Magic Software Enterprises Stock Price, News & Analysis
Company Description
Magic Software Enterprises Ltd. (NASDAQ and TASE: MGIC) is a global information technology company that focuses on software and IT services. According to its public disclosures, Magic Software operates in the software publishers industry and the broader information sector, combining proprietary software platforms with IT consulting and professional services.
The company reports two main operating segments: Software Services and IT Professional Services. Based on available information, Magic Software generates a significant portion of its revenue from IT Professional Services. This segment offers IT services in areas such as infrastructure design and delivery, application development, technology planning and implementation services, communications services and solutions, and supplemental outsourcing services. These activities are described in the company’s disclosures and form a core part of its business model.
Magic Software also describes itself in multiple press releases and SEC filings as a global provider of end-to-end integration and application development platforms solutions and IT consulting services. In some communications, the company refers to its proprietary application development and business process integration platforms as "Magic Technology" and notes that these platforms are intended to accelerate the planning, development, deployment and integration of on-premise, mobile and cloud business applications. In addition, Magic Software states that it provides selected packaged vertical software solutions and software services, including IT outsourcing software services.
Geographically, Magic Software’s disclosures indicate that it derives a majority of its revenue from the United States, with additional presence in Israel, Europe, Japan and other countries. The company describes itself as collaborating with customers and business partners in many countries and notes that it serves clients in multiple markets. This international footprint is part of its positioning as a global provider of integration platforms, low-code and application development tools, and IT services.
Magic Software’s public financial reports emphasize recurring themes: revenue from integration and application development platforms, demand for digital, artificial intelligence (AI) and cloud transformation solutions, and continued activity in IT consulting and outsourcing. In several earnings releases, the company highlights demand for its digital and cloud transformation offerings and notes that its services are used in areas such as mobile, Internet of Things (IoT), Big Data, communications, embedded systems, cloud solutions and cyber-related projects. These descriptions come directly from the company’s own communications about its software and services portfolio.
From a corporate structure and capital markets perspective, Magic Software is listed on both the NASDAQ Global Select Market and the Tel Aviv Stock Exchange (TASE) under the ticker symbol MGIC. The company files annual reports on Form 20-F and periodic reports on Form 6-K with the U.S. Securities and Exchange Commission as a foreign private issuer. These filings include audited financial statements, discussion of risk factors, segment information and other disclosures relevant to investors.
Magic Software has also disclosed significant corporate developments. In a report on Form 6-K, the company announced that it entered into a definitive Agreement and Plan of Merger with Matrix IT Ltd. and a wholly owned subsidiary of Matrix. Under the terms described, Matrix will acquire all of Magic Software’s share capital by way of a reverse triangular merger, with Magic Software surviving as a wholly owned subsidiary of Matrix. The consideration to Magic Software’s shareholders is expected to be in ordinary shares of Matrix, and the company has stated that, following the merger, Magic’s shareholders are expected to hold a specified percentage of Matrix’s outstanding shares on a fully diluted basis. The company has also indicated that, upon completion of the merger, Magic’s ordinary shares are expected to be delisted from trading on the NASDAQ and TASE, and that eligible shareholders will receive Matrix shares traded on the Tel Aviv Stock Exchange.
As part of this merger process, Magic Software has reported that a special and independent committee of its board of directors evaluated the transaction, considered alternatives (including not proceeding with the merger), and received a fairness opinion from an external valuator. The merger remains subject to conditions such as shareholder approval, regulatory approvals, and other customary closing conditions, as described in the Merger Agreement and related filings. Until the merger is completed, Magic Software continues to report its quarterly and annual financial results and to operate under its existing corporate structure.
Magic Software’s public communications also discuss the use of non-GAAP financial measures such as non-GAAP gross profit, non-GAAP operating income and non-GAAP net income attributable to shareholders. The company states that it uses these measures for internal analysis, incentive compensation and budgeting, and that it provides reconciliations to the most comparable GAAP measures in its earnings releases. Items commonly excluded in these non-GAAP metrics include amortization of purchased intangible assets, in-process research and development capitalization and amortization, share-based payment costs, acquisition-related costs, certain tax effects, and changes in valuation of contingent consideration.
Overall, Magic Software Enterprises Ltd. describes itself as combining proprietary integration and application development platforms with IT consulting, software services and outsourcing. It focuses on helping organizations plan, develop, deploy and integrate business applications across on-premise and cloud environments, while also providing professional services in infrastructure, application development, technology planning and related areas. Its disclosures emphasize global operations, a significant revenue contribution from IT Professional Services, and an ongoing corporate transaction that, if completed, will result in Magic Software becoming a wholly owned subsidiary of Matrix IT Ltd. and its shares being delisted from NASDAQ and TASE.
Business Segments and Activities
According to available descriptions, Magic Software’s business is organized around two primary segments:
- Software Services – This segment is associated with the company’s proprietary application development and business process integration platforms, referred to in some communications as Magic Technology. These platforms are described as enabling enterprises to accelerate the delivery of business solutions and to integrate applications across on-premise, mobile and cloud environments.
- IT Professional Services – This segment is reported to generate the majority of the company’s revenue. It includes IT services in infrastructure design and delivery, application development, technology planning and implementation, communications services and solutions, and supplemental outsourcing services. The company also refers to IT outsourcing software services and a portfolio of software services in areas such as mobile, IoT, Big Data, communications, embedded systems, cloud solutions and cyber-related projects.
