Fundtech Ltd. (Nasdaq:FNDT), a market leader in global transaction banking solutions, today announced financial results for the first quarter 2010.
Fundtech posted quarterly revenues of $33.4 million, a 28% increase year-over-year, compared to first quarter revenues of $26.1 million in 2009, and a 2% increase compared to fourth quarter 2009 revenues of $32.8 million.
On a GAAP (Generally Accepted Accounting Principles) basis, Fundtech reported net income of $1.4 million, or $0.09 per diluted share, for the first quarter of 2010 compared with net loss of ($0.9) million, or ($0.06) per diluted share, in the first quarter of 2009, and net income of $3.4 million, or $0.21 per diluted share, in the fourth quarter of 2009.
Excluding stock-based compensation, amortization of intangibles, and deferred taxes Fundtech's adjusted net income for the first quarter of 2010 was $2.5 million, or $0.16 per diluted share, compared with $0.4 million, or $0.03 per diluted share, in the first quarter of 2009 and $3.3 million, or $0.21 per diluted share, in the fourth quarter of 2009. (See Schedule A attached to this news release -- Reconciliation to GAAP).
Commenting on the results, Fundtech CEO Reuven BenMenachem said: "These are exciting times for us as we begin 2010 with our highest quarterly revenues ever. I believe that we are well positioned in the financial technology industry, as banks of all sizes place a greater emphasis on improving operations and customer experience in their transaction banking business. Our 26% year- over- year organic revenue growth is evidence that we have emerged from the financial crisis stronger than ever. Our increased guidance indicates that we expect strong demand to continue, especially for our main growth engine Global PAYplus®. I believe that our recent organizational changes and the emphasis on scaling our operations, will ensure that we will continue to provide our customers with industry's best products and services which will lead to further growth in 2011 and beyond."
• During the first quarter of 2010 Fundtech closed 12123- new deals and added 5 new bank customers.
• During the first quarter of 2010 Fundtech closed 9 new system sales with banks including 3 U.S. Payments, 1 Global CASHplus, and 5 at BBP.
• For the first quarter of 2010 operating cash flows were $20.8 million compared to $14.0 million in the first quarter of 2009.
• For the first quarter of 2010 Adjusted EBITDA was $5.0 million compared to $2.8 million in the first quarter of 2009.
• During the first quarter of 2010 Fundtech acquired purchased 131,000 of its ordinary shares in consideration for $1.8 million as part of its share repurchase program.
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.
We are presenting Fundtech's non-GAAP net income as well as Adjusted EBITDA. We define non-GAAP net income as net income plus stock-based compensation, amortization of intangibles, impairment of goodwill and other intangible assets, impairment of marketable securities, and deferred taxes. We define Adjusted EBITDA as net income plus stock-based compensation, amortization of intangibles, impairment of goodwill and other intangible assets, impairment of marketable securities, deferred and current taxes, and interest expense (income).
A detailed reconciliation of GAAP net income to non-GAAP net income and Adjusted EBITDA 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.
For the year 2010 Fundtech is increasing its guidance as follows:
• Fundtech estimates that revenues for 2010 will be between $135 million and $137.5 million compared to the prior guidance of $132 million and $135 million; that GAAP earnings per diluted share will be between $0.40 and $0.47 compared to prior guidance of $0.32 and $ 0.42; and that; non-GAAP earnings per diluted share, before all amortization expenses, stock-based compensation expenses and deferred taxes, will be between $0.68 and $0.75 compared to prior guidance of $0.63 and $0.73.
• Fundtech estimates that financial expense for 2010 will be approximately $0.5 million and that tax expenses, excluding deferred taxes will be approximately $1.6 million.
• Fundtech estimates that amortization expenses for 2010 will be approximately $1.8 million and that stock-based compensation expenses will be approximately $2.8 million.
• Fundtech estimates that the number of shares that will be used for the calculation of 2010 earnings per share will be approximately 16.25 million shares.
For the second quarter of 2010 Fundtech is providing the following guidance:
• Fundtech estimates that second quarter revenues will be between $33.7 million and $34.5 million; that GAAP earnings per diluted share will be between $0.09 and $0.12; and that non-GAAP earnings per diluted share, before all amortization expenses, stock-based compensation expenses, and deferred taxes will be between $0.16 and $0.19.
• Fundtech estimates that financial income for the second quarter will be zero and that tax expenses, excluding deferred taxes will be approximately $0.4 million.
• Fundtech estimates that quarterly amortization expenses for the second quarter of 2010 will be approximately $0.5 million and that stock-based compensation expenses will be approximately $0.7 million.
• Fundtech estimates that the number of shares used for the calculation of quarterly earnings per share will be 16.2 million shares.
Fundtech's guidance 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.