Exhibit 99.1
Fundtech Contact:
Yoram Bibring
Fundtech Ltd.
Tel: 1-201-946-1100
yoram.bibring@fundtech.com
georger@fundtech.com
Ruder Finn, Inc., New York
Justine Schneider
(212) 583-2750
schneiderj@ruderfinn.com
FOR IMMEDIATE RELEASE
FUNDTECH REPORTS FINANCIAL RESULTS FOR THE
THIRD QUARTER OF 2007
-Quarterly Revenues Grow 24% Year-over-Year to $26.6 Million
-GAAP EPS 13 Cents
-Non GAAP EPS 19 Cents
JERSEY CITY, N.J. —October 29, 2007, — Fundtech Ltd. (NASDAQ: FNDT), a leading provider of global electronic payment, settlement and cash management solutions, today announced financial results for the third quarter ended September 30, 2007. Fundtech posted quarterly revenues of $26.6 million, a 24% increase year-over-year, compared to third quarter revenues of $21.5 million in 2006 and 5% higher than second quarter 2007 revenues of $25.4 million.
On a GAAP (Generally Accepted Accounting Principles) basis, the Company reported net income of $2.2 million or $0.13 per diluted share, for the third quarter of 2007, compared with net income of $1.2 million, or $0.08 per diluted share, in the third quarter of 2006, and net income of $1.7 million, or $0.10 per diluted share, in the second quarter of 2007.
Excluding stock-based compensation and amortization of intangibles, Fundtech’s adjusted non-GAAP net income for the third quarter of 2007 was $3.1 million, or $0.19 per diluted share, compared with $2.5 million, or $0.16 per diluted share, in the third quarter of 2006 and $2.8 million, or $0.17 per diluted share, in the second quarter of 2007. The adjusted non-GAAP net income for the third quarter of 2006 also excluded amortization of capitalized software costs (See Schedule A attached to this news release -- Reconciliation to GAAP).
“During the third quarter we continued to post strong organic growth as our revenues increased organically by 20% compared to the third quarter of 2006.” said CEO Reuven BenMenachem. “Looking ahead to 2008 I believe that our growth will continue to be strong. I believe that our large customers will expand their business with us as they seek to enhance the functionality and scope of their Global PAYplus implementations and I also believe that our leadership position in the global payments market will make us the preferred solution for other large banks that are seeking to overhaul their payments infrastructure.”
Other operational highlights:
| · | During the third quarter Fundtech closed 77 new deals and added 6 new bank customers. |
| · | During the third quarter Fundtech closed 11 new system sales including 1 Global PAYplus, CASHplus, 1 WebACCESS, 3 PAYplus USA, 4 IGT plus, and 1 Transact CashIn. |
| · | The Global PAYplus deal and one of the IGT plus deals were with a major bank in the Pacific Rim that will implement both systems. |
| · | To support the current and expected growth of Global PAYplus revenues Fundtech has recruited approximately 30 technical people over the last six months and expects to add additional 25 before the end of 2007. |
Reconciliation of GAAP results to non-GAAP results
Fundtech provides adjusted 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 the Company 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, and amortization of intangibles and for the quarters prior to the second quarter of 2007 also excluding amortization of capitalized software costs.
A detailed reconciliation of GAAP net income to non-GAAP net income is included in Schedule A, Reconciliation to GAAP which is attached to this news release.
Guidance
The financial guidance provided is current as of today only and the Company undertakes no obligation to update its estimates.
For the fourth quarter of 2007 we expect revenues of between $29 million and $30 million, GAAP earnings per diluted share of between $0.13 and $0.18 and adjusted non-GAAP earnings per diluted share, before all amortization expenses and stock compensation expenses, are expected to be in the range of $0.19 to $0.24.
For fiscal 2007 we are increasing our revenue guidance and earnings per share guidance. We currently expect revenues of between $104.2 million and $105.2 million up from the previous guidance of $100.0 million to $101.5 million.
We expect GAAP earnings per diluted share of between $0.39 and $0.44 compared to our previous guidance of $0.37 and $0.43 and expect adjusted non-GAAP earnings per diluted share, before all amortization expenses and stock compensation expenses, are expected to be in the range of $0.66 to $0.71 up from our previous guidance of $0.63 to $0.70.
We estimate that for 2007 our income tax expenses will be approximately $1.3 million while net interest income will be approximately $2.0 million.