Geographic Reach
Magic Software’s disclosures indicate that it derives a majority of its revenue from the United States, with additional revenue from Israel, Europe, Japan and other countries. The company describes itself as having a global presence and as collaborating with customers and business partners in multiple countries. This geographic diversification is presented as part of its profile as a global provider of integration platforms, low-code and application development tools, and IT services.
Regulatory Reporting and Investor Information
As a foreign private issuer listed on NASDAQ and TASE, Magic Software files an annual report on Form 20-F with the U.S. Securities and Exchange Commission, which includes audited financial statements and risk factor disclosures. It also furnishes interim financial information and material updates on Form 6-K, including quarterly results, announcements about dividends, guidance updates and information about the proposed merger with Matrix IT Ltd. The company notes that its non-GAAP financial measures are presented alongside GAAP results and that reconciliations are included in its financial press releases and filings.
Merger with Matrix IT Ltd.
In a Form 6-K filing, Magic Software reported that it entered into a definitive Agreement and Plan of Merger with Matrix IT Ltd. and a wholly owned subsidiary of Matrix. Under this agreement, Matrix will acquire all of Magic Software’s share capital by way of a reverse triangular merger, with Magic Software surviving as a wholly owned subsidiary of Matrix. The consideration to Magic Software’s shareholders will be in Matrix ordinary shares, and the company has stated that, following the closing, Magic’s shareholders and Matrix’s existing shareholders will hold specified percentages of Matrix’s outstanding shares on a fully diluted basis. The company has also disclosed that, because Matrix trades only on the Tel Aviv Stock Exchange, Magic’s eligible shareholders will receive Matrix shares listed on the TASE and that Magic’s shares on NASDAQ will be canceled.
The company has described the process leading to the Merger Agreement, including the role of a special committee, the use of independent financial advisors, and the receipt of a fairness opinion. It has also outlined conditions to closing, such as shareholder approvals, regulatory clearances, tax rulings, and other customary conditions. Until these conditions are satisfied and the merger is completed, Magic Software continues to operate and report as an independent public company.
FAQs about Magic Software Enterprises Ltd. (MGIC)
- What does Magic Software Enterprises Ltd. do?
Magic Software Enterprises Ltd. describes itself as a global provider of end-to-end integration and application development platforms solutions and IT consulting services. It also offers IT professional services, including infrastructure design and delivery, application development, technology planning and implementation, communications services and solutions, and supplemental outsourcing services. - How does Magic Software generate revenue?
According to available segment information, Magic Software generates revenue from Software Services and IT Professional Services. The company states that it earns a majority of its revenue from the IT Professional Services segment, which includes IT services in infrastructure, application development, technology planning and implementation, communications services and solutions, and outsourcing-related services. - In which regions does Magic Software operate?
Magic Software’s disclosures indicate that it derives a majority of its revenue from the United States and also has a presence in Israel, Europe, Japan and other countries. The company describes itself as a global provider and notes that it collaborates with customers and partners in multiple countries. - On which stock exchanges is Magic Software listed?
Magic Software Enterprises Ltd. states that its ordinary shares trade on the NASDAQ Global Select Market and on the Tel Aviv Stock Exchange (TASE) under the ticker symbol MGIC. - What is Magic Technology?
In its own description, Magic refers to its proprietary application development and business process integration platforms as Magic Technology. These platforms are described as enabling enterprises to accelerate the planning, development, deployment and integration of on-premise, mobile and cloud business applications. - What types of IT services does Magic Software provide?
The company reports that its IT Professional Services segment covers infrastructure design and delivery, application development, technology planning and implementation services, communications services and solutions, and supplemental outsourcing services. It also mentions software services and IT outsourcing software services in areas such as mobile, IoT, Big Data, communications, embedded systems, cloud solutions and cyber-related projects. - What is the merger between Magic Software and Matrix IT Ltd.?
Magic Software has announced that it entered into a definitive Agreement and Plan of Merger with Matrix IT Ltd. and a wholly owned Matrix subsidiary. Under this agreement, Matrix will acquire all of Magic Software’s share capital by way of a reverse triangular merger, with Magic Software surviving as a wholly owned subsidiary of Matrix. The consideration to Magic’s shareholders will be Matrix ordinary shares, and Magic’s NASDAQ-listed shares are expected to be canceled upon completion of the merger, as described in the company’s Form 6-K filing. - Will Magic Software’s shares remain listed on NASDAQ?
In its Merger Agreement disclosure, Magic Software states that, upon completion of the merger with Matrix IT Ltd., Magic’s ordinary shares are expected to be delisted from trading on NASDAQ and the Tel Aviv Stock Exchange. Eligible shareholders of Magic are expected to receive Matrix shares listed on the Tel Aviv Stock Exchange, subject to the terms and conditions of the merger. - What financial information does Magic Software provide to investors?
Magic Software furnishes quarterly and annual financial results through press releases and SEC filings, including Form 20-F and Form 6-K. These materials include GAAP financial statements and non-GAAP measures such as non-GAAP gross profit, non-GAAP operating income and non-GAAP net income attributable to shareholders, along with reconciliations between GAAP and non-GAAP figures. - How does Magic Software describe its role in digital and cloud transformation?
In several earnings releases, Magic Software notes that there is demand for its digital, AI-driven and cloud transformation solutions. It describes itself as a provider of digital and cloud transformation capabilities through its integration and application development platforms and related IT services, including mobile, IoT, Big Data, cloud solutions and cyber-related projects.