Israel
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000-27648
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(State or other Jurisdiction
of Incorporation or Organization)
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(Commission File Number)
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(IRS Employer Identification No.)
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☐
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Exhibit
Number
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Description
|
99.1 |
Press release, dated August 6, 2018, announcing financial results for the quarter ended June 30, 2018.
|
|
By:
|
/s/ Thomas Fuller | |
Name: | Thomas Fuller | ||
Title: | Chief Financial Officer |
NEWS RELEASE
www.vocaltec.com
|
|
· |
Total net revenues of $20.0 million
|
· |
GAAP operating income of $4.8 million, Adjusted EBITDA of $7.1 million
|
· |
GAAP diluted EPS of $0.25, non-GAAP diluted EPS of $0.33
|
· |
Cash and cash equivalents of $58.9 million and no debt as of June 30, 2018
|
– |
Net revenues: Total net revenues for the second quarter of 2018 were $20.0 million. Net revenues from the sales of magicJack devices were $1.8 million and access rights renewal revenues were $12.4 million, and accounted for 62% of total net revenues. Prepaid minute revenues were $1.0 million and access and wholesale charges were $0.7 million during the quarter. Broadsmart Global, Inc. contributed $2.8 million in revenues to the second quarter of 2018. Other revenue items contributed the remaining $1.3 million of total net revenues during the second quarter of 2018.
|
– |
Operating Income: GAAP operating income for the second quarter of 2018 was $4.8 million, which included $0.6 million in charges primarily related to non-recurring professional and legal costs and severances expenses.
|
– |
Adjusted EBITDA: Adjusted EBITDA for the second quarter of 2018 was $7.1 million.
|
– |
Net Income: GAAP net income attributable to common shareholders for the second quarter of 2018 was $4.1 million or $0.25 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 $0.2 million impact from certain tax items, which included an increase to uncertain tax positions and an increase to deferred tax assets related foreign currency revaluation.
|
– |
Non-GAAP net income: Non-GAAP net income attributable to common shareholders for the second quarter of 2018 was $5.4 million or $0.33 non-GAAP net income per diluted share based on 16.2 million weighted-average diluted ordinary shares outstanding.
|
– |
Cash: As of June 30, 2018, magicJack VocalTec had cash and cash equivalents of $58.9 million and no debt. During the second quarter of 2018, the company generated $5.1 million in net cash provided by operating activities.
|
– |
As of June 30, 2018, magicJack had an estimated 1.85 million active MJ subscribers, which are defined as device users that are under an active subscription contract.
|
– |
magicJack activated 72,000 subscribers during the Second quarter of 2018. 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 June 30, 2018, magicJack’s average monthly churn was 2.0%.
|
– |
magicJack defines non-GAAP adjusted EBITDA as GAAP operating income (loss) excluding: depreciation and amortization, share-based compensation, impairment of intangible assets, asset impairment, proxy contest related expenses, severance and senior management transition expenses, write-down of inventory components and other items, which include a provision for legal settlements, transaction related expenses, costs related to Broadsmart acquisition matters and employment of its founders, provision for restructuring and a provision for certain tax matters.
|
– |
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, proxy contest related expenses, severance and senior management transition expenses, write-down of inventory components and other items, which include a provision for legal settlements, transaction related expenses, costs related to Broadsmart acquisition matters and employment of its founders, provision for restructuring, a provision for certain tax matters, and tax related items.
