Majesco (MJCO) Reports Q3 EPS of $0.05, Revenues Beat

Majesco (NYSE: MJCO) reported Q3 EPS of $0.05, versus ($0.08) reported last year. Revenue for the quarter came in at $35.4 million versus the consensus estimate of $32.95 million.

“Our third quarter financial results reflect the growing success of our cloud strategy and the solutions to help insurers adapt to a new era,” stated Adam Elster, Majesco’s CEO. “The number of cloud customers continues to grow driving a 51% increase in cloud revenues year-over-year. This clearly demonstrates Majesco’s ability to rapidly deliver ‘time to value’ to our customers while providing a modern platform for insurers to innovate new products and business models. In addition, higher cloud revenues and improved delivery efficiencies are driving better margins as demonstrated in the third quarter.”

“We are excited to welcome the entire Exaxe team to the Majesco family, and even more excited to introduce this technology to Majesco’s growing customer base and prospects across Europe.”

Mr. Elster concluded, “I continue to be encouraged by Majesco’s products, people and customer focus which are well aligned with the opportunities and trends of the insurance market. We feel this is best validated by our recent customer wins, increased backlog, and pipeline growth. I am pleased with the progress we are making and believe fiscal 2019 is on track to be a strong year for the company.”

Financial Highlights

For the third quarter ended December 31, 2018

• Revenue for the third quarter ended December 31, 2018, was $35.4 million up 11.4% as compared to $31.8 million for the third quarter ended December 31, 2017. The increase in revenue was primarily due to higher mix of cloud business and additional revenuefrom the acquisition of Exaxe Holdings consummated during the quarter.
• Gross profit was $17.5 million (49.3% of revenue) for the third quarter ended December 31, 2018, compared to $14.9 million (46.9% of revenue) for the quarter ended December 31, 2017. The increase in margin was primarily due to a higher mix of cloud business, higher proportion of recurring revenues and improved delivery efficiencies.
• Research and development (R&D) expenses were $4.8 million (13.6% of revenue) during the third quarter ended December 31, 2018, as compared to $4.5 million (14.3% of revenue) during the quarter ended December 31, 2017. The company continues to invest in R&D focused on cloud and digital solutions.
• Selling, General and Administrative (SG&A) expenses were $9.7 million (27.4% of revenue) during the third quarter ended December 31, 2018, as compared to $10.3 million (32.3% of revenue) for the quarter ended December 31, 2017. The 490-basis point reduction in SG&A as a percent of revenue reflects improved operating leverage. Further, absolute SG&A expenses during the third quarter ended December 31, 2018 were lower as the customary Convergence Conference held in the third quarter every fiscal has been planned for April 2019.
• Adjusted EBITDA for the third quarter ended December 31, 2018 was $4.9 million (13.9% of revenue) as compared to Adjusted EBITDA of $2.2 million (6.8% of revenue) for the quarter ended December 31, 2017. The Adjusted EBITDA margins also improved sequentially by 79 basis points as compared to the second quarter ended September 30, 2018.
• Net income for the third quarter ended December 31, 2018 was $1.8 million, or $0.05 per diluted share as compared to a net loss of $3.1 million, or $(0.08) per share, for the quarter ended December 31, 2017. Net income was significantly higher due to improved revenue and profitability performance.

For earnings history and earnings-related data on Majesco (MJCO) click here.

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