Fourth Quarter Revenues Increased by 26% Year-Over-Year to $198.3 Million; Non-GAAP Net Income for the Fourth Quarter Increased 83% to $10.0 Million
Or Yehuda, Israel, March 14, 2013 – Formula Systems (1985) Ltd. (NASDAQ: FORTY) a leading provider of software consulting services, computer-based business solutions, and proprietary software products, today announced its results for the fourth quarter and full year of 2012.
Financial Highlights for the Year Ended December 31, 2012
- Revenues for the year ended December 31, 2012, increased 16% to $744.7 million compared to $640.6 million in the year ended December 31, 2011.
- Operating income for the year ended December 31, 2012, increased 15% to $57.0 million compared to $49.5 million in the year ended December 31, 2011. Non-GAAP operating income for the year ended December 31, 2012, increased 29% to $72.8 million compared to $56.4 million in the year ended December 31, 2011.
- Net income for the year ended December 31, 2012, increased 40% to $24.0 million, or $1.72 per fully diluted share, compared to $17.2 million, or $1.3 per fully diluted share, in the year ended December 31, 2011, excluding income of $25.8 million recorded in the year ended December 31, 2011 in connection with the acquisition by Sapiens International Corporation N.V. of IDIT I.D.I Technologies Ltd and FIS Software Ltd. Non-GAAP net income for the year ended December 31, 2012, increased 49% to $32.0 million compared to $21.6 million in the year ended December 31, 2011, excluding $25.8 million recorded in the year ended December 31, 2011 in connection with the foregoing acquisition by Sapiens.
- Consolidated cash and short term and long term investments in marketable securities totaled approximately $126.4 million as of December 31, 2012.
- Total equity on December 31, 2012 was $468.5 million (representing 53% of the total balance sheet).
Financial Highlights for the Fourth Quarter Ended December 31, 2012
- Revenues for the fourth quarter ended December 31, 2012, increased 26% to $198.3 million compared to $157.3 million in the same period of 2011.
- Operating income for the fourth quarter ended December 31, 2012, increased 42% to $15.1 million, compared to $10.7 million in the same period of 2011. Non-GAAP operating income for the fourth quarter ended December 31, 2012, increased 55% to $20.3 million, compared to $13.1 million in the same period of 2011;
- Net income for the fourth quarter ended December 31, 2012, increased 82% to $7.5 million, or $0.53 per fully diluted share, compared to $4.1 million, or $0.30 per fully diluted share, in the same period of 2011. Non-GAAP net income for the fourth quarter ended December 31, 2012, increased 83% to $10.0 million compared to $5.5 million in the same period of 2011.
Comments of Management
Commenting on the results, Guy Bernstein, CEO of Formula Systems, said, “We are very pleased with our 2012 fourth quarter and full year results, during which all of our businesses grew in both their top and bottom lines accompanied with strong cash flow from their ongoing operations. Looking at 2012, Sapiens launched its newest product suit and its new innovative Decision management solution designated to top tier financial institutions, continued closing new deals with tier one customers in its target markets in North America, UK, Europe and APAC and finished the year scoring record high revenue and profit. Magic, with its powerful and versatile enterprise-grade application development and integration solutions continued to further enhance its offering by strengthening its relationships with partners and vendors in the enterprise mobility and enterprise software ecosystems, like Samsung, SAP, Salesforce.com, Oracle JDE,IBM and Microsoft SharePoint. Matrix, despite the challenging economic climate and increased pressure on margins, showed growth from both new and existing customers, continuing the expansion of its offerings in fields such as information security, fraud risk and fraud prevention solutions, allowing it to extend its services to customers outside of Israel.”
“Looking forward, We believe that we are well positioned to continue our growth track in 2013” concluded Bernstein.
Non-GAAP Financial Measures
This release includes non-GAAP operating income, net income, basic and diluted earnings per share and other non-GAAP financial measures. These non-GAAP measures exclude the following items:
- Amortization of intangible assets derived from acquisitions;
- Research and development capitalization and related amortization;
- Share-based compensation; and
- Related tax effect.
Formula’s management believes that the purpose of such adjustments is to give an indication of Formula’s performance exclusive of non-cash charges and other items that are considered by management to be outside of Formula's core operating results.
This non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. Formula believes that non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with Formula’s results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Formula’s results of operations in conjunction with the corresponding GAAP measures. Please refer to the Reconciliation of Selected Financial Metrics from GAAP to Non-GAAP tables below.
Formula Systems (1985) Ltd. is a global information technology company principally engaged, through its subsidiaries and affiliates, in providing software consulting services, developing proprietary software products, and providing computer-based business solutions.
For more information, visit www.formulasystems.com.
Formula Systems (1985) Ltd.
Except for any historical information contained herein, matters discussed in this press release might include forward-looking statements that involve a number of risks and uncertainties. Regarding any financial statements, actual results might vary significantly based upon a number of factors including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product conditions, both locally and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in Formula's most recent annual report and other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and the Company undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.