Quarterly Net Income of $3.9 Million Up $3.1 Million Year-Over-Year Third Quarter GAAP Basic Earnings Per Share of $0.35 up $0.26 Year-Over-Year
WEST PALM BEACH, Fla. and NETANYA, Israel, Oct. 28, 2011 (GLOBE NEWSWIRE) — magicJack VocalTec, Ltd. (The Voice Experts), the company that invented voice over IP (VoIP) and sold over eight million magicJacks(R), today reported financial results for the third quarter of fiscal 2011 ended September 30, 2011.
Record quarterly net income for the third quarter of fiscal 2011 was $3.9 million, or $0.35 per share, compared to $0.8 million, or $0.09 per share, for the third quarter of fiscal 2010 while revenue from renewals increased 73% and operating income grew 175% for the same comparative quarters. Revenue for the third quarter was $28.9 million. As previously announced, revenue is expected to grow at 20% – 30 % from full year 2011 to 2012.
Daniel Borislow, the Company’s President and Chief Executive Officer, gives a brief update: “The new magicJack PLUS has been selling very well in our first retail outlet, Radio Shack, and on our internet site www.magicJack.com. The magicJack APP(TM) for Apple devices has been downloaded hundreds of thousands of times since BETA was introduced last month, without any advertising spend. Various marketing and media outlets have been proven efficient, and we expect even more efficiency in first quarter 2012. Needless to say, I am quite pleased with the progress we have been making. We also expect to bring to market new products and services quicker and more frequently in the future, contributing to the top and bottom line. It continues to be an honor to serve magicJack VocalTec and its investors.”
The above statements are based on current targets. These statements are forward-looking, and actual results may differ materially.
The following unaudited consolidated financial information presents summary information and does not include notes and other information required by Generally Accepted Accounting Principles (GAAP) in the United States. This information should be read in conjunction with magicJack VocalTec’s audited consolidated financial statements included in the annual report on Form 20-F for the year ended December 31, 2010.
| MAGICJACK VOCALTEC LTD AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEET INFORMATION | ||
| (in thousands) | ||
| December 31, | September 30, | |
| 2010 | 2011 | |
| ASSETS | (Unaudited) | (Unaudited) |
| Current assets: | ||
| Cash and cash equivalents | $ 28,628 | $ 11,081 |
| Marketable securities, at fair value | 19,331 | 21,940 |
| Accounts receivable, net of allowance for doubtful accounts and billing adjustments | ||
| of $8,498 and $15,403, respectively | 10,336 | 14,421 |
| Inventories | 3,008 | 8,064 |
| Deferred costs | 6,615 | 5,033 |
| Deposits and other current assets | 1,541 | 2,037 |
| Total current assets | 69,459 | 62,576 |
| Property and equipment, net | 3,771 | 3,082 |
| Intangible assets, net | 7,275 | 11,931 |
| Goodwill | 32,304 | 32,304 |
| Deposits and other non-current assets | 1,739 | 1,281 |
| Total assets | $ 114,548 | $ 111,174 |
| LIABILITIES AND CAPITAL DEFICIT | ||
| Current liabilities: | ||
| Accounts payable | $ 2,590 | $ 3,808 |
| Accrued expenses and other current liabilities | 9,834 | 7,501 |
| Accrued bonuses | 1,000 | — |
| Deferred revenue, current portion | 58,087 | 55,589 |
| Total current liabilities | 71,511 | 66,898 |
| Deferred revenue, net of current portion | 34,121 | 40,075 |
| Other non-current liabilities | 664 | 4,081 |
| Total liabilities | 106,296 | 111,054 |
| Commitments and contingencies | ||
| Redeemable ordinary shares, No par value; 333 shares issued and outstanding | 8,373 | 7,733 |
| Capital deficit: | ||
| Ordinary shares, No par value; 100,000 shares authorized; 11,476 and 10,836 shares | ||
| issued, respectively; 11,473 and 10,836 shares outstanding, respectively | 91,527 | 74,985 |
| Additional paid-in capital | 1,971 | 4,091 |
| Accumulated other comprehensive income (loss) | 989 | (1,031) |
