Magic Software Enterprises Ltd (MGIC) 2023 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by.

女士們先生們，謝謝你們的支持。

Welcome to the Magic Software Enterprises 2023 fourth quarter and full year financial results conference call.

歡迎參加Magic Software Enterprises 2023年第四季及全年財務業績電話會議。

Magic’s fourth quarter 2023 earnings release was issued before the market opened this morning and it has been posted on the company’s website at www.magicsoftware.com.

Magic 的 2023 年第四季財報是在今天早上開市前發布的，並已發佈在該公司網站 www.magicsoftware.com 上。

(Operator instructions) With us on the line today are Magic CEO, Mr. Guy Bernstein; Magic CFO, Mr. Asaf Berenstin and Magic CTO, Mr. Yuval Lavi.

（接線生說明）今天與我們通話的是萬智牌執行長 Guy Bernstein 先生； Magic 財務長 Asaf Berenstin 先生及 Magic 首席技術長 Yuval Lavi 先生。

Before we start, I would like to remind everyone that projections or other forward-looking statements may be provided on this conference call.

在開始之前，我想提醒大家，本次電話會議可能會提供預測或其他前瞻性陳述。

The Safe Harbor provision provided in the press release issued today also applies to the content of this call.

今天發布的新聞稿中提供的安全港條款也適用於本次電話會議的內容。

Magic expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in its views or expectations or otherwise.

Magic 明確表示不承擔更新或修改任何這些前瞻性陳述的義務，無論是由於未來事件、新資訊、其觀點或期望的變化還是其他原因。

Also during the course of today’s call, management will refer to non-GAAP financial measures, a reconciliation schedule showing GAAP versus non-GAAP results has been provided in the press release issued before the market opened this morning.

此外，在今天的電話會議中，管理階層將參考非公認會計準則財務指標，今天上午開市前發布的新聞稿中提供了顯示公認會計準則與非公認會計準則結果的調節表。

A replay of this call will be available after the call on the Investor Relations section of the company’s website.

電話會議結束後，將在公司網站的投資者關係部分提供該電話會議的重播。

I will now turn the call over to Mr. Asaf Berenstin, CFO of Magic Software.

現在我將把電話轉給 Magic Software 財務長 Asaf Berenstin 先生。

Please go ahead.

請繼續。

Thank you, Operator, and thank you everyone for joining us today as we report our fourth quarter 2023 financial results.

謝謝運營商，也謝謝大家今天加入我們，我們將報告 2023 年第四季的財務表現。

During the call today, I will review highlights from our fourth quarter results and provide an overview of our outlook.

在今天的電話會議中，我將回顧我們第四季度業績的亮點，並概述我們的前景。

Revenue in the fourth quarter of 2023 decreased to $125.5 million, down approximately 14.7% from the fourth quarter of 2022.

2023年第四季營收下降至1.255億美元，較2022年第四季下降約14.7%。

As we already mentioned in the past calls during the year, the effect of the currency fluctuations over the course of the year was and still is significant compared to the corresponding quarters of last year.

正如我們在過去的電話會議中已經提到的那樣，與去年同期相比，這一年貨幣波動的影響仍然很大。

On a constant currency basis, calculated based on the average currency exchange rates for the three months ended December 31, 2022, revenues for the fourth quarter of 2023 would have decreased by approximately 11.2% compared to the fourth quarter of 2022, to $130.6 million, $5 million more higher than our reported revenue figure for the quarter.

以固定匯率計算，根據截至 2022 年 12 月 31 日止三個月的平均貨幣匯率計算，2023 年第四季的營收將比 2022 年第四季下降約 11.2%，至 1.306 億美元，比我們報告的本季營收數字高出500 萬美元。

As we described in the third quarter results conference call on November 14, the reduction in our third quarter and fourth quarter revenues was caused primarily by two factors.

正如我們在11月14日的第三季業績電話會議上所描述的，我們第三季和第四季營收的減少主要由兩個因素造成。

One, the currency headwind caused by the significant devaluation of the new Israeli shekel relative to the US dollar in 2023, reaching 9.7% for the year and 9.3% for the fourth quarter, which has hurt our Israeli shekel-denominated operations by $5.6 million for the fourth quarter and $22.9 million for the year.

