Orc reports interims

Source: Orc Software

Interim report January 1-March 31, 2008

Over 90% recurring income provides stability
Net revenue for Q1 2008 was SEK 136.5m (118.9), up by 15% compared to Q1 2007. Recurring revenue increased by 24% over Q1 2007 and now accounts for more than 90% of total revenue. Operating income was 21.1 (30.1), equal to an operating margin of 15% (25). Adjusted for foreign exchange effects, operating income was SEK 29.4m (27.0), equal to an operating margin of 22% (23).
The annualized value of existing customer contracts at the end of Q1 2008 was SEK 496.7M (396.3), up by SEK 100.4M or 25%. On a fixed exchange rate basis, the increase was 35%.

January-March 2008
  • Net revenue of SEK 136.5m (118.9)
  • Revenue growth of 15% compared to Q1 2007
  • Operating income of SEK 21.1m (30.1)
  • Operating margin 15% (25)
  • Operating margin adjusted for foreign exchange effects 22% (23)
  • Income after tax of SEK 15.2m (20.8)
  • Basic earnings per share of SEK 1.00 (1.39)

CEO Thomas Bill comments: "Orc performs well in turbulent financial market. We are seeing a continued inflow of new customers and the level of add-on sales to existing customers remains high. Our customers are continuing to invest in solutions for derivatives trading, electronic trading and automated trading.

"Contract reductions and terminations were down somewhat from Q4 2007. It is worth noting that a significantly larger share of customers expand their orders than reduce them. Furthermore, the vast majority of our customers have felt only limited effects from the ongoing turmoil in the financial market. Provided that liquidity is adequate, many of Orc's customers have opportunities for healthy profitability in a highly volatile market like that of recent months. However, we are aware that the situation could change and are monitoring developments so that we can quickly take action if needed.

"The size of the order book was adversely affected by the plunging US dollar during the quarter and foreign exchange losses on revaluation of assets and liabilities in foreign currency had a negative impact on earnings. In 2007 our earnings were also affected by foreign exchange effects, but these cancelled each other out on a full-year basis.

Orc's business model based on recurring revenue creates good stability in operations. The SEK 497m in our order book consists of contracted revenue for the coming 12 months and corresponds to 130% of operating expenses for 2007. Added to this are continuous new and add-on sales. The transition to contracts with recurring revenue for Orc cameronFIX has progressed more quickly than anticipated, contributing to a 24% increase in recurring system revenue compared to Q1 2007, and these now make up over 90% of total revenue.

"On the whole, we look forward to the remainder of 2008 with confidence and expect to increase both our revenue and order book compared to 2007."

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