Majesco US Q4 results

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Majesco Announces Fiscal 2016 Year-End Financial Results

Company Release - 5/10/2016 4:15 PM ET

Fourth Quarter Revenue up 48.8%

Fiscal 2016 Revenue up 42.9%

Year End Order Backlog up 14.1% sequentially to $71.9 Million

MORRISTOWN, N.J.--(BUSINESS WIRE)-- Majesco, a global provider of core insurance software, consulting and services for insurance business transformation, today announced its financial results for the fiscal 2016 fourth quarter and fiscal year ended March 31, 2016.

“Fiscal 2016 has created a solid foundation and path to scale our business plan with significant progress across all key performance indicators,” commented Ketan Mehta, CEO and Co-Founder. “As we have stated previously, year one of our growth journey was dedicated to investing in our business to drive order book growth and market penetration. I am pleased with our results as the investments we made in our products, sales, marketing and infrastructure, have resulted in 43% increase in revenues, 47% increase in order backlog and 17 new customer wins during the year. In addition, I am particularly encouraged by the 9.1% increase in revenue we achieved on a sequential quarter basis.

“As we enter the new fiscal year, we are focused on our customer’s implementation success, revenue growth and profitability to achieve our 2018 goal of delivering revenue of $ 200 to $ 225 million and EBIDTA of over 12%.

“We continue to gain momentum across mid-market, start-up and tier 1 carriers with our core, digital, data, distribution and cloud businesses and I am excited to share more about our plans for the future at our May 11, 2016 investor day.”

Financial Highlights

For the fourth quarter ended March 31, 2016

• Revenue for the fourth quarter ended March 31, 2016 increased 48.8% to $32.3 million as compared to $21.7 million in the corresponding quarter of last year. The growth was primarily driven by favourable momentum in Majesco’s P&C and L&A business, new customer wins, expanding customer relationships during the year, and the addition of Cover-All. On a sequential basis, fourth quarter revenue increased 9.1% compared to $29.6 million for the quarter ended December 31, 2015.
• Gross profit was $14.4 million (44.7% of revenue) for the fourth quarter ended March 31, 2016, compared to $7.1 million (32.5% of revenue) for the quarter ended March 31, 2015. The 12.2 percentage point increase in gross margin was primarily due to the increase in revenues, a favorable mix of higher margin business and a 6.5% margin impact in the fourth quarter of 2015 due to the termination by a customer of a project in the India Asia Pacific geography for which a reserve had been taken in the quarter ended March 31, 2015.
• Research and development expenses were $4.6 million (14.3% of revenue) during the fourth quarter ended March 31, 2016 as compared to $2.5 million (11.4% of revenue) during the quarter ended March 31, 2015, largely on account of planned product investments in both the P&C and L&A segments.
• SG&A expenses were $10.5 million (32.6% of revenue) during the fourth quarter ended March 31, 2016 as compared to $5.4 million (25.0% of revenue) during the quarter ended March 31, 2015. The increased SG&A expense for the fiscal 2016 fourth quarter was primarily due to the expansion of Majesco’s global sales and marketing infrastructure and the impact of the merger with Cover-All.
• Adjusted EBITDA for the fourth quarter ended March 31, 2016 was $0.4 million (1.3% of revenue) as compared to $1.3 million (5.8% of revenue) during the quarter ended March 31, 2015.
• Net loss for the fourth quarter ended March 31, 2016 was $1.5 million, or ($0.04) per share as compared to a net loss of $0.9 million, or ($0.03) per share for the quarter ended March 31, 2015.
  
  
  EBITDA and Adjusted EBITDA are non-GAAP measures. Reconciliation tables of EBITDA and Adjusted EBITDA as used in this press release to GAAP are included in the financial section of this press release.

For the fiscal year ended March 31, 2016

• Revenue for the fiscal year ended March 31, 2016 increased 42.9% to $113.3 million as compared to $79.3 million for the fiscal year ended March 31, 2015.
• Gross profit was $50.5 million (44.5% of revenue) for the fiscal year ended March 31, 2016, compared to $30.5 million (38.5% of revenue) for the fiscal year ended March 31, 2015. The improvement in gross margin was primarily due to good revenue momentum in Majesco’s P&C and L&A businesses.
• Research and development expenses were $16.3 million (14.4% of revenue) for the fiscal year ended March 31, 2016 as compared to $10.3 million (13.0% of revenue) for the fiscal year ended March 31, 2015.
• SG&A expenses were $38.2 million (33.7% of revenue) for the fiscal year ended March 31, 2016 as compared to $21.0 million (26.5% of revenue) for the fiscal year ended March 31, 2015.
• Adjusted EBITDA for the fiscal year ended March 31, 2016 was $0.6 million (0.5% of revenue) as compared to $3.0 million (3.8% of revenue) for the fiscal year ended March 31, 2015.
• Net loss for the fiscal year ended March 31, 2016 was $3.6 million or ($0.10) per share as compared to a net loss of $0.7 million, or ($0.02) per share for the fiscal year ended March 31, 2015.

Balance Sheet

• Majesco had cash and cash equivalents of $6.2 million at March 31, 2016, compared to $6.5 million at March 31, 2015, and $9.7 million at December 31, 2015.
• Total debt at March 31, 2016 was $13.8 million, compared to $4.5 million at March 31, 2015, and $12.0 million at December 31, 2015.

Operating Highlights

• The company added three new clients during the quarter resulting in a total of 17 new client wins for the fiscal year. This included Maine Mutual Group, a mid-market insurer, selecting Majesco P&C Suite and Majesco Business Analytics in the Cloud; UNUM, a tier one insurer, selecting Majesco L&A Policy and Majesco Billing; QBE, a top 20 insurer selecting Majesco Billing, Policy Admin and Business Analytics in the cloud; and Clear Blue Financial Holdings, a new start-up, selecting Majesco Data Services and Majesco Digital Services. The total client count as of March 31, 2016 stands at 149.
• In addition, Majesco expanded its relationship with a number of existing client accounts, including two tier 1 insurers highlighting progress with our cross sale strategy. This included the expanding relationship with Homesite to support their broadening product portfolio and geographical presence in the U.S. and Hallmark Financial Services who selected Majesco’s Policy for P&C as their strategic enterprise platform for the Hallmark Commercial Insurance Solutions division.
• Majesco announced the release of Majesco Testing Services that includes strategic test consulting, insurance automation framework and digital testing framework.
• The 12-month backlog at March 31, 2016 was $71.9 million as compared to $63.0 million at December 31, 2015, up 14.1% reflecting strong growth momentum and higher by 47% as compared to March 31, 2015.
• Majesco announced its expanding partnership ecosystem with the additions of Business Agility and Splice software strengthening the portfolio of offerings to clients and cloud business model.