Swiss core banking systems vendor Temenos has dodged the fall-out from the ongoing credit crunch, reporting a healthy rise in revenue and earnings for Q1 2008 and raising its year-end guidance.
For the first quarter ending 31 March 2008, Temenos is reporting a hefty 47% increase in revenue to US$88.4 million, compared to $60.3 million a year ago.
Temenos says it signed 10 new core banking clients in the quarter. Licence revenue was up 33% to $31.1 million, from $23.4 million last year.
Operating profit for the quarter was $6.5 million, compared with $5.2 million in the same period last year, an increase of 25%. The vendor says margin for the quarter was lower than in the prior year, reflecting a change in the sales mix towards lower margin service revenue, as well as the mix in Q1 2007 being skewed by "extraordinary licence growth of 109%".
Ebit came in at $6.5 million for Q1 2008, compared to 5.2 million in the year ago period. Net income rose to $7.0 million in the quarter - Temenos says this represents an increase of 67% on the prior year and was boosted by foreign exchange gains.
Commenting on the results, Temenos CEO Andreas Andreades says the company has managed to "grow licence and total revenue very strongly against a tough comparative period" and "materially exceed market expectations".
Andreades says the credit crunch is presenting challenges for customers "but we have still to see any slowdown in our business".
"Our clients are increasingly focused on ways to save costs and we are confident that our systems' ability to automate processes, consolidate systems and reduce maintenance expenses, especially when overlaid with their capacity to generate revenue synergies, will see banks continue to embark on transformational projects," he adds. "While constantly vigilant to changes in demand, we are sufficiently optimistic about the depth and cover in our pipeline to be raising guidance for the full year."
The company's revised 2008 outlook is for total revenue of $415 million, 26% above last year and EBIT of $87.5 million, 40% above 2007 levels.
In a presentation accompanying its results statement the vendor says it has seen no slow down in business due to its "minimal exposure" to the investment banking sector and any exposure to the turbulent US market is chiefly through its alliance with Metavante.
Furthermore, the firm says its clients are spread across retail, universal, private and wholesale banks and it has strong presence in the emerging markets - which account for 66% of licences.
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In a separate move, US banking group JPMorgan is working with Temenos on a $30 million project to implement a centralised operating platform to support the expansion of its global treasury management and liquidity services businesses.
The new platform will be based on T24 Model Bank, a pre-configured version of the vendor's T24 platform. Work has already begun on the deployment of the technology, with a pilot slated for later this year.
Temenos says its technology will "bring uniformity to the bank's product offerings" and enable JPMorgan to offer "a consistent set of services across the world, and utilise robust infrastructure to deliver richer data and real-time reporting to clients".
The technology allows for a single version of the system to be rolled out around the globe, offering a single client view across an enterprise, says Temenos. Its modular features enable accommodation of local requirements and variants including regulatory and tax requirements.
Sue Webb, EVP, global core cash management, JPMorgan Treasury Services, says: "The global marketplace is where we expect to see significant growth in our business going forward, and we recognise that having the most robust technology capabilities possible will be a key driver in achieving our goals."
In addition to the $30 million commitment, JP Morgan says it will make additional significant technology investments to support its international expansion.