Temenos Group AG (SWX: TEMN), a leading provider of integrated core banking systems, today announced financial results for its third quarter 2007.
Revenue for the third quarter was USD70.8m, up from USD44.8m in the same period last year, representing growth of 58%. While all revenue lines enjoyed solid growth, licence sales were particularly strong at USD28m, an increase of 109% on the prior year.
Operating profit, net income and EPS
Operating profit for the quarter was USD6.2m, compared with USD0.5m in the same period last year, reflecting a favourable change in the sales mix, good cost control and continued improvement in services margins, which reached 8% in the quarter (up from 3% a year ago).
Gains from forward foreign exchange contracts gave an additional boost to net income, which rose to USD9.9m for the quarter against a loss of USD0.5m for Q3 2006. Net income translated into diluted EPS of USD0.16 compared to a loss if USD0.01 in the same period last year. Adjusted EPS, which excludes amortisation of acquisition-related intangibles, was USD0.17, compared to a loss of USD0.01 in the same period last year.
Commenting on the results, CEO Andreas Andreades said, “We are very pleased with the third quarter results. The desire to grow revenue, improve business agility and enhance customer service - coupled with changes in competition and regulation, such as SEPA - are causing banks to replace their core banking systems and, as these results demonstrate, we continue not only to increase our share of a buoyant market, but also to attract big, high profile clients.
“So far, we have not seen any impact on our business from the sub-prime crisis in the US and our pipeline remains strong, both into Q4, where we are well ahead of 2006 at the end of October, and into 2008. We believe that the momentum we have built up in terms of new signings will be sustained through 2008 and beyond as the many growth initiatives we have put in place, such as the partnership with Metavante in the US and the launch of ARC (our front-end product), start to gain traction. In view of our strong performance and our improved visibility over Q4, we are happy to raise guidance once more for the full year.”
- 9 new core banking clients signed in the quarter (45 in LTM), including:
- High-profile endorsement of T24’s cash management and SEPA compliance offering through the deal with Dresdner Kleinwort
- Important recognition of T24’s open and modular architecture through Banque Libano-Française’s decision to deploy T24 in an SOA environment
- An acceleration in the take-up of ARC, our front-office CRM solution, with 7 new clients added in the quarter bringing the total to 16.
- The appointment of a new Global Services Director, who will oversee the improving performance of this division.
The company’s outlook for the remainder of the year assumes a zero tax rate, a USD/EUR rate of USD0.71, a USD/CHF rate of USD1.19 and a USD/GBP rate of USD0.49.
The latest outlook, which has been raised for the third time this year, anticipates licences in the range of USD135-140m, up 38%-43% on 2006; total revenue of USD310-315m , up 43%-46% on 2006; EBIT of USD59m, up 77% on 2006, giving a margin of 19% (unchanged from previous guidance); and adjusted EPS of USD0.92.
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