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Longtop Financial Technologies Limited Announces Unaudited Financial Results for the Fiscal Quarter Ended September 30, 2009
HONG KONG, Nov. 16 /PRNewswire-Asia/ --
- Second Quarter Total Revenues of US$42.8 million, Up 52.0% Year-on-Year;
- Second Quarter Adjusted(1) Operating Income of US$20.8 million, an
Increase of 33.4% Year-on-Year;
- Second Quarter Adjusted Net Income of US$21.4 million, an Increase of
32.0% Year-on-Year;
- Second Quarter Adjusted Diluted Earnings Per Share of US$0.40, an
Increase of 29.0% Year-on-Year;
- Full Year 2010 Revenue Guidance Increased to US$158.0 million from
Previous Guidance of US$145.0 million and Adjusted Diluted Earnings Per
Share Guidance Increased to US$1.29 Per Share from Previous Guidance of
US$1.22 Per Share
Longtop Financial Technologies Limited ("Longtop") (NYSE: "LFT"), a
leading software developer and solutions provider targeting the financial
services industry in China, announced today unaudited financial results for
the quarter ended
"I'm pleased to report that on the back of solid execution once again our
second quarter financial results exceeded our top and bottom line guidance,"
commented
(1) Explanation of the Company's Adjusted (i.e. non-GAAP) financial
measures and the related reconciliations to GAAP financial measures
are included in the accompanying "Non-GAAP Disclosure" and the
"Consolidated Adjusted Statements of Operations."
FISCAL SECOND QUARTER DETAILED FINANCIAL RESULTS
Revenue
2009 Q2 and 2010 Q2 Revenue - US$000s
Three months ended Six months ended
September September % September September %
30, 2008 30, 2009 Change 30, 2008 30, 2009 Change
Software Development $23,583 $36,995 56.9% $39,652 $61,712 55.6%
Other Services $4,605 $5,839 26.8% $7,864 $9,615 22.3%
Total Revenue $28,188 $42,834 52.0% $47,516 $71,327 50.1%
Total revenues for the quarter ended
Total revenues for the six months ended
Software Development Revenues by Customer Type-US$000s
Three months ended Six months ended
September September % September September %
30, 2008 30, 2009 Change 30, 2008 30, 2009 Change
Big Four Banks 11,862 17,793 50.0% 21,028 28,808 37.0%
Other Banks 8,672 12,477 43.9% 13,922 21,874 57.1%
Insurance 2,283 5,181 126.9% 3,169 7,886 148.8%
Enterprises 766 1,544 101.6% 1,533 3,144 105.1%
Total 23,583 36,995 56.9% 39,652 61,712 55.6%
Software development revenue from the Big Four Banks was
Software development revenue from Other Banks was
Software development revenue from Insurance was
Software development revenue from Enterprises was
Gross Margins
Three months ended Six months ended
September September Change September September Change
30, 2008 30, 2009 (Decrease) 30, 2008 30, 2009 (Decrease)
Adjusted Software
Development Gross
Margin % 77.0% 73.3% (3.7%) 72.7% 71.6% (1.1%)
Adjusted Other
Services
Gross Margin % 53.2% 38.7% (14.5%) 61.2% 31.4% (29.8%)
Adjusted Total
Gross Margin % 73.1% 68.5% (4.6%) 70.8% 66.2% (4.6%)
Adjusted Total Gross Margin was 68.5% and 66.2% for the three and six
months ended
Operating Expenses
Three months ended Six months ended
September September % September September %
30, 2008 30, 2009 Change 30, 2008 30, 2009 Change
Adjusted Operating
Expenses - US$000s 5,038 8,600 70.7% 9,006 14,880 65.2%
Adjusted Operating
Expenses - % of
revenue 17.9% 20.1% -- 19.0% 20.8% --
Adjusted Operating Expenses, which were 20.1% and 20.8% of revenue for the
three and six months ended
Operating Income and Net Income
Three months ended Six months ended
September September % September September %
30, 2008 30, 2009 Change 30, 2008 30, 2009 Change
Adjusted Operating
Income - US$000s 15,567 20,760 33.4% 24,624 32,325 31.3%
Adjusted Operating
Income - % of
revenue 55.2% 48.5% -- 51.8% 45.3% --
Adjusted Operating Income was
Three months ended Six months ended
September September % September September %
30, 2008 30, 2009 Change 30, 2008 30, 2009 Change
Adjusted Net Income
- US$000s 16,238 21,427 32.0% 24,065 32,118 33.5%
Adjusted Net income
per Diluted Share 0.31 0.40 29.0% 0.46 0.60 30.4%
Adjusted Net Income
- % of revenue 57.6% 50.0% -- 50.6% 45.0% --
US GAAP Net Income
- US$000s 14,197 18,909 33.2% 20,284 27,293 34.6%
US GAAP Net income
per Diluted Share 0.27 0.35 29.6% 0.39 0.51 30.8%
US GAAP Net Income
- % of revenue 50.4% 44.1% -- 42.7% 38.3% --
Reconciliation between US GAAP Net Income and Adjusted Net Income
Three months ended Six months ended
September September % September September %
Change Change
30, 2008 30, 2009 30, 2008 30, 2009
Adjusted Net Income
- US$000s $16,238 $21,427 32.0% $24,065 $32,118 33.5%
Stock compensation $1,428 $1,528 7.0% $2,742 $3,003 9.5%
Amortization of
acquired
intangible assets $556 $900 61.9% $982 $1,642 67.2%
Amortization of
acquired
deferred
compensation $57 $90 57.9% $57 $180 215.8%
