Temenos doubles full year profit; inks US distribution deal

Temenos doubles full year profit; inks US distribution deal

Swiss banking systems vendor Temenos is reporting a near doubling in full year net income for 2006 to $34.4m, compared to $17.9m in 2005. The firm has also hiked its earnings outlook for 2007 by 42% on the back of a distribution deal it has signed with an un-named US vendor.

Full year revenue came in at $216.3m, up 28% on last year's $168.7m 2005.

Temenos says net profit for the fourth quarter more than doubled to $25.6m, compared to $12.9m in Q4 2005, while revenues rose 36% to $78.8m, compared to $58.1m in the same period last year.

License revenue from the vendor's T24 platform rose 90% in the fourth quarter, and 61% in the year. The vendor says new name client wins during Q4 totalled 16, bringing the total for 2006 to 41.

Maintenance revenues rose to $14.9m in Q4 2006, up 22% on Q4 2005, says Temenos, while service revenues increased by 18% in the fourth quarter, and by 25% for the second half of 2006.

Temenos is also reporting a core banking joint development and distribution agreement for the US with an un-named software and services provider.

Under the deal the US company will distribute the Temenos Core Banking (TCB) platform in the US. Temenos will retain royalties on license and maintenance fees, outsourcing fees, and professional services revenues.

The two parties will also co-operate in the development of a customised platform for the US market based on TCB. This will itially be offered to top-tier US financial institutions through an in-house licensing model, although the US company is also evaluating specific components for use in its core service bureau offering, says Temenos.

The Swiss vendor says it has entered into a non-exclusive agreement with the US firm to deploy TCB for service bureau processing in selected markets outside of the US.

The vendor expects to generate minimum contractual revenues of $102m until 2012 under the distrbution agreement, which was signed this month.

Based on improved earnings visibility and contracted minimum revenues for the US arising from the distribution agreement, Temenos says it is increasing its 2007 outlook.

The company has raised its EPS guidance to 81 cents from 66 cents, up 42$ compared with earnings of 57 cents a share for 2006. The firm's outlook for license revenues is $115m, compared to $97.9m in 2006, and it is also expecting to reach $270m of revenues in 2007, a 25% rise on $250m in 2006.

As well as growing earnings and revenues the company says it is still seeking acquisitions that will strengthen its core business. The firm says it is in the final stages of negotiatiing an acquisition that will provide "faster time to market into a key market". The name of the company was not disclosed, although Temenos does says the size of the transaction is expected to be under $20m.

The vendor has also managed to sign five previous users of the Misys Equation platform to its T24 platform. The vendor began targeting Misys customers in Q4 2005 with a pre-customised version of its T24 core banking system that is designed to provide a quick and efficient upgrade path for users of Equation.

"Implementation timeframes are now down to between six to nine months, enabling faster time to market and improving ROI," says Temenos in a statement. "We expect acceleration in the number of banks converting from Misys products as we mature our campaigns."

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