Trintech Reports Second Quarter Fiscal Year 2010 Financial Results

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Revenues of $9.9 million and Adjusted EBITDA Net Income of $1.5 million and Net Income of $603,000 DUBLIN and DALLAS, Aug. 25 /PRNewswire-FirstCall/ -- Trintech Group Plc (NASDAQ:TTPA), a leading global provider of integrated financial governance, transaction risk management, and compliance solutions, today announced revenues of $9.9 million for the second quarter ended July 31, 2009, an adjusted EBITDA net income of $1.5 million and a net profit for the quarter of $603,000. Highlights: -- Revenue amounted to $9.9 million for Q2 of the 2010 fiscal year which represented a 5% reduction compared to the same period of the prior year. -- Trintech generated an adjusted EBITDA net income of $1.5 million for Q2 of the 2010 fiscal year compared to an adjusted EBITDA net income of $215,000 for the corresponding period in the prior year, representing growth of 595%. Adjusted EBITDA net income per ADS was $0.09 for Q2 of the 2010 fiscal year compared to $0.01 for the same period in the prior year. -- Trintech had cash balances of $17.8 million (including restricted cash of $170,000) at July 31, 2009. The Company also generated $826,000 cash from operating activities for Q2 of the 2010 fiscal year which was an increase of $945,000 compared to the same period in the prior year. -- Gross margin amounted to $7.0 million in Q2 of the 2010 fiscal year, representing 71% of revenue, compared to $7.1 million and 68% in Q2 of the prior year. -- Trintech incurred research and development expenditure of $1.4 million in Q2 of the 2010 fiscal year compared with $1.6 million in Q2 of the prior year, a decrease of 11%. -- Trintech reduced expenditure in sales and marketing by 22% from $3.5 million in Q2 in the 2009 fiscal year to $2.7 million in the same quarter in the 2010 fiscal year. -- General and administrative expenses decreased by 18% to $2.1 million in Q2 of the 2010 fiscal year compared to $2.6 million in Q2 of the 2009 fiscal year. -- Trintech generated a net income of $603,000 in Q2 of the 2010 fiscal year compared with a net loss of $965,000 in Q2 of the 2009 fiscal year. Combined basic and diluted net income per equivalent ADS for the quarter ended July 31, 2009 was $0.04, compared to a basic and diluted net loss of $0.06 for the same period in the prior year. Cyril McGuire, Chief Executive Officer, said, "Our Q2 trading performance was strong with very robust growth in our EBITDA earnings of $1.5 million representing over 595% growth compared to the same period last year. Our management focus is to increase profitability and cash generation, control our operating costs while still investing in target opportunities. During the quarter, we experienced growth in our customer pipeline, an improvement in our order backlog, and some early encouraging signs of recovery in our target markets. Overall, Trintech is well positioned to execute and capitalise on future market opportunities as the broader economy recovers." Paul Byrne, President, added, "Trintech's strategy of helping senior finance executives drive real financial returns from automating more of their financial processes continues to underpin strong EBITDA profit growth. As the economic environment begins to recover and we benefit from the launch of new products, such as Unity XFR, and develop new partnerships, we believe the Company will continue to grow EBITDA profitability." Recent Highlights include: Trintech announced that P.F. Chang's has selected its ReconNET software to automate their high volume revenue and treasury reconciliation process. ReconNET is a component of Trintech's Unity platform, a suite of modular software that enables companies to meet their financial governance, risk management and compliance goals. P.F. Chang's China Bistro, Inc. owns and operates two restaurant concepts in the Asian niche in the United States. Trintech announced that Mexx has selected its ReconNET software for financial process compliance. Mexx markets an extensive range of fashion apparel and lifestyle accessories for women, men and children. Trintech announced a strategic partnership with WNS (Holdings) Limited (NYSE:WNS), a leading provider of business process outsourcing (BPO) services and solutions. Under the terms of the agreement, WNS will offer its customers Trintech's