Trintech Reports Fourth Quarter and Fiscal Year 2007 Financial Results
Dublin, Ireland/Dallas, Texas – February 28, 2007– Trintech Group Plc (NASDAQ: TTPA), a leading provider of financial software and services specializing in reconciliation workflow, revenue enhancement, transaction risk management, and compliance, today announced its fourth quarter and fiscal year 2007 financial results. Following the sale of its payments systems business to VeriFone Holdings Inc. in the third quarter, Trintech is required to present its financial results on a continuing and discontinued basis. This requirement has resulted in the presentation of financial results showing fourth quarter revenues for the continuing business (the Funds Management Systems business) of $7.5 million and adjusted EBITDA income for the continuing business of $163,000. The net loss incurred in the quarter for the continuing business amounted to $270,000 and the net income generated for the continuing and discontinued businesses amounted to $225,000.
* Revenue for the continuing business amounted to $7.5 million compared to $5.4 million in Q4 last year, representing 38 percent growth in the Funds Management Systems (”FMS”) business.
* Revenue for the continuing business increased 23 percent for the fiscal year to $25.8 million compared to $21.0 million in the prior year.
* Gross profit for the continuing business amounted to $5.3 million in Q4, representing 71% of revenue, compared to $4.3 million and 79% in Q4 last year.
* Gross profit for the continuing business amounted to $19.1 million in the fiscal year, representing 74% of revenue, compared to $16.7 million and 79% in the prior year.
* Trintech has increased expenditure in research and development for the FMS business from $725,000 in Q4 last year to $1.5 million in the same quarter this year and by 97 percent for the fiscal year to $4.9 million compared to $2.5 million in the prior fiscal year. This investment is focused on enhancing the functionality of the FMS software platform with a view to targeting new vertical markets for its reconciliation suite of products. The investment has had a short term negative impact on earnings and is expected to do so through at least the end of the second quarter of fiscal 2008.
* Trintech has also increased expenditure quarter on quarter in sales and marketing for the FMS business from $1.2 million in Q4 last year to $1.7 million in the same quarter this year and by 50 percent to $7.1 million compared to $4.7 million in the prior fiscal year. This investment is targeted at growing the sales and distribution network for Trintech’s reconciliation products both in the USA and internationally.
* Trintech generated Adjusted EBITDA income from continuing operations of $163,000 for Q4 and generated $65,000 on an EBITDA income basis.
* Trintech generated Adjusted EBITDA income from continuing operations of $694,000 for the fiscal year, but incurred an EBITDA net loss of $2.9 million.
* Trintech generated a net loss from discontinued operations for the quarter and fiscal year of $94,000 and $6.9 million, respectively. This loss resulted from trading losses of the divested payments business, lease termination costs associated with the Dublin facilities and other rationalization costs.
* Trintech generated a profit on the sale of the payments business amounting to $589,000 for Q4 and $5.4 million for the fiscal year. The business was sold for $12.1 million of which $2.0 million is being retained in an escrow account for 18 months to address any claims that may arise under the representations and warranties given as part of the disposal of the business. In addition, the net assets of the business sold and fees and other transaction costs associated with the sale of the business have been deducted to arrive at the profit on sale.
* Combined basic and diluted net loss per equivalent ADS for the year ended January 31, 2007 was $0.16, compared with a basic and diluted net loss per equivalent ADS of $0.10 for the year ended January 31, 2006.
* Combined basic and diluted net income per equivalent ADS for the quarter ended January 31, 2007 was $0.00, compared with a basic net income per equivalent ADS of $0.14 and a diluted net income per equivalent ADS of $0.13 for the corresponding quarter ended January 31, 2006.
Cyril McGuire, Chairman and Chief Executive Officer said, “Trintech’s Q4 results reflect a solid quarter and year end performance. Our growth strategy is focused on aggressively expanding our transaction risk management and compliance solutions for our customers in the commercial, financial and health care markets. Trintech continues to invest in new emerging growth markets, such as health care where performance targets for our health care acquisition, Concuity, were achieved for the quarter.”
Paul Byrne, President, added, “In addition to continuing to seek to accelerate our growth through acquisition, we are also investing significant capital to deliver new innovative products and services to our growing customer base globally and are fully committed to our recurring revenue business model which represented over 60% of revenue in Q4.”
