Majesco’s Posts 1.9% Revenue Growth in Q4

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Majesco’s Posts 1.9% Revenue Growth in Q4

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Majesco (NASDAQ: MJCO) on Thursday, 28 May 2020 released its fourth quarter earnings along with its Full year Fiscal results. The company’s revenues increased by 1.9% in the quarter, amounting to $37.9 million. The company saw an increase in its product demand, as a result of its cloud-product based strategy. Companies of all sizes have been turning towards the company to partner with them on their digital transformation journey.

On the release of the earnings report, Mr Adam Elster (CEO) stated that, “We are living in unique times; times none of us have experienced before, and our number one priority is to protect the health and safety of our employees, customers, partners and the communities in which we operate. We were an early adopter of the ‘work from home’ transition, and all Majesco’s global employees have been operating remotely since March 16th. We have successfully managed all customer expectations, while ensuring our business continuity, seamless focus and commitment to projects and services.”

Financial Highlights for Fiscal Year 2020 

(Source: Business Quant)

  1. Revenues increased from $141.3 million last fiscal year to $146.4 million, an increase by 3.6%. The increase was mainly seen due the increase in its product revenues by 33.2% which helped the business overcome a 10.7% decline in its professional services revenues.
  2. Gross Profit for the year increased from $68.8 million (48.7% of revenue) to $71.6 million (48.9% of revenue) in the current fiscal year.
  3. R&D expenses were recorded at $19.1 million (13% of revenue).
  4. SG&A expenses increased to $42.3 million (28.9% of revenue) from $39.7 million (28.1% of revenue). The increase in the expenses was a result of higher sales driven activities and additions to the Leadership team.
  5. Adjusted EBITDA for the year was $18 million (12.3% of revenue).
  6. The Net Income for the fiscal year amounted to $9.7 million. And, 0.21 diluted per share.
  7. Cash and cash equivalents stood at $51.4 million as compared to $39.4 million last fiscal year.
  8. The company had zero debt at the end of the year on 31 March 2020, as compared to $0.4 million last year.

Other Business Developments during the year

  1. 5 successful Go-Lives during the fourth quarter of fiscal 2020 and 37 total go-lives for the full fiscal 2020.
  2. Acquisition of Inspro Technologies, a Philadelphia based insurance software business. The transaction had closed on April 1, 2020.
  3. The company was named a Leader by Gartner in the September 2019 Magic Quadrant for P&C Core Insurance Platforms, North America.
  4. New deal wins, upgrades and expansions for the fourth quarter fiscal 2020 included:
    • A tier 1 insurance carrier implementing Majesco Billing
    • A global tier 1 insurance carrier selected Majesco for their core solution
    • A longtime customer of Majesco expanded its scope with Majesco adding Digital 1 st and upgrading to latest version transitioning to the cloud model
    • A global tier 1 insurance company continued its expansion with Majesco’s core solutions to additional specialty lines of business
    • A global tier 1 insurance company expanded its implementation of Majesco’s core solutions to additional countries and lines of business

Key Revenue Contributors

(Source: Business Quant)

  1. An addition of 8 new clients was made organically for the year.
  2. Professional services revenues decreased to $84.7 million, down by 10.7% over the previous year.
  3. License, subscription, and maintenance revenue (product revenue) amounted to $61.8 million, an increase by 33.2% over previous year. This contributed to 42.2% of the total revenue for the fiscal year.

Q4 Financial Highlights

  1. Net Income was recorded $3.6 million. And $0.08 per diluted share.
  2. Revenue from operation was recorded at $37.9 million as compared to $37.2 million the previous year.
  3. Gross Profit earned was $18.2 million (48.1% of revenue), an increase from $18 million (48.5% of revenue) of last year.
  4. Research and development (R&D) expenses amounted to $4.4 million (11.7% of revenue).
  5. Selling, general and administrative (SG&A) expenses were $10.6 million (28.0% of revenue).
  6. Adjusted EBITDA was $5.1 million (13.5% of revenue).

Moving Forward 

“While it may be premature and difficult to predict the business impact due to the unprecedented environment caused by the COVID-19 crisis, we believe customers are likely to shift focus and investment, and move to cloud and digital experience platforms, automation, efficiency and modernization.”

“We remain confident in our strategy, committed to its execution and believe we have the right platform in place to handle the near-term challenges associated with COVID-19, while continuing to pursue long-term growth opportunities.”- Press release

In the current market scenario the company aims to move forward through digital avenues. New innovations that would be more consumer friendly in the lock downs are being looked at. The company has been able to perform well even through the outbreak of the pandemic. The company has stable earnings to sustain itself in the market and invest in new opportunities.

For existing investors it is a stock to hold onto for the time period and for new investors it is a good option to invest in. The company has stable financials through which it is able to cover all of its expenses and debt obligations.

 

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