financial governance applications, implementation services and technical support in order to maximize efficiencies, tighten controls and increase ROI from financial operations. Trintech announced that Providence Health & Services had increased revenue by $35 million using Concuity ClearContracts. Trintech signed an agreement to expand the breadth of services provided to the Providence multi-hospital system. Providence Health & Services has, based on the success achieved to date, extended its agreement to include the addition of four more facilities using the ClearContracts software-as-a-service revenue management solution from Concuity. The expanded agreement includes an extension of Concuity's ClearContracts solutions to the 16 hospitals located in the Washington, Alaska, Montana and California regions of Providence Health & Services. Providence uses ClearContracts for all contract management functions including accounts receivables management, account recovery, management reporting and managed care contract negotiations. Trintech announced the availability of Unity Xtensible Financial Reporting (XFR), a financial reporting software solution with embedded support for the tagging and output of XBRL-compliant financial statements. As global accounting standards have started to converge, businesses are increasingly being required to understand and adopt XBRL as an enabling technology in enterprise wide disclosure initiatives being mandated by global financial governing bodies, such as the SEC's Final Rule in the US and HMRC in the UK. Trintech announced that the independent research firm Forrester Research, Inc. had included Trintech on its report "The Forrester Wave(TM): Enterprise Governance, Risk and Compliance Platforms, Q3 2009." Trintech held its 10th Annual General Meeting (AGM) as a public company in Dublin, Ireland. At the AGM, Cyril McGuire, Chairman and CEO, welcomed the approval by shareholders of all the ordinary and special resolutions including the approval of the share buy-back agreement with First Analysis Securities Corporation. The timing and amount of any repurchase by Trintech under the share buy-back programme will be dependent upon market conditions, securities law limitations and other corporate considerations. Trintech announced the successful conclusion of its thirteenth annual US-based Customer Conference held May 18-20 at the Omni Fort Worth Hotel in Fort Worth, Texas. The Conference, which attracted more than 200 attendees, featured finance, accounting and treasury professionals from world-class organizations, including Intel, Target, Hewlett Packard, FedEx Office, Lockheed Martin, Sprint, Yahoo!, Questar and more. This year's conference theme focused on helping clients maximize current and planned investments in governance, risk and compliance solutions to increase productivity and achieve more with existing resources. Results Overview: Revenue for the second quarter ended July 31, 2009 was $9.9 million compared with $10.5 million for the corresponding quarter in the prior year, a decrease of 5%. The strengthening of the dollar versus the pound and the euro accounted for approximately $115,000 of this revenue variance and the remaining revenue variance was due to the reasons outlined below. Software license revenue for the quarter ended July 31, 2009 was $5.3 million compared with $5.4 million for the corresponding quarter in the prior year, a decrease of 1%. The decrease was primarily due to weaker governance, risk and compliance (GRC) license sales in the quarter in the EMEA markets due to economic uncertainty in these markets negatively impacting our normal sale cycles with customers becoming more cautious, procurement processes lengthening and general uncertainty creating significant challenges to close new business. This fall in revenues was partially offset by stronger maintenance revenues from existing customers in the US. Service revenue for the quarter ended July 31, 2009 was $4.6 million compared with $5.1 million for the corresponding quarter in the prior year, a decrease of 10%. The decrease was primarily due to a fall in revenues from our GRC business in the US and European markets which was partially offset by an increase in revenues from ASP services in our Healthcare business in the US. Total gross margin for the second quarter ended July 31, 2009 was $7.0 million, a decrease of 1% from $7.1 million in the corresponding quarter in the prior year. Gross margin percentage increased to 71% in Q2 of the 2010 fiscal year compared to 68% in the same period of the prior year. The increase in margin percentage was due to a change in the revenue mix. Total operating expenses for the second quarter ended July 31, 2009 were $6.6 million, a decrease of 18% from $8.0 million in the corresponding quarter in the prior year. The decrease in costs was primarily due to headcount reductions and lower salary costs. There has also been a reduction in discretionary expenditure in all areas of Trintech over the last year as the economic position worsened in the US and Europe. The strengthening of the dollar versus the pound and the euro accounted for approximately $246,000 of this operating cost reduction compared to Q2 in the prior year. Adjusted EBITDA operating expenses for the quarter ended July 31, 2009 were $5.9 million, a decrease of 17% compared to adjusted EBITDA operating expenses of $7.1 million for the corresponding period in the prior year. Restructuring expenses were $19,000 for the quarter ended July 31, 2009. These charges related primarily to employee termination costs as a result of the company re-aligning its cost base in the current difficult economic environment. Adjusted EBITDA net income was $1.5 million for the second quarter ended July 31, 2009 compared to an adjusted EBITDA net income of $215,000 for the corresponding quarter in the prior year. This represented a 595% increase from Q2 in the prior year and reflects the company's lower operating cost base. Trintech's balance sheet remains strong with cash balances of $17.8 million (including restricted cash of $170,000) as of July 31, 2009. Net cash generated from operations for the three months ended July 31 2009 was $826,000. Trintech will host a conference call to discuss its financial results and business outlook beginning at 15:30hrs (UK Time) today, Wednesday, August 26, 2009. Please see advisory for information on the call. A web simulcast of Trintech's conference call reviewing our performance for Q2 of fiscal year 2010 and our business outlook for Q3 fiscal year 2010 will be broadcast live today, Wednesday, August 26, 2009 at 15:30 hrs (UK Time), 10:30 hrs (NY Time) and 07:30 hrs (CA Time) and thereafter for 1 year at http://www.trintech.com/investor. An instant telephone replay will also be available for 10 days by dialing +44 1452 55 00 00 and entering the following access number (99452612 #). About Trintech Group Trintech Group Plc (NASDAQ:TTPA) is a leading global provider of integrated financial governance, transaction risk management, and compliance solutions. The Company enables companies to achieve excellence in financial governance and performance management through a comprehensive platform of account reconciliation, accounting compliance, and financial reporting applications across the financial lifecycle. Over 600 leading global organizations are realizing the benefits of Trintech solutions every day to gain greater control, visibility, and efficiency across financial processes; improve financial performance through stronger management of revenue and cost cycles; ensure the accuracy and integrity of financial data, thereby reducing the risk of material weaknesses and restatements and to drive immediate efficiencies and cost reductions in financial operations through automation and scalability. Trintech's customers include retail chains, commercial companies, financial institutions and healthcare providers in the United States, the UK and the Republic of Ireland, continental Europe and Australia. Customers who have used our software in recent years include Ericsson, HSBC, Regis Corporation, Providence Health & Services and Cleveland Clinic Foundation. For more information on how Trintech can help you increase confidence in business performance and reduce financial risk, please contact us online at http://www.trintech.com/ or at our principal business office in Addison, Texas, or through an international office in Ireland, the United Kingdom, or the Netherlands. Trintech - 15851 Dallas Parkway, Suite 900 - Addison, TX 75001 - Tel 1 972 701 9802 Trintech UK Ltd. - Warnford Court, 29 Throgmorton St. - London EC2N2AT, UK - Tel +44 (0) 20 7628 5235 Trintech Technologies - Block C, Central Park - Leopardstown, Dublin 18, Ireland - Tel +353 1 293 9840 Trintech - Cypresbaan 9 - 2908 LT Capelle a/d Ijssel, The Netherlands - Tel +31 (0) 10 8507 474 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 Trintech's business outlook and product strategy, areas of management focus, and Trintech's belief that it is well positioned to execute and capitalize on future market opportunities and will continue to grow EBITDA profitability. 