Recent Highlights include:
Trintech announced the acquisition of substantially all of the assets and assumption of certain liabilities of Concuity, Inc., a private company specializing in technology solutions for the health care industry, for an expected total cash consideration of up to $8.25 million. The acquisition has been accounted for utilizing the purchase method of accounting in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations”. Under the purchase method of accounting, the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated fair values. The allocation of the purchase price has been prepared based on preliminary estimates of fair values. Therefore, actual amounts recorded upon the finalization of estimates of fair values may differ materially.
Concuity, Inc. is a Chicago, Illinois based private company which provides leading-edge technology solutions to optimize contract profitability for the health care industry. Concuity’s primary value proposition is providing health care providers with software applications to allow them to recover revenue that has not been paid by payers due to the complexity of the health care billing process in the United States. The acquisition of the Concuity business continues Trintech’s expansion into the fast growing health care market.
Trintech announced that East West Bank, a large commercial bank headquartered in Los Angeles, selected Trintech’s ReconNET to automate Federal Reserve reconciliations, and AssureNET GL to automate GL reconciliation, review and certification processes. Trintech’s solution suite is expected to increase enterprise efficiencies, and enable East West Bank to more effectively manage operational risk. East West Bank, with $10 billion in assets, is a full-service commercial bank serving consumers and businesses throughout California and Houston, Texas, many of which are engaged in business in the Asia/Pacific Rim region.
Trintech announced that Plymouth & South West Co-operative Society selected ReconNET to streamline reconciliation processes and increase operational control. The Society will use ReconNET to automate the verification and reconciliation of its cash, cheque payments, and credit cards. Additionally, ReconNET will be used to reconcile supplier statements to A/P ledger and Co-op Society statements. Plymouth and South West Co-operative Society is an independent retail co-operative owned and controlled by its more than 130,000 members.
Trintech announced that a major wholesale financial institution based in the central United States selected AssureNET GL to automate their account reconciliation program and to increase efficiencies in regards to the preparation, review, and approval of manual and/or semi-manual balance sheet reconciliations. The bank funds residential mortgages and community development loans for hundreds of commercial banks, credit unions, insurance companies and thrifts.
Trintech announced that Calor Gas Limited selected Trintech’s ReconNET to automate cash, check, and credit card reconciliations to reduce the risks associated with what was previously a labor-intensive manual process. ReconNET will be used to identify and resolve exceptions early within the transaction lifecycle to improve processing efficiency, and reduce exposure to operational risk. Calor Gas is the UK’s leading supplier of Liquefied Petroleum Gas.
Trintech announced the opening of its new London office located at 75 Cannon Street. This office along with Trintech’s other sales offices in Ireland and the Netherlands will provide the foundation for the development and expansion of European operations. Trintech announced the availability of AssureNET Express. AssureNET Express complements Trintech’s current line of On-Demand solutions, including ReconNET for high volume, transaction-intensive account reconciliation, and Treasury eNET for treasury and cash management.
Trintech announced the availability of ReconNET 7.3. The newest version of Trintech’s reconciliation and account balancing application dramatically increases the security of credit card and/or personal data (e.g., Social Security number) through encryption, and provides the ability for businesses using ReconNET to pass the most stringent PCI audit.
Revenue for the year ended January 31, 2007 was $25.8 million compared with $21.0 million for the year ended January 31, 2006, an increase of 23 percent. Revenue in the fourth quarter was $7.5 million compared with $5.4 million for the corresponding quarter last year, an increase of 38 percent.
Software license revenue for the year ended January 31, 2007 was $14.4 million compared with $11.7 million for the year ended January 31, 2006, an increase of 23 percent. In the fourth quarter, software license revenue increased 26 percent to $3.8 million from $3.1 million in the previous quarter last year.
Service revenue for the year ended January 31, 2006 increased 22 percent to $11.4 million from $9.3 million last year. Service revenue for the quarter ended January 31, 2007 increased 54 percent to $3.7 million from $2.4 million in the corresponding quarter last year.
Total gross margin for the year ended January 31, 2007 was $19.1 million, an increase of 14 percent from $16.7 million in the previous year. Total gross margin for the fourth quarter was $5.3 million, an increase of 23 percent from $4.3 million in the corresponding quarter last year.
Total operating expenses from continuing operations for the year ended January 31, 2007 were $21.4 million, an increase of 42 percent from $15.1 million in the previous year. Adjusted EBITDA operating expenses for the year ended January 31, 2007 were $19.0 million, an increase of 35 percent on the Adjusted EBITDA operating expenses for last year.
