MAGIC SOFTWARE ANNOUNCES SELECTED PRELIMINARY THIRD QUARTER 2023 FINANCIAL RESULTS

Company will announce results for the third quarter of 2023 on November 14, 2023

Or Yehuda, Israel, Nov. 08, 2023 (GLOBE NEWSWIRE) -- Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC) (the “Company”), a global provider of IT consulting services and end-to-end integration and application development platforms solutions, today provided certain selected preliminary unaudited financial results for the third quarter ended September 30, 2023.

“During the latter half of the third quarter of 2023, we experienced a substantial and unexpected decline in demand for our software services from several of our important U.S.-based blue-chip customers which, without any advance notification, decided to immediately suspend active time and materials based projects. This reduced demand had a negative impact on our third quarter revenues and will also impact partially our fourth quarter top line”, said Guy Bernstein, Chief Executive Officer of Magic. “As a result, third quarter revenue will be below the low end of the prior guidance range. Despite this unexpected decline in demand, it did not have a material impact on our profitability, and we expect our non-GAAP operating margin for the third quarter to be approximately 13.2%, which mimics such margin for the first half of 2023,” concluded Mr. Bernstein.

In addition to the above-described factor, the outbreak of Israel’s war against the terrorist organization Hamas as of October 7, 2023 has resulted in approximately 200 of the Company’s employees being drafted for reserve duty and unavailable for work. Furthermore, the Company’s New Israeli Shekel (NIS)-denominated operations have been adversely impacted by the continued devaluation of the NIS in relation to the U.S. dollar, which has caused further deterioration to the Company’s fourth quarter results of operations. All of the foregoing factors, together with the uncertain global macroeconomic environment, have caused the Company to anticipate significantly lower revenues, and, accordingly, to adjust its revenue guidance, for the fourth quarter of 2023 and, consequently, for the full year of 2023.

Third quarter revenue is now expected to be approximately $129.3 million, compared to the previous expectation of $142.4 million to $143.1 million.

Non-GAAP operating income^* is now expected to be approximately $17.1 million in the third quarter of 2023, approximately 13.2% as a percentage of revenue and the same as for the first half of 2023.