Sub-total $2,041 $2,518 23.4% $3,781 $4,825 27.6%
US GAAP Net Income $14,197 $18,909 33.2% $20,284 $27,293 34.6%
Adjusted Net Income for the quarter ended
Adjusted Net Income for the six months ended
Unrestricted cash balances at
Commenting on the results,
BUSINESS OUTLOOK
Longtop anticipates for the quarter ending
i) Total revenues of
ii) Adjusted Operating Income of
iii) Adjusted Net Income of
Longtop anticipates for its fiscal year ending
i) Total revenues of
ii) Adjusted Operating Income of
iii) Adjusted Net Income of
CONFERENCE CALL AND WEBCAST
Longtop's senior management team will host a conference call and audio web
cast at
The dial-in numbers for the conference call are as follows:
U.S. Toll Free: 1866 549 1292
China Toll Free: 400 681 6949
Hong Kong and International: +852 3005 2050
Passcode: 765115#
A live and archived web cast of this call will be available on Longtop's website at http://www.longtop.com/en/index.asp
NON-GAAP DISCLOSURE ("ADJUSTED")
To supplement the unaudited consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Longtop's management reports and uses non-GAAP ("Adjusted") measures of revenues, cost of revenues, operating expenses, net income and net income per share, which are adjusted from results based on GAAP. To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures to exclude certain business combination accounting entries and expenses related to acquisitions, as well as other significant expenses including stock-based compensation that we believe are helpful in understanding our past financial performance and our future results. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures. Management believes these non-GAAP financial measures enhance the user's overall understanding of our current financial performance and our prospects for the future. Specifically, we believe the non-GAAP financial measures provide useful information to both management and investors by excluding certain items that we believe are not indicative of our core operating results. The presentation of this additional information is not meant to be considered superior to, in isolation from or as a substitute for results prepared in accordance with US GAAP. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures contained in this release and which we discuss below. Readers are cautioned not to view non-GAAP results on a stand-alone basis or as a substitute for results under GAAP, or as being comparable to results reported or forecasted by other companies.
Definitions of Non-GAAP Measures
Adjusted Cost of Revenue is defined as cost of revenue excluding, if applicable: (1) non-cash compensation expense and (2) amortization of acquired intangibles.
Adjusted Gross Margin is defined as Total Revenue less Adjusted Cost of Revenue.
Adjusted Operating Expenses is defined as operating expenses excluding, if applicable: (1) non-cash compensation expense, (2) amortization of acquired intangibles, deferred compensation arising on acquisition and goodwill impairment, and (3) one-time items.
Adjusted Operating Income is defined as Adjusted Gross Margin less Adjusted Operating Expenses.
Adjusted Net Income is defined as Adjusted Operating Income plus/minus other income/(expenses), less income taxes, excluding if applicable: (1) one- time items and (2) discontinued operations.
Adjusted EPS is defined as Adjusted Net Income divided by diluted shares.
One-Time Items, if applicable, are excluded from Adjusted Operating Income and Adjusted Net Income. These items are one-time in nature and non-recurring, infrequent or unusual, and have not occurred in the past two years or are not expected to recur in the next two years. GAAP results include one-time items.
Expenses That Are Excluded From Our Non-GAAP Measures
Non-cash compensation expense consists principally of expense associated with the grants, including unvested grants assumed in acquisitions, of restricted stock, restricted stock units and stock options. These expenses are not paid in cash, and we include the related shares in our fully diluted shares outstanding, which, for restricted stock units and stock options, are included on a treasury method basis. Longtop's management believes excluding the share-based compensation expense from its non-GAAP financial measure is useful for itself and investors. Although share-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, and as share-based compensation expense does not involve any upfront or subsequent cash outflow, Longtop does not factor this in when evaluating and approving expenditures or when determining the allocation of its resources to its business segments. As a result, the monthly financial results for internal reporting and any performance measure for commission and bonus are based on non-GAAP financial measures that exclude share-based compensation expense.
