Magic Software Reports Second Quarter Results

Magic Software Reports Second Quarter Results Contact: Ziv Zviel VP Finance Magic Software Enterprises Ltd. +972-3-538 9219 Ziv_Zviel@magicsoftware.com August 9, 2007 Magic Software Reports Second Quarter Results Company Reports Net Income of $0.8 Million Demonstrating Sustainable Profitability [ Q2 2007 Financials ] http://www.magicsoftware.com/Static/Binaries/ne_pr/Q2_2007_financials_0.pdf OR YEHUDA, ISRAEL; August 9, 2007 - Magic Software Enterprises Ltd. (NASDAQ: MGIC), a leading provider of state-of-the-art business integration and application development technology, reported today its results for the quarter ended June 30, 2007. Financial Highlights Total revenues were $16.8 million, an 11% increase over Q2 2006 Net income was $0.8 million compared to a $1.3 million net loss in Q2 2006 In Q2 2007, the company reported positive free cash flow of $0.6 million Cash and cash equivalents, including short-term marketable securities, reached $17 million at June 30, 2007 Second Quarter Results Second quarter of 2007 results reflect the company's sustained profitability for a third consecutive quarter and continued revenue growth. Total revenue for the second quarter ended June 30, 2007 was $16.8 million, an increase of 2% from the $16.4 million reported in the first quarter of 2007 and an 11% increase compared to the $15.2 million reported in the second quarter of 2006. Gross profit for the second quarter of 2007 was $9.1 million, compared to $8.7 million in the first quarter of 2007 and $8.1 million in the second quarter of 2006. Net income for the second quarter of 2007 amounted to $0.8 million, compared to a net income of $1.0 million in the first quarter of 2007 and a net loss of $1.3 million reported in the comparable quarter of 2006. Eitan Naor, President and CEO of Magic Software, commented, "During the second quarter we began carrying out steps intended to reinforce our execution capabilities. As our first step towards rebuilding Magic Software's management team, we've recently appointed two new senior management members. David Zigdon, who has extensive experience in senior financial management roles in international public companies, will assume the position of Chief Financial Officer as of October 15th. We've also appointed Arita Mattsoff as our new vice-president of global marketing. Arita brings with her extensive experience in global marketing in enterprise software companies. She will be joining us in September." "We're currently turning the Company's focus to sales execution and customer support, with an emphasis on improving existing customer relationships, expanding the sales pipeline and closing pending deals," added Naor. Conference Call Magic Software's management will also host a conference call today at 11am EDT, or 6pm in Israel. To participate in the conference call, please call the appropriate number listed below at least five to ten minutes prior to the start of the call: From the US: 1 888 642 5032 From Israel: 03 918 0688 All others: +972 3 918 0688 Callers should reference the Magic Software Earnings Conference Call. For those unable to listen to the conference call, there will be a replay available from the investor relations part of Magic's web-site at: www.magicsoftware.com About Magic Software Enterprises Magic Software Enterprises (NASDAQ: MGIC) has been a leader in enterprise application development, deployment and integration technology for more than two decades. The company's service-oriented (SOA) platforms are used by companies worldwide to develop, maintain, and deploy both legacy and new business solutions, while integrating these applications across both internal and external, heterogeneous environments. Magic Software's platform-independent methodology lets companies achieve agility by quickly assembling composite applications, allowing programmers to create services and architects and business analysts to orchestrate and reuse these services to enable business processes. Through partnerships with industry leaders such as IBM and SAP and more than 2500 ISVs worldwide, Magic Software technology is used by more than 1.5 million customers around the globe. Magic Software is a subsidiary of the Formula Systems and Emblaze Group of companies. For more information on Magic Software Enterprises and its products and services, visit www.magicsoftware.com. Except for the historical information contained herein, the matters discussed in this news release include forward-looking statements that may involve a number of risks and uncertainties. Actual results may vary significantly based upon a number of factors including, but not limited to, risks in product and technology development, market acceptance of new products and continuing product conditions, both here and abroad, release and sales of new products by strategic resellers and customers, and other risk factors detailed in the Company's most recent annual report and other filings with the Securities and Exchange Commission.