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NEWS RELEASE www.vocaltec.com

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Total net revenues of $21.7 million, access rights renewal revenues were $12.8 million

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GAAP operating income of $4.0 million, non-GAAP adjusted EBITDA of $5.9 million

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GAAP diluted EPS of $0.15, non-GAAP diluted EPS of $0.26

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Cash and cash equivalents of $51.3 million and no debt as of September 30, 2017

 

West Palm Beach, Fla. and Netanya, Israel, November 9, 2017 – magicJack VocalTec Ltd. (Nasdaq: CALL), a leading VoIP cloud-based communications and UCaaS company, today announced financial results for the third quarter ended September 30, 2017.

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Net revenues: Total net revenues for the third quarter of 2017 were $21.7 million. Net revenues from the sales of magicJack devices were $2.6 million and access rights renewal revenues were $12.8 million, and accounted for 59% of total net revenues. Prepaid minute revenues were $1.1 million and access and wholesale charges were $0.9 million during the quarter. Broadsmart Global, Inc. contributed $2.6 million in revenues to the third quarter of 2017. Other revenue items contributed the remaining $1.6 million of total net revenues during the third of 2017.

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Operating income: GAAP operating income for the third quarter of 2017 was $4.0 million which included $1.3 million in net charges primarily related to non-recurring legal costs, a gain on mark-to-market and senior management transition expenses.

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Non-GAAP Adjusted EBITDA: Adjusted EBITDA for the third quarter of 2017 was $5.9 million.

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Net Income: GAAP net income attributable to common shareholders for the third quarter of 2017 was $2.5 million or $0.15. Non GAAP diluted net income per share based on 16.1 million weighted-average diluted ordinary shares outstanding. GAAP net income included the following items:

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$1.6 million tax-related items, which included a $0.5 million tax impact due to expiration of stock options;

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$1.1 million in costs related to the strategic process;

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$0.3 million in severance and executive management transition expenses; and

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$0.9 million gain on mark-to-market.

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Non-GAAP net income: Non-GAAP net income attributable to common shareholders for the third quarter of 2017 was $4.2 million or $0.26. Non-GAAP net income per share based on 16.1 million weighted-average diluted ordinary shares outstanding.

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Cash: As of September 30, 2017, magicJack VocalTec had cash and cash equivalents of $51.3 million and no debt. During the third quarter of 2017, the company generated $4.5 million net cash in operating activities, which reflects the impact of $2.0 million received from escrow related to the acquisition of Broadsmart Global, Inc., $1.0 million received as a result of a dispute settlement. It also includes payments for approximately $0.7 million payout for an executive sign-on bonus and compensation accrued in prior quarters, $0.3 million in severances and senior management transition costs, a $0.3 million payment related to a legal settlement accrued in a prior quarter, as well as payments of expenses associated with the strategic process.

A reconciliation of GAAP to non-GAAP measures, as well as the calculation of free cash flow has been provided in the tables included below in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Measures.”

 

NEWS RELEASE www.vocaltec.com

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As of September 30, 2017, magicJack had an estimated 2.00 million active MJ subscribers, which are defined as device users that are under an active subscription contract.

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magicJack activated approximately 85,000 subscribers during the third quarter of 2017. Activations are defined as devices that become activated on to a subscription contract during a given period.

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During the quarter ended September 30, 2017, magicJack’s average monthly churn was 2.0%.

 

magicJack VocalTec Ltd. (Nasdaq: CALL), the inventor of magicJack and a pioneer in Voice over IP (VoIP) technology and services, is a leading cloud communications company. With its easy-to-use, low cost solution for telecommunications, the Company has sold more than 11 million award-winning magicJack devices, which is now in its fifth generation, has millions of downloads of its free calling apps, and holds more than 30 technology patents.