Amortization of acquired intangibles is a non-cash expense relating to acquisitions. At the time of an acquisition, the intangible assets of the acquired company, such as backlog, customer relationships, and intellectual property, are valued and amortized over their estimated lives. While it is likely that we will have significant intangible amortization expense as we continue to acquire companies, we have excluded the effect of amortization of intangible assets from our non-GAAP financial measures. Amortization of intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well.
Acquisition proceeds allocated to deferred compensation arises where a portion of the purchase price paid to shareholders is considered compensation expense rather than purchase price under US GAAP. Deferred compensation arising on acquisition is inconsistent in amount and frequency and is significantly affected by the timing and size of our acquisitions. Investors should note that the use of deferred compensation arising on acquisition contributed to revenues earned during the periods presented and will contribute to future period revenues as well.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
It is currently expected that the Business Outlook will not be updated until the release of Longtop's next quarterly earnings announcement; however, Longtop reserves the right to update its Business Outlook at any time for any reason.
This announcement contains forward-looking statements within the meaning
of the safe harbor provisions of the Private Securities Litigation Reform Act
of 1995, including those with respect to our anticipated operating results for
the quarter ended
About Longtop Financial Technologies Limited
Longtop is a leading software development and solutions provider targeting
the financial services industry in China. Longtop develops and delivers a
comprehensive range of software applications and solutions with a focus on
meeting the rapidly growing IT needs of the financial services institutions in
China. Headquartered in
For more information, please visit: http://www.longtop.com .
For more information, please contact:
For Investors:
Longtop Financial Technologies Limited
Charles Zhang, CFA
Email: ir@longtop.com
Phone: +86-10-8421-7758
For Media:
IR Inside BV
Caroline Straathof
Email: caroline.straathof@irinside.com
Phone: +31-6-5462-4301
CONSOLIDATED BALANCE SHEETS
March 31, September 30,
2009 2009
(In U.S. dollar thousands, except
share and per share data)
Assets
Current assets:
Cash and cash equivalents $238,295 $226,430
Restricted cash 463 536
Accounts receivable, net 29,861 56,384
Inventories 4,982 4,520
Amounts due from related parties 682 1,268
Deferred tax assets 979 1,016
Other current assets 4,712 12,041
Total current assets 279,974 302,195
Fixed assets, net 14,858 26,169
Prepaid land use right 5,167 5,117
Intangible assets, net 11,526 27,193
Goodwill 24,837 38,531
Deferred tax assets 1,479 1,479
Other assets 632 450
Total assets $338,473 $401,134
Liabilities and shareholders' equity
Current liabilities:
Short-term borrowings $486 $4,709
Accounts payable 3,299 9,436
Deferred revenue 16,010 19,001
Amounts due to related parties 17 77
Deferred tax liabilities 867 935
Accrued and other current liabilities 23,810 31,808
Total current liabilities 44,489 65,966
Long-term liabilities:
Obligations under capital leases,
net of current portion 98 --
Deferred tax liabilities 1,242 5,554
Other non-current liabilities 286 3,620
Total liabilities 46,115 75,140
Shareholders' equity:
Ordinary shares $0.01 par value
(1,500,000,000 shares authorized,
51,036,816 and 51,691,623 shares
issued and outstanding as of March
31, 2009 and September 30, 2009,
respectively) $510 $517
Additional paid-in capital 243,194 249,262
Retained earnings 29,451 56,744
Accumulated other comprehensive
income 19,203 19,471
Total shareholders' equity 292,358 325,994
Total liabilities and shareholders'
equity $338,473 $401,134
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
September September September September
30, 2008 30, 2009 30, 2008 30, 2009
(In U.S. dollar thousands, except share and
per share data)
Revenues:
Software development $23,583 $36,995 $39,652 $61,712
Other services 4,605 5,839 7,864 9,615
Total revenues 28,188 42,834 47,516 71,327
Cost of revenues:
Software development 5,962 10,825 11,770 19,144
Other services 2,541 3,767 3,746 7,141
Total cost of revenues 8,503 14,592 15,516 26,285