一是2023年以色列新謝克爾相對於美元大幅貶值帶來的貨幣逆風，全年貶值達到9.7%，第四季貶值9.3%，這對我們以以色列謝克爾計價的業務造成了560萬美元的損失。

And second, a substantial and unexpected decline in demand for our professional services from several of our important US-based blue chip customers, which without any advance notification and due to internal reasons unrelated to our software services decided during the second half of the third quarter and going forward to immediately suspend significant parts of their active time and materials-based projects.

其次，我們的幾個重要的美國藍籌客戶對我們的專業服務的需求出現了意外的大幅下降，這是在沒有任何事先通知的情況下，由於與我們的軟體服務無關的內部原因，在第三季度下半年決定的。

Behind the results also lies the ongoing challenging macroeconomic climate, which did not help our ability to overcome the primary adverse factors that weigh against us.

結果背後也隱藏著持續充滿挑戰的宏觀經濟環境，這無助於我們克服對我們不利的主要不利因素。

We also noted a significant post-third quarter event, the outbreak of the Israeli war against the terrorist organization Hamas, which among other things has currently led to the drafting to active military service of approximately 200 out of our 1,700 Israeli employees.

我們還注意到第三季後的一個重大事件，即以色列針對恐怖組織哈馬斯的戰爭爆發，除此之外，目前已導致我們 1,700 名以色列員工中約 200 人應徵入伍。

We keep on standing with Israel in its fight and wish our employees who are fighting and the entire Israeli armed forces continued success at eliminating the terrorist organization that slandered and conducted the brutal murder of 1,400 Israeli civilians and continues to hold 134 Israeli hostages.

我們繼續與以色列並肩作戰，並祝福我們正在戰鬥的員工和整個以色列武裝部隊繼續成功消滅這個恐怖組織，該組織誹謗和殘酷謀殺了1,400名以色列平民，並繼續扣押134名以色列人質。

The absence of our Israeli employees who were drafted for active military services since the beginning of the war on October 7, together with the decline in demand for our software services from several of our important US-based blue-chip customers and the continued challenging macroeconomic environment of high interest rates, persistent inflation and reduced capital spending have caused us to report significantly lower revenues for the fourth quarter and for the second half compared to the same period last year.

自 10 月 7 日戰爭爆發以來，我們應徵入伍服兵役的以色列員工就缺席了，加上我們的幾個重要的美國藍籌客戶對我們軟體服務的需求下降，以及宏觀經濟的持續挑戰高利率、持續通膨和資本支出減少的環境導致我們第四季和下半年的收入與去年同期相比大幅下降。

Having said that, I would like to highlight that our fourth quarter revenues have reached the higher end of our fourth quarter revenue guidance target.

話雖如此，我想強調的是，我們第四季的營收已經達到了第四季營收指引目標的上限。

Despite all of those difficulties working against us, we continue to plow forward with our worldwide dedication and confidence that we can continue to execute on sales of a world-class suit of products and in providing related services.

儘管有所有這些困難，我們仍以全球奉獻精神繼續前進，並相信我們可以繼續銷售世界一流的產品並提供相關服務。

Our AI low-code, no-code and services offerings are critical as customers continue to automate and digitize their systems and products, and while some of our customers are facing macro and company-specific challenges, we believe we have the right set of offerings to address our clients needs.

隨著客戶不斷實現系統和產品的自動化和數位化，我們的人工智慧低程式碼、無程式碼和服務產品至關重要，雖然我們的一些客戶面臨著宏觀和公司特定的挑戰，但我們相信我們擁有正確的產品組合以滿足顧客的需求。

We have seen even in this challenging environment that outstanding execution by our teams and our adherence to our cost structure enable us to improve our profitability, despite the lower revenues.

我們看到，即使在這種充滿挑戰的環境中，我們團隊的出色執行力和對成本結構的堅持使我們能夠提高盈利能力，儘管收入較低。

In the fourth quarter of 2023, our non-GAAP operating margin held strong at approximately 14.1% of our revenues, 80 basis points higher compared to the margin during the first half of 2023 and 140 basis points higher compared to the corresponding period last year.

2023 年第四季度，我們的非 GAAP 營業利潤率保持強勁，約佔營收的 14.1%，比 2023 年上半年的利潤率高出 80 個基點，比去年同期高出 140 個基點。

This shows the inherent scalability and the sensibility of our business model and our ability to maintain and even improve our operating margin, whether our revenues rise or fall.