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, 2009 filed with the US Securities and Exchange Commission (http://www.sec.gov/) and subsequent filings with the US Securities and Exchange Commission. Lastly, Trintech assumes no obligation to update these forward-looking statements. Contact Paul Byrne, President Joseph Seery, VP Finance, Group Trintech Group Plc +353 1 293 9840 TRINTECH GROUP PLC CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (U.S. dollars in thousands) July 31, January 31, -------- ----------- ASSETS 2009 2009 ---- ---- Current assets Cash and cash equivalents $17,675 $17,363 Restricted cash - 1,143 Accounts receivable, net of allowance for doubtful accounts of $268 and $267 at July 31, 2009 and January 31, 2009, respectively 5,389 6,021 Prepaid expenses and other current assets 1,230 1,140 Deferred costs 275 296 Net current deferred tax asset 362 252 --- --- Total current assets 24,931 26,215 ------ ------ Non-current assets Restricted cash 170 170 Property and equipment, net 1,171 1,430 Deferred costs 783 261 Intangible assets, net 4,123 5,309 Goodwill 24,003 24,089 ------ ------ Total non-current assets 30,250 31,259 ------ ------ Total assets $55,181 $57,474 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable 94 704 Accrued payroll and related expenses 2,170 1,878 Deferred consideration - 2,970 Income taxes payable 149 161 Other accrued liabilities 1,706 1,730 Deferred revenues 10,920 10,122 ------ ------ Total current liabilities 15,039 17,565 ------ ------ Non-current liabilities Capital leases due after more than one year - 42 Income taxes payable 61 110 Net non-current deferred tax liability 362 252 Deferred rent less current portion 470 537 --- --- Total non-current liabilities 893 941 --- --- Series B preference shares, $0.0027 par value 10,000,000 authorized at July 31, 2009 and January 31, 2009, respectively None issued and outstanding - - Shareholders' equity: Ordinary Shares, $0.0027 par value: 100,000,000 shares authorized; 33,454,385 shares issued and 32,945,761 and 31,843,333 shares outstanding at July 31, 2009 and January 31, 2009, respectively. 90 90 Additional paid-in capital 253,230 253,076 Treasury shares (at cost, 508,624 and 595,552 at July 31, 2009 and January 31, 2009, respectively) (750) (879) Accumulated deficit (209,175) (209,367) Accumulated other comprehensive loss (4,146) (3,952) ------ ------- Total shareholders' equity 39,249 38,968 ------ ------ Total liabilities and shareholders' equity $55,181 $57,474 ======= ======= TRINTECH GROUP PLC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (U.S. dollars in thousands, except share and per share data) Three Months Six Months Ended July 31, Ended July 31, -------------- -------------- 2009 2008 2009 2008 ---- ---- ---- ---- Revenue License $5,305 $5,373 $10,111 $10,271 Service 4,624 5,112 8,983 9,855 ----- ----- ----- ----- Total revenue 9,929 10,485 19,094 20,126 ----- ------ ------ ------ Cost of revenue License 560 588 1,116 1,086 Amortization of purchased technology 181 226 362 442 Service 2,150 2,577 4,525 4,821 ----- ----- ----- ----- Total cost of revenue 2,891 3,391 6,003 6,349 ----- ----- ----- ----- Gross margin 7,038 7,094 13,091 13,777 Operating expenses: Research and Development 1,384 1,558 2,870 3,050 Sales and marketing 2,702 3,458 4,938 6,537 General and administrative 2,099 2,554 4,245 5,043 Restructuring charges 19 54 253 54 Amortization of purchased intangible assets 412 415 824 810 --- --- --- --- Total operating expenses 6,616 8,039 13,130 15,494 ----- ----- ------ ------ Income (loss) from operations 422 (945) (39) (1,717) Interest income, net 12 74 37 192 Exchange gain (loss), net 166 (4) 227 101 --- --- --- --- Income (loss) before provision for income taxes 600 (875) 225 (1,424) Provision for income taxes 3 (90) (33) (29) --- --- --- --- Net income (loss) $603 $(965) $192 $(1,453) ==== ===== ==== ======== Weighted-average shares used in computing basic net income (loss) per Ordinary Share Basic 32,945,761 31,910,955 