Despite recording a 15% decline in revenue for the second quarter, Swiss core banking supplier Temenos says its cost cutting programme has left it in a strong position to navigate the downturn.
Revenue for the quarter was $81.9 million, down from $95.9 million in the same period the previous year. Licence revenue for the quarter was down 19% to $27.3 million.
Net profit was $7.3 million, down from $8.6 million in Q2 2008 although operating profit was up four per cent to $10.5 million.
The vendor says operating cashflow has been vastly improved to $21.3 million - compared to -$8.1 million - representing 117% of Ebitda.
Andreas Andreades, CEO, Temenos, says: "We knew the environment would be difficult in 2009, but through early, decisive action and solid execution, we are delivering better profits and cashflow - while continuing to take market share - and so leaving ourselves with the flexibility and resources to exploit fully market opportunities."
Temenos has been actively cutting costs and laying off staff in an effort to improve margins and retain profitability.
"For some time, we have been reshaping our delivery model to become more profitable and less working capital-intensive - through better processes, greater levels of offshoring, stricter payment terms - but the pace of change has been accelerated," says Andreades.
Temenos says it expects full year Ebit margins of 19-20% on a cost base of $310 million. Full year maintenance revenues are expected to be no less than $118 million with FY services to fall within the range of $130 million and $140million.
Meanwhile, the cash generation outlook has been increased to reflect stronger performance and the proceeds of the recent settlement with Fidelity acquisition target Metavante over a disbanded US sales and marketing joint venture. Operating cash for the year is expected to be $110 million, up from the previous outlook of $80 million.
"We have taken up significantly our outlook for free cashflow generation in 2009, underlining the solidity of our current position, our capacity to take advantage of market opportunities, and the confidence with which we approach the second half of the year," concludes Andreades.