MJCO Majesco

First quarter total revenue of $41.2M up 10.6% YOY Product Revenue of $19.9M, 48.2% of total revenue, and increase of 24.6% YOY Record Sales performance and total backlog of $254M First quarter Adjusted EBITDA of $6.0M

Majesco (NASDAQ:MJCO), a global provider of cloud insurance platform software, today announced strong financial results for the fiscal 2021 first quarter ended June 30, 2020.

“Q1 FY21 was a record quarter for Majesco across all our key performance metrics of Total Revenue, Product Revenue, New Sales and Margin,” stated Adam Elster, Majesco’s CEO. “Companies of all sizes are turning to Majesco to partner with on their digital transformation journey and the team demonstrated excellent performance against our cloud product-based strategy. Our relentless focus on delivering innovation and customer success has fuelled our growth and solidified our leadership.”

“We remain confident in our strategy, committed to its execution and believe we have the right platform in place to handle the near-term challenges associated with COVID-19, while continuing to pursue long-term growth opportunities,” Elster continued.

“We are extremely excited to partner with Thoma Bravo, a firm with an established track record working with companies transitioning to the cloud.”

Key Revenue Drivers:

• License, subscription, and maintenance revenue (product revenue) of $19.9 million, up 24.6% for the same period last fiscal year, and constituted 48.2% of total revenue for the first quarter 2021.
• Professional services revenue of $21.3 million, down 5.4% compared to the same period in the previous fiscal as a percentage of total revenue.
• Majesco’s total order backlog on June 30, 2020 was $254 million. Previously Majesco was reporting a 12 month executable backlog only.

First Quarter 2021 Financial Results

• Revenue was $41.2 million, compared to $37.3 million for the same period last fiscal year. The 10.6% increase in revenue is primarily due to the inclusion of the Inspro business.
• Gross profit was $19.4 million (47.0% of revenue), compared to $19.9 million (53.3% of revenue) for the same period last fiscal year. The primary reason for the decline is that in the period ended June 30, 2019, there was a one time license fee which impacted the Gross Margin.
• Research and development (R&D) expenses were $3.8 million (9.3% of revenue), compared to $5.4 million (14.7% of revenue) for the same period last fiscal year. The company has rationalized its R&D investments in the international business through transition from a geographical investment approach to a more global product management and development structure and repurposed some of the teams to deliver new business.
• Selling, general and administrative (SG&A) expenses were $11.6 million (28.2% of revenue), compared to $11.8 million (31.7% of revenue) for the same period last fiscal year.
• Net income was $1.3 million or $0.03 basic and diluted per share as compared to net income of $1.3 million or $0.03 basic and diluted per share, for the same period last fiscal year. Net Income for the period was impacted by one time M&A expenses of $ 1.8 million for the Inspro acquisition.
• Adjusted EBITDA was $6.0 million (14.5% of revenue), compared to $4.7 million (12.7% of revenue) for the same period 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

Other Highlights

• Majesco had cash and cash equivalents, including short term investments of $30.9 million at June 30, 2020, compared to $51.5 million at March 31, 2020. The drop was primarily on account of funding of the Inspro transaction.
• Majesco had $ 1.1 million in indebtedness as of June 30, 2020, compared $ 0.1 million as of March 31, 2020. This indebtedness consisted primarily of software and equipment lease liabilities assumed in the acquisition of Inspro Technologies.
• 11 successful Go-Lives during the first quarter of fiscal 2021.
• 2 new customer additions and 1 customer signed up to migrate from On-Prem to Cloud.
• Cloud customer count stood at 79 at the end of first quarter 2021.
• The Company successfully acquired Inspro Technologies, a Philadelphia based insurance software business. This transaction closed on April 1, 2020.

Given the pending transaction with Thoma Bravo, Majesco will not be hosting a Q1 earnings call.

