MIND CTI Reports Second Quarter 2019 Results

 

Yoqneam, Israel, August 12, 2019 MIND C.T.I. LTD. – (NasdaqGM:MNDO), a leading provider of convergent 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 second quarter ended June 30, 2019.

The following will summarize our major achievements in the second quarter of 2019 as well as our business. The financial results can be found in the Company News section of our website at http://www.mindcti.com/company/news/ and in our Form 6-K.

 

Financial Highlights
  • Revenues were $6.0 million, a 32.7% increase when compared with $4.6 in the second quarter of 2018, with the increase attributed to the acquisition of Message Mobile GmbH in March 2019, which generated revenues of approximately $1.9 million during the quarter.
  • Operating income was $1.0 million, or 17.2% of total revenues, compared with $1.3 million, or 28.4% of total revenues in the second quarter of 2018, with the decrease in operating income margin primarily reflecting the lower margins in the acquired business.
  • Net income was $1.0 million, or $0.05 per share, compared with $1.2 million, or $0.06 per share in the second quarter of 2018.
  • Cash flow from operating activities in the quarter was $1.1 million, compared with $0.9 million in the second quarter of 2018.

 

Six Month Financial Highlights
  • Revenues were $10.5 million, compared with $9.1 million in the first six months of 2018.
  • Operating income was $2.5 million, or 24.0% of total revenues, compared with $2.6 million or 28.1% of total revenues in the first six months of 2018.
  • Net income was $2.5 million, or $0.13 per share, compared with $2.3 million or $0.12 per share in the first six months of 2018.
  • Cash flow from operating activities in the first six months of 2019 was $3.4 million, compared with $2.3 million in the first six months of 2018.

As of June 30, 2019, we had 229 employees in our Romania, Israel, Germany and U.S. offices, compared with 216 as of June 30, 2018.

Monica Iancu, MIND CTI CEO, commented: “The financial results reflect the operating activities inclusive of the enterprise messaging solutions acquisition for the full second quarter. We continue to be challenged by the shrinking relevant markets and strong competition in both our billing and our enterprise solutions, as previously announced multiple times. We started to experience the expected continuous negative impact and we continue making the necessary adjustments to our cost structure. Revenue-wise we see the visible impact of the acquisition, while operating margins in the enterprise messaging space are much lower than in our traditional business. As previously mentioned, we expect to focus in the next few quarters on the integration of Message Mobile and on exploring its potential growth, including through additional acquisitions, while striving to find ways to increase margins in this field. At the same time we continue our planned investments aimed at responding to market needs and continue with our dividend policy.”

 

Financial Income and Cash Position

Our cash position, including short and long-term deposits and marketable securities, was $12.2 million as of June 30, 2019, compared with $14.1 million as of June 30, 2018. The decrease is primarily attributed to the $2.25 million used in the Message Mobile acquisition.

As previously announced, the Board declared on March 4, 2019 a cash dividend of $0.26 per share before withholding tax. The record date was March 18, 2019 and the payment date was March 28, 2019. Tax was withheld at a rate of 20%.

The dividend declared and distributed was approximately $5 million – approximately $4 million was paid to the shareholders in March 2019 and approximately $1 million was paid for the withholding tax to the Israel Tax Authority in April 2019, similar to the process in 2018.

 

Revenue Distribution for Q2 2019

Revenues in the Americas represented 50%, revenues in Europe represented 43% (including the Message Mobile revenues in Germany that represented 32%) and revenues in the rest of the world represented 7% of our total revenues.

Revenues from customer care and billing software totaled $3.3 million, or 55% of total revenues, revenues from enterprise messaging and payment solutions were $1.9 million, or 32% of total revenues, and revenues from enterprise call accounting software totaled $0.8 million, or 13% of total revenues.

Revenues from licenses were $0.4 million, or 7% of total revenues, while revenues from maintenance and additional services were $5.6 million, or 93% of total revenues.

 

Acquisition Update

As previously announced, MIND acquired Message Mobile GmbH, a leading provider of enterprise messaging, communication and payment solutions, based in Lüneburg, Germany with more than 15 years’ experience in the mobile industry. Its messaging platform enables enterprises to easily communicate with clients and partners via text / SMS, voice and instant messaging services like WhatsApp, Facebook Messenger and Telegram. Message Mobile also offers mobile payment solutions that use phone bill charging for a wide range of applications such as mobile parking payment.

The financial results reflect the operating activities inclusive of the acquisition as from April 1, 2019.

 

AGM Update

The company held its Annual General Meeting of Shareholders on May 26, 2019 and all the proposed resolutions were approved.

