The efficiency program that was announced and launched in December 2008 is being implemented according to plan, which had a positive impact on costs for the quarter.
In combination with strong revenue and foreign exchange gains, this led to a year-over-year increase in operating income by SEK 26.6m to SEK 47.7m. Operating margin was 29%.
The annual contract value at the end of Q1 2009 was SEK 690.3m (496.7), an increase of SEK 193.6m, or 39%, compared to Q1 2008. On a fixed exchange rate basis, the increase was SEK 59.4m, or 12%.
January - March 2009
• Operating revenue of SEK 163.8m (136.5)
• Revenue growth of 20% (15)
• Operating income of SEK 47.7m (21.1)
• Operating margin of 29% (15)
• Income after tax of SEK 34.0m (15.2)
• Basic earnings per share of SEK 2.23 (1.00)
CEO Thomas Bill comments: Orc got off to a good start in Q1 2009 with an increase of SEK 45m in the Annualized Contract Value - one of our key performance metrics. In the course of one year our total value has risen by close to SEK 200m and now amounts to nearly SEK 700m. Our ability to grow in spite of the deep recession is a testament to the strength of our business model, strategy and products, even though part of the increase is due to a stronger dollar and euro.
We also achieved healthy growth in revenue. Here, we have considerable stability in that recurring revenue makes 95% of our total operating revenue. The efficiency program that we started in December 2008 has been largely completed and the resulting cost savings contributed to the period's robust earnings. Our operating margin of 29% confirms this positive picture.
We have continued investing in competitive solutions such as our new product for futures trading that will be launched during Q2.This is a market segment that Orc has previously targeted to only a limited extent.
However, there are some dark clouds on the horizon and we are taking these seriously. In response to a high share of contract reductions, particularly in Europe, and a still cautious stance among many of our major customers, we are working hard to optimize sales, service and development of solutions. It is also vital that we keep our costs down to avoid exposing ourselves to unnecessary risks in the event of further deterioration in the market. Furthermore, weakening of the US dollar or euro would have a negative impact on our revenue and margins.
We are well aware that upcoming events may affect the company negatively during the remainder of the year. But in spite of this, we expect to increase our annual contract value, revenue and income for the full year 2009 compared to 2008.