Gross profit 19,685 28,242 32,000 45,042
Operating expenses:
Research and development 1,204 1,962 2,313 3,479
Sales and marketing 2,616 5,304 4,408 8,563
General and administrative 2,339 2,734 4,436 5,500
Total operating expenses 6,159 10,000 11,157 17,542
Income from operations 13,526 18,242 20,843 27,500
Other income (expenses):
Interest income 1,609 992 3,516 2,000
Interest expense (25) (178) (292) (194)
Other income (expense),
net 717 220 (295) 305
Total other income 2,301 1,034 2,929 2,111
Income before income tax
expense 15,827 19,276 23,772 29,611
Income tax expense (1,630) (367) (3,488) (2,318)
Net income 14,197 18,909 20,284 27,293
Net income per share:
Basic ordinary share $0.28 $0.37 $0.40 $0.53
Diluted $0.27 $0.35 $0.39 $0.51
Shares used in computation
of net income per share:
Basic ordinary share 50,491,027 51,461,241 50,406,533 51,326,441
Diluted 52,398,944 53,375,287 52,455,885 53,306,623
Includes share-based
compensation related to:
Cost of revenues software
development $419 $485 $779 $923
Cost of revenues other
services 63 69 122 138
General and administrative
expenses 473 419 945 859
Sales and marketing
expenses 371 452 713 880
Research and development
expenses 102 103 183 203
UNAUDITED CONSOLIDATED ADJUSTED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
September September September September
30, 2008 30, 2009 30, 2008 30, 2009
(In U.S. dollar thousands, except share and
per share data)
Revenues:
Software development 23,583 36,995 39,652 61,712
Other services 4,605 5,839 7,864 9,615
Total revenues 28,188 42,834 47,516 71,327
Cost of revenues:
Software development 5,962 10,825 11,770 19,144
Other services 2,541 3,767 3,746 7,141
Total cost of
revenues 8,503 14,592 15,516 26,285
Cost of revenue
adjustments:
Share-based compensation
software development (419) (485) (779) (923)
Share-based compensation
other services (63) (69) (122) (138)
Amortization of acquired
intangible assets other
services (283) (87) (532) (344)
Amortization of acquired
intangible assets software
development (98) (387) (140) (578)
Amortization of acquired
deferred compensation other
services (39) (33) (39) (66)
Amortization of acquired
deferred compensation
software development (18) (57) (18) (114)
Adjusted cost of revenues:
Software development 5,427 9,896 10,833 17,529
Other services 2,156 3,578 3,053 6,593
Total adjusted cost
of revenues 7,583 13,474 13,886 24,122
Gross profit 19,685 28,242 32,000 45,042
Adjusted gross profit 20,605 29,360 33,630 47,205
Operating expenses:
Research and
development 1,204 1,962 2,313 3,479
Sales and marketing 2,616 5,304 4,408 8,563
General and
administrative 2,339 2,734 4,436 5,500
Total operating
expenses 6,159 10,000 11,157 17,542
Operating expense
adjustments:
Share-based compensation
research and development (102) (103) (183) (203)
Share-based compensation
sales and marketing (371) (452) (713) (880)
Share-based compensation
general and administrative (473) (419) (945) (859)
Amortization of acquired
intangible assets sales
and marketing (136) (360) (243) (590)
Amortization of acquired
intangible assets general
and administrative (39) (66) (67) (130)
Adjusted operating expenses:
Research and development 1,102 1,859 2,130 3,276
Sales and marketing 2,109 4,492 3,452 7,093
General and administrative 1,827 2,249 3,424 4,511
Total adjusted operating
expenses 5,038 8,600 9,006 14,880
Income from operations 13,526 18,242 20,843 27,500
Adjusted income from
operations 15,567 20,760 24,624 32,325
Other income (expenses):
Interest income 1,609 992 3,516 2,000
Interest expense (25) (178) (292) (194)
Other (expenses)
income, net 717 220 (295) 305
Total other income 2,301 1,034 2,929 2,111
Income before income tax
expense 15,827 19,276 23,772 29,611
Adjusted income before
income tax expense 17,868 21,794 27,553 34,436
Income tax expense (1,630) (367) (3,488) (2,318)
Net income 14,197 18,909 20,284 27,293
Adjusted net income 16,238 21,427 24,065 32,118
Net income per share:
Basic ordinary share $0.28 $0.37 $0.40 $0.53
Diluted $0.27 $0.35 $0.39 $0.51
Adjusted net income per
share:
Basic ordinary share $0.32 $0.42 $0.48 $0.63
Diluted $0.31 $0.40 $0.46 $0.60
Shares used in computation
of net income and
adjusted net income per
share:
Basic ordinary share 50,491,027 51,461,241 50,406,533 51,326,441
Diluted 52,398,944 53,375,287 52,455,885 53,306,623
SOURCE Longtop Financial Technologies Limited
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