- 2nd Quarter revenue a record high of $34.8 million and year-over-year growth of 23%
- 2nd Quarter GAAP EPS15 Cents /2nd Quarter Non GAAP EPS22 Cents
- Increasing annual guidance
JERSEY CITY, N.J., Aug. 4, 2010 (GLOBE NEWSWIRE) -- Fundtech Ltd. (Nasdaq:FNDT), a market leader in global transaction banking solutions, today announced financial results for the second quarter 2010. Fundtech posted quarterly revenues of $34.8 million, a 23% increase year-over-year, compared to second quarter revenues of $28.3 million in 2009, and a 4% increase compared to first quarter 2010 revenues of $33.4 million.
On a GAAP (Generally Accepted Accounting Principles) basis, Fundtech reported net income of $2.4 million, or $0.15 per diluted share, for the second quarter of 2010 compared with net income of $0.5 million, or $0.03 per diluted share, in the second quarter of 2009, and net income of $1.4 million, or $0.09 per diluted share, in the first quarter of 2010.
Excluding stock-based compensation, amortization of intangibles, and deferred taxes, Fundtech's adjusted (non-GAAP) net income for the second quarter of 2010 was $3.6 million, or $0.22 per diluted share, compared with $1.8 million, or $0.11 per diluted share, in the second quarter of 2009 and $2.5 million, or $0.16 per diluted share, in the first quarter of 2010. (See Schedule A attached to this news release -- Reconciliation to GAAP).
"Second quarter revenues and operating income set a new record high for us and 2010 is shaping up as a strong growth year in terms of both the top line -- and the bottom line," said Fundtech CEO Reuven BenMenachem. "For the first half of 2010 revenues grew year over-year by 25% and Adjusted EBITDA grew year over-year 94% from $5.7 million to $11.1 million. The improvement in profitability is the result of the revenue growth as well as improved efficiency associated with the scaling of our business and improved cost controls. Our increased guidance indicates that we expect strong demand to continue, especially for our main growth engine: Global PAYplus®."
Other Highlights:
- During the second quarter of 2010 Fundtech closed 107 new deals and added 8 new bank customers.
- During the second quarter of 2010 Fundtech closed 13 new system sales with banks including 3 US Payments, 1 Global PAYplus, 2 PAYplus FTS, 1 PAYplus CLS and 6 at BBP.
- For the first half of 2010 operating cash flows were $20.6 million compared to $15.4 million in the first half of 2009.
- For the second quarter of 2010 Adjusted EBITDA was $6.1 million compared to $2.9 million in the second quarter of 2009.
- During the second quarter of 2010 Fundtech acquired 205,000 ordinary shares in consideration for $2.6 million as part of its share repurchase program.
Fundtech also announced today that its board of directors approved expanding its previously announced repurchase program by an additional $15 million. Currently Fundtech has $2.2 million available for buying additional shares under previously approved board resolutions and Israeli court approvals. Under Israeli Companies Law, Fundtech is currently restricted from continuing to buy additional shares beyond that amount due to lack of sufficient retained earnings. Fundtech is planning to file a petition with the Israeli courts to permit the continuation and expansion of the repurchase program.
Fundtech will be asking the courts to permit the repurchase of Ordinary Shares limited to an additional investment of $15 million and expects to file the petition over the next few weeks and for the courts to reply to the petition within approximately 60-120 days thereafter.
Reconciliation of GAAP Results to Non-GAAP Results
Fundtech provides non-GAAP operating results as a supplement to its GAAP financial results. The presentation of this information should not be considered in isolation to, or as a substitute for the financial results presented in accordance with GAAP. Management believes that non-GAAP financial measures are useful to investors because they allow for an evaluation of Fundtech with a focus on the performance of its core operations.
Fundtech's executive management team uses these same non-GAAP measures internally to assess the ongoing performance of the company. Since this information is not a GAAP measurement of financial performance, there are material limitations to its usefulness on a stand-alone basis, including the lack of comparability of this presentation to the GAAP financial results of other companies.
We are presenting Fundtech's non-GAAP net income as well as Adjusted EBITDA. We define non-GAAP net income as net income plus stock-based compensation, amortization of intangibles, impairment of goodwill and other intangible assets, impairment of marketable securities, and deferred taxes. We define Adjusted EBITDA as net income plus stock-based compensation, depreciation and amortization expenses, impairment of marketable securities, deferred and current taxes, and interest expense (income).
A detailed reconciliation of GAAP net income to non-GAAP net income and Adjusted EBITDA is included in the attached Schedule A.
Guidance
The financial guidance provided is current as of today only and Fundtech undertakes no obligation to update its estimates.
