

 

1,208

 

 

 

1,089

 

Total Liabilities..............................................................................................

$

56,034

 

 

$

52,777

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

Preferred stock, par value $0.002 per share – 50,000,000 shares authorized as of
   December 31, 2019 and 50,000,000 as of March 31, 2019, NIL shares issued and
   outstanding as of December 31, 2019 and March 31, 2019.............................

 

--

 

 

 

--

 

Common stock, par value $0.002 per share – 450,000,000 shares authorized as of
   December 31, 2019 and March 31, 2019, 43,284,951 shares issued and 43,235,701
   shares outstanding as of December 31, 2019 and 42,846,273 shares issued and
   outstanding as of March 31, 2019................................................

$

87

 

 

$

86

 

Additional paid-in capital

 

125,699

 

 

 

122,163

 

Accumulated deficit........................................................................................

 

(20,002

)

 

 

(26,499

)

Accumulated other comprehensive loss ...........................................................

 

(740

)

 

 

(412

)

Non-controlling interest in consolidated subsidiaries……………………………………………

 

--

 

 

 

 

1,233

 

Total equity of common stockholder...................................................................

 

105,044

 

 

 

96,571

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY..................................................

$

161,078

 

 

$

149,348

 

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):

2019

 

2018

 

2019

 

2018

Net Income

$

3,875

 

 

$

1,727

 

 

$

6,065

 

 

$

5,447

 

 

 

 

 

 

 

 

 

Add:

 

 

 

 

 

 

 

Provision for income taxes

 

797

 

 

 

483

 

 

 

3,130

 

 

 

2,543

 

Depreciation and amortization

 

1,200

 

 

 

1,201

 

 

 

3,643

 

 

 

3,075

 

 

 

 

 

 

 

 

 

Interest expense

 

79

 

 

 

113

 

 

 

269

 

 

 

342

 

 

 

 

 

 

 

 

 

Less:

 

 

 

 

 

 

 

Interest income

 

(141

)

 

 

(7

)

 

 

(491

)

 

 

(32

)

Other income (expenses), net

 

(138

)

 

 

57

 

 

 

(578

)

 

 

(553

)

EBITDA

$

5,672

 

 

$

3,574

 

 

$

12,038

 

 

$

10,822

 

 

 

 

 

 

 

 

 

Add:

 

 

 

 

 

 

 

Stock based compensation

 

672

 

 

 

814

 

 

 

2,170

 

 

 

2,178

 

Reversal of accrual for contingent liability

 

(1,359

)

 

---

 

 

(1,359

)

 

 

(835

)

Merger and acquisition expenses

---

 

 

442

 

 

---

 

 

442

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

4,985

 

 

$

4,830

 

 

$

12,849

 

 

$

12,607

 

 

 

 

 

 

 

 

 

Revenue

 

37,175

 

 

 

35,820

 

 

 

108,534

 

 

 

104,117

 

Adjusted EBITDA as a % of Revenue

 

13.41

%

 

 

13.48

%

 

 

11.84

%

 

 

12.11

%

 

Contacts

Majesco:

Media
Majesco
Laura Tillotson
Director, Marketing Communications
+ 201 230 0752
Laura.Tillotson@majesco.com

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

Contacts

Majesco:

Media
Majesco
Laura Tillotson
Director, Marketing Communications
+ 201 230 0752
Laura.Tillotson@majesco.com

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