Magic Software Enterprises (MGIC) Q2 2025 Earnings Call August 13, 2025 10:30 AM ET Speaker0Ladies and gentlemen, thank you for standing by. Welcome to the Magic Software Enterprises twenty twenty five Second Quarter Financial Results Conference Call. Magic's second quarter twenty twenty five earnings release was issued before the market opened this morning, and it has been posted on the company's website at www.magicsoftware.com. At this time, all participants are in a listen only mode. A brief question an ...

OR YEHUDA, Israel, Aug. 13, 2025 (GLOBE NEWSWIRE) -- Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC) (“the Company”), a global provider of IT consulting services and end-to-end integration and application development platforms solutions, announced today its financial results for the second quarter and first half ended June 30, 2025. Summary Results for the Second Quarter 2025 (USD in millions, except per share data) GAAP Non-GAAP <td colspan="3" style="border-right: solid black 1pt ; ...

Core Viewpoint - MGIC Investment Corporation received upgrades from Moody's Ratings, reflecting its strong performance and financial stability [1][2]. Group 1: Ratings Upgrade - Moody's upgraded MGIC's senior unsecured debt rating to Baa2 from Baa3 [1]. - The insurance financial strength rating of MGIC's principal operating subsidiary, Mortgage Guaranty Insurance Corporation, was upgraded to A2 from A3 [1]. - The outlook for both ratings is stable [1]. Group 2: Rationale for Upgrade - The upgrades were based on MGIC's consistent performance, good net capital generation, and robust profitability and capital adequacy [2]. Group 3: Company Positioning - The CEO of MGIC expressed satisfaction with the upgrades, highlighting the company's market leadership and disciplined approach [3]. - MGIC aims to continue executing its business strategies and creating long-term value for stakeholders [3].

Key Takeaways MTG reported Q2 operating net income of 82 cents per share, up 6.5% year over year.New insurance written rose 21.5% year over year to $16.4 billion.Primary delinquency rose 4.6% year over year to 24,444 loans.Shares of MGIC Investment Corporation (MTG) gained 2.3% in the last three trading session as the insurer’s bottom line beat expectations. MTG reported second-quarter 2025 operating net income per share of 82 cents, which beat the Zacks Consensus Estimate by 17.1%. Moreover, the bottom lin ...

Shares of MGIC Investment Corp ( MTG ) have been a modest performer over the past year, gaining 2%. After a strong run, the stock has pulled back over the past month as concerns have intensified around a slowing in theOver fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific stock or have a question for an article, just let me know!Analyst’s Disclosur ...

Company Announcement - MGIC Investment Corporation plans to release its second quarter 2025 financial results after the market closes on July 30, 2025 [1] - A conference call/webcast is scheduled for 9:30 a.m. Eastern Time on July 31, 2025, to discuss the results for the quarter ended June 30, 2025 [1] Participation Details - Individuals interested in joining the conference call should register to receive the dial-in number and unique PIN [2] - It is recommended to join the call at least 10 minutes before it begins, and the call will also be available via webcast on the Company's Investor website [2] Company Overview - Mortgage Guaranty Insurance Corporation (MGIC) is the principal subsidiary of MGIC Investment Corporation, serving lenders across the United States [3] - MGIC helps families achieve homeownership by providing affordable low-down-payment mortgages through private mortgage insurance [3]

Financial Data and Key Metrics Changes - Revenue in Q1 2025 reached an all-time high of $147.3 million, representing a 12.7% increase from Q1 2024 [5] - Non-GAAP gross margin for Q1 2025 was 28.5%, down from 29.3% in the same period last year [10][11] - Non-GAAP net income attributed to controlling interest increased by 8.3% to $12.2 million, or $0.25 per fully diluted share, compared to $11.3 million, or $0.23 per share in Q1 2024 [13] Business Line Data and Key Metrics Changes - Revenue from Israeli operations amounted to $69.9 million, up by 17.7% compared to $59.3 million in the same period last year, accounting for 47% of overall quarterly revenue [10] - North American operations increased by approximately 11.1% due to the acquisition of Theory Inc, while excluding this acquisition, revenues remained stable [5][9] Market Data and Key Metrics Changes - The U.S. market has shown signs of recovery, with existing customers beginning to increase their engagement, indicating a positive trend for future growth [6][22] - The company noted that the second quarter of 2025 will have approximately 4.5 fewer billable days compared to Q1, which may temporarily impact operational activity [17] Company Strategy and Development Direction - The company is focusing on AI, low code, and no code solutions, aiming to capitalize on the growing demand for digital transformation services [7][8] - A proposed merger with Matrix IT is expected to enhance capabilities and market presence, creating a more diversified global IT service provider [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand across markets and reiterated full-year 2025 revenue guidance in the range of $593 million to $603 million, reflecting a year-over-year growth of 7.3% to 9.1% [17] - The management acknowledged the temporary headwinds due to fewer billable days in Q2 but remains optimistic about the overall growth trajectory [17][18] Other Important Information - Cash flow from operating activities for Q1 2025 was $14.9 million, down from $27.7 million in the same period last year, primarily due to increased investment in working capital [14][15] - The company paid a cash dividend of $16.1 million or $0.327 per share for the second half of 2024, accounting for 75% of distributable profits [14] Q&A Session Summary Question: Comments on momentum in the U.S. market - Management noted improvements from existing customers and a positive trend in deal flow, indicating a potential for expansion in the second half of the year [22][23] Question: Operating margin lower than historical levels - The decrease in operating margin is attributed to the timing of software license renewals, which are expected to improve in the latter half of 2025 [24][25]

