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Trintech reports Q3 profit loss

23 November 2005  |  1708 views  |  0 Source: Trintech

Trintech Group Plc (NASDAQ: TTPA), a leading provider of transaction reconciliation and payment infrastructure solutions, today announced third quarter revenues of $11.4 million and a net loss for the quarter of $387,000.


  • Revenue amounted to $11.4 million compared to $15.1 million in Q3 last year. As announced in August, revenue was negatively impacted in the quarter by technical issues associated with certain hardware products. These issues have been resolved and sales of these products recommenced towards the end of the quarter.
  • Gross margin amounted to $7.5 million in Q3, representing 66% of revenue.
  • We continued to invest in our unattended payments business and announced the launch of our recent product for the petroleum market, OpenPay 4000, in November. This R&D investment has had a short term negative impact on earnings and will continue to do so through the end of the 2006 fiscal year.
  • Basic and diluted net loss per equivalent ADS for the quarter ended October 31, 2005 was ($0.02), compared with basic and diluted net income per equivalent ADS of $0.03 for the corresponding quarter ended October 31, 2004.

Cyril McGuire, Chairman and Chief Executive Officer, commenting on the results said: "Trintech's business remains solid despite a challenging Q3 performance. Trintech's performance in the quarter was adversely impacted by challenging market conditions and the product related issue announced in August which has now been successfully resolved. Our investment programme in PayWare OpenPay for the emerging unattended payment market, is building customer pipeline and market share.

During Q3, our Funds Management business performed very well. This business continues to meet and exceed its performance targets and provides a software and transaction platform for further growth for the Trintech group. We are also continuing to review various expansion opportunities, both organically and through acquisition, within the funds management area both in the US and Europe."

Recent highlights include:

Trintech unveiled its latest unattended payment terminal at the Cartes 2005 Exposition in Paris, France. The OpenPay UPT 4000 is targeted at petrol stations, convenience stores and supermarkets that need a compact, powerful pay-at-pump terminal that is compliant with the latest terminal security standards and technologies. Trintech's primary route to market for this product will be through channel partners including pump manufacturers, forecourt Point-of-Sale suppliers and retail system integrators.

Trintech announced that PayWare OpenPay has been awarded the new Visa, MasterCard and JCB Payment Card Industry Certification for Encrypting PIN Pads (PCI EPP). The certification is another industry first for Trintech's Unattended Payments Business and ensures that PayWare OpenPay customers are the first to achieve compliance with the latest standards for PIN security.

Trintech announced that UK mobile communications provider O2 selected ReconNET to automate the verification and reconciliation of its cash, checks, credit card transactions and customer billing system payment receipts. O2 will also use ExecuNET for business analysis and to identify trends in funds management processes.

Trintech announced that KIT Limited Partnership selected Trintech's ReconNET to automate the verification and reconciliation of its cash and credit cards for its chain of 481 restaurants. KIT Limited Partnership also selected ReconNET to automatically assign, organize and prioritize its research incidents. ReconNET is designed to enable the company to streamline accounting processes and provide effective risk management and reporting across its enterprise.

Trintech announced that NationsRent selected Trintech's ReconNET, DataFlow Transaction Network and Bank Fee Analysis software solutions to optimize their funds management processes. NationsRent will use ReconNET to automate the verification and reconciliation of its bank deposits, and the DataFlow Transaction Network to collect, format and deliver its daily banking data. Bank Fee Analysis is intended to further streamline the company's finance and treasury processes and reduce costs by detecting and recovering fee overcharges.

Trintech announced that Cineplex Entertainment (Cineplex) (TSX: CGX.UN) extended its use of Trintech's ReconNET to reconcile its cash accounts and identify and resolve exceptions more efficiently. The ReconNET system is designed to provide Cineplex with a sound foundation for managing operational risk across its enterprise and reduce the potential for cash loss.

At the Sarbanes-Oxley Conference and Exposition held in Baltimore, Maryland in September, Trintech unveiled its new internal control software solution for general ledger account reconciliation.

Results Overview:

Revenue for the quarter ended October 31, 2005 was $11.4 million compared with $15.1 million for the corresponding quarter last year.

Product revenue for the quarter ended October 31, 2005 decreased 63 percent to $2.1 million compared to $5.6 million for the corresponding quarter last year.

License revenue for the quarter ended October 31, 2005 decreased 7 percent to $5.8 million from $6.2 million for Q3 last year.

Service revenue for the quarter ended October 31, 2005 increased 7 percent to $3.6 million from $3.3 million for the corresponding quarter last year.

Total gross margin for the quarter ended October 31, 2005 was $7.5 million, a decrease of 14 percent from $8.7 million in the corresponding period last year.

Operating expenses in Q3 increased to $8.2 million compared to $8.1 million in the corresponding quarter last year. Adjusted EBITDA operating expenses for Q3 this year and the corresponding quarter last year were each $7.8 million.

Trintech's balance sheet remains strong with cash and cash equivalent balances of $35.7 million as of October 31, 2005. Net cash usage for the nine months ended October 31, 2005 was $3.5 million which includes acquisition related payments of $1.2 million made in Q1 of the current fiscal year in respect of acquisitions made in prior periods. Capital expenditure during the same nine-month period amounted to $517,000 and primarily related to computer and tooling equipment.

During the quarter ended October 31, 2005, Trintech did not repurchase any stock under its stock repurchase program. As of October 31, 2005, $3.8 million remained available for future repurchases under this program.

Paul Byrne, President of Trintech, stated: "We have worked closely with our customers during the quarter on the successful resolution of the technical issues that affected certain hardware products and have recommenced product shipments. We are confident that the operational discussions that have taken place in recent months will form the basis for strong working relationships with our customers moving forward.

We continue to invest in the OpenPay product range for the unattended payments market which is a major focus for management to drive growth in our Payments business. The Funds Management business continues to perform strongly and we have commenced an investment program to drive reconciliation revenue growth in new vertical markets. Whilst these investments will have a negative impact on earnings in the short term, they position Trintech for solid long term growth for FY07 and beyond."» Download the document now 55.6 kb (Adobe Acrobat Document)

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