MIND CTI Reports Second Quarter 2018 Results
Yoqneam, Israel, July 26, 2018 MIND C.T.I. LTD. – (NasdaqGM:MNDO), a leading provider of convergent end-to-end prepaid/postpaid billing and customer care product based solutions for service providers as well as unified communications analytics and call accounting solutions for enterprises, today announced results for its second quarter ended June 30, 2018.
The following will summarize our major achievements in the second quarter of 2018, as well as our business. Full financial results can be found in the Company News section of our website at https://mindcti.com/company/news/ and in our Form 6-K.
- Revenues were $4.6 million, similar to $4.6 million in the second quarter of 2017 and similar to $4.5 million in the first quarter of 2018.
- Operating income was $1.3 million, or 28% of total revenues, compared to $1.2 million or 27% of total revenues in the second quarter of 2017 and similar to $1.3 million, or 28% of total revenues in the first quarter of 2018.
- Net income was $1.2 million, or $0.06 per share, compared to $1.9 million (Q2 2017 net income includes a one-time net capital gain of $0.9 million from the sale of a subsidiary), or $0.10 per share in the second quarter of 2017 and compared to $1.2 million, or $0.06 per share in the first quarter of 2018.
- Multiple follow-on orders, including 3 significant ones.
- Cash flow from operating activities was $0.9 million, compared to a negative $0.3 million in the second quarter of 2017 and compared to $1.3 million in the first quarter of 2018.
Six Month Financial Highlights
- Revenues were $9.1 million, compared to $9.0 million in the first six months of 2017.
- Operating income was $2.6 million, or 28% of total revenues, compared to $2.2 million or 24% of total revenues in the first six months of 2017.
- Net income was $2.3 million, or $0.12 per share, compared to $2.8 million (first half of 2017 net income includes a one-time net capital gain of $0.9 million from the sale of a subsidiary), or $0.14 per share in the first six months of 2017.
- Cash flow from operating activities in the first six months of 2018 was $2.3 million, compared to $0.3 million in the first six months of 2017.
As of June 30, 2018, we had 216 employees, compared with 248 as of June 30, 2017 and 228 as of March 31, 2018.
Monica Iancu, MIND CTI CEO, commented: “We are pleased with the Q2 results and the strong flow of follow-on orders. At the same time, we continue to be challenged by the markets and by intense competition in the areas we are active in. As previously mentioned, during our over twenty years of operation, we have a few times experienced challenging periods and with long-term planning ahead, we succeeded to maintain profitability and create new opportunities. Thanks to our significant recurring revenues, including a continuous stream of multiple follow-on orders and the success of our new platform, we are able to compensate in 2018 for the loss of one long-term major SaaS customer and some small customers under maintenance agreements that decided to exit their business, losses that we have already announced in 2017. We continue to enhance our offering as well as increase our marketing efforts.”
Financial Income and Cash Position
In the first half of 2018, we encountered a financial expense due to calculated valuations of cash and trade receivable balances in currencies other than the U.S. dollar and that are dependent on exchange rates. In the first half of 2017, we encountered significant financial income based on the same reasons. Fluctuations in our financial income are the result of interest we receive on our bank deposits and marketable securities, but mainly from the significant oscillation of exchange rates between the U.S. dollar and other currencies with which we operate.
As previously announced, the Board declared on February 22, 2018 a cash dividend of $0.30 per share before withholding tax. The record date was March 8, 2018 and the payment date was March 22, 2018. Tax was withheld at a rate of 20%.
The dividend declared and distributed was approximately $5.8 million – approximately $4.6 million was paid to the shareholders in March 2018 and approximately $1.2 million was paid for the withholding tax to the Israeli Tax authority in April 2018.
Our cash position, including short and long-term deposits and available-for-sale securities, was $14.1 million as of June 30, 2018, compared to $15.3 million as of June 30, 2017.
Revenue Distribution for Q2 2018
Revenues in the Americas represented 76%, revenues in Europe represented 16% and revenues in the rest of the world represented 8% of our total revenues.
Revenues from customer care and billing software totaled $3.9 million, or 85% of total revenues, while revenues from enterprise call accounting software totaled $0.6 million, or 15% of total revenues.
Revenues from licenses were $0.5 million, or 10% of total revenues, while revenues from maintenance and additional services were $4.0 million, or 90% of total revenues.
Similar to previous quarters, our valued customers showed their appreciation for our technology and support. These valued customers continue to invest in upgrades to grow their businesses and improve processes resulting in follow-on orders.
This quarter’s follow-on orders include a significant upgrade to our MINDBill version 8 that will be implemented within four to six quarters, new provisioning and mediation projects, maintenance extensions, as well as specific customizations and additional professional services.
Update on Pursuit of Acquisitions
As we previously announced, given our strong cash position and our experienced organization, we believe that we are well positioned and have the required resources to respond to market needs and at the same time focus on targeting potential acquisitions that could benefit our growth.
Lately we have reached different phases in such processes. Being cautious and focused on acquiring only at reasonable valuations and only targets that satisfy the criteria we defined: proven revenues, complementary technology, geography and expected accretion to earnings within a few quarters, we did not close any deal but we continue our pursuit.
