Fundtech (NASDAQ: FNDT), a leading provider of global electronic payment, settlement and cash management solutions, today announced financial results for the second quarter ended June 30, 2007.
Fundtech posted quarterly revenues of $25.4 million, an 18% increase year-over-year, compared to second quarter revenues of $21.5 million in 2006 and 10% higher than first quarter 2007 revenues of $23.2 million.
On a GAAP (Generally Accepted Accounting Principles) basis, the Company reported net income of $1.7 million or $0.10 per diluted share, for the second quarter of 2007, compared with net income of $0.8 million, or $0.05 per diluted share, in the second quarter of 2006, and net income of $0.4 million, or $0.03 per diluted share, in the first quarter of 2007.
Excluding stock-based compensation and amortization of intangibles, Fundtech's adjusted non-GAAP net income for the second quarter of 2007 was $2.8 million, or $0.17 per diluted share, compared with $2.2 million, or $0.14 per diluted share, in the second quarter of 2006 and $1.9 million, or $0.12 per diluted share, in the first quarter of 2007. Both prior quarters' adjusted non-GAAP net income also excluded amortization of capitalized software costs (See Schedule A attached to this news release - Reconciliation to GAAP).
"The second quarter of 2007 was another quarter of record revenues for Fundtech as we continue on our path of strong organic growth," said CEO Reuven Ben Menachem. "We are witnessing substantial pick up in sales activities at the high end of the payments market and, I believe that our Global PAYplus product as well as our unique domain expertise, will provide us with a meaningful competitive advantage in our long term quest to become the number one provider of both high value and low value payment solutions to the top 100 banks in the world. In addition, we are continuing to make excellent progress in our Cash Management business in the US and I am happy to report that our year-to-date revenues from this segment have grown by more than 50% year over year."
Other operational highlights:
- During the second quarter Fundtech closed 58 new deals and added 8 new bank customers.
- During the second quarter Fundtech closed 12 new system sales including 1 CLS system, 3 PAYplus USA, and 7 IGT plus at BBP.
- During the second quarter Fundtech also closed a large CASHplus in- house deal with a major US bank.
Reconciliation of GAAP results to non-GAAP results
Fundtech provides adjusted non-GAAP operating results as a supplement to its GAAP financial results. The presentation of this information should not be considered in isolation to, or as a substitute for, the financial results presented in accordance with GAAP. Management believes that non-GAAP financial measures are useful to investors because they allow for an evaluation of the Company with a focus on the performance of its core operations. Fundtech's executive management team uses these same non-GAAP measures internally to assess the ongoing performance of the Company. Since this information is not a GAAP measurement of financial performance, there are material limitations to its usefulness on a stand-alone basis, including the lack of comparability of this presentation to the GAAP financial results of other companies.
Fundtech's non-GAAP results exclude stock-based compensation, and amortization of intangibles and for the quarters prior to the second quarter of 2007 also excluding amortization of capitalized software costs.
A detailed reconciliation of GAAP net income to non-GAAP net income is included in the attached Schedule A, Reconciliation to GAAP.
The financial guidance provided is current as of today only and the Company undertakes no obligation to update its estimates.
For the third quarter of 2007 we expect revenues of between $25.5 million and $26.2 million, GAAP earnings per diluted share of between $0.10 and $0.14 and adjusted non-GAAP earnings per diluted share, before all amortization expenses and stock compensation expenses, are expected to be in the range of $0.15 to $0.19.
For fiscal 2007 we are increasing our revenue guidance and maintaining our earnings per share guidance. We currently expect revenues of between $100.0 million and $101.5 million up from the previous guidance of $99.0 million to $101.0 million, while we continue to expect GAAP earnings per diluted share of between $0.37 and $0.43 and adjusted non-GAAP earnings per diluted share, before all amortization expenses and stock compensation expenses, are expected to be in the range of $0.63 to $0.70.
We estimate that for 2007 our income tax expenses will be approximately $1.5 million while net interest income will be approximately $2.0 million.
We estimate that amortization expenses for the third quarter of 2007 will be approximately $280,000 and that stock compensation expenses will be approximately $630,000.
We estimate that amortization expenses for 2007 will be approximately $1.8 million and that stock compensation expenses will be approximately $2.6 million.
The Company's guidance for the third quarter of 2007 and full-year 2007 assumes no change in the calculation of the Company's tax provision, which currently assumes a full valuation allowance against the Company's deferred tax assets.
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