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 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® Engagement, 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 Reports 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: the adverse impact on economies around the world and our customers of the current COVID-19 pandemic; our ability to achieve increased market penetration for our product and service offerings and obtain new customers; our ability to raise future capital as needed; the growth prospects of the property & casualty and life & annuity insurance industry; the strength and potential of our technology platform and our ability to innovate and anticipate future customer needs; our ability to compete successfully against other providers and products; data privacy and cyber security risks; technological disruptions; our ability to successfully integrate our acquisitions and identify new acquisitions; the risk of loss of customers or strategic relationships; the success of our research and development investments; changes in economic conditions, political conditions and trade protection measures; regulatory and tax law changes; immigration risks; our ability to obtain, use or successfully integrate third-party licensed technology; key personnel risks; and litigation risks.

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.

Important Additional Information:

In connection with the proposed merger of Majesco with an affiliate of Thoma Bravo L.P., Majesco will file a consent solicitation statement and other relevant documents concerning the proposed merger with the SEC. The consent solicitation statement and other materials filed with the SEC will contain important information regarding the merger, including, among other things, the recommendation of Majesco's board of directors with respect to the merger. SHAREHOLDERS ARE URGED TO READ THE CONSENT SOLICITATION STATEMENT AND OTHER CONSENT MATERIALS THAT MAJESCO FILES WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER AND RELATED MATTERS. You will be able to obtain the consent solicitation statement, as well as other filings containing information about Majesco, free of charge, at the website maintained by the SEC at www.sec.gov. Copies of the consent solicitation statement and other filings made by Majesco with the SEC can also be obtained, free of charge, by directing a request to Majesco, 412 Mount Kemble Ave., Suite 110C, Morristown, NJ 07960, Attention: Corporate Secretary.

Participants in the Solicitation:

Majesco and its executive officers and directors may be deemed, under SEC rules, to be participants in the solicitation of consents from Majesco’s shareholders with respect to the proposed merger. Information regarding the executive officers and directors of Majesco and their respective ownership of Majesco common stock is included in the Proxy Statement for Majesco’s 2020 Annual Meeting of Stockholders (the “2020 Proxy Statement”), filed with the SEC on July 29, 2020. To the extent that holdings of Majesco’s securities have changed since the amounts printed in the 2020 Proxy Statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. More detailed information regarding the identity of the potential participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the consent solicitation statement and other materials to be filed with SEC in connection with the proposed merger.

Majesco and Subsidiaries

 

Consolidated Statements of Income (Unaudited)

(All amounts are in thousands of US Dollars except per share data and as stated otherwise)

 

 

 

Three months ended June 30, 2020

 

Three months ended June 30, 2019

 

Revenue

 

$

41,247

 

 

$

37,304

 

Cost of revenue

 

 

21,878

 

 

 

17,434

 

Gross profit

  19,369  

 

19,870

 

 

 

 

 

 

Operating expenses

 

 

 

 

Research and development expenses

 

 

3,818

 

 

 

5,470

 

Selling, general and administrative expenses

 

 

11,627

 

 

 

11,826

 

M&A expenses – InsPro

 

 

1,819

 

 

 

--

 

Total operating expenses

 

 

17,264

 

 

 

17,296

 

Income from operations

 

 

2,105

 

 

 

2,574

 

Interest income

 

 

36

 

 

 

189

 

Interest expense

 

 

(136

)

 

 

(89

)

Other income (expenses), net

 

 

21

 

 

 

(11

)

Income before provision for income taxes

 

 

2,026

 

 

 

2,663

 

Provision for income taxes

 

 

739

 

 

 

1,381

 

Net income

 

$

1,287

 

 

$

1,282

 

 

 

 

 

 

Earnings per share:

 

 

 

 

Basic

 

$

0.03

 

 

$

0.03

 

Diluted

 

$

0.03

 

 

$

0.03

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

 

 

 

Basic

 

 

43,348,966

 

 

 

42,912,982

 

Diluted

 

 

45,050,609

 

 

 

44,896,086

 

Majesco and Subsidiaries

   

Consolidated Balance Sheets

   

(All amounts are in thousands of U.S. Dollars except per share data and as stated otherwise)

       

 

 

June 30, 2020 (unaudited)

 

March 31, 2020 (audited)

ASSETS

 

 

 

CURRENT ASSETS

 

 

 

Cash and cash equivalents

 

$

23,320

 

 

$

35,240

 

Short term investments

 

 

7,546

 

 

 

16,173

 

Restricted cash

 

 

