-- Second Quarter Total Revenues of US$28.2 million, Up 40.8% Year-on-Year;
-- Second Quarter Adjusted(1) Net Income of US$16.2 million, an Increase
of 40.4% Year-on-Year;
-- Second Quarter US GAAP Net Income of US$14.2 million, an Increase of
43.1% Year-on-Year;
-- Full Year 2009 Revenue Guidance Increased to US$98.5 million from
US$93.0 million, Adjusted Net Income Guidance Increased to US$49.5
million from US$47.0 million and Adjusted Diluted Earnings Per Share
Guidance Increased to $0.94 Per Share from $0.87 Per Share;
(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.
XIAMEN, China, Nov. 17 /Xinhua-PRNewswire/ -- 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 September 30, 2008, which is the second quarter of its fiscal year ending March 31, 2009.
"I'm pleased to report that once again our second quarter financial results exceeded our top and bottom line guidance. These results demonstrate that even in the current economic environment our business model has a strong foundation based on recurring revenue and profits, a dependable, diversified and well-capitalized customer base, a business focus on a high-growth market, and a range of software development products and solutions that bring value to our customers," commented Weizhou Lian, CEO of Longtop. "Based on these strong fundamentals and our ongoing discussions with customers about their IT spending plans, we are again increasing our full year guidance and are confident we can achieve our existing 2010 financial targets."
FISCAL SECOND QUARTER DETAILED FINANCIAL RESULTS
Revenue
2008 Q2 and 2009 Q2 Revenue - US$000s
Three months ended Six months ended
September September % September September %
30, 2007 30, 2008 Change 30, 2007 30, 2008 Change
Software development $18,126 $23,583 30.1% $26,332 $39,652 50.6%
Other services $1,887 $4,605 144.0% $5,094 $7,864 54.4%
Total revenue $20,013 $28,188 40.8% $31,426 $47,516 51.2%
Total revenues for the quarter ended September 30, 2008, were US$28.2 million, an increase of 40.8% year-on-year (YoY) from US$20.0 million in the corresponding year ago period, and exceeding company guidance of US$26 million. Software development revenues of US$23.6 million contributed 83.7% of total revenues, a YoY increase of 30.1%.
Total revenues for the six months ended September 30, 2008, were US$47.5 million, an increase of 51.2% YoY from US$31.4 million in the corresponding year ago period. Software development revenues, which were 83.4% of total revenues for the six months ended September 30, 2008, amounted to US$39.7 million, a YoY increase of 50.6%.
Software Development Revenue by Customer Type - US$000s
Three months ended Six months ended
September September % Change September September %
30, 2007 30, 2008 (Decrease) 30, 2007 30, 2008 Change
Big Four Banks 10,224 11,862 16.0% 16,394 21,028 28.3%
Other Banks 5,371 8,672 61.5% 6,646 13,922 109.5%
Insurance 1,500 2,283 52.2% 1,887 3,169 67.9%
Enterprises 1,031 766 (25.7%) 1,405 1,533 9.1%
Total 18,126 23,583 30.1% 26,332 39,652 50.6%
Software Development Revenue Customer Concentration Analysis
Three months ended Six months ended
September September Change September September Change
30, 2007 30, 2008(Decrease) 30, 2007 30, 2008 (Decrease)
% of Software
Development
Revenue from
Big Four Banks 56.4% 50.3% (6.1%) 62.3% 53.0% (9.3%)
Other Banks 29.6% 36.8% 7.2% 25.2% 35.1% 9.9%
Insurance 8.3% 9.7% 1.4% 7.2% 8.0% 0.8%
Enterprises 5.7% 3.2% (2.5%) 5.3% 3.9% (1.4%)
Total 100.0% 100.0% 0.0% 100.0% 100.0% 0.0%
Software development revenue from the Big Four Banks in the second quarter was US$11.9 million, an increase of 16.0% YoY. Big Four banks accounted for 50.3% of software development revenues for the fiscal second quarter 2009, as compared to 56.4% in the corresponding year ago period. Software development revenue from the Big Four Banks for the six months ended September 30, 2008, was US$ 21.0 million, an increase of 28.3% YoY. Big Four Banks accounted for 53.0% of software development revenues for the six months ended September 30, 2008, as compared to 62.3% in the corresponding year ago period.
