MIND CTI Reports Third Quarter 2020 Results
Yoqneam, Israel, November 10, 2020 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, unified communications analytics and call accounting solutions for enterprises as well as enterprise messaging solutions, today announced results for its third quarter ended September 30, 2020.
The following will summarize our major achievements in the third quarter of 2020, 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.
Q3 2020 Financial Highlights
- Revenues were $5.9 million, compared to $5.8 million in the third quarter of 2019, with the increase attributed to the acquisition of GTX GmbH in September 2019, which generated revenues of approximately $1.0 million during the quarter.
- Operating income was $1.4 million, compared to $1.3 million in the third quarter of 2019.
- Net income was $1.4 million, or $0.07 per share, compared to $1.2 million, or $0.06 per share in the third quarter of 2019.
- Cash flow from operating activities was $1.9 million, compared to $2.0 million in the third quarter of 2019.
- New win and multiple follow-on orders
- Cash position was $14.7 million as of September 30, 2020.
Nine Months Financial Highlights
- Revenues were $17.6 million, compared to $16.0 million in the first nine months of 2019, with the increase attributed to the acquisition of GTX GmbH in September 2019, which generated revenues of approximately $2.8 million during the first nine months of 2020 and to the acquisition of Message Mobile GmbH in March 2019, which generated revenues of approximately $1.3 million during the first quarter of 2020.
- Operating income was $4.1 million, or 24% of total revenues, compared to $3.8 million, or 24% of total revenues in the first nine months of 2019.
- Net income was $4.0 million, or $0.20 per share, compared to $3.7 million, or $0.19 per share in the first nine months of 2019.
- Cash flows from operating activities in the first nine months of 2020 was $4.2 million, compared to $5.4 million in the first nine months of 2019.
Monica Iancu, MIND CTI CEO, commented: “The environment remains challenging as described in the last few years’ previous press releases. Communications service providers continue to face major challenges. Moreover, some of them are experiencing additional negative impact on revenues from reduction in tourism, associated with COVID-19. They are expected to develop new services and offer multi-play discounted bundles and at the same time they attempt to reduce their costs. While there is demand for our products and services, most processes are constantly delayed, and competition is fierce. As previously stated, during our over twenty years of operation, we have experienced challenging market conditions and we executed successfully in shifting our focus towards new opportunities.”
Impact of COVID-19
We experience the effect of the pandemic in all areas of our business, mainly due to the delays in the pace of ongoing implementation rollouts in all our lines of business, due to lockdowns and other COVID-19 related measures. Also, due to the general economic uncertainty, the majority of our customers, both enterprises and carriers, are restricting their budgets.
Revenue Distribution for Q3 2020
The Americas represented 43%, Europe represented 51% (including the Message Mobile and GTX revenues in Germany that represented 38%) and the rest of the world represented 6% of total revenues.
Customer care and billing software totaled $3.05 million, or 52% of total revenues, enterprise messaging and payment solutions were $2.25 million, or 38% of total revenues, and enterprise call accounting software totaled $ 0.6 million, or 10% of our total revenues.
Licenses totaled $0.3 million, or 6% of total revenues, while maintenance and additional services were $5.6 million, or 94% of total revenues.
Revenue Distribution for Nine Months 2020
The Americas represented 45%, Europe represented 50% (including the Message Mobile and GTX revenues in Germany that represented 37%) and the rest of the world represented 5% of total revenues.
Customer care and billing software totaled $9.1 million, or 52% of total revenues, enterprise messaging and payment solutions were $6.5 million, or 37% of total revenues, and enterprise call accounting software totaled $2 million, or 11% of our total revenues.
Licenses totaled $1.1 million, or 6% of total revenues, while maintenance and additional services were $16.5 million, or 94% of total revenues.
New Win
The new win is with an African alternative carrier that provides data services to corporates across all industries. The MINDBill solution was selected after a lengthy process based on our proven successful deployment and open architecture for interfacing with the various network elements, CRM, fulfillment and ERP. MIND will provide them the B2B billing required to achieve a competitive advantage and differentiate their brand with sophisticated rating schemes, tailor-made packages targeting specific market segments and business processes to support future market penetration. MIND BSS will facilitate the compelling needs to prevent revenue loss, to ensure that all the services are billed, to handle disputes and to provide a structured dunning process.
Message Mobile GmbH 2019 Results
As previously announced, after reviewing the revenue recognition methodology for messaging and mobile payment transactions, based on the key principal-versus-agent considerations under ASC 606, Revenues from Contract with Customers, we concluded to recognize revenues from Message Mobile’s mobile payments line of business on a “net basis” instead of a “gross basis”. Consequently, only our share in the processed transactions is recognized as revenues.