39

 

 

 

39

 

Accounts receivables, net

 

 

29,678

 

 

 

26,156

 

Unbilled accounts receivable

 

 

21,129

 

 

 

16,118

 

Prepaid expenses and other current assets

 

 

8.887

 

 

 

7,266

 

Total current assets

 

 

90,599

 

 

 

100,992

 

Property and equipment, net

 

 

2,692

 

 

 

2,132

 

Operating lease right-of-use asset, net

 

 

3,601

 

 

 

2,977

 

Intangible assets, net

 

 

10,879

 

 

 

9,531

 

Deferred income tax assets

 

 

9,513

 

 

 

7,195

 

Unbilled accounts receivable

 

 

1,532

 

 

 

847

 

Other assets

 

2,601

 

 

1,746

 

Goodwill

 

 

40,073

 

 

 

34,095

 

Total Assets

 

$

161,490

 

 

$

159,515

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

Short term debt

 

$

153

 

 

$

25

 

Current maturities of long-term borrowings

 

 

620

 

 

 

--

 

Accounts payable

 

 

5,261

 

 

 

4,159

 

Operating lease right-of-use liability

 

 

1,961

 

 

 

1,399

 

Accrued expenses and other liabilities

 

 

19,596

 

 

 

22,746

 

Deferred revenue

 

 

20,993

 

 

 

20,553

 

Total current liabilities

 

 

48,584

 

 

 

48,882

 

Finance lease obligation, net of current portion

 

 

144

 

 

 

--

 

Vehicle loan

 

 

191

 

 

 

68

 

Operating lease right-of-use liability, net of current portion

 

 

1,631

 

 

 

1,611

 

Other

 

 

2,016

 

 

 

2,341

 

Total Liabilities

 

 

52,566

 

 

 

52,902

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

Preferred stock, par value $0.002 per share – 50,000,000 shares authorized as of June 30, 2020 and March 31, 2020, and no shares issued and outstanding as of June 30, 2020 and March 31, 2020

 

 

--

 

 

 

--

 

Common stock, par value $0.002 per share – 450,000,000 shares authorized, 43,349,678 shares issued (including 54,999 shares held as Treasury Stock) and 43,294,679 shares outstanding as of June 30, 2020 and 43,334,678 shares issued (including 49,250 shares held as Treasury Stock) and 43,285,428 shares outstanding as of March 31, 2020;

 

 

87

 

 

 

87

 

Additional paid-in capital

 

 

127,383

 

 

 

126,643

 

Accumulated deficit

 

 

(15,098

)

 

 

(16,385

)

Accumulated other comprehensive (loss)

 

 

(3,448

)

 

 

(3,732

)

Total stockholders’ equity

 

 

108,924

 

 

 

106,613

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

161,490

 

 

$

159,515

 

Majesco and Subsidiaries

Reconciliation of U.S. GAAP Net Income to EBITDA and Adjusted EBITDA (Unaudited)

(All amounts are in thousands of U.S. Dollars except per share data and as stated otherwise)

   

 

 

Three Months Ended June 30,

 

 

2020

 

2019

Net income

 

$

1,287

 

 

$

1,282

 

 

 

 

 

 

Add:

 

 

 

 

Provision (benefit) for income taxes

 

 

739

 

 

 

1,381

 

Depreciation and amortization

 

 

1,395

 

 

 

1,226

 

 

 

 

 

 

Interest expense

 

 

136

 

 

 

89

 

 

 

 

 

 

Less:

 

 

 

 

 

Interest income

 

 

(36

)

 

 

 (189

)

Other income (expenses), net

 

 

(21

)

 

 

11

 

EBITDA

 

$

3,500

 

 

$

3,800

 

 

 

 

 

 

Add:

 

 

 

 

 

M&A expenses - InsPro

 

 

1,819

 

 

 

--

 

Stock based compensation

 

 

679

 

 

 

929

 

Adjusted EBITDA

 

$

5,998

 

 

$

4,729

 

 

 

 

 

 

Revenue

 

$

41,247

 

 

$

37,304

 

Adjusted EBITDA as a % of Revenue

 

 

14.54

%

 

 

12.68

%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200810005785/en/

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