Financial Data and Key Metrics Changes - Revenue in Q1 2025 reached an all-time record of $147.3 million, up approximately 12.7% from Q1 2024 [5] - Non-GAAP gross margin for Q1 2025 was 28.5%, compared to 29.3% in the same period last year [11] - Non-GAAP net income for Q1 2025 increased by 8.3% to $12.2 million, or $0.25 per fully diluted share, compared to $11.3 million, or $0.23 per share in Q1 2024 [14] Business Line Data and Key Metrics Changes - Revenue from Israeli operations amounted to $69.9 million, up by 17.7% compared to $59.3 million in the same period last year, accounting for 47% of overall quarterly revenue [11] - North American operations increased by approximately 11.1% due to the acquisition of Theory Inc, while excluding this acquisition, revenues remained stable [5][10] Market Data and Key Metrics Changes - The U.S. market has not fully recovered, but there are indications of positive momentum driven by economic improvement [6] - The company has around 400 customers in the U.S. market, with improvements noted among larger customers contributing significantly to business [23] Company Strategy and Development Direction - The company is focusing on AI, low code, no code, and service offerings to meet customer demands for automation and digital transformation [7] - A proposed merger with Matrix IT is expected to enhance capabilities and broaden the customer base, creating a more resilient global IT service provider [19][20] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing demand across markets and reiterated full-year 2025 revenue guidance in the range of $593 million to $603 million, reflecting anticipated year-over-year growth of 7.3% to 9.1% [17][18] - The second quarter is expected to face temporary headwinds due to fewer billable days, which may impact operational activity [18][19] Other Important Information - Cash flow from operating activities for Q1 2025 was $14.9 million, down from $27.7 million in the same period of 2024, primarily due to increased investment in working capital [15][16] - The company paid a cash dividend of $16.1 million or $0.327 per share for the second half of 2024, accounting for 75% of distributable profits [15] Q&A Session Summary Question: Comments on momentum in the U.S. market - Management noted improvements from existing customers, particularly larger ones, indicating a positive sign for continued expansion in the second half of the year [22][23] Question: Operating margin lower than historically - Management explained that the lower operating margin is due to the timing of software license renewals, which are more concentrated in the latter half of the year compared to the previous year [24][25]

Core Viewpoint - Magic Software Enterprises Ltd. reported strong financial results for Q1 2025, indicating growth in revenues and net income, driven by strategic initiatives and demand for digital and cloud transformation solutions [6][8]. Financial Performance - Revenues for Q1 2025 increased by 12.7% to $147.3 million, compared to $130.7 million in Q1 2024 [2][8]. - Gross profit rose by 10.7% to $40.6 million, with a gross margin of 27.6%, slightly down from 28.1% in the previous year [2][8]. - Operating income increased by 9.1% to $15.7 million, with an operating margin of 10.7%, down from 11.0% [2][8]. - Net income attributable to shareholders grew by 7.7% to $9.5 million, or $0.19 per diluted share, compared to $8.8 million, or $0.18 per diluted share, in the same period last year [2][8]. - Non-GAAP net income attributable to shareholders increased by 8.3% to $12.2 million, or $0.25 per diluted share [2][8]. Cash Flow and Guidance - Cash flow from operating activities for Q1 2025 was $14.9 million, down from $27.7 million in Q1 2024 [8]. - As of March 31, 2025, the company had cash, cash equivalents, and short and long-term bank deposits totaling $105.0 million [8]. - The company reiterated its 2025 annual revenue guidance of between $593 million and $603 million, reflecting an annual growth of 7.3% to 9.1% compared to the prior year [8]. Market and Strategic Insights - The CEO highlighted strong momentum in the Israeli market and early signs of recovery in the U.S. market, with robust demand for digital, AI, and cloud transformation solutions [6]. - The company is focused on strategic growth initiatives and has successfully executed agreements with both new and existing customers [6].

Group 1 - Magic Software Enterprises Ltd. filed its annual report on Form 20-F for the fiscal year ended December 31, 2024 with the U.S. Securities and Exchange Commission on May 14, 2025 [1] - The annual report includes audited financial statements for 2024 and is accessible on the SEC's website and the company's investor relations website [1] - The company offers to deliver a hard copy of its 2024 annual report, including complete audited financial statements, free of charge to shareholders upon request [2] Group 2 - Magic Software Enterprises is a global provider of end-to-end integration and application development platforms solutions and IT consulting services [3]