| Treasury stock (3 and 0 shares, respectively) | (81) | — |
| Deficit | (94,527) | (85,658) |
| Total capital deficit | (121) | (7,613) |
| Total liabilities and capital deficit | $ 114,548 | $ 111,174 |
| MAGICJACK VOCALTEC LTD AND SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENT OF OPERATIONS INFORMATION | ||||
| (in thousands, except per share information) | ||||
| Three Months Ended | Nine Months Ended | Three Months Ended | Nine Months Ended | |
| September 30, 2010 | September 30, 2010 | September 30, 2011 | September 30, 2011 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Revenues | $ 29,788 | $ 91,165 | $ 28,912 | $ 87,816 |
| Cost of revenues | 13,750 | 42,854 | 12,505 | 37,594 |
| Gross profit | 16,038 | 48,311 | 16,407 | 50,222 |
| Operating expenses: | ||||
| Advertising | 7,480 | 25,281 | 7,301 | 20,812 |
| General and administrative | 6,257 | 21,432 | 5,880 | 19,453 |
| Research and development | 1,362 | 2,933 | 647 | 1,973 |
| Total operating expenses | 15,099 | 49,646 | 13,828 | 42,238 |
| Operating income (loss) | 939 | (1,335) | 2,579 | 7,984 |
| Other income (expense): | ||||
| Realized (losses) gains on marketable securities | (200) | (437) | 1,257 | 500 |
| Interest and dividend income | 253 | 833 | 210 | 592 |
| Interest expense | — | (146) | (118) | (158) |
| Other income, net | 4 | 19 | 4 | 26 |
| Gain on extinguishment of debt | — | 234 | — | — |
| Total other income | 57 | 503 | 1,353 | 960 |
| Net income (loss) before income taxes | 996 | (832) | 3,932 | 8,944 |
| Income tax expense | 180 | 187 | 23 | 75 |
| Net income (loss) | $ 816 | $ (1,019) | $ 3,909 | $ 8,869 |
| Income (loss) per ordinary share: | ||||
| Basic | $ 0.09 | $ (0.10) | $ 0.35 | $ 0.77 |
| Diluted | $ 0.09 | $ (0.10) | $ 0.34 | $ 0.76 |
| MAGICJACK VOCALTEC LTD AND SUBSIDIARIES | |||||||
| UNAUDITED CONSOLIDATED STATEMENT OF CAPITAL DEFICIT INFORMATION | |||||||
| For the Nine Months Ended September 30, 2011 | |||||||
| (in thousands) | |||||||
| Number | Common Stock Amount | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Treasury Stock Amount | Deficit | Total Capital Deficit | |
| Balance, January 1, 2011 | 11,473 | $ 91,527 | $ 1,971 | $ 989 | $ (81) | $ (94,527) | $ (121) |
| Exercise of ordinary share options | 255 | 1,720 | — | — | — | — | 1,720 |
| Share based compensation | 24 | 613 | 168 | — | — | — | 781 |
| Purchase of treasury stock | (916) | — | 1,256 | — | (18,794) | — | (17,538) |
| Retirement of treasury stock | — | (18,875) | — | — | 18,875 | — | — |
| Contributed services | — | — | 56 | — | — | — | 56 |
| Unrealized loss on marketable securities | — | — | — | (2,020) | — | — | (2,020) |
| Adjustment of redemption value of redeemable | |||||||
| ordinary shares | — | — | 640 | — | — | — | 640 |
| Net income | — | — | — | — | — | 8,869 | 8,869 |
| Balance, September 30, 2011 | 10,836 | $ 74,985 | $ 4,091 | $ (1,031) | $ — | $ (85,658) | $ (7,613) |
| MAGICJACK VOCALTEC LTD AND SUBSIDIARIES | ||
| CONSOLIDATED STATEMENT OF CASH FLOWS INFORMATION | ||
| (in thousands) | ||
| Nine Months Ended September 30, | ||
| 2010 | 2011 | |
| Cash flows from operating activities: | (Unaudited) | (Unaudited) |
| Net (loss) income | $ (1,019) | $ 8,869 |
| Adjustments to reconcile net (loss) income to | ||
| net cash provided by operating activities: | ||
| Provision for doubtful accounts and billing adjustments | 3,209 | 6,998 |
| Stock-based compensation | 5,105 | 597 |
| Depreciation and amortization | 2,127 | 3,136 |
| Deferred income tax provision | — | 70 |
| Interest expense – non-cash | 85 | 158 |
| Realized loss (gain) on sale of securities | 437 | (500) |
| Gain on extinguishment of debt | (234) | — |
| Contributed services | — | 56 |
| Decrease (increase) in operating assets: | ||
| Accounts receivable | (6,251) | (11,083) |
| Inventories | 506 | (5,056) |
| Deferred costs | 1,197 | 1,582 |
| Deposits and other current assets | 1,443 | (425) |
| Deposits and other non-current assets | (644) | 571 |
| Increase (decrease) in operating liabilities: | ||