For the year 2010 Fundtech is increasing its guidance as follows:
- Fundtech estimates that revenues for 2010 will be between $138 million and $140.0 million compared to the prior guidance of $135 million and $137.5 million; that GAAP net income per diluted share will be between $0.51 and $0.57 compared to prior guidance of $0.40 and $ 0.47 and that; non-GAAP net income per diluted share, before all amortization expenses, stock-based compensation expenses and deferred taxes, will be between $0.79 and $0.85 compared to prior guidance of $0.68 and $0.75.
- Fundtech estimates that financial expense for 2010 will be approximately $1.0 million and that tax expenses, excluding deferred taxes, will be approximately $1.9 million.
- Fundtech estimates that amortization expenses for 2010 will be approximately $1.6 million and that stock-based compensation expenses will be approximately $2.8 million.
- Fundtech estimates that the number of shares that will be used for the calculation of 2010 net income per share will be approximately 16.1 million shares.
For the third quarter of 2010 Fundtech is providing the following guidance
- Fundtech estimates that third quarter revenues will be between $35 million and $36 million; that GAAP net income per diluted share will be between $0.14 and $0.18; and that non-GAAP net income per diluted share, before all amortization expenses, stock-based compensation expenses, and deferred taxes will be between $0.21 and $0.25.
- Fundtech estimates that financial income for the third quarter will be zero and that tax expenses, excluding deferred taxes will be approximately $0.5 million.
- Fundtech estimates that quarterly amortization expenses for the third quarter of 2010 will be approximately $0.4 million and that stock-based compensation expenses will be approximately $0.7 million.
- Fundtech estimates that the number of shares used for the calculation of quarterly net income per share will be 16.1 million shares.
Fundtech's guidance does not include the impact of deferred taxes and also does not include the impact of any future impairment of intangible assets, as these assets are periodically being evaluated by Fundtech's management under evolving accounting standards which are incapable of assessment in advance.
Fundtech to Host Conference Call
The senior management of Fundtech will host a conference call at 8:30 AM (ET) today, Wednesday, August 4, to discuss Fundtech's second quarter results and to answer questions from the investment community
To participate, please call 1-877-303-7023 or +1-224-357-2223 and ask for the Fundtech call.
A replay of the conference call will be available from 10:30 AM (ET) August 4, until 11:59 PM (ET) Tuesday August 24. The replay may be accessed by dialing 1-800-642-1687 or 1+706-645-9291, conference ID: 87833637.
This call will also be web cast live on: http://www.fundtech.com. An online replay will be available until September 30, 2010.
About Fundtech
Fundtech (Nasdaq:FNDT), was founded in 1993, and is a leading provider of software and services to banks of all sizes around the world. Payments systems include wire transfers, ACH origination, cross-border payments and remittance. Cash management systems are designed for large corporate through small business clients. Fundtech operates the world's largest SWIFT service bureau. We offer an extensive line of financial supply chain applications including electronic invoice presentment and supply chain financing. And we are the leading provider of CLS systems to the world's largest banks. More than 1,000 clients throughout the world rely on Fundtech solutions to improve operational efficiency and provide greater competitiveness through innovative business-to-business services. For more information, visit www.fundtech.com.
Forward Looking Statements:
This news release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, projections of revenues, income or loss, capital expenditures, plans for growth and future operations, competition and regulation. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted or quantified. When used in this Release, the words, "estimates," "expects," "anticipates," "believes," "plans," "intends," and variations of such words and similar expressions are intended to identify forward-looking statements that involve risks and uncertainties. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements. The factors that could cause actual results to differ materially from those discussed or identified from time to time in Fundtech's public filings, including its Annual Report on Form 20-F for the year ended December 31, 2009, including general economic and market conditions, changes in regulations and taxes and changes in competition in pricing environment. Undue reliance should not be placed on these forward-looking statements, which are applicable only as of the date hereof. Fundtech undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this release or to reflect the occurrence of unanticipated events.