As a result of the above, our consolidated revenues for Q2 2019 were $5.7 million instead of $6.0 million (Message Mobile being $1.6 million instead of $1.9 million) and the consolidated cost of revenues were $2.9 million instead of $3.2 million (Message Mobile being $1.3 million instead of $1.6 million).
Our consolidated revenues for Q3 2019 were $5.8 million instead of $6.1 million (Message Mobile being $1.7 million instead of $2.0 million) and the consolidated cost of revenues were $2.7 million instead of $3.0 million (Message Mobile being $1.3 million instead of $1.6 million).
All the other metrics, including gross profit, operating income and cash, are unchanged from the preliminary amounts announced in 2019.
MIND C.T.I. LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months | Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| U.S. dollars in thousands (except per share data) | ||||||||||||||||
| REVENUES | $ | 5,912 | *$ | 5,780 | $ | 17,555 | *$ | 15,975 | ||||||||
| COST OF REVENUES | 2,857 | *2,658 | 8,334 | *6,748 | ||||||||||||
| GROSS PROFIT | 3,055 | 3,122 | 9,221 | 9,227 | ||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Research and development | 1,015 | 1,060 | 2,936 | 3,050 | ||||||||||||
| Selling and marketing | 185 | 320 | 859 | 868 | ||||||||||||
| General and administrative | 424 | 435 | 1,300 | 1,482 | ||||||||||||
| Total operating expenses | 1,624 | 1,815 | 5,095 | 5,400 | ||||||||||||
| OPERATING INCOME | 1,431 | 1,307 | 4,126 | 3,827 | ||||||||||||
| FINANCIAL INCOME, net |
69 | – | 195 | 274 | ||||||||||||
| INCOME BEFORE TAXES ON INCOME | 1,500 | 1,307 | 4,321 | 4,101 | ||||||||||||
| TAXES ON INCOME | 94 | 113 | 328 | 366 | ||||||||||||
| NET INCOME | $ | 1,406 | $ | 1,194 | $ | 3,993 | $ | 3,735 | ||||||||
| EARNINGS PER SHARE – basic and diluted – in U.S. dollars |
$ | 0.07 | $ | 0.06 | $ | 0.20 | $ | 0.19 | ||||||||
| WEIGHTED AVERAGE NUMBER OF SHARES USED IN COMPUTATION OF EARNINGS PER SHARE – in thousands: |
||||||||||||||||
| Basic | 19,899 | 19,821 | 19,898 | 19,707 | ||||||||||||
| Diluted | 20,111 | 20,024 | 20,109 | 19,975 | ||||||||||||
| * | See “Message Mobile GmbH 2019 Results” paragraph in the press release. |
MIND C.T.I. LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| September 30, | December 31, | |||||||
| 2020 | 2019 | |||||||
| U.S. dollars in thousands | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 7,960 | $ | 6,479 | ||||
| Short-term bank deposits | 5,100 | 6,795 | ||||||
| Marketable securities | 1,482 | 1,916 | ||||||
| Accounts receivable, net: | ||||||||
| Trade | 2,843 | 3,082 | ||||||
| Other | 609 | 577 | ||||||
| Prepaid expenses | 226 | 228 | ||||||
| Total current assets | 18,220 | 19,077 | ||||||
| INVESTMENTS AND OTHER NON-CURRENT ASSETS: | ||||||||
| Marketable securities | 129 | 129 | ||||||
| Severance pay fund | 1,707 | 1,725 | ||||||
| Deferred income taxes | 105 | 36 | ||||||
| PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization |
161 | 167 | ||||||
| RIGHT-OF-USE ASSETS, net of accumulated depreciation |
1,078 | 1,290 | ||||||
| INTANGIBLE ASSETS, net of accumulated amortization |
701 | 761 | ||||||
| GOODWILL | 8,008 | 7,910 | ||||||
| Total assets | $ | 30,109 | $ | 31,095 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accruals: | ||||||||
| Trade | $ | 2,015 | $ | 2,066 | ||||
| Other | 1,782 | 1,818 | ||||||
| Current maturities of lease liabilities | 235 | 292 | ||||||
| Deferred revenues | 1,697 | 1,892 | ||||||
| Total current liabilities | 5,729 | 6,068 | ||||||
| LONG-TERM LIABILITIES: | ||||||||
| Deferred revenues | 82 | 103 | ||||||
| Lease liabilities, net of current maturities | 868 | 983 | ||||||
| Employee rights upon retirement | 1,743 | 1,775 | ||||||
| Deferred income taxes | 211 | 230 | ||||||
| Total liabilities | 8,633 | 9,159 | ||||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Share capital | 54 | 54 | ||||||