32,848,156 31,900,826 ========== ========== ========== ========== Diluted 32,979,535 31,910,955 32,863,235 31,900,826 ========== ========== ========== ========== Basic and diluted income (loss) per Ordinary Share $0.02 $(0.03) $(0.01) $(0.05) ===== ====== ====== ====== Basic and diluted income (loss) per equivalent ADS $0.04 $(0.06) $(0.01) $(0.09) ===== ====== ====== ====== TRINTECH GROUP PLC RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA NET INCOME (U.S. dollars in thousands, except share and per share data) Three Months Ended Six months ended July 31, July 31, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- Net income (loss) $603 $(965) $192 $(1,453) Adjustments: Depreciation 151 190 318 392 Amortization 593 641 1,186 1,252 Share-based compensation 143 279 241 539 Restructuring charges 19 54 253 54 Interest income, net (12) (74) (37) (192) Income taxes (3) 90 33 29 --- --- --- --- Adjusted Earnings Before Interest, Taxation, Depreciation, Amortization, Share-based compensation and Restructuring charges (EBITDA) net income $1,494 $215 $2,186 $621 ===== === ===== === Adjusted Basic and diluted income per Ordinary Share $0.05 $0.01 $0.07 $0.02 ==== ==== ==== ==== Adjusted basic and diluted income per ADS equivalent $0.09 $0.01 $0.13 $0.04 ==== ==== ==== ==== Note: Management believes Adjusted EBITDA net income is an important measure of Company performance without consideration of the non-operating income and expense adjusted above as it presents a clearer view of operational performance changes between the comparative periods. TRINTECH GROUP PLC RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED EBITDA OPERATING EXPENSES (U.S. dollars in thousands) Three Months Ended Six months ended July 31, July 31, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- Total operating expenses $6,616 $8,039 $13,130 $15,494 Adjustments: Restructuring charges (19) (54) (253) (54) Depreciation (140) (168) (299) (349) Amortization (412) (415) (824) (810) Share-based compensation (129) (262) (221) (508) ---- ---- ---- ---- Adjusted EBITDA operating expenses $5,916 $7,140 $11,533 $13,773 ===== ===== ====== ====== Note: Management believes Adjusted EBITDA operating expenses is an important measure of Company performance without consideration of the non-operating expense adjusted above as it presents a clearer view of operational performance changes between the comparative periods. TRINTECH GROUP PLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (U.S. dollars in thousands) Six Months Ended July 31, --------------- 2009 2008 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $192 $(1,453) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 318 392 Amortization 1,186 1,252 Share-based compensation 241 539 Effect of changes in foreign currency exchange rates (142) (69) Changes in operating assets and liabilities: Accounts receivable 1,803 873 Prepaid expenses and other current assets (539) (264) Accounts payable (619) 492 Accrued payroll and related expenses 246 (512) Deferred revenues (397) 248 Other accrued liabilities (209) (607) ---- ---- Net cash provided by operating activities 2,080 891 ----- --- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (52) (148) Payments relating to acquisitions (2,883) (8,708) ------ ------ Net cash used in investing activities (2,935) (8,856) ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on capital leases (79) (73) Issuance of ordinary shares 41 65 Decrease in restricted cash deposits 1,143 - ----- --- Net cash provided by (used in) financing activities 1,105 (8) ----- --- Net increase (decrease) in cash and cash equivalents 250 (7,973) Effect of exchange rate changes on cash and cash equivalents 62 149 Cash and cash equivalents at beginning of period 17,363 23,766 ------ ------ Cash and cash equivalents at end of period $17,675 $15,942 ======= ======= Supplemental disclosure of cash flow information Interest paid $9 $17 === === Taxes paid $93 $164 === ==== Supplemental disclosure of non-cash flow information Acquisition of property and equipment under capital leases $- $(30) === ==== Shares issued in connection with acquisition $- $1,239 === ====== DATASOURCE: Trintech Group Plc CONTACT: Paul Byrne, President, , or Joseph Seery, VP Finance, Group, , both of Trintech Group Plc, +353 1 293 9840 Web Site: http://www.trintech.com/

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