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SunGard FS revenue/earnings up

05 February 2015  |  3170 views  |  0 Source: SunGard

SunGard Data Systems Inc. ("SunGard" or the "Company"), one of the world's leading software and technology services companies, today reported results for the fourth quarter and full year ended December 31, 2014.

For the fourth quarter, revenue was $792 million, up 3% year over year (up 5% adjusting for currency). Operating income was $204 million in the quarter, up 24% year over year, driven by this revenue increase, and a 3% decrease in total costs and expenses. The operating income margin was 25.8%, up 4.5 points year over year. Adjusted EBITDA was $272 million, up 4% year over year, and the adjusted EBITDA margin was 34.3%, up 0.6 points year over year. Adjusted EBITDA is defined in Note 1 attached to this release.

For the full year 2014, revenue was $2.8 billion, up 2% year over year (also up 2% adjusting for currency) and operating income was $87 million, which included a $339 million non-cash impairment charge related to the Availability Services split-off in the first quarter. Adjusted EBITDA was $765 million, flat year over year, and the adjusted EBITDA margin was 27.2%, down 0.5 points year over year. Excluding the impairment charge in 2014 and the $11.5 million benefit from the sale of a bankruptcy claim in 2013, full year 2014 revenue grew 2%, operating income increased 8%, adjusted EBITDA grew 1%, and the adjusted EBITDA margin declined 0.2 points.

Russ Fradin, president and chief executive officer, commented, “We’re focused on making the right investments to continually improve our organic growth rate. This is fueled by investments in great software products and a broad array of services. Clients are responding positively to these initiatives, knowing that our offerings help their businesses be more competitive. Our fourth quarter results validate that we are on the right track. We were particularly pleased with our sales momentum and our organic revenue growth in the final quarter of the year. Overall, I’m proud of the advances we’ve made in building a stronger, more streamlined software and services company.”

Financial Systems (“FS”) segment revenue was $737 million in the fourth quarter, up 3% year over year (up 5% year over year adjusting for currency), driven by a 20% improvement in license fees. FS segment costs and expenses were $472 million, up 2% year over year, due to investments in sales and delivery capacity. Adjusted EBITDA for the period was $265 million, up 5% from the prior year, and the adjusted EBITDA margin was 35.9%, up 0.6 points from last year.

For the full year 2014, FS revenue was $2.6 billion, up 2% year over year (also up 2% adjusting for currency). For the same period, adjusted EBITDA was $742 million, a decrease of 1%, compared to the prior year, and the adjusted EBITDA margin was 28.6%, down 0.6 points from last year. Excluding the sale of the bankruptcy claim in the third quarter of 2013, full year 2014 FS revenue grew 2%, adjusted EBITDA grew 1% and the adjusted EBITDA margin declined 0.3 points.

Notable SunGard solutions in the quarter included the following deals:

  • Global Plus was selected by one of the world’s largest banks to help grow its bank custody line of business.
  • GMI, Streamcore and Clearvision were selected by one of the world’s top 20 global banks for a fully hosted derivatives clearing solution, including ongoing managed services.
  • Apex Securities Finance, as a hosted solution, was chosen by one of the largest banks in Canada to support operations across its securities finance business.
  • GMI was renewed by a global investment bank to support its post-trade derivatives middle and back-office processing.
  • Investran was selected by a leading global private investment firm to help drive operational efficiencies across all of its funds.
  • Prophet Risk license and professional services were selected by one of the largest US insurance companies to help meet its regulatory and risk management requirements.
  • Adaptiv and MarketMap Energy solutions were selected by one of the largest Scandinavian financial services firms to enable the retirement of legacy solutions, gain a more efficient and effective trading operation and support expansion in North America and Asia.
  • Quantum was selected by a global technology company as its treasury solution which will be deployed in a private cloud environment and wrapped with ongoing managed services.

Public Sector and Education (“PS&E”) segment revenue was $55 million in the fourth quarter, up 1% year over year. PS&E segment costs and expenses were $38 million, up 3% year over year, primarily due to investments in delivery capacity in Public Sector. Adjusted EBITDA was $17 million, down 2% year over year, and the adjusted EBITDA margin was 31.7%, down 1.1 points from last year.

For the full year 2014, PS&E revenue was $217 million, up 4% year over year. For the same period, adjusted EBITDA was $68 million, an increase of 2%, compared to the prior year, and the adjusted EBITDA margin was 31.1%, down 0.6 points from last year. These results continue to reflect strnong demand for our public sector solutions as well as our investment in new sales capacity during the quarter.

Notable SunGard solutions in the quarter included the following deals:

  • ONESolution was selected by a city in Minnesota to provide full enterprise-wide software solutions for finance, payroll, work management and utility billing.
  • BusinessPLUS was selected by a California school district to help manage its critical financial, procurement, payroll and personnel functions.
  • ONESolution was selected by a city in Kansas to provide public safety solutions for computer-aided emergency dispatch, records management, and mobile computing.
  • eSchoolPLUS was selected by a school district in South Dakota to help manage its student’s administrative functions.

Financial Position

For the twelve months ended December 31, 2014, the continuing operations of the Company generated $332 million in cash flow from operations. Capital expenditures were $143 million, up $32 million year over year, including a $21 million increase in the capitalization of software due to new product investments.

At December 31, 2014, total debt was $4.7 billion and cash was $447 million. The Company’s leverage ratio, as defined in its senior secured credit agreement, was 5.41x, flat compared to March 31, 2014 when we completed the Availability Services split-off. The leverage ratio is calculated using adjusted EBITDA as defined in Note 2 attached to this release. See Note 3 attached to this release for supplemental information on debt.

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