這顯示了我們業務模式固有的可擴展性和敏感性，以及我們維持甚至提高營業利潤率的能力，無論我們的收入上升還是下降。

We believe that our ability to maintain the profitability of our operations will keep our balance sheet strong and will enable us to invest to drive revenue growth in the future.

我們相信，維持業務獲利能力的能力將使我們的資產負債表保持強勁，並使我們能夠進行投資以推動未來的收入成長。

As we look at our business, we see that we continue to leverage our digital technologies and cloud-based platforms to create strong demands for our innovative software solution and services.

當我們審視我們的業務時，我們發現我們繼續利用我們的數位技術和基於雲端的平台來為我們的創新軟體解決方案和服務創造強烈的需求。

We similarly continue to see excellent execution by our teams.

同樣，我們繼續看到我們團隊的出色執行力。

Setting aside the factors that slow us our revenues in North America, which were beyond our control, we experienced another quarter of solid performance recorded across all other parts of our business.

撇開北美地區營收成長放緩的因素（這些因素是我們無法控制的），我們所有其他的業務部門又經歷了一個季度的穩健業績。

We continue to see exciting opportunities and growth potential in the dynamic realm of cloud technology and managed services.

我們繼續在雲端技術和託管服務的動態領域看到令人興奮的機會和成長潛力。

Since the first days of Magic Software, we have been characterized by our ability to take complex IT processes and make them simple.

自從 Magic Software 誕生以來，我們的特點就是能夠將複雜的 IT 流程變得簡單。

Today, we put our focus on helping our clients to transition seamlessly to the cloud, enhance their Software-as-a-Service capabilities and deliver acceptation value to our comprehensive suite of managed cloud services.

今天，我們的重點是幫助客戶無縫過渡到雲端，增強他們的軟體即服務能力，並為我們的綜合託管雲端服務套件提供接受價值。

We have made it our mission to assist businesses in overcoming the challenges associated with migrating to the cloud and achieving through SaaS excellence.

我們的使命是幫助企業克服與遷移到雲端相關的挑戰並透過 SaaS 實現卓越。

Like many others, we recognize that the cloud is not just technology shifts.

與許多其他人一樣，我們認識到雲端不僅僅是技術轉變。

It’s a transformative journey that demands expertise, dedication and innovation to which we bring industry-leading best practices, ensuring that our clients cloud deployments meet the highest standards of performance, scalability, security and reliability.

這是一趟變革之旅，需要專業知識、奉獻精神和創新，我們將帶來業界領先的最佳實踐，確保我們客戶的雲端部署符合效能、可擴展性、安全性和可靠性的最高標準。

Our suite of managed cloud services, which includes services such as NOC-as-a-Service, SOC-as-a-Service, DevOps-as-a-Service, FinOps-as-a-Service and much more tailored to address critical aspects of cloud operation and clients business continuity, empowering our clients to focus on their core competencies, while leading the management and optimization of the cloud and IT system environments to us.

我們的託管雲端服務套件，包括 NOC 即服務、SOC 即服務、DevOps 即服務、FinOps 即服務等服務，以及更多為解決關鍵問題而量身定制的服務雲端營運和客戶業務連續性方面，使我們的客戶能夠專注於他們的核心競爭力，同時主導雲端和IT系統環境的管理和最佳化。

The global cloud services market continues to experience rapid growth with businesses of all sizes recognizing the benefit of migrating to the cloud.

全球雲端服務市場持續快速成長，各種規模的企業都意識到遷移到雲端的好處。

The managed cloud service market, in particular, is projected to witness substantial expansion with double-digit CAGR during the due to the increasing complexity of cloud environments and the need for specialized expertise.

特別是，由於雲端環境的複雜性不斷增加以及對專業知識的需求不斷增加，託管雲端服務市場預計將以兩位數的複合年增長率大幅擴張。

As of today, Magic has over 300 logos consuming its managed cloud services.

截至目前，Magic 已有 300 多個商標使用其託管雲端服務。

What sets Magic apart is its deep domain expertise, a customer-centric approach and a proven track record of delivering successful cloud transformation.

Magic 的獨特之處在於其深厚的領域專業知識、以客戶為中心的方法以及成功實現雲端轉型的良好記錄。

Our team of seasoned professionals leverages their expertise across the three major cloud platforms, AWS, GCP and Azure, and are well positioned to provide our customers with optimal solutions tailored to their unique needs.