| FUNDTECH LTD. AND ITS SUBSIDIARIES | ||
| Condensed Consolidated Balance Sheets | ||
| (In Thousands) | ||
|
June 30, 2009 |
December 31, 2008 |
|
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 29,242 | $ 20,903 |
| Short term deposit | 1,032 | ---- |
| Marketable securities | 24,287 | 21,248 |
| Trade receivables, net | 26,138 | 23,445 |
| Deferred tax asset | 2,280 | 2,334 |
| Other accounts receivable and prepaid expenses | 6,511 | 6,527 |
| Total current assets | 89,490 | 74,457 |
| Marketable securities | 749 | 774 |
| Severance pay fund | 1,661 | 1,508 |
| Long term lease deposits | 1,889 | 1,769 |
| Long term prepaid expenses | 2,335 | 2,574 |
| Property and equipment, net | 12,155 | 13,305 |
| Goodwill, net | 37,958 | 40,228 |
| Other assets, net | 4,495 | 5,737 |
| Total assets | $ 150,732 | $ 140,352 |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Trade payables | $ 2,075 | $ 2,035 |
| Deferred revenues | 21,668 | 9,141 |
| Employee and payroll accruals | 8,027 | 7,467 |
| Other accounts payable and accrued expenses | 6,271 | 6,287 |
| Total current liabilities | 38,041 | 24,930 |
| Accrued severance pay | 3,669 | 3,344 |
| Deferred tax liability | 1,201 | 1,119 |
| Other long term liabilities | 2,005 | 2,777 |
| Total liabilities | 44,916 | 32,170 |
| Shareholders' equity: | ||
| Share capital | 49 | 49 |
| Additional paid-in capital | 161,111 | 159,558 |
| Accumulated other comprehensive income (Loss) | (1,494) | 1,828 |
| Accumulated deficit | (36,989) | (40,797) |
| Treasury stock, at cost | (16,861) | (12,456) |
| Total shareholders' equity | 105,816 | 108,182 |
| Total liabilities and shareholders' equity | $ 150,732 | $ 140,352 |
| FUNDTECH LTD. AND ITS SUBSIDIARIES | ||||
| Consolidated Statements of Operations | ||||
| (In Thousands, Except Share and Per Share Data) | ||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||
| 2010 | 2009 | 2010 | 2009 | |
| Revenues: | ||||
| Software license | $ 4,768 | $ 1,978 | $ 8,482 | $ 3,808 |
| Software hosting | 7,380 | 6,206 | 14,402 | 11,914 |
| Maintenance | 10,579 | 9,950 | 20,721 | 19,424 |
| Services | 12,033 | 10,144 | 24,564 | 19,204 |
| Total revenues | 34,760 | 28,278 | 68,169 | 54,350 |
| Operating expenses: | ||||
| Software licenses costs | 84 | 83 | 295 | 432 |
| Amortization of other intangible assets | 405 | 527 | 831 | 1,000 |
| Maintenance, hosting and services costs [1] | 15,914 | 12,864 | 31,517 | 25,007 |
| Software development [1] | 5,455 | 5,214 | 10,829 | 9,955 |
| Selling and marketing [1] | 4,606 | 4,544 | 9,112 | 8,511 |
| General and administrative [1] | 4,771 | 5,009 | 9,769 | 9,568 |
| Total operating expenses | 31,235 | 28,241 | 62,353 | 54,473 |
| Operating income (Loss) | 3,525 | 37 | 5,816 | (123) |
| Financial income (expense), net | (615) | 680 | (1,085) | 178 |
| Income taxes | (496) | (172) | (923) | (397) |
| Net income (Loss) | $ 2,414 | $ 545 | $ 3,808 | $ (342) |
| Net income (Loss) per share: | ||||
| Net income (Loss) used in computing income (Loss) per share | $ 2,414 | $ 545 | $ 3,808 | $ (342) |
| Basic income (Loss) per share | $ 0.16 | $ 0.04 | $ 0.25 | $ (0.02) |
| Diluted income (Loss) per share | $ 0.15 | $ 0.03 | $ 0.24 | $ (0.02) |
| Shares used in computing: | ||||
| Basic income per share | 15,197,440 | 15,361,724 | 15,275,326 | 15,342,159 |
| Diluted income per share | 15,919,582 | 15,800,079 | 16,035,729 | 15,609,889 |
| Adjusted non-GAAP[2] net income per share: | ||||
| Adjusted non-GAAP[2] net income used in computing income per share | $ 3,579 | $ 1,760 | $ 6,095 | $ 2,171 |
| Adjusted non-GAAP[2] net income per share | $ 0.22 | $ 0.11 | $ 0.38 | $ 0.14 |
| Shares used in computing adjusted non-GAAP[2] net income per share | 15,919,582 | 15,800,079 | 16,035,729 | 15,609,889 |
| [1] Includes charges for stock-based compensation in 2010 and 2009 | ||||
| [2] See Reconciliation from GAAP | ||||
| FUNDTECH LTD. AND ITS SUBSIDIARIES | ||||
| Consolidated Statement of Cash Flows | ||||
| (In Thousands) | ||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||
| 2010 | 2009 | 2010 | 2009 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
| Net income (Loss) | $ 2,414 | $ 545 | $ 3,808 | $ (342) |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||
| Depreciation and amortization | 1,866 | 2,223 | 3,885 | 4,312 |
