Weaker earnings at Vasco and DST drag Finextra50 lower

Weaker earnings at Vasco and DST drag Finextra50 lower

Weaker than expected earnings for several US fintech stocks dragged the Finextra50 Financial Technology Index down one percent to 85.80 on Friday in a week that saw very few companies post significant gains. Orc and Advent were among those bucking the trend.

Last week online security vendor Vasco Data Security reported a 15% drop in operating income for the first quarter, amid signs of a slowdown in the approval process from banking clients. This drove its share price down 32.90% for the week. It closed Friday at $9.71.

DST Systems also saw a significant share price fall on the back of earnings statement last week. Although its revenue and net income rose, its adjusted earnings fell to $55.2 million, or 86 cents per share, from $62.6 million, or 87 cents per share, last year. That result fell short of the 92 cents per share expected by analysts, according to Reuters Thomson.

The company was downgraded from 'buy'to 'neutral' by Merrill Lynch last week on account of the quarterly figures as well as a perceived change in revenue mix, with a shift towards subaccounts, which have lower incremental sales.

Revenue and net income rises were attributed to growing fees from its mutual fund shareholder processing business. But non-GAAP adjustments had to be made due to tax issues and loss on share holdings. Pre-adjustment net income rose to $72.2 million from $65.4 million in the year-ago period. But operating revenue rose just 1 percent to $430.8 million from $426.2 million last year.

Other index constituents to see significant falls last week were:

Very few companies saw significant rises last week, but Orc Software managed to post a healthy 9.09% increase for the week to close Friday at SEK114.00. On Thursday last week the company held its annual general meeting, which approved the Board of Directors' proposed dividend of SEK4.00 per share. The company also announced last week that Orc Trader and Liquidator customers, as well as anyone requiring direct market access to Chi-X Canada, can now use Orc's market connectivity solution to trade on Chi-X Canada.

Investment management system vendor Advent Software also rose 8.24% to $43.34 ahead of this week's earnings announcement.

Credit scoring specialist Fair Isaac began to regain some of the ground it has lost due to the US sub-prime crisis, rising 4.13% to $26.70, while in Europe Oberthur Card Systems rose 4.87% to EUR 4.74.

Index comparison

More information on the Finextra50 Financial Technology Index methodology and constituent stocks can be found here.

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