我們經驗豐富的專業團隊利用他們在三大雲端平台（AWS、GCP 和 Azure）上的專業知識，能夠為客戶提供適合其獨特需求的最佳解決方案。

Our strategic focus centers on being industry leaders in artificial intelligence, AI and generative AI.

我們的策略重點是成為人工智慧、人工智慧和產生人工智慧領域的產業領導者。

This strategic alignment allows us to cater to a diverse clientele, ranging from digital native technology companies to traditional enterprises.

這種策略聯盟使我們能夠滿足從數位原生技術公司到傳統企業的多元化客戶需求。

By harnessing the power of AI and generative AI, we aim to empower businesses to enhance efficiency and competitiveness in their respective domains.

透過利用人工智慧和生成式人工智慧的力量，我們的目標是幫助企業提高各自領域的效率和競爭力。

Proceeding to address our fourth quarter financials, in the fourth quarter of 2023, our revenues in North America amounted to $51.3 million, which is approximately $30.4 million or 37% lower compared to the fourth quarter of 2022 and $7.2 million or 12% lower compared to the third quarter of 2023, mainly due to additional cutbacks made by several clients in the US, among which some of our largest customers during the second half of the third quarter, which decided to reduce expenses and put on hold IT investment decisions resulting in a decrease of close to 600 of our US specialists compared to the respective quarter last year.

繼續討論我們的第四季財務數據，2023 年第四季度，我們在北美的營收達到5,130 萬美元，比2022 年第四季約減少3,040 萬美元，即減少37%，比2022 年第四季減少720 萬美元，減少12%。去年同期相比，我們的美國專家減少了近600 名。

Revenue from our Israeli operation amounted to $54.3 million, up by 9.5%, compared to $49.6 million reported in the fourth quarter of 2022.

我們以色列業務的營收達 5,430 萬美元，較 2022 年第四季的 4,960 萬美元成長 9.5%。

The impact of the continued devaluation of the new Israeli shekel versus the US dollar was a material factor in reducing the increase of our dollar reported Israeli market revenue.

以色列新謝克爾兌美元持續貶值的影響是減少以色列市場收入成長的重要因素。

On a constant currency basis, calculated based on the average currency exchange rate for the three months ended December 31, 2022, revenues for the fourth quarter of 2023 of our Israeli operation would have increased by an additional $5.6 million to $59.9 million overall, reflecting a year over year growth of 20.8% in real terms.

以固定匯率計算，根據截至 2022 年 12 月 31 日止三個月的平均貨幣匯率計算，我們以色列業務 2023 年第四季的營收將額外增加 560 萬美元，達到 5,990 萬美元，反映出同比實際成長20.8%。

This demonstrates our strong performance in the region and reconfirms our long-term strategic decision to focus on mature, stable and technology-driven sectors such as healthcare, which accounts for 20% of our business, high-tech, which accounts for 25%, defense 10%, finance 15%, and the public sector 5%, which allowed us to partially compensate for the current slowdown we experience in North America.

這證明了我們在該地區的強勁表現，並再次確認了我們的長期戰略決策，即專注於成熟、穩定和技術驅動的行業，例如醫療保健（占我們業務的20%）、高科技（佔25 %）、國防 10%，金融 15%，公部門 5%，這使我們能夠部分彌補北美目前經歷的經濟放緩。

Turning now to profitability, despite the significant currency headwind and the problems with our US-based revenues during the second half of 2023, we were nevertheless able to increase our gross margin for the fourth quarter of 2023 by 150 basis points to 30.8% of revenues or $38.6 million, compared to 29.3% in the corresponding quarter of 2022, in which it was $43.2 million.

現在轉向盈利能力，儘管 2023 年下半年存在重大貨幣逆風以及我們在美國的收入存在問題，但我們仍然能夠將 2023 年第四季度的毛利率提高 150 個基點，達到收入的 30.8%或3860 萬美元，而2022 年同期為4,320 萬美元，增幅為29.3%。

The breakdown of our revenue mix for the year of 2023 was approximately 19% related to our software solutions, with a gross margin of approximately 64% and 81% related to our professional services, with a gross margin of approximately 21%.

