Temenos Group AG, a provider of mission-critical core banking software systems, has released its financial results for the fourth quarter and full year 2007.
Revenue for the fourth quarter was $125.3 million, up from $78.8 million in the same period last year, representing growth of 59%. For the full year, revenue reached $329.9 million, 53% above the 2006 figure, with all revenue lines experiencing strong growth. Q4 and full year revenues were 16% and 5% above consensus estimates, respectively.
Operating profit for the quarter was $43.7 million, compared with $26.9 million in the same period last year, an increase of 62%. Operating profit for the year was $62.5 million, compared to $33.3 million in 2006, representing a rise of 88%. Operating profit was 5% and 8% above consensus for the year and the quarter, respectively. Margin for the year at 19% was 350 basis points above the prior year, reflecting a favourable change in the sales mix, good cost control and continued improvement in services margins, which reached 7.4%.
Net income was $44.3 million in the quarter and $64.7 million for the full year. Adjusted EPS, which excludes amortisation of acquisition-related intangibles, was $0.66 in the quarter, a 61% increase over 2006, and $1.03 in the full year a 78% increase over 2006. Adjusted EPS was 11% ahead of consensus estimates for the year and 17% of consensus estimates for the quarter, reflecting the operating profit outperformance, but also a larger than expected foreign exchange gain.
Temenos also enjoyed strong cash conversion across both businesses, T24 and TCB. Cashflow from operations was $64.8 million for the year, 18% ahead of management guidance of $55 million, representing an EBITDA conversion of 83% and an increase of 136% over the prior year.
The companys outlook for 2008 assumes a zero tax rate, a USD/EUR rate of $0.68, a USD/CHF rate of $1.09 and a USD/GBP rate of $0.50. The 2008 outlook is for licences sales of $173 million, 16% up on 2007 levels; total revenue of $400 million, 21% above 2007; EBIT of $85, 36% above 2007 levels and a margin of 21.3%; and adjusted EPS of $1.33, 30% above the 2007 figure.
“I am pleased to be able to report another set of outstanding results. Both our businesses, T24 and TCB, have had their best year ever and we have exceeded the markets expectations for revenues, earnings and cash. Although we are alive to the changes in a challenging macroeconomic environment, these results demonstrate that, to date, we have not experienced any slowdown as a result of the credit crunch affecting financial institutions.
“Indeed, based on our robust pipeline of future deals, we are happy to be raising guidance again the ninth consecutive quarter we have done so. We are confident that the factors driving core banking system replacement are too compelling to ignore and believe that Temenos is very well placed to continue to capitalise on the opportunities in this growing market,” says Andreas Andreades, CEO, Temenos.