As previously announced, MIND’s Annual General Meeting of Shareholders will be held on Tuesday, August 14, 2018 at 10:00 A.M. (Israel time), at the offices of the Company, Industrial Park, Building 7, Yoqneam 2069202, Israel.
Shareholders of record at the close of business on July 11, 2018 are entitled to vote at the Meeting. All shareholders are cordially invited to attend the Meeting in person. Proxy statements and proxy cards for use by shareholders that cannot attend the meeting in person will be sent by mail to shareholders that hold shares registered with the American Stock Transfer & Trust Company, including shares held via DTC members.
MIND C.T.I. LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|June 30,||June 30,|
dollars in thousands (except per share data)
and development expenses
and marketing expenses
and administrative expenses
disposal of a subsidiary
income (expenses) – net
taxes on income
per ordinary share:
average number of ordinary shares used in computation of earnings per ordinary share – in thousands:
MIND C.T.I. LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
|June 30,||December 31,|
|U.S. dollars in thousands|
|A s s e t s|
|Cash and cash equivalents||$||4,233||$||5,014|
|Short-term bank deposits||4,077||6,102|
|Accounts receivable, net:|
|Deferred cost of revenues||178||–|
|Total current assets||15,739||19,427|
|INVESTMENTS AND OTHER NON-CURRENT ASSETS:|
|Marketable securities – available-for-sale||524||544|
|Severance pay fund||1,540||1,642|
|Deferred income taxes||33||32|
|Long-term bank deposits||98||101|
EQUIPMENT, net of accumulated depreciation and amortization
|Liabilities and shareholders’ equity|
|CURRENT LIABILITIES :|
|Accounts payable and accruals:|
|Total current liabilities||3,807||4,506|
|LONG-TERM LIABILITIES :|
|Employee rights upon retirement||1,624||1,712|
|Total long-term liabilities||1,651||1,850|
|Additional paid-in capital||26,281||26,180|
|Accumulated other comprehensive loss||(826||)||(804||)|
|Total shareholders’ equity||18,098||21,022|
|Total liabilities and shareholders’ equity||$||23,556||$||27,378|
MIND C.T.I. LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|Three Months Ended||Six Months
|June 30,||June 30,|
|U.S. dollars in thousands|
|Cash flows from operating activities:|
|Adjustments to reconcile net
income to net cash provided by operating activities:
|Depreciation and amortization||20||24||44||52|
|Accrued severance pay||27||(134||)||(7||)||(68||)|
|Deferred income taxes, net||–||–||(1||)||–|
|Realized (gain) loss from marketable securities available-for-sale||(1||)||23||–||27|
|Unrealized gain (loss) on marketable securities, net||11||–||35||(14||)|
|Employees share-based compensation expenses||50||44||101||88|
|Gain on disposal of a subsidiary||–||(893||)||–||(893||)|
|Changes in operating asset and liability items:|
|Decrease (increase) in accounts receivable:|
|Increase in prepaid expenses and deferred cost of revenues||(97||)||(112||)||(185||)||(180||)|
|Increase (decrease) in accounts payable and accruals:|
|Decrease in deferred revenues||(354||)||(887||)||(1,072||)||(1,425||)|
|Net cash provided by (used in) operating activities||942||(271||)||2278||267|
|Cash flows from investing activities:|
|Purchase of property and equipment||(3||)||–||(34||)||(12||)|
|Severance pay funds||(25||)||139||21||91|
|Proceeds from (investment in) marketable securities||410||(1,035||)||688||(947||)|
|Proceeds from sale of marketable securities available-for-sale||–||326||–||326|
|Proceeds from (investment in) short-term bank deposits||–||(140||)||2,025||2,256|
|Proceeds from sale of subsidiary||–||–||–||1,169|
|Net cash provided by (used in) investing activities||382||(710||)||2,700||2,883|
|Cash flows from financing activities:|
|Employee stock options exercised and paid||1||–||39||53|
|Net cash used in financing activities||(1,183||)||–||(5,760||)||(6,120||)|
|Increase (decrease) in cash and cash equivalents||142||(981||)||(781||)||(2,970||)|
|Balance of cash and cash
equivalents at beginning of period
|Balance of cash and cash equivalents at end of period||$||4,233||$||6,195||$||4,233||$||6,195|
MIND CTI Ltd. is a leading provider of convergent end-to-end billing and customer care product based solutions for service providers as well as unified communications analytics and call accounting solutions for enterprises. MIND provides a complete range of billing applications for any business model (license, SaaS, managed service or complete outsourced billing service) for Wireless, Wireline, Cable, IP Services and Quad-play carriers. A global company, with over twenty years of experience in providing solutions to carriers and enterprises, MIND operates from offices in the United States, Romania and Israel.
Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995: All statements other than historical facts included in the foregoing press release regarding the Company’s business strategy are “forward-looking statements.” These statements are based on management’s beliefs and assumptions and on information currently available to management. Forward-looking statements are not guarantees of future performance, and actual results may materially differ. The forward-looking statements involve risks, uncertainties, and assumptions, including the risks discussed in the Company’s filings with the United States Securities Exchange Commission. The Company does not undertake to update any forward-looking information.
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MIND CTI Ltd.