 

MIND C.T.I. LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

Three Months Six Months
Ended June 30, Ended June 30,
2019 2018 2019 2018
Unaudited
U.S. dollars in thousands (except per share data)
Revenues $ 6,044 $ 4,555 $ 10,505 $ 9,097
Cost of revenues 3,189 1,533 4,400 3,293
Gross profit 2,855 3,022 6,105 5,804
Research and development expenses 1,051 873 1,990 1,710
Selling and marketing expenses 243 420 548 725
General and administrative expenses 524 434 1,047 817
Operating income 1,037 1,295 2,520 2,552
Financial income (expenses), net 136 (24 ) 274 (16 )
Income before taxes on income 1,173 1,271 2,794 2,536
Taxes on income 126 111 253 214
Net income $ 1,047 $ 1,160 $ 2,541 $ 2,322
Earnings per ordinary share – basic and diluted $ 0.05 $ 0.06 $ 0.13 $ 0.12
Weighted average number of shares used  in computation of earnings per share – in thousands:
Basic 19,818 19,317 19,649 19,326
Diluted 19,999 19,557 19,870 19,573

MIND C.T.I. LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, December 31,
2019 2018
Unaudited Audited
U.S. dollars in thousands
Assets
CURRENT ASSETS:
Cash and cash equivalents $ 3,471 $ 2,739
Short-term bank deposits 6,279 8,714
Marketable securities 2,315 4,352
Accounts receivable, net:
Trade 3,464 2,130
Other 558 560
Prepaid expenses 330 209
Inventory 4 4
Total current assets 16,421 18,708
INVESTMENTS AND OTHER NON-CURRENT ASSETS:
Marketable securities – available-for-sale 124 105
Severance pay fund 1,574 1,439
Deferred income taxes 34 34
Long-term bank deposits 98
RIGHT-OF-USE ASSETS, net of accumulated depreciation 842
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization
157 164
GOODWILL AND INTANGIBLE ASSETS, net of accumulated amortization 8,546 5,430
Total assets $ 27,698 $ 25,978
Liabilities and shareholders’ equity
CURRENT LIABILITIES :
Accounts payable and accruals:
Trade 1,835 $ 147
Other 1,541 1,501
Current maturities of lease Liabilities 320
Deferred revenues 2,426 1,788
Total current liabilities 6,122 3,436
LONG-TERM LIABILITIES :
Deferred revenues 53 43
Lease liabilities, net of current maturities 526
Employee rights upon retirement 1,682 1,517
Total liabilities 8,383 4,996
SHAREHOLDERS’ EQUITY:
Share capital 54 54
Additional paid-in capital 26,498 26,404
Accumulated other comprehensive loss (875 ) (877 )
Treasury shares (758 ) (1,515 )
Accumulated deficit (5,604 ) (3,084 )
Total shareholders’ equity 19,315 20,982
Total liabilities and shareholders’ equity $ 27,698 $ 25,978

MIND C.T.I. LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

Three Months Six Months
Ended June 30, Ended June 30,
2019 2018 2019 2018
Unaudited
U.S. dollars in thousands
Cash flows from operating activities:
Net income $ 1,047 $ 1,160 $ 2,541 $ 2,322
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 35 20 48 44
Accrued severance pay 71 27 143 (7 )
Deferred income taxes, net (1 )
Financial income from available-for-sale securities (5 ) (1 ) (19 )
Unrealized (loss) gain on marketable securities, net (39 ) 11 (78 ) 35
Employees share-based compensation expenses 47 50 94 101
Financial expenses in respect of lease liabilities (30 ) (15 )
Changes in operating asset and liability items:
Decrease (increase) in accounts receivable:
Trade (426 ) 333 (51 ) 356
Other 161 37 167 129
Decrease (increase)  in
prepaid expenses
294 (97 ) (121 ) (185 )
Increase (decrease) in accounts payable and accruals:
Trade (104 ) (196 ) 396 37
Other (156 ) (48 ) (325 ) 519
Change in operating lease liability 7 4
Decrease (increase) in deferred revenues 245 (354 ) 637 (1,072 )
Net cash provided by operating activities 1,147 942 3,421 2,278
Cash flows from investing activities:
Purchase of property and equipment (11 ) (3 ) (12 ) (34 )
Severance pay funds (58 ) (25 ) (113 ) 21
Proceeds from  marketable securities 536 410 2,213 688
Acquisition of a subsidiary (2,215 )
Proceeds from (investment in) short-term bank deposits (285 ) 2,435 2,025
Net cash provided by investing activities 182 382 2,308 2,700
Cash flows from financing activities:
Employee stock options exercised and paid 1 39
Dividend paid (1,012 ) (1,184 ) (5,061 ) (5,799 )
Net cash used in financing activities (1,012 ) (1,183 ) (5,061 ) (5,760 )
Increase (decrease) in cash and cash equivalents 317 142 668 (781 )
Balance
of cash and cash equivalents at beginning of period
3,154 4,091 *2,803 5,014
Balance of cash and cash equivalents at end of period $ 3,471 $ 4,233 $ 3,471 $ 4,233

* 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 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
investor@mindcti.com