| Additional paid-in capital | 27,220 | 27,050 | ||||||
| Accumulated other comprehensive loss | (734 | ) | (884 | ) | ||||
| Accumulated deficit | (3,862 | ) | (3,080 | ) | ||||
| Treasury shares | (1,202 | ) | (1,204 | ) | ||||
| Total shareholders’ equity | 21,476 | 21,936 | ||||||
| Total liabilities and shareholders’ equity | $ | 30,109 | $ | 31,095 | ||||
MIND C.T.I. LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(Unaudited)
| Three Months | Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| U.S. dollars in thousands | ||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
| Net income | $ | 1,406 | $ | 1,194 | $ | 3,993 | $ | 3,735 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
| Depreciation and amortization | 61 | 42 | 154 | 90 | ||||||||||||
| Accrued severance pay | 16 | 93 | 81 | 236 | ||||||||||||
| Deferred income taxes, net | (80 | ) | (9 | ) | (98 | ) | (19 | ) | ||||||||
| Unrealized gain from marketable securities, net | (9 | ) | (13 | ) | (35 | ) | (91 | ) | ||||||||
| Realized gain on sale of marketable securities, net | (18 | ) | (5 | ) | (25 | ) | (24 | ) | ||||||||
| Employees share-based compensation expenses | 58 | 53 | 171 | 147 | ||||||||||||
| Changes in operating asset and liability items: | ||||||||||||||||
| Decrease (increase) in accounts receivable: | ||||||||||||||||
| Trade | 94 | 164 | 323 | 113 | ||||||||||||
| Other | 173 | 207 | (16 | ) | 374 | |||||||||||
| Decrease (increase) in prepaid expenses: | 38 | 14 | (2 | ) | (107 | ) | ||||||||||
| Increase (decrease) in accounts payable and accruals: | ||||||||||||||||
| Trade | 10 | (52 | ) | (127 | ) | 344 | ||||||||||
| Other | 69 | 357 | (58 | ) | 27 | |||||||||||
| Change in operating lease liability | 44 | (21 | ) | 40 | (17 | ) | ||||||||||
| Decrease (increase) in deferred revenues | 2 | (4 | ) | (216 | ) | 633 | ||||||||||
| Net cash provided by operating activities | 1,864 | 2,020 | 4,185 | 5,441 | ||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
| Acquisition of a subsidiary | – | (95 | ) | – | (2,310 | ) | ||||||||||
| Purchase of property and equipment | (7 | ) | (14 | ) | (60 | ) | (26 | ) | ||||||||
| Severance pay funds | (32 | ) | (89 | ) | (95 | ) | (202 | ) | ||||||||
| Proceeds from sale of marketable securities | 502 | 224 | 494 | 2,437 | ||||||||||||
| Proceeds from (investment in) short-term bank deposits | 1,765 | (841 | ) | 1,695 | 1,594 | |||||||||||
| Net cash provided by (used in) investing activities | 2,228 | (815 | ) | 2,034 | 1,493 | |||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
| Dividend paid | – | – | (4,775 | ) | (5,061 | ) | ||||||||||
| Net cash used in financing activities | – | – | (4,775 | ) | (5,061 | ) | ||||||||||
| Translation adjustments on cash and cash equivalents | 31 | (5 | ) | 37 | (5 | ) | ||||||||||
| INCREASE IN CASH AND CASH EQUIVALENTS | 4,123 | 1,200 | 1,481 | 1,868 | ||||||||||||
| BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 3,837 | 3,471 | 6,479 | *2,803 | ||||||||||||
| BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 7,960 | $ | 4,671 | $ | 7,960 | $ | 4,671 | ||||||||
| * | Includes $2,739 cash and cash equivalents and $64 restricted cash that was presented in other receivables. |
About MIND
MIND CTI Ltd. is a leading provider of convergent end-to-end billing and customer care product-based solutions for service providers, unified communications analytics and call accounting solutions for enterprises as well as enterprise messaging solutions. 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, Germany 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 annual report and other filings with the United States Securities Exchange Commission. The Company does not undertake to update any forward-looking information.
For more information please contact:
Andrea Dray
MIND CTI Ltd.
Tel: +972-4-993-6666