Fundtech (Nasdaq:FNDT), a leader in global transaction banking solutions, today announced financial results for the second quarter of 2009.
Fundtech posted quarterly revenues of $28.3 million, an 11% decrease year-over-year, compared to second quarter revenues of $31.6 million in 2008, and an 8% increase compared to first quarter 2009 revenues of $26.1 million.
On a GAAP (Generally Accepted Accounting Principles) basis, Fundtech reported a net profit of $0.5 million or $0.03 per diluted share, for the second quarter of 2009 compared with net income of $1.7 million, or $0.10 per diluted share, in the second quarter of 2008, and net loss of ($0.9) million, or ($0.16) per diluted share, in the first quarter of 2009.
Excluding stock-based compensation and, amortization of intangibles, Fundtech's adjusted net income for the second quarter of 2009 was $1.8 million, or $0.11 per diluted share, compared with $3.0 million, or $0.18 per diluted share, in the second quarter of 2008 and $0.4 million, or $0.03 per diluted share, in the first quarter of 2009 (See Schedule A attached to this news release -- Reconciliation to GAAP).
"I am pleased that we have been able to meet guidance and sequentially improve our financial results in the second quarter" said Fundtech CEO Reuven Ben Menachem. "While market conditions remain uncertain we are starting to see some signs that the large Banks may be starting to invest in their infrastructure again. We believe that our proven success delivering large payment systems on a global scale combined with our superior technology will provide us with an important competitive advantage selling to these large global and regional banks."
- During the second quarter (excluding Accountis and Synergy) Fundtech closed 148 new deals and added 4 new bank customers.
- During the second quarter Fundtech closed 10 new system sales including 3 US Payments, 2 CASHplus, 1 Global CASHplus and 2 at BBP.
- During the second quarter Fundtech closed the sale of two Global PAYplus systems one of which was in the US and the other to a Pacific Rim Bank.
- As previously reported, on April 1 Fundtech closed through its wholly owned subsidiary Accountis the acquisition of InterSoftware. InterSoftware provides payment services to UK corporations and its 2008 revenues were approximately GBP 1.1 million. Cash consideration paid for the acquired 100% interest in InterSoftware was GBP 2.7 million.
Fundtech also announced today that its board of directors approved expanding its previously announced $10 million stock repurchase program. Under this previously approved plan Fundtech has acquired approximately 707,000 Ordinary Shares in consideration for approximately $5.8 million since November 2008. Under Israeli Companies law Fundtech is currently restricted from continuing to buy additional shares due to lack of sufficient retained earnings.
Fundtech is planning to file a petition with the Israeli courts to permit the continuation and expansion of the repurchase program. Fundtech will be asking the courts to permit the repurchase of Ordinary Shares limited to an additional investment of $10 million beyond the $5.8 million already invested since the fourth quarter of 2008. Fundtech expects to file the petition over the next few weeks and for the courts to reply to the petition within approximately 60-90 days thereafter.
Reconciliation of GAAP results to non-GAAP results
Fundtech provides 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 Fundtech 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, amortization of intangibles, impairment of goodwill and other intangible assets, deferred taxes as well as other items that management deems as non recurring items.
A detailed reconciliation of GAAP net income to non-GAAP net income is included in the attached Schedule A.
The financial guidance provided is current as of today only and Fundtech undertakes no obligation to update its estimates.
Due to the current market environment we are providing updated guidance only for the third quarter of 2009.
For the third quarter of 2009 we now expect revenues of between $29 million and $30 million, GAAP earnings per diluted share of between $0.02 and $0.06 and non-GAAP earnings per diluted share, before all amortization expenses and stock-based compensation expenses, of between $0.10 and $0.14.
Fundtech estimates that quarterly financial income for the third quarter will be approximately zero and that tax expenses, excluding deferred taxes will be approximately $300,000.
Fundtech estimates that quarterly amortization expenses for the third quarter will be approximately $500,000 and that stock-based compensation expenses will be approximately $700,000.
Fundtech's guidance for the third quarter of 2009 does not include the impact of deferred taxes and also does not include the impact of any future impairment of intangible assets, as these assets are periodically being evaluated by Fundtech's management under evolving accounting standards which are incapable of assessment in advance.
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