Financial transaction processing software developer Fundtech Ltd. (Nasdaq: FNDT; TASE: FNDT) reported stronger than expected third quarter revenue and earnings, and provided fourth quarter guidance that was above analyst estimates.
Fundtech CEO Reuven Ben Menachem said that in the third quarter, "we saw tangible evidence that large banks have resumed investment in their transaction banking business and in particular payment systems."
Third quarter revenue was $30.6 million, 3% lower than in the corresponding quarter in 2008, when it was $31.5 million, but it represented an increase of 8% compared with second quarter revenue of $28.3 million. Revenue was higher than analyst expectations of $29.66 million.
On a non-GAAP (generally accepted accounting principles) basis, net profit for the third quarter of 2009 was $2.8 million, (or $0.18 per share), compared with $3.3 million, ($0.20 per diluted share), in the third quarter of 2008.
Analysts had expected earnings per share to be $0.13 in the third quarter.
Fundtech said that during the quarter, it closed 116 new deals with banks and added 10 new bank customers.
The company also issued guidance which was above previous analyst expectations. The company expects revenue of $31.5-32.5 million, and non-GAAP earnings per diluted share, before all amortization expenses and stock-based compensation expenses, of between $0.17 and $0.21. These figures are stronger than the $30.9 million revenue and $0.16 EPS forecast by analysts for the fourth quarter.
Ben Menachem said, "We believe that in the post-financial crisis environment, transaction banking is becoming a highly valued, high growth line of business for financial institutions -- both for its ability to generate highly profitable fee income as well as requiring substantially less capital relative to other banking products."
Shares in Fundtech closed on Friday at $12.98, reflecting a market cap of $199.39 million. The company's shares rose 5.5% by mid-afternoon today on the Tel Aviv Stock Exchange (TASE).
IDB Holding Corp. Ltd. (TASE:IDBH) unit Clal Industries and Investments owns 55% of the company.
Published by Globes [online], Israel business news - www.globes-online.com - on November 2, 2009
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