Swiss core banking vendor Temenos has posted a 49% drop in third quarter net profit as foreign exchange losses take a chunk out of otherwise impressive earnings.
Revenue for the third quarter was $100.4m, up from $70.8m in the same period last year, representing growth of 42%. Licence revenue for the quarter was $35.3m, 26% ahead of the previous year.
Operating profit for the quarter was $11.2m, compared with $6.2m in the same period last year, an increase of 79%, with margins at 11.1%, 230 basis points higher than in the prior year on the back of cost control initiatives.
However, net income shrunk by 49% to $5 million as a result of non-cash foreign exchange losses resulting from re-translation of financial instruments and closing balances. Adjusted EPS was $0.13 in the quarter compared to $0.17 in the same period last year.
Temenos CEO Andreas Andreades remains bullish about the firm's prospects, despite the ongoing financial crisis. "We knew that our pipeline of deals was robust going into the quarter, but what was pleasing was that our conversion rate remained high," he says. "Licence growth drivers in the third quarter - like investment in growth segments, the replacement of obsolete systems, cost reduction - are equally prevalent in the fourth quarter pipeline deals and so we anticipate similar high conversion levels."
Looking ahead, he says good visibility and a strong pipeline gives no reason for the firm to adjust its expectations for FY09.
Markets were unmoved by the news, leaving the Temenos share price hovering in the range Sfr15.50 - Sfr16.50, way off its year high of Sfr34.60.