We estimate that amortization expenses for 2007 will be approximately $1.8 million and that stock compensation expenses will be approximately $2.7 million.
The Company’s guidance for the fourth quarter of 2007 and full-year 2007 assumes no change in the calculation of the Company’s tax provision, which currently assumes a full valuation allowance against the Company’s deferred tax assets.
Company to Host Conference Call
The senior management of Fundtech will host a conference call at 08:30 a.m. (ET) tomorrow, Tuesday, October 30, to discuss the Company’s third-quarter as well as 2007 financial guidance, and to answer questions from the investment community.
To participate, please call (866)-800-8651 or 1-617-614-2704 and ask for the Fundtech Call.
A replay of the conference call will be available for playback from 10:30AM (ET) October 30, until 11:59PM (ET) November 6. The replay may be accessed by dialing (888) 286-8010 or 617-801-6888, passcode 62426813.
This call will also be web cast live on: http://www.fundtech.com. An online replay will be available until November 30.
About Fundtech
With thirteen offices on four continents, Fundtech Ltd is a leading provider of software solutions and services to financial institutions around the world. The Company develops and sells a broad array of products across the "financial supply chain" that enable banks to automate their corporate banking activities in order to improve efficiency, while providing their customers flexibility, convenience and control. Fundtech offers products in five business segments: payments, cash management, settlements, financial messaging, and post-trade securities settlement.
Fundtech is a publicly traded company, listed on NASDAQ (FNDT). The company was founded in 1993. For more information, please visit www.fundtech.com.
Forward Looking Statements:
This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, the expectations related to fourth-quarter revenues; fourth-quarter GAAP earnings per share; fourth-quarter adjusted non-GAAP earnings per share; full-year 2007 revenues; full-year 2007 GAAP earnings per share; and full-year 2007 adjusted non-GAAP earnings per share. These statements are based on management’s current expectations and are subject to risks, uncertainties, and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated,
expected, estimated or projected. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: a downturn in the financial services industry; failure to obtain revenue as anticipated; and risks and other factors detailed from time to time in Fundtech's public filings, including its Annual Report on Form 20-F for the year ended December 31, 2006. Fundtech undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this news release or to reflect the occurrence of unanticipated events.
# # #
Schedule A
| | | | | | | |
| FUNDTECH LTD. AND ITS SUBSIDIARIES | | | | | | |
Condensed Consolidated Balance Sheets | | | | | | |
| (In Thousands) | | | | | | |
| | | | | | | |
| | | | | | | |
| | | September 30, | | | December 31, | |
| | | 2007 | | | 2006 | |
ASSETS | | | | | | |
| | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 34,851 | | | $ | 28,616 | |
| Short term deposits | | | 1,493 | | | | -- | |
| Marketable securities - short term | | | 13,790 | | | | 18,551 | |
| Trade receivables, net | | | 26,415 | | | | 25,058 | |
| Other accounts receivable, prepaid expenses and inventories | | | 3,670 | | | | 2,608 | |
| | | | | | | | | |
Total current assets | | | 80,219 | | | | 74,833 | |
| | | | | | | | | |
| Severance pay fund | | | 1,074 | | | | 1,221 | |
| Long term lease deposits | | | 642 | | | | 639 | |
| Prepaid expenses | | | 2,012 | | | | 1,821 | |
| Property and equipment, net | | | 13,484 | | | | 11,944 | |
| Goodwill, net | | | 22,384 | | | | 18,979 | |
| Other assets, net | | | 3,051 | | | | 2,626 | |
| | | | | | | | | |
Total assets | | $ | 122,866 | | | $ | 112,063 | |
| | | | | | | |
| | | | | | | | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Trade payables | | $ | 1,752 | | | $ | 2,444 | |
| Deferred revenues | | | 8,976 | | | | 7,567 | |
| Accrued restructuring expenses | | | 108 | | | | 185 | |
| Employee and payroll accruals | | | 5,624 | | | | 4,483 | |
| Other accounts payable and accrued expenses | | | 4,637 | | | | 5,360 | |
| | | | - | | | | - | |
Total current liabilities | | | 21,097 | | | | 20,039 | |
| | | | | | | | | |
| Accrued severance pay | | | 1,408 | | | | 1,399 | |
| Accrued restructuring and other expenses | | | -- | | | | 62 | |
| Other long term liabilities | | | 1,676 | | | | 777 | |
| | | | | | | | | |
Total liabilities | | | 24,181 | | | | 22,277 | |
| | | | | | | | | |
| Shareholders' equity: | | | | | | | | |
| Share capital | | | 46 | | | | 46 | |
| Additional paid-in capital | | | 150,479 | | | | 146,611 | |
| Accumulated other comprehensive income (loss) | | | 434 | | | | (196 | ) |
| Accumulated deficit | | | (49,016 | ) | | | (53,417 | ) |
| Treasury stock, at cost | | | (3,258 | ) | | | (3,258 | ) |
| | | | | | | | | |
Total shareholders' equity | | | 98,685 | | | | 89,786 | |
| | | | | | | | | |
Total liabilities and shareholders' equity | | $ | 122,866 | | | $ | 112,063 | |
| | | | | | | |
| | | | | | | | | | | | | |
| FUNDTECH LTD. AND ITS SUBSIDIARIES | | | | |
Consolidated Statements of Operations | | | | |
| (In Thousands, Except Share and Per Share Data) | | | | |
| | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | September 30, | | | | | | September 30, | | | | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| Revenues: | | | | | | | | | | | | |
| Software license | | $ | 4,098 | | | $ | 2,960 | | | $ | 13,505 | | | $ | 8,766 | |
| Software hosting | | | 3,965 | | | | 3,438 | | | | 10,938 | | | | 9,642 | |
| Maintenance | | | 7,369 | | | | 5,608 | | | | 19,468 | | | | 16,690 | |
| Services | | | 11,213 | | | | 9,492 | | | | 31,298 | | | | 27,309 | |
| | | | | | | | | | | | | | | | | |
Total revenues | | | 26,645 | | | | 21,498 | | | | 75,209 | | | | 62,407 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| Software licenses costs | | | 125 | | | | 111 | | | | 248 | | | | 412 | |
| Amortization of capitalized software development costs | | | -- | | | | 394 | | | | 394 | | | | 1,182 | |
| Amortization of other intangible assets | | | 281 | | | | 319 | | | | 1,106 | | | | 957 | |
Maintenance, hosting and services costs [1] | | | 11,760 | | | | 8,779 | | | | 32,791 | | | | 25,882 | |
Software development [1] | | | 4,863 | | | | 4,241 | | | | 13,994 | | | | 12,086 | |
Selling and marketing [1] | | | 4,442 | | | | 3,816 | | | | 13,304 | | | | 11,488 | |
General and administrative [1] | | | 3,358 | | | | 2,962 | | | | 9,746 | | | | 8,952 | |
| | | | | | | | | | | | | | | | | |
Total operating expenses | | | 24,829 | | | | 20,622 | | | | 71,583 | | | | 60,959 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Operating income | | | 1,816 | | | | 876 | | | | 3,626 | | | | 1,448 | |
| Financial income, net | | | 593 | | | | 542 | | | | 1,559 | | | | 1,514 | |
| Income taxes | | | (166 | ) | | | (233 | ) | | | (784 | ) | | | (846 | ) |
| | | | | | | | | | | | | | | | | |
Net income | | $ | 2,243 | | | $ | 1,185 | | | $ | 4,401 | | | $ | 2,116 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net income per share: | | | | | | | | | | | | | | | | |
| Net income used in computing income per share | | $ | 2,243 | | | $ | 1,185 | | | $ | 4,401 | | | $ | 2,116 | |
| Basic income per share | | $ | 0.15 | | | $ | 0.08 | | | $ | 0.29 | | | $ | 0.14 | |
| Diluted income per share | | $ | 0.13 | | | $ | 0.08 | | | $ | 0.26 | | | $ | 0.13 | |
| Shares used in computing: | | | | | | | | | | | | | | | | |
| Basic income per share | | | 15,382,445 | | | | 15,027,037 | | | | 15,263,073 | | | | 14,949,176 | |
| Diluted income per share | | | 16,776,329 | | | | 15,789,382 | | | | 16,672,081 | | | | 15,894,853 | |
| | | | | | | | | | | | | | | | | |