Total operating expenses from continuing operations for the fourth quarter were $6.0 million, an increase of 48 percent from $4.1 million in the corresponding quarter last year. Adjusted EBITDA operating expenses for the quarter ended January 31, 2007 were $5.3 million, an increase of 39 percent on the Adjusted EBITDA operating expenses for the corresponding period last year.
Trintech’s balance sheet remains strong with cash and cash equivalent balances of $25.8 million as of January 31, 2007. Net cash usage for the twelve months ended January 31, 2007 was $9.0 million, which includes acquisition related payments of $9.1 million and acquisition related receipts comprising the proceeds of the sale of the payments business to VeriFone Holdings Inc., net of the warranty reserve and transaction related costs.
During the quarter ended January 31, 2007, Trintech did not purchase any shares via the share buy-back program. As a result, $2.9 million remains available for future repurchases under this program as at January 31, 2007.
Trintech will host a conference call to discuss its financial results and business outlook beginning at 15:30hrs (UK Time) today, Wednesday, February 28, 2007. Please see advisory for information on the call.
A web simulcast of Trintech’s conference call reviewing our performance for Q4 fiscal year 2007 and our business outlook for Q1 and full fiscal year 2008 will be broadcast live today, Wednesday, February 28, 2007 at 15:30 hrs (UK Time), 10:30 hrs (NY Time) and 07:30 hrs (CA Time) and thereafter for 1 year at www.trintech.com. An instant telephone replay will also be available for 10 days by dialing +44 1452 550 000 and entering the following access number (8 7 3 9 6 5 6 #).
Trintech Group Plc (NASDAQ: TTPA) is a leading global provider of financial software and services specializing in reconciliation workflow, revenue enhancement, transaction risk management, and compliance for commercial, financial, and health care markets. For over 20 years, Trintech has been providing comprehensive, industry-leading solutions to financial departments seeking greater insight into critical transaction processes. Trintech delivers a configurable, highly scalable platform that incorporates a company’s unique business processes, enabling managers to obtain greater visibility and more efficiently manage business risk throughout the transaction lifecycle. Trintech’s transaction process management solutions include: ReconNET for high volume transaction reconciliation; AssureNET GL for general ledger reconciliation and certification; On-Demand solutions for ASP ReconNET and AssureNET services and the Dataflow Transaction Network for data collection and delivery; and ClearContracts, an ASP service which enables health care providers to optimize contract profitability by reconciling payments received from their patients’ insurers to amounts they should have received from claims under the terms of their respective contracts. Over 450 leading companies across a variety of industries rely on Trintech products and services. Clients include: 7-Eleven, Kroger, Regal Entertainment, Accor, UPMC, Farmer’s Insurance Group, YUM! Brands Restaurants, Rohm and Haas, Verizon Wireless, and Ameren.
Trintech’s principal business office is in Dallas, Texas, with international offices in Ireland, the United Kingdom and the Netherlands. Trintech can be reached at 15851 Dallas Parkway, Suite 900, Addison, TX 75001 (Tel 1.972.701.9802). Trintech’s corporate office can be contacted at Trintech Technologies, Block C, Central Park, Leopardstown, Dublin 18, Ireland (Tel 353.1.293.9840). For more information, please visit www.trintech.com.
Forward Looking Statements
This news release contains “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any “forward looking statements” in this press release are subject to certain risks and uncertainties that could cause actual results to differ materially from those stated. “Forward looking statements” in this press release include statements, among others, relating to the estimated fair values of the assets acquired and liabilities assumed for purposes of purchase accounting related to Trintech’s purchase of Concuity, the focus of investment in research and development for the FMS business and the financial impact of such investment, the focus of investment in sales and marketing for the FMS business and the financial impact of such investment, the expected benefits from East West Bank’s installation of ReconNet and AssureNet, the expected benefits from Plymouth & South West Co-operative Society’s installation of ReconNet and the expected benefits from Calor Gas Limited’s installation of ReconNet. Factors that could cause or contribute to such differences include Trintech’s ability to accurately predict future sales, its ability to accurately predict and meet customer needs and to successfully position itself in the market, Trintech’s ability to ensure the performance of its products and services, and its ability to improve the performance of its organization and ensure the long term health of its business. Actual performance may also be affected by other factors more fully discussed in Trintech’s Form 20-F for the fiscal year ended January 31, 2006 and Trintech’s Form 6-K for the quarter ended October 31, 2006, each filed with the US Securities and Exchange Commission (www.sec.gov). Lastly, Trintech assumes no obligation to update these forward-looking statements.
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- VP Finance
- Trintech Group Plc
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