2023 年我們的收入組合細分中，約 19% 與我們的軟體解決方案相關，毛利率約為 64%；81% 與我們的專業服務相關，毛利率約為 21%。

In 2022, approximately 17% of our revenues were attributable to our software solutions segment, with a gross margin of approximately 64%, same as this year, and 83% related to our professional services, with a gross margin of approximately 21%, again, same as this year.

2022年，我們約17%的收入來自軟體解決方案部門，毛利率約為64%，與今年相同；83%來自我們的專業服務，毛利率再次約為21% ，和今年一樣。

The breakdown of our gross profit mix for the year was approximately 42% related to our software solutions and 58% related to our professional services, compared to 39% and 61% in the same period last year.

在本年度毛利組合的細分情況中，約 42% 與我們的軟體解決方案相關，58% 與我們的專業服務相關，而去年同期分別為 39% 和 61%。

Our non-GAAP operating income for the fourth quarter of 2023 fell on an absolute basis, while increasing on a percentage basis, compared to the corresponding period of 2022.

與 2022 年同期相比，我們 2023 年第四季的非 GAAP 營業收入絕對值下降，但百分比增加。

It was $17.7 million, compared to $18.7 million in the same period last year.

該數字為 1,770 萬美元，而去年同期為 1,870 萬美元。

This reflects an operating margin of 14.1% for the quarter, compared to 12.7% in the fourth quarter of 2022.

這反映出該季度的營業利潤率為 14.1%，而 2022 年第四季的營業利潤率為 12.7%。

On a constant currency basis, calculated based on average currency exchange rates for the three month period ended December 31, 2022, non-GAAP operating income for the fourth quarter of 2023 would have decreased by 2.8% to $18.2 million for the quarter.

以固定匯率計算，根據截至 2022 年 12 月 31 日止三個月期間的平均貨幣匯率計算，2023 年第四季的非公認會計原則營業收入將下降 2.8%，至 1,820 萬美元。

Financial expenses, during the quarter, we had financial debt interest expenses of $1.5 million, related to our $81 million financial debt, compared to $0.7 million of interest expenses recorded in the same period last year, related to a total financial debt of $51 million.

財務費用，本季我們的金融債務利息支出為 150 萬美元，與 8,100 萬美元的金融債務相關，而去年同期記錄的利息支出為 70 萬美元，與 5,100 萬美元的金融債務總額相關。

The increase in our financial expenses mainly resulted from the increase in our overall debt in 2023, and in our interest rate level, as the majority of our debt bears variable interest rates, which has been subject to higher interest rates in 2023, compared to the same period last year.

我們的財務費用增加主要是由於2023年我們的整體債務增加，以及我們的利率水準增加，因為我們的大部分債務採用浮動利率，與2023年相比，我們的利率水準較高。

Net income attributable to non-controlling interest.

歸屬於非控制權益的淨利。

As our business combination model has often relied on keeping formal shareholders in acquired entities as minority stakeholders, in addition to their managerial role in such entities, we are allocating a portion of our net income to those minorities shareholders.

由於我們的業務合併模式通常依賴將被收購實體中的正式股東保留為少數股東，因此除了他們在這些實體中的管理角色外，我們還將淨收入的一部分分配給這些少數股東。

Net income attributable to non-controlling interest increased $1.5 million, compared to $1.6 million for the same period last year.

歸屬於非控制權益的淨利潤增加了 150 萬美元，而去年同期為 160 萬美元。

Our non-GAAP net income for the fourth quarter decreased by 24% to $11.6 million or $0.24 per fully diluted share, compared to $13.4 million or $0.27 per fully diluted share in the same period last year, which was a product of the reduction in our operating income and increase in financial expenses resulting from increased level of debt and increased bank interest rate.

我們第四季的非公認會計準則淨利潤下降了24%，至1,160 萬美元，即完全稀釋每股0.24 美元，而去年同期為1,340 萬美元，即完全稀釋每股0.27 美元，這是我們的淨利潤減少的結果。

Turning now to the full year results for the 12 months that ended December 31, 2023. 2023 revenues decreased to $535.1 million, down approximately 5.6% for $568.8 million in 2022.

現在轉向截至 2023 年 12 月 31 日的 12 個月的全年業績。

As we already mentioned, during the year the effect of the currency fluctuation on our revenues over the course of the year was significant compared to the corresponding year.

正如我們已經提到的，與去年相比，年內貨幣波動對我們全年收入的影響較大。

On a constant currency basis, calculated based on the average currency exchanges for the 12 months ended December 31, 2022, revenues for 2023 would have decreased by approximately 1.6% to $557.9 million compared to 2022, $22.8 million higher than our reported revenue figures for the year.