Adjusted non-GAAP[2] net income per share: | | | | | | | | | | | | | | | | |
Adjusted non-GAAP[2] net income used in computing income per share | | $ | 3,150 | | | $ | 2,480 | | | $ | 7,858 | | | $ | 6,107 | |
Adjusted non-GAAP[2] net income per share | | $ | 0.19 | | | $ | 0.16 | | | $ | 0.47 | | | $ | 0.38 | |
Shares used in computing adjusted non-GAAP[2] net income per share | | | 16,776,329 | | | | 15,789,382 | | | | 16,672,081 | | | | 15,894,853 | |
| | | | | | | | | | | | | | | | | |
Reconciliation of net income to adjusted non-GAAP[2] net income: | | | | | | | | | | | | | | | | |
| Net income | | $ | 2,243 | | | $ | 1,185 | | | $ | 4,401 | | | $ | 2,116 | |
| Amortization | | | 281 | | | | 713 | | | | 1,500 | | | | 2,139 | |
| Stock-based compensation | | | 626 | | | | 582 | | | | 1,957 | | | | 1,852 | |
| | | | | | | | | | | | | | | | | |
Adjusted non-GAAP[2] net income | | $ | 3,150 | | | $ | 2,480 | | | $ | 7,858 | | | $ | 6,107 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
[1] Includes charges for stock-based compensation in 2007 and 2006 | | | | | | | | | | | | | |
[2] See Reconciliation to GAAP | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| FUNDTECH LTD. AND ITS SUBSIDIARIES | | | |
Consolidated Statement of Cash Flows | | | |
| (In Thousands) | | | |
| | | | | | | | | | | | |
| | | | | |
| | | | Nine Months Ended | | | | Three Months Ended | |
| | | | September 30, | | | | September 30, | |
| | | | 2007 | | | 2006 | | | | 2007 | |
| CASH FLOWS FROM OPERATIONS: | | | | | | | | | | | |
| Net income | | | $ | 4,401 | | | $ | 2,116 | | | | $ | 2,243 | |
| Adjustments to reconcile net income to net cash | | | | | | | | | | | | | | |
| provided by (used in) operating activities: | | | | | | | | | | | | | | |
| Depreciation and amortization | | | | 4,867 | | | | 4,759 | | | | | 1,456 | |
| increase in trade receivables | | | | (242 | ) | | | (5,919 | ) | | | | (4,701 | ) |
| (Increase) decrease in prepaid expenses, other accounts receivable and inventories | | | | (1,504 | ) | | | 444 | | | | | (334 | ) |
| (Decrease) increase in trade payables | | | | (463 | ) | | | 403 | | | | | (520 | ) |
| Increase (decrease) in deferred revenues | | | | 1,772 | | | | 172 | | | | | (4,325 | ) |
| Increase in employee and payroll accruals | | | | 869 | | | | 1,158 | | | | | 1,380 | |
| (Decrease) increase in other accounts payable and accrued expenses | | | | (310 | ) | | | (2,541 | ) | | | | 642 | |
| Decrease in accrued restructuring expenses | | | | (139 | ) | | | (144 | ) | | | | (46 | ) |
| Increase in accrued severance pay, net | | | | 156 | | | | 85 | | | | | 55 | |
| Increase in accrued interest on marketable securities | | | | (64 | ) | | | (6 | ) | | | | (50 | ) |
| (Gains) losses gains on disposition of fixed assets | | | | (8 | ) | | | 8 | | | | | (1 | ) |
| Stock-based compensation | | | | 1,957 | | | | 1,853 | | | | | 626 | |
| Increase in other long term payables | | | | -- | | | | 3 | | | | | -- | |
| | | | | | | | | | | | | | | |
Net cash provided by (used in) operations | | | | 11,292 | | | | 2,391 | | | | | (3,575 | ) |
| | | | | | | | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | | | | |
| Investment in held-to-maturity marketable securities | | | | (17,265 | ) | | | (37,451 | ) | | | | (5,860 | ) |
| Proceeds from held-to-maturity marketable securities | | | | 23,180 | | | | 33,322 | | | | | 10,774 | |
| (Investment in) maturity of short term deposits | | | | (1,427 | ) | | | 216 | | | | | 1,405 | |
| Purchase of property and equipment | | | | (4,763 | ) | | | (3,738 | ) | | | | (1,431 | ) |
| Decrease (increase) in long-term lease deposits and prepaid expenses | | | | 22 | | | | 115 | | | | | (1 | ) |
| Investments in subsidiaries | | | | (7,297 | ) | | | -- | | | | | -- | |
| Proceeds from sale of fixed assets | | | | 38 | | | | 3 | | | | | 1 | |
| | | | | | | | | | | | | | | |
Net cash provided by (used in) investing activities | | | | (7,512 | ) | | | (7,533 | ) | | | | 4,888 | |
| | | | | | | | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | | | | | | | |
| Proceeds from the issuance of share capital and | | | | | | | | | | | | | | |
| exercise of stock options and warrants, net | | | | 1,911 | | | | 1,124 | | | | | 611 | |
| Decrease in long-term other liabilities | | | | (61 | ) | | | (80 | ) | | | | -- | |
| Investment in treasury stock, at cost | | | | -- | | | | (1,893 | ) | | | | -- | |
| | | | | | | | | | | | | | | |
Net cash provided by (used in) financing activities | | | | 1,850 | | | | (849 | ) | | | | 611 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Effect of exchange rate on cash and cash equivalents | | | | 605 | | | | 388 | | | | | 546 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Increase (decrease) in cash and cash equivalents | | | | 6,235 | | | | (5,603 | ) | | | | 2,470 | |
| Cash and cash equivalents at the beginning of the period | | | | 28,616 | | | | 30,807 | | | | | 32,381 | |
| | | | | | | | | | | | | | | |
| Cash and cash equivalents at the end of the period | | | $ | 34,851 | | | $ | 25,204 | | | | $ | 34,851 | |
| | | | | | | | | | | | | | | |
Appendix A | | | | | | | | | | | | | | |
Investment in Subsidiaries | | | | | | | | | | | | | | |
| Working Capital | | | $ | 689 | | | $ | -- | | | | $ | -- | |
| Long term assets | | | | 1,999 | | | | -- | | | | | -- | |
| Long term liabilities | | | | -- | | | | -- | | | | | -- | |
| Goodwill | | | | 4,609 | | | | -- | | | | | -- | |
| | | | | | | | | | | | | | | |
| | | | $ | 7,297 | | | $ | -- | | | | $ | -- | |
| | | | | | | | | | | | | | | |
(In Thousands, Except Share and Per Share Data)
| The following information sets forth Fundtech's calculation of adjusted non-GAAP | | | | | | | |
| net income as contained in the Company's press release: | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | | | | | Nine Months Ended | |
| | | September 30, | | | | June 30, | | | September 30, | | | | |
| | | 2007 | | | 2006 | | | | 2007 | | | 2007 | | | 2006 | |
| | | | | | | | | | | | | | | | | |
Reconciliation of net income (loss) to adjusted non-GAAP net income: | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Net income (loss) | | | 2243[1 | ] | | | 1185[1 | ] | | | | 1730[1 | ] | | | 4401[1 | ] | | | 2116[1 | ] |
| Amortization of capitalized | | | | | | | | | | | | | | | | | | | | | |
software development costs | | | -- | | | | 394 | | | | | -- | | | | 394 | | | | 1,182 | |
| Amortization of other intangible assets | | | 281 | | | | 319 | | | | | 416 | | | | 1,106 | | | | 957 | |
| Stock-based compensation charged as follows: | | | | | | | | | | | | | | | | | | | | | |
| Maintenance, hosting and services costs | | | 78 | | | | 55 | | | | | 79 | | | | 229 | | | | 167 | |
| Software development | | | 100 | | | | 39 | | | | | 99 | | | | 260 | | | | 112 | |
| Selling and marketing | | | 119 | | | | 117 | | | | | 124 | | | | 393 | | | | 367 | |
| General and administrative | | | 329 | | | | 371 | | | | | 364 | | | | 1,075 | | | | 1,206 | |
| | | | | | | | | | | | | | | | | | | | | | |
| Adjusted non-GAAP net income | | $ | 3,150 | | | $ | 2,480 | | | | $ | 2,812 | | | $ | 7,858 | | | $ | 6,107 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| Adjusted non-GAAP net income per share | | $ | 0.19 | | | $ | 0.16 | | | | $ | 0.17 | | | $ | 0.47 | | | $ | 0.38 | |
| | | | | | | | | | | | | | | | | |
| Shares used in computing | | | | | | | | | | | | | | | | | | | | | |
| adjusted non-GAAP net income per share | | | 16,776,329 | | | | 15,789,382 | | | | | 16,489,597 | | | | 16,672,081 | | | | 15,894,853 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
[1] Net income per share (diluted) was approximately $0.15 , $0.08 and $0.10 for the three months ended September 30, 2007 | |
| and 2006 and the three months ended June 30, 2007, respectively. Net income per share (diluted) was | | | | | |
| approximately $0.28 and $0.13 for the Nine months ended September 30, 2007 and 2006, respectively. | | | | | |