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
(In thousands except per share data)
|
||||||||||||||||
(Unaudited)
|
Quarter
|
Quarter
|
Six Months
|
Six Months
|
||||||||||||
|
Ended
|
Ended
|
Ended
|
Ended
|
||||||||||||
|
30-Jun-18
|
30-Jun-17
|
30-Jun-18
|
30-Jun-17
|
||||||||||||
Net revenues
|
$
|
20,022
|
$
|
22,381
|
$
|
40,037
|
$
|
45,578
|
||||||||
Cost of revenues
|
7,100
|
8,166
|
14,263
|
17,617
|
||||||||||||
Gross profit
|
12,922
|
14,215
|
25,774
|
27,961
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Marketing
|
893
|
2,120
|
2,085
|
4,527
|
||||||||||||
General and administrative
|
5,799
|
9,544
|
13,301
|
22,369
|
||||||||||||
Research and development
|
1,404
|
1,462
|
2,861
|
2,961
|
||||||||||||
Impairment of intangible assets and goodwill
|
-
|
-
|
131
|
31,527
|
||||||||||||
Total operating expenses
|
8,096
|
13,126
|
18,378
|
61,384
|
||||||||||||
Operating income (loss)
|
4,826
|
1,089
|
7,396
|
(33,423
|
)
|
|||||||||||
Other income (expense):
|
||||||||||||||||
Interest and dividend income
|
187
|
17
|
280
|
23
|
||||||||||||
Other income (expense)
|
5
|
(13
|
)
|
3
|
(30
|
)
|
||||||||||
Total other income (expense)
|
192
|
4
|
283
|
(7
|
)
|
|||||||||||
Income (loss) before income taxes
|
5,018
|
1,093
|
7,679
|
(33,430
|
)
|
|||||||||||
Income tax expense (benefit)
|
922
|
2,587
|
1,617
|
(8,768
|
)
|
|||||||||||
Net income (loss)
|
4,096
|
(1,494
|
)
|
6,062
|
(24,662
|
)
|
||||||||||
Net loss attributable to noncontrolling interest
|
-
|
(67
|
)
|
-
|
-
|
|||||||||||
Net income (loss) attributable to common shareholders
|
$
|
4,096
|
$
|
(1,561
|
)
|
$
|
6,062
|
$
|
(24,662
|
)
|
||||||
|
||||||||||||||||
Earnings (loss) per ordinary share:
|
||||||||||||||||
Basic
|
$
|
0.25
|
$
|
(0.10
|
)
|
$
|
0.37
|
$
|
(1.54
|
)
|
||||||
Diluted
|
$
|
0.25
|
$
|
(0.10
|
)
|
$
|
0.37
|
$
|
(1.54
|
)
|
||||||
Weighted average ordinary shares outstanding:
|
||||||||||||||||
Basic
|
16,205
|
16,078
|
16,199
|
16,056
|
||||||||||||
Diluted
|
16,205
|
16,078
|
16,199
|
16,056
|
CONDENSED CONSOLIDATED BALANCE SHEETS INFORMATION
|
||||||||
(In thousands)
|
||||||||
(Unaudited)
|
||||||||
As of
|
As of
|
|||||||
30-Jun-18
|
31-Dec-17
|
|||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$
|
58,896
|
$
|
52,638
|
||||
Investments, at fair value
|
369
|
369
|
||||||
Accounts receivable, net
|
2,153
|
2,428
|
||||||
Inventories
|
1,825
|
1,880
|
||||||
Contractual Cost - Current
|
301
|
1,936
|
||||||
Prepaid income taxes
|
844
|
2,016
|
||||||
Deposits and other current assets
|
1,753
|
1,874
|
||||||
Total current assets
|
66,141
|
63,141
|
||||||
Property and equipment, net
|
2,264
|
2,772
|
||||||
Intangible assets, net
|
8,820
|
10,190
|
||||||
Goodwill
|
32,304
|
32,304
|
||||||
Deferred tax assets
|
31,467
|
31,726
|
||||||
Deposits and other non-current assets
|
814
|
909
|
||||||
Contractual Cost - Non Current
|
541
|
-
|
||||||
Total Assets
|
$
|
142,351
|
$
|
141,042
|
||||
LIABILITIES AND CAPITAL EQUITY
|
||||||||
Current Liabilities
|
||||||||
Accounts payable
|
$
|
2,289
|
$
|
3,199
|
||||
Accrued expenses and other current liabilities
|
5,111
|
6,454
|
||||||
Contract liabilities - Current
|
39,129
|
42,243
|
||||||
Total current liabilities
|
46,529
|
51,896
|
||||||
Contract liabilities - Non Current
|
36,602
|
38,797
|
||||||
Other non-current liabilities
|
13,994
|
13,787
|
||||||
Total Capital Equity
|
45,226
|
36,562
|
||||||
Total Liabilities and Capital Equity
|
$
|
142,351
|
$
|
141,042
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
|
||||||||
(In thousands)
|
||||||||
(Unaudited)
|
Six Months
|
Six Months
|
||||||
|
Ended
|
Ended
|
||||||
|
30-Jun-18
|
30-Jun-17
|
||||||
Cash flows from operating activities:
|
||||||||
Net (loss) income
|
$
|
6,062
|
$
|
(24,662
|
)
|
|||
Provision for doubtful accounts and billing adjustments
|
21
|
126
|
||||||
Share-based compensation
|
1,985
|
1,303
|
||||||
Depreciation and amortization
|
1,777
|
2,419
|
||||||
Impairment of intangible assets
|
131
|
31,527
|
||||||
Increase of uncertain tax position
|
(56
|
)
|
1,809
|
|||||
