magicJack Reports First Quarter 2018 Financial Results

magicJack VocalTec Ltd (NASDAQ:CALL), a leading VoIP cloud based communications and UCaas company announced financial results for the first quarter ending March 31, 2018.

The company had a total net revenue of $20 million with GAAP operating income of $2.6 million and adjusted EBITDA of $5.5 million. The company’s GAAP diluted EPS was of $0.12. magicJack had a cash and cash equivalents of $53.9 million and no debt as of March 31, 2018.

As quoted in the press release:

First Quarter 2018 Financial Highlights:

• Net revenues: Total net revenues for the first quarter of 2018 were $20.0 million. Net revenues from the sales of magicJack devices were $1.9 million and access rights renewal revenues were $12.3 million, and accounted for 62% of total net revenues. Prepaid minute revenues were $1.0 million and access and wholesale charges were $0.8 million during the quarter. Broadsmart Global, Inc. contributed $2.6 million in revenues to the first quarter of 2018. Other revenue items contributed the remaining $1.4 million of total net revenues during the first quarter of 2018.
• Operating Income: GAAP operating income for the first quarter of 2018 was $2.6 million, which included $0.9 million in net charges primarily related to non-recurring professional and legal costs, executive management transition and severances expenses, and the impairment of a licensing agreement.
• Adjusted EBITDA: Adjusted EBITDA for the first quarter of 2018 was $5.5 million.
• Net Income: GAAP net income attributable to common shareholders for the first quarter of 2018 was $2.0 million or $0.12 GAAP diluted net income per share based on 16.2 million weighted-average diluted ordinary shares outstanding. GAAP net income included the aforementioned items under the Operating Income section above, as well as a $0.1 million impact from certain tax items, which included an increase to uncertain tax positions, increase in the Company’s tax valuation allowance, and increase to deferred tax assets related to expiration and forfeiture of stock options and restricted stock awards.
• Non-GAAP net income: Non-GAAP net income attributable to common shareholders for the first quarter of 2018 was $4.1 million or $0.25 non-GAAP net income per diluted share based on 16.2 million weighted-average diluted ordinary shares outstanding.
• Cash: As of March 31, 2018, magicJack VocalTec had cash and cash equivalents of $53.9 million and no debt. During the first quarter of 2018, the company generated $1.3 million in net cash provided by operating activities, which reflects the impact of paying out annual executive and employee bonuses, as well as legal and professional fees related to the strategic process.

A reconciliation of GAAP to non-GAAP measures 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.”

Additional First Quarter 2018 Highlights and Recent Updates:

• As of March 31, 2018, magicJack had an estimated 1.89 million active MJ subscribers, which are defined as device users that are under an active subscription contract.

• magicJack activated 84,000 subscribers during the first quarter of 2018. Activations are defined as devices that become activated on to a subscription contract during a given period.

• During the quarter ended March 31, 2018, magicJack’s average monthly churn was 2.3%.

• On November 9, 2017, the Company entered into a Merger Agreement with B. Riley Financial, Inc., in which B. Riley has agreed to acquire all of the outstanding shares of the Company for $8.71 per share (the “Transaction”). The Company has received all required consents and approvals from the state public service commissions and is waiting for approval from the Federal Communications Commission. The Company expects the Transaction to close in the next three months.

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