以固定匯率計算，根據截至2022 年12 月31 日的12 個月平均匯率計算，2023 年的收入將比2022 年下降約1.6%，至5.579 億美元，比我們報告的2022 年收入數據高出2,280萬美元。

Turning now to profitability, despite the significant currency headwind, the problems with our US-based revenues during the second half of 2023, we were nevertheless able to increase our gross margin for the year by 120 basis points to 29.6% of revenues or $158.4 million, compared to 28.4% in 2022, in which it was $160.8 million.

現在轉向獲利能力，儘管面臨巨大的貨幣逆風以及 2023 年下半年我們在美國的收入出現問題，但我們仍然能夠將今年的毛利率提高 120 個基點，達到收入的 29.6% 或 1.584 億美元，而2022年為1.608 億美元，為28.4%。

Our non-GAAP operating income for the year fell on an absolute basis while increasing on a percentage basis compared to the corresponding period of 2022.

與 2022 年同期相比，我們本年度的非 GAAP 營業收入絕對值下降，但百分比增加。

It was $71.8 million, compared to $74.5 million in the same period last year.

該數字為 7,180 萬美元，而去年同期為 7,450 萬美元。

This reflects an operating margin of 13.4% for the year, compared to 13.1% in 2022.

這反映出今年的營業利益率為 13.4%，而 2022 年為 13.1%。

On a constant currency basis, calculated based on average currency exchanges for the 12 months period ended December 31, 2022, non-GAAP operating income for the year would have reached to $74.5 million same as last year.

以固定匯率計算，根據截至 2022 年 12 月 31 日止 12 個月期間的平均匯率計算，本年度非 GAAP 營業收入將達到 7,450 萬美元，與去年持平。

Our non-GAAP net income for the year decreased by 6.5% to $48.4 million or $0.99 per fully diluted share, compared to $51.7 million or $1.05 per fully diluted share in 2022, which was a product of the reduction in our operating income and increased financial expenses resulting from increased level of debt and increased bank income.

我們本年度的非公認會計準則淨利潤下降了6.5%，至4840 萬美元，或完全稀釋每股0.99 美元，而2022 年為5170 萬美元，或完全稀釋每股1.05 美元，這是我們營業收入減少和財務增加的結果。

Turning now to the balance sheet, as of December 31, 2023, our cash and cash equivalents and short-term bank deposits amounted to approximately $107 million same as of September 30, 2023.

現在轉向資產負債表，截至 2023 年 12 月 31 日，我們的現金和現金等價物以及短期銀行存款截至 2023 年 9 月 30 日約為 1.07 億美元。

Our total financial debt as of December 31, 2023 amounted to $81 million, compared to $88 million as of the end of the previous quarter.

截至 2023 年 12 月 31 日，我們的財務債務總額為 8,100 萬美元，而上一季末為 8,800 萬美元。

Our cash flow from operating activities was $12.4 during the fourth quarter of 2023, compared to $12.1 million in the same period of 2022.

2023 年第四季我們的經營活動現金流量為 12.4 美元，而 2022 年同期為 1,210 萬美元。

Our cash flow from operating activities for the year increased 29% to $77.9 million, compared to $60 million, excluding payments of deferred and contingent considerations related to acquisitions recorded under cash flow from operating activities.

我們本年度的經營活動現金流量成長了 29%，達到 7,790 萬美元，而此前為 6,000 萬美元，不包括與經營活動現金流量項下記錄的收購相關的遞延和或有對價的付款。

In closing, I would like to turn to our annual revenue guidance for 2024.

最後，我想談談我們 2024 年的年度收入指引。

As we stated on our third quarter earnings call, as of the third quarter, our business activity in North America experienced a significant slowdown side-by-side to the outbreak of Israeli war against the terrorist organization Hamas, which, among other things, has led to drafting to active military service of approximately 200 of our 1,700 Israeli employees.

正如我們在第三季財報電話會議上所說，截至第三季度，隨著以色列針對恐怖組織哈馬斯的戰爭爆發，我們在北美的業務活動大幅放緩。 200 人應徵入伍服現役。

We acknowledge that while short-term conditions are not ideal, we are nevertheless optimistic that in 2024, once the major part of the war in Israel would also be behind us, we expect to return to our normalized historical growth rate in the mid-term.