| Stock-based compensation | 675 | 688 | 1,371 | 1,513 |
| Accrued interest on marketable securities and accretion amortization | 44 | 42 | 25 | 49 |
| Deferred income taxes | 85 | 168 | 148 | 87 |
| Decrease (Increase) in trade receivables | 3,002 | (1,943) | (2,834) | 1,202 |
| Decrease (Increase) in prepaid expenses and other accounts receivable | 1,598 | 342 | 96 | (1,287) |
| Increase (Decrease) in trade payables | (209) | (22) | 85 | (705) |
| Increase (Decrease) in deferred revenues | (9,165) | (996) | 12,432 | 11,052 |
| Increase (Decrease) in employee and payroll accruals | 332 | (190) | 657 | (857) |
| Increase (Decrease) in other accounts payable and accrued expenses | (941) | (398) | 622 | 259 |
| Increase in accrued severance pay, net | 54 | 78 | 254 | 102 |
| Net cash provided by (used in) operations | (245) | 537 | 20,549 | 15,385 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||
| Investment in held-to-maturity marketable securities | (7,911) | (5,217) | (19,404) | (5,217) |
| Redemption of held-to-maturity marketable securities | 13,058 | 3,104 | 16,365 | 4,519 |
| Investment in short term deposits | (1,032) | 326 | (1,032) | (367) |
| Purchase of property and equipment | (1,343) | (1,251) | (2,102) | (2,597) |
| Net change in long term lease deposits and long term prepaid expenses | (130) | (221) | (117) | (284) |
| Additional consideration in a business combination | ---- | (3,836) | (830) | (5,497) |
| Net cash provided by (used in) investing activities | 2,642 | (7,095) | (7,120) | (9,443) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
| Proceeds from issuance of share capital and | ||||
| exercise of stock options and warrants, net | 48 | 68 | 182 | 73 |
| Decrease in long term Liabilities | (9) | ---- | (25) | ---- |
| Investment in treasury stock, at cost | (2,622) | (3,565) | (4,405) | (5,090) |
| Net cash used in financing activities | (2,583) | (3,497) | (4,248) | (5,017) |
| Effect of exchange rate on cash and cash equivalents | (651) | 693 | (842) | 436 |
| Increase (decrease)in cash and cash equivalents | (837) | (9,362) | 8,339 | 1,361 |
| Cash and cash equivalents at the beginning of the period | 30,079 | 40,365 | 20,903 | 29,642 |
| Cash and cash equivalents at the end of the period | $ 29,242 | $ 31,003 | $ 29,242 | $ 31,003 |
| Appendix A | ||||
| Additional consideration in a business combination | ||||
| Working Capital | $ ---- | $ (167) | $ ---- | $ (167) |
| Long term assets | ---- | 1,804 | ---- | 1,804 |
| Long term liabilities | ---- | ---- | ---- | ---- |
| Goodwill | ---- | 2,199 | 830 | 3,860 |
| $ ---- | $ 3,836 | $ 830 | $ 5,497 | |
| Schedule A to Press Release | ||||
| Reconciliation from GAAP | ||||
| (In Thousands, Except Share and Per Share Data) | ||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||
| 2010 | 2009 | 2010 | 2009 | |
| Reconciliation of GAAP net income (loss) to adjusted EBITDA and to adjusted net income: | ||||
| Net income (loss) [1] | $ 2,414 | $ 545 | $ 3,808 | $ (342) |
| Financial income (expense), net | 615 | (680) | 1,085 | (178) |
| Income taxes | 496 | 172 | 923 | 397 |
| Amortization | 405 | 527 | 831 | 1,000 |
| Depreciation | 1,461 | 1,696 | 3,054 | 3,312 |
| Stock based compensation [2] | 675 | 688 | 1,371 | 1,513 |
| Adjusted EBITDA | $ 6,066 | $ 2,948 | $ 11,072 | $ 5,702 |
| Financial income (expense), net | (615) | 680 | (1,085) | 178 |
| Income taxes | (411) | (172) | (838) | (397) |
| Depreciation | (1,461) | (1,696) | (3,054) | (3,312) |
| Adjusted net income | $ 3,579 | $ 1,760 | $ 6,095 | $ 2,171 |
| Adjusted net income per share | $ 0.22 | $ 0.11 | $ 0.38 | $ 0.14 |
| Shares used in computing adjusted net income per share | 15,919,582 | 15,800,079 | 16,035,729 | 15,609,889 |
| [1] Net income per share (diluted) was approximately $0.15 and $0.03 for the three months ended June 30, 2010 and 2009, respectively | ||||
| Net income (loss) per share (diluted) was approximately $0.24 and $(0.02) for the six months ended June 30, 2010 and 2009, respectively | ||||
| [2] Stock based compensation | ||||
| Maintenance, hosting and services costs | $ 77 | $ 130 | $ 170 | $ 272 |
| Software development | 61 | 48 | 114 | 106 |
| Selling and marketing | 163 | 165 | 314 | 408 |
| General and administrative | 374 | 345 | 773 | 727 |
| $ 675 | $ 688 | $ 1,371 | $ 1,513 | |