Deferred income tax (benefit) provision
|
119
|
(9,091
|
)
|
|||||
Loss on sale of assets
|
-
|
18
|
||||||
Changes in operating assets and liabilities
|
(3,698
|
)
|
(7,575
|
)
|
||||
Net cash provided by (used in) operating activities
|
6,341
|
(4,126
|
)
|
|||||
Cash flows from investing activities:
|
||||||||
Proceeds from sales of investments
|
-
|
245
|
||||||
Purchases of property and equipment
|
30
|
(248
|
)
|
|||||
Acquisition of intangible assets
|
-
|
(1,089
|
)
|
|||||
Net cash (used in) investing activities
|
(30
|
)
|
(1,092
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Repurchase of ordinary shares to settle withholding liability
|
(53
|
)
|
(135
|
)
|
||||
Net cash (used in) financing activities
|
(53
|
)
|
(135
|
)
|
||||
|
||||||||
Net increase (decrease) in cash and cash equivalents
|
6,258
|
(5,353
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
52,638
|
52,394
|
||||||
Cash and cash equivalents, end of period
|
$
|
58,896
|
$
|
47,041
|
RECONCILIATION OF OPERATING INCOME (LOSS) TO NON-GAAP ADJUSTED EBITDA
|
||||||||||||||||
|
||||||||||||||||
(In thousands)
|
||||||||||||||||
(Unaudited)
|
Quarter
|
Quarter
|
Six Months
|
Six Months
|
||||||||||||
|
Ended
|
Ended
|
Ended
|
Ended
|
||||||||||||
|
30-Jun-18
|
30-Jun-17
|
30-Jun-18
|
30-Jun-17
|
||||||||||||
GAAP Operating income (loss)
|
$
|
4,826
|
$
|
1,089
|
$
|
7,396
|
$
|
(33,423
|
)
|
|||||||
Depreciation and amortization
|
818
|
894
|
1,777
|
2,419
|
||||||||||||
Share-based compensation
|
892
|
567
|
1,985
|
1,303
|
||||||||||||
Impairment of intangible assets
|
-
|
-
|
131
|
31,527
|
||||||||||||
Asset impairment
|
-
|
104
|
-
|
490
|
||||||||||||
Proxy contest related expenses
|
-
|
25
|
-
|
1,042
|
||||||||||||
Severance and senior management transition expenses
|
30
|
16
|
143
|
2,928
|
||||||||||||
Write-down of inventory components
|
-
|
-
|
-
|
386
|
||||||||||||
Other Items
|
541
|
1,697
|
1,192
|
1,895
|
||||||||||||
Non- GAAP Adjusted EBITDA
|
$
|
7,107
|
$
|
4,392
|
$
|
12,624
|
$
|
8,567
|
RECONCILIATION OF NET INCOME (LOSS) TO NON-GAAP NET INCOME
|
||||||||||||||||
|
||||||||||||||||
(In thousands)
|
||||||||||||||||
(Unaudited)
|
Quarter
|
Quarter
|
Six Months
|
Six Months
|
||||||||||||
|
Ended
|
Ended
|
Ended
|
Ended
|
||||||||||||
|
30-Jun-18
|
30-Jun-17
|
30-Jun-18
|
30-Jun-17
|
||||||||||||
GAAP Net income (loss) attributable to common shareholders
|
$
|
4,096
|
$
|
(1,561
|
)
|
$
|
6,062
|
$
|
(24,662
|
)
|
||||||
Share-based compensation
|
892
|
567
|
1,985
|
1,303
|
||||||||||||
Impairment of intangible assets
|
-
|
-
|
131
|
31,527
|
||||||||||||
Asset impairment
|
-
|
104
|
-
|
490
|
||||||||||||
Proxy contest related expenses
|
-
|
25
|
-
|
1,042
|
||||||||||||
Severance and senior management transition expenses
|
30
|
16
|
143
|
2,928
|
||||||||||||
Write-down of inventory components
|
-
|
-
|
-
|
386
|
||||||||||||
Other Items
|
541
|
1,697
|
1,192
|
1,895
|
||||||||||||
Tax related items
|
(168
|
)
|
2,594
|
(53
|
)
|
(8,089
|
)
|
|||||||||
Non-GAAP Net income
|
$
|
5,391
|
$
|
3,442
|
$
|
9,460
|
$
|
6,820
|
||||||||
|
||||||||||||||||
GAAP earnings (loss) per ordinary share – Diluted
|
$
|
0.25
|
$
|
(0.10
|
)
|
$
|
0.37
|
$
|
(1.54
|
)
|
||||||
Share-based compensation
|
0.06
|
0.04
|
0.12
|
0.08
|
||||||||||||
Impairment of intangible assets
|
-
|
-
|
0.01
|
1.96
|
||||||||||||
Asset impairment
|
-
|
0.01
|
-
|
0.03
|
||||||||||||
Consideration adjustment / Gain on mark-to-market
|
-
|
-
|
-
|
-
|
||||||||||||
Transaction related expenses
|
-
|
-
|
-
|
-
|
||||||||||||
Proxy contest related expenses
|
-
|
0.00
|
-
|
0.06
|
||||||||||||
Severance and senior management transition expenses
|
0.00
|
0.00
|
0.01
|
0.18
|
||||||||||||
Write-down of inventory components
|
-
|
-
|
-
|
0.02
|
||||||||||||
Other Items
|
0.03
|
0.11
|
0.07
|
0.12
|
||||||||||||
Tax related items
|
(0.01
|
)
|
0.16
|
(0.00
|
)
|
(0.50
|
)
|
|||||||||
Non-GAAP Net income per share – Diluted
|
$
|
0.33
|
$
|
0.21
|
$
|
0.58
|
$
|
0.42
|
||||||||
|
||||||||||||||||
Weighted average ordinary shares outstanding - Diluted:
|
16,205
|
16,078
|
16,199
|
16,056
|