我們承認，雖然短期情況並不理想，但我們仍然樂觀地認為，到 2024 年，一旦以色列戰爭的主要部分也結束，我們預計將在中期恢復到正常的歷史成長率。

As such, we anticipate 2024 revenues to be in the range between $540 million and $550 million, based on current currency exchange rates.

因此，根據目前貨幣匯率，我們預計 2024 年營收將在 5.4 億美元至 5.5 億美元之間。

This guidance for 2024, when measured against our annualized 2023 fourth quarter revenue on a go-forward basis, reflects an annual growth of 7.5% to 9.5%.

與我們的 2023 年第四季年化收入相比，2024 年的指引反映了 7.5% 至 9.5% 的年增長率。

Magic has a well-established track record of growth, profitability and high cash generation.

Magic 在成長、獲利能力和高現金產生方面擁有良好的記錄。

Across the globe, our dedicated team is resolutely focused on executing our strategic vision to not only restore but compress our previous height, thereby ensuring sustained growth and the continual enhancement of shareholders value.

在全球範圍內，我們的專業團隊堅定地專注於執行我們的策略願景，不僅恢復而且壓縮我們之前的高度，從而確保持續成長和股東價值的持續提升。

I would like to thank our clients and shareholders for their continued support and trust, and we look forward to continue to deliver results on your behalf.

我要感謝我們的客戶和股東一直以來的支持和信任，我們期待繼續為您帶來成果。

With that, I will turn the call over to the operator for questions.

這樣，我會將電話轉給接線生詢問問題。

(Operator instructions)

（操作員說明）

Chris Reimer, Barclays.

克里斯·雷默，巴克萊銀行。

Hi.

你好。

Thanks for taking my questions and congratulations on the strong results.

感謝您回答我的問題並祝賀我們取得了優異的成績。

I was wondering if you could provide any color on the outlook and maybe some of the contributing factors in arriving at your revenues range.

我想知道您是否可以提供有關前景的任何信息，以及達到您的收入範圍的一些影響因素。

Basically, if we separate between the US market, the North American market and the Israeli market, in the Israeli market, we saw in 2023 compared to 2022 a continued strong momentum, by the way, despite the events that we are currently experiencing in Israel and the fact that we had all through the quarter a significant amount of employees drafted to the Israeli effort against Hamas.

基本上，如果我們區分美國市場、北美市場和以色列市場，在以色列市場，我們看到與 2022 年相比，2023 年持續強勁的勢頭，順便說一句，儘管我們目前在以色列經歷了一些事件事實上，整個季度我們都有大量員工被徵召加入以色列對抗哈馬斯的行動。

I think that what drove our revenues significantly higher was, first of all, the fact that we are operating in strong sectors in Israel, like the finance sector and the high-tech sector and the and of course, the defense sector, which, because of the events in Israel, had to accelerate projects, deliverables and even increase the level of operations that we had with them prior to the happenings in Israel.

我認為，推動我們收入大幅成長的原因首先是我們在以色列的強勢部門開展業務，例如金融部門和高科技部門，當然還有國防部門，因為以色列發生的事件，必須加快專案、交付成果，甚至提高我們在以色列事件發生之前與他們的合作程度。

With that, I would say that, when we show guidance for growth next year between 7.5% to 9.5%, still I think that the second half is expected to be significantly higher than in the first half.

話雖如此，我想說的是，當我們給出明年 7.5% 至 9.5% 之間的成長指引時，我仍然認為下半年預計將明顯高於上半年。

If I need to assume, I would assume that 20% to 25% of the growth will happen during the first half and the rest will happen during the second half of 2024.

如果需要假設的話，我會假設 20% 到 25% 的成長將發生在 2024 年上半年，其餘的將發生在下半年。

Got it.

知道了。

And how would you describe the environment in the US versus the last two quarters?

您如何描述美國過去兩季的環境？

Have you seen any change?

你看到有什麼改變嗎？

I think we saw that things have come down a bit, so we don’t face any more cuts.

我認為我們看到情況有所好轉，因此我們不會再面臨任何削減。

And we’re trying, it’s a bit, we don’t want to tend to sound too optimistic, but we start to see new hiring's.

我們正在嘗試，只是一點點，我們不想聽起來過於樂觀，但我們開始看到新的招募。

But, yes, it’s on a small scale, therefore we prefer to be conservative.

