Trintech Q2 sales up; narrows losses

Source: Trintech Group

Trintech Group (NASDAQ: TTPA), a leading global provider of financial software and services specializing in reconciliation workflow, revenue enhancement, transaction risk management, and compliance for commercial, financial, and healthcare markets, today announced second quarter revenues of $8.9 million, an Adjusted EBITDA loss of $226,000 and a net loss for the quarter of $1.0 million.

Highlights:
  • Revenue amounted to $8.9 million compared to $6.0 million in Q2 last year, representing 48 percent growth.
  • Gross margin amounted to $6.0 million in Q2, representing 68% of revenue, compared to $4.6 million and 76% in Q2 last year. The fall in gross margin percentage was primarily due to lower margins from the healthcare business acquired in the fourth quarter of fiscal 2007.
  • Trintech has increased expenditure in research and development from $1.1 million in Q2 last year to $1.3 million in the same quarter this year. The increase was primarily due to the inclusion of costs related to the healthcare business.
  • Trintech has also increased expenditure quarter on quarter in sales and marketing from $1.8 million in Q2 last year to $3.0 million in the same quarter this year. The increase was primarily due to the inclusion of costs related to the healthcare business and increased investment in growing the sales and distribution network for Trintech's reconciliation products both in the USA and internationally.
  • Trintech increased expenditure in general and administrative from $1.9 million in Q2 last year to $2.7 million in the same quarter this year. The increase was primarily due to the inclusion of costs related to the healthcare business and higher accounting, legal and compliance costs in Q2 this year.
  • Trintech incurred an Adjusted EBITDA loss of $226,000 for Q2 compared to an Adjusted EBITDA loss of $974,000 for the corresponding period last year.
  • Combined basic and diluted net loss per equivalent ADS for the quarter ended July 31, 2007 was $0.07, compared with a basic and diluted net loss per equivalent ADS of $0.14 for the quarter ended July 31, 2006.
  • Following the sale of its payments systems business to VeriFone Holdings Inc. in the third quarter of fiscal 2007, Trintech is required to present its financial results on a continuing and discontinued basis.


Cyril McGuire, Chairman & Chief Executive Officer said, "Trintech'tech's performance in Q2 was solid with a strong growth of 48% in sales revenue compared to Q2 last year. We are continuing to invest in new products and markets as we position Trintech for broader market adoption especially in new growth markets of Financial Services and Healthcare. Management is focused on organic growth opportunities and synergistic accretive acquisitions in our sector to accelerate revenue and profitability growth."

Paul Byrne, President, added, "Our strong year over year growth of 48% in revenue primarily driven by organic growth, reflects the success of the investments we have made, and will continue to make, in our sales force and marketing campaigns to generate demand for our products and services. We expect this investment across all product lines to drive sufficient revenue growth to return Trintech to EBITDA profitability for the second half of the current fiscal year. We continue to seek further partnership opportunities to expand our distribution channels and geographic reach."

Recent Highlights include:
Trintech announced that Agrium Inc., had selected AssureNET GL to automate and streamline their general ledger reconciliation process. Agrium, performing more than 1,500 reconciliations per month, will use AssureNET GL for general ledger reconciliation, reviews and approvals, variance analysis, manual journal entry review and approval, and closing process tasks and activities. Calgary-based Agrium Inc., (TSX and NYSE: AGU) is the largest agricultural retailer in the United States, operating more than 400 retail farm centers, across 25 states with another 30 facilities in Argentina and Chile.

Trintech announced that the Charity Financial Services division of Charities Aid Foundation (2007 recipients of the Queen's Award for Enterprise) had selected Trintech to improve financial transaction management across its Fundraising Support business. The Trintech solution will integrate with donor and financial administration systems, as well as business ledger systems to ensure more efficient reconciliation workflow and enhanced visibility to and control of funds. The Charities Aid Foundation (CAF) is a registered UK charity that is committed to effective giving, providing a range of specialist services to donors, companies and charities. CAF manages £2.2bn of individual, company, and charity funds, and helps to distribute approximately £300m annually across six continents.

Trintech announced that Aera Energy LLC (Aera) had selected AssureNET GL to automate general ledger reconciliation, review, and certification processes for accounting compliance. One of California's largest oil and gas producers, Aera, has properties that extend from the Los Angeles Basin to Coalinga. Its daily oil and gas output accounts for approximately 30% of the Californian state's production.

Trintech announced that United States Beef Corporation had selected ReconNET to automate the reconciliation of its cash, credit card, and gift card transactions, and the DataFlow Transaction Network to collect, aggregate, and deliver bank data. The automation of manual reconciliation and streamlined data delivery will enable United States Beef Corporation to increase organizational controls, reduce exposure to risk, and improve productivity. United States Beef Corporation has rapidly grown ever since the opening of its first Arby's restaurant in 1969. Today, the company is the largest Arby's franchisee in the world with over 240 restaurants in Oklahoma, Arkansas, Kansas, Illinois, and Missouri.

Trintech announced the availability of EOB PRO for ClearContracts, its web-based, revenue cycle management system. ClearContracts helps healthcare providers identify and correct underpayments due to payer non-compliance in the contract revenue cycle. EOB PRO converts paper-based Explanation of Benefits (EOBs) into Health Insurance Portability and Accountability Act of 1996 ("HIPAA") standard 835s, eliminating the intensive, manual process of posting paper EOB payments to a healthcare billing system.

Trintech held its 8th Annual General Meeting (AGM) as a public company in Dublin, Ireland on July 25, 2007. At the AGM, Cyril McGuire, Chairman and CEO, welcomed the approval by shareholders of all the ordinary and special resolutions.

Results Overview:

Continuing Operations:

Revenue in the second quarter was $8.9 million compared with $6.0 million for the corresponding quarter last year, an increase of 48 percent.

Software license revenue for the quarter ended July 31, 2007 was $4.5 million compared with $3.3 million in the corresponding quarter last year, an increase of 36 percent.

Service revenue for the quarter ended July 31, 2007 increased 61 percent to $4.4 million from $2.7 million in the corresponding quarter last year.

Total gross margin for the second quarter was $6.0 million, an increase of 31 percent from $4.6 million in the corresponding quarter last year.

Total operating expenses from continuing operations for the second quarter were $7.3 million, an increase of 42 percent from $5.1 million in the corresponding quarter last year. Adjusted EBITDA operating expenses from continuing operations for the quarter ended July 31, 2007 were $6.5 million, an increase of 42 percent on the Adjusted EBITDA operating expenses from continuing operations for the corresponding period last year. The increase in operating expenses and Adjusted EBITDA operating expenses was primarily due to the inclusion of $1.1 million operating expenses related to the healthcare business, increased investment in growing the sales and distribution network for Trintech's reconciliation products both in the USA and internationally and higher accounting, legal and compliance costs compared to the corresponding period in the prior year.

Adjusted EBITDA net loss from continuing operations was $239,000 for the second quarter compared to an adjusted EBITDA net income of $164,000 from the corresponding quarter last year.

Trintech's balance sheet remains strong with net cash and cash equivalent balances of $23.0 million as of July 31, 2007. Net cash usage for the three months ended July 31, 2007 was $1.5 million, which included payments relating to the sale of the Payments business of $331,000.

During the quarter ended July 31, 2007, Trintech did not purchase any shares via the share buy-back program. As a result, $2.9 million remains available for future repurchases under this program as at July 31, 2007.Download the document now 18.5 kb (PDF File)

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