| Accounts payable | (2,023) | 1,203 |
| Accrued expenses and other current liabilities | (1,668) | (1,256) |
| Accrued bonuses | — | (1,000) |
| Deferred revenue | 13,055 | 3,456 |
| Other non-current liabilities | 181 | (66) |
| Net cash provided by operating activities | 15,506 | 7,310 |
| Cash flows from investing activities: | ||
| Purchase of marketable securities | (37,584) | (12,780) |
| Sales of marketable securities | 32,147 | 8,223 |
| Purchases to cover short investment positions | — | (15,917) |
| Sales of short investment positions | — | 13,768 |
| Purchases of property and equipment | (961) | (815) |
| Merger with Vocaltec | 7,777 | — |
| Acquisition of other intangible assets | (37) | (1,518) |
| Net cash provided by (used in) investing activities | 1,342 | (9,039) |
| Cash flows from financing activities: | ||
| Repurchase of ordinary shares to settle | ||
| bonus withholding liability | (3,981) | — |
| Purchase of treasury stock | (81) | (17,538) |
| Repayment of debt | (4,766) | — |
| Proceeds from exercise of ordinary share options | 28 | 1,720 |
| Net cash used in financing activities | (8,800) | (15,818) |
| Net increase (decrease) in cash and cash equivalents | 8,048 | (17,547) |
| Cash and cash equivalents, beginning of period | 13,335 | 28,628 |
| Cash and cash equivalents, end of period | $ 21,383 | $ 11,081 |
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this press release, including statements about our projected revenues, cash flows, strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. These factors include, among other things: changes to our business resulting from increased competition; any operational or cultural difficulties associated with the integration of the businesses of VocalTec and YMax; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the merger; unexpected costs, charges or expenses resulting from the merger; the ability of the combined company to achieve the estimated potential synergies or the longer time it may take, and increased costs required, to achieve those synergies; our ability to develop, introduce and market innovative products, services and applications; our customer turnover rate and our customer acceptance rate; changes in general economic, business, political and regulatory conditions; availability and costs associated with operating our network; potential liability resulting from pending or future litigation, or from changes in the laws, regulations or policies; the degree of legal protection afforded to our products; changes in the composition or restructuring of us or our subsidiaries and the successful completion of acquisitions, divestitures and joint venture activities; and the various other factors discussed in the “Risk Factors” section of the Forms 6-K and 20-F filed with the Securities and Exchange Commission. Such factors, among others, could have a material adverse effect upon our business, results of operations and financial condition. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
magicJack(R) is a registered trademark of magicJack VocalTec Ltd. All other product or company names mentioned are the property of their respective owners.
About magicJack VocalTec Ltd.
magicJack VocalTec Ltd. (Nasdaq:CALL – News), the inventor of VoIP including the softphone and magicJack, has the goal of becoming the leading international provider of global voice over many platforms. The company has achieved sales of over eight million of the easy-to-use, award-winning magicJack since the device’s launch in 2008, and has the use of over 30 patents, some dating to when the company invented VoIP. It is the largest reaching CLEC (Competitive Local Exchange Carrier) in the United States in terms of area codes available and certification in number of states, and the network has historically had uptime of over 99.99 percent.
The magicJack VocalTec Ltd. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10116
Contact:
Michael Tribolet Investor Relations 201.301.5604 mt@magicjack.com
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