但是，是的，規模很小，因此我們更願意保守。

Got it.

知道了。

Thanks a lot.

多謝。

That’s it for me.

我就是這樣。

Maggie Nolan, William Blair.

瑪吉諾蘭、威廉布萊爾。

Hi.

你好。

Thank you for all the detail.

謝謝你提供的所有細節。

Can you talk about talent management and your utilization and margin targets for 2024, given the changes in the client base, as well as the draft in Israel?

鑑於客戶群的變化以及以色列的選秀，您能否談談人才管理以及 2024 年的利用率和利潤目標？

I think that currently, and again, looking forward next year, as we said, in the mid-term to return to our regular pace of the operation or growth level, I think that our gross margins should remain relatively stable at around 29%.

我認為目前，再次展望明年，正如我們所說，在中期恢復到我們正常的營運節奏或成長水平，我認為我們的毛利率應該保持相對穩定在29%左右。

As I mentioned during the call, our gross margin from the software side of our operation is, if you look back for three years, five years, seven years back, you see that it is around 64%.

正如我在電話會議中提到的，我們營運中軟體的毛利率是，如果你回顧三年、五年、七年前，你會發現它約為 64%。

Our gross margin from our professional services is around between 21% or 22% also going forward.

未來我們專業服務的毛利率也將在 21% 或 22% 左右。

I think that those margins are pretty stable going forward.

我認為這些利潤率未來相當穩定。

The shift sometimes on our weighted average gross margin is, as in this year, goes because of the changes, because of the mix between those two operations, because of the fact that the level of our professional services went down significantly in the US market, lowering our lowest part of the margin business, we managed to experience higher margins on average.

有時我們的加權平均毛利率會發生變化，就像今年一樣，是因為這些變化，因為這兩個業務之間的混合，因為我們的專業服務水平在美國市場大幅下降，透過降低利潤率最低的業務部分，我們平均獲得了更高的利潤率。

Again, looking back, I think that the 13% operating margin is what we are currently always aiming to be around or at that level.

再次回顧過去，我認為 13% 的營業利潤率是我們目前始終追求的目標水準。

Thank you.

謝謝。

With respect to your revenue guidance for the year, what are the foreign currency assumptions baked into that guidance?

關於您今年的收入指導，該指導包含哪些外幣假設？

As I mentioned on the call, we take the current, we don’t try to anticipate the fluctuation of the currency.

正如我在電話中提到的，我們順應潮流，我們不會試圖預測貨幣的波動。

Otherwise, we would have been in other parts of business, not in IT.

否則，我們就會從事其他業務領域，而不是 IT 領域。

We use the current level of the currency exchange rate.

我們使用目前的貨幣匯率水準。

And on a year over year basis, what is roughly the impact using the current level?

與去年同期相比，使用當前水準的影響大致是多少？

Basically, the average in 2023 was around 3.69. The current exchange rate is 3.65. That’s low, I don’t, so currently, there shouldn’t be any significant difference except for Q4, where the average rate was around 3.8. Today, we are at 3.65. So again, on the Israeli side of our operation, 40% of our revenues today that should pick up our profit a little bit.

基本上2023年的平均值在3.69左右。目前的匯率是3.65。我不這麼認為，這個數字很低，所以目前，除了第四季度之外，應該不會有任何顯著差異，該季度的平均比率約為 3.8。今天，我們的價格是 3.65。同樣，在我們業務的以色列方面，我們今天收入的 40% 應該會稍微增加我們的利潤。

Thank you.

謝謝。

(Operator instructions)

（操作員說明）

There are no further questions at this time.

目前沒有其他問題。

Mr. Bernstein, would you like to make your concluding statement?

伯恩斯坦先生，您願意做一下總結嗎？

Yeah.

是的。

So, thank you everyone for joining the call.

所以，感謝大家加入這通通話。

We hope to bring good news in the near future and thank you for joining us.

我們希望在不久的將來帶來好消息，並感謝您加入我們。

Thank you.

謝謝。

This concludes the Magic Software Enterprises Ltd 2023 fourth quarter results conference call.

Magic Software Enterprises Ltd 2023 年第四季業績電話會議至此結束。

Thank you for your participation.

感謝您的參與。

You may go ahead and disconnect.

您可以繼續並斷開連線。