Broadsmart, a leading hosted UCaaS (Unified Communication as a Service) provider for medium-to-large multi-location enterprise customers, is a division of magicJack VocalTec Ltd. Broadsmart has a track record of designing, provisioning and delivering complex UCaaS solutions to blue chip corporate customers on a nationwide basis. Broadsmart has expertise in servicing enterprises with hundreds-to-thousands of locations.

magicJack^® is a registered trademark of magicJack VocalTec Ltd. All other product or company names mentioned are the property of their respective owners.

Seth Potter

Investor Relations

561-749-2255

 

NEWS RELEASE www.vocaltec.com

Non-GAAP Measures

The Non-GAAP measures shown in this release exclude various items detailed further below.

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magicJack defines non-GAAP adjusted EBITDA as GAAP operating income (loss) excluding: depreciation and amortization, share-based compensation, impairment of intangible assets, asset impairment, gain on mark-to-market, transaction related expenses, proxy contest related expenses, severance and senior management transition expenses, write-down of inventory components and other items.

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magicJack defines non-GAAP net income as GAAP net income (loss) attributable to common shareholders excluding: share-based compensation, impairment of intangible assets, asset impairment, transaction related expenses, proxy contest related expenses, severance and senior management transition expenses, write-down of inventory components, other items and tax related items.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included with the financial information included in this press release. These measures are not in accordance with, or an alternative for, GAAP and may be different from non-GAAP measures used by other companies. Management believes that the presentation of non-GAAP results, when shown in conjunction with corresponding GAAP measures, provides useful information to management and investors regarding financial and business trends related to the company's results of operations. Further, management believes that these non-GAAP measures improve management's and investors' ability to compare the company's financial performance with other companies in the technology industry. Because these items vary significantly between companies, it is useful to compare results excluding these amounts as identified below.

 

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NEWS RELEASE www.vocaltec.com

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(In thousands)
(Unaudited)
		As of				As of
		30-Sep-17				31-Dec-16
ASSETS
Current Assets
Cash and cash equivalents		$	51,254			$	52,394
Investments, at fair value			369				447
Accounts receivable, net			2,521				3,171
Inventories, net			2,047				4,441
Deferred costs			1,933				2,319
Prepaid income taxes			2,374				527
Receivable from earnout escrow			-				2,000
Deposits and other current assets			1,267				1,970
Total current assets			61,765				67,269
Property and equipment, net			3,074				3,805
Intangible assets, net			10,877				28,854
Goodwill			32,304				47,185
Deferred tax assets			34,478				26,568
Deposits and other non-current assets			866				836
Total Assets		$	143,364			$	174,517
LIABILITIES AND CAPITAL EQUITY
Current Liabilities
Accounts payable		$	3,201			$	2,790
Income tax payable			-				1,527
Accrued expenses and other current liabilities			6,049				8,426
Deferred revenue, current portion			42,972				48,507
Total current liabilities			52,222				61,250
Deferred revenue, net of current portion			40,071				44,201
Other non-current liabilities			12,529				10,866
Total Capital Equity			38,542				58,200
Total Liabilities and Capital Equity		$	143,364			$	174,517

 

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(In thousands)
(Unaudited)		Quarter				Quarter				Nine Months				Nine Months
		Ended				Ended				Ended				Ended
		30-Sep-17				30-Sep-16				30-Sep-17				30-Sep-16
GAAP Operating income (loss)		$	3,981			$	5,428			$	(29,442	)		$	13,868
Depreciation and amortization			978				1,328				3,397				3,510
Share-based compensation			750				919				2,053				3,169
Impairment of intangible assets			-				498				31,527				498
Asset impairment			-				-				490				-
Gain on mark-to-market			(894	)			(2,000	)			(894	)			(2,000	)
Transaction related expenses			-				-				-				799
Proxy contest related expenses			-				496				1,042				496
Severance and senior management transition expenses			40				24				2,968				635
Write-down of inventory components			-				112				386				112
Other Items			1,059				221				2,954				495
Non-GAAPAdjusted EBITDA		$	5,914			$	7,026			$	14,481			$	21,582

 

 

 

 

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