Magic Software Enterprises Ltd. (NASDAQ:MGIC) Q3 2022 Earnings Conference Call November 14, 2022 10:00 AM ET
Company Participants
Asaf Berenstin - Chief Financial Officer
Guy Bernstein - Chief Executive Officer
Yuval Lavi - Vice President of Technology and innovation
Conference Call Participants
Chris Reimer - Barclays Bank PLC
Operator
Welcome to Magic Software Enterprises’ 2022 Third Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
With us on the line today are Magic's CEO, Mr. Guy Bernstein; Magic's CFO, Mr. Asaf Berenstin; and Magic VP of Technology and Innovation, Mr. Yuval Lavi. Magic third quarter 2022 earnings release was issued before the market opened this morning, and it has been posted on the Company's website at www.magicsoftware.com.
Before we start, I'd like to remind everyone that this conference call may contain projections or other forward-looking statements. The Safe Harbor provision provided in the press release issued today also applies to the content of this call. 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.
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. A replay of this call will be available after the call on our Investor Relations section of the Company's website.
I will now turn the call over to Mr. Asaf Berenstin, CFO of Magic Software. Please go ahead.
Asaf Berenstin
Thank you, operator, and thank you, everyone, for joining us today as we report our third quarter 2022 financial results.
During the call today, I will review highlight from our third quarter results and provide an overview of our achievements. Magic delivered its strongest topline and bottom line quarterly results with revenue increasing by 19% year-over-year to approximately $144 million, exceeding market expectations and net income increasing by 14.9% year-over-year to approximately $13.5 million. Growth in Q3 was broad-based with all geographies growing in double digits accompanied by a strong pipeline.
On a constant currency basis, revenues for the third quarter of 2022 would have increased by 23% compared to the same period last year with 19% reflecting organic growth. This achievement translated to a 14.4% year-over-year increase in our non-GAAP operating income in the third quarter with operating margin reaching 12.9% down from 13.4% in the same period last year. The decrease in our gross margin is mainly attributable to the change of our revenue mix related to our software solutions versus our professional services, which I elaborate on later on this call.