Software development revenue from Other Banks in the fiscal second quarter 2009 was US$8.7 million, a YoY increase of 61.5%. Other Banks accounted for 36.8% of software development revenues for the three months ended September 30, 2008, as compared to 29.6% in the corresponding year ago period. Software development revenue from Other Banks for the six months ended September 30, 2008, was US$13.9 million, an increase of 109.5% YoY. Other Banks accounted for 35.1% of software development revenues for the six months ended September 30, 2008, as compared to 25.2% in the corresponding year ago period.
Gross Margins
Three months ended Six months ended
September September Change September September Change
30, 2007 30, 2008 (Decrease) 30, 2007 30, 2008 (Decrease)
Adjusted
Total
Gross
Margin % 83.2% 73.1% (10.1%) 79.8% 70.8% (9.0%)
US GAAP
Total
Gross
Margin % 82.0% 69.8% (12.1%) 78.3% 67.3% (10.9%)
Adjusted Total Gross Margin of 73.1% in the second fiscal quarter was in line with the Company's guidance and was 10.1% lower than the 83.2% in the corresponding year ago period. US GAAP total gross margin in the second quarter was 69.8% as compared to 82.0% in the corresponding year ago period with the difference between US GAAP and Adjusted Gross Margin being the exclusion of share-based compensation and amortization of acquired intangibles. Adjusted Total Gross Margin for the six months ended September 30, 2008 was 70.8%, as compared to 79.8% in the corresponding year ago period. US GAAP total gross margin for the six months ended September 30, 2008 was 67.3%, as compared to 78.3% in the corresponding year ago period.
The YoY decline in gross margin is consistent with previous guidance of full year Adjusted Gross Margin of 70.0% and was due to lower gross margins on Fenet, which was acquired in October 2007, and a higher mix of customized solution revenue with 71.2% of revenue coming from customized solutions for the three months and 67.7% for the six months ended September 30, 2008, as compared to 48.3% and 52.0% in the respective year ago periods. The Company is well on track to achieve its target for Adjusted Gross Margin of 70.0% for fiscal 2009.
Operating Expenses
Three months ended Six months ended
September September % September September %
30, 2007 30, 2008 Change 30, 2007 30, 2008 Change
Adjusted Operating
Expenses - US$000s 3,052 5,038 65.1% 5,930 9,006 51.9%
Adjusted Operating
Expenses - % of
revenue 15.3% 17.9% -- 18.9% 19.0% --
US GAAP operating
expenses - US$000s 3,229 6,159 90.7% 6,366 11,157 75.3%
US GAAP operating
expenses - % of
revenue 16.1% 21.8% -- 20.3% 23.5% --
Adjusted Operating Expenses, which were 17.9% and 19.0% of revenue for the three and six months ended September 30, 2008, are in line with full year Company guidance of 20.0%. The YoY increase in total Adjusted Operating Expenses of 51.9% for the first six months of 2009 is in line with total revenue growth of 51.2%. US GAAP operating expenses, which were 23.5% of revenue for the six months ended September 30, 2008, increased 75.3%from the corresponding year ago period as compared to 51.9% for Adjusted Operating Expenses primarily due to share-based compensation expenses subsequent to the initial public offering in October 2007, which are excluded from the Adjusted Operating Expenses.
Operating Income
Three months ended Six months ended
September September % September September %
30, 2007 30, 2008 Change 30, 2007 30, 2008 Change
Adjusted Operating
Income - US$000s 13,598 15,567 14.5% 19,149 24,624 28.6%
Adjusted Operating
Income - % of
revenue 67.9% 55.2% -- 60.9% 51.8% --
US GAAP operating
income - US$000s 13,174 13,526 2.7% 18,225 20,843 14.4%
US GAAP operating
income - % of
revenue 65.8% 48.0% -- 58.0% 43.9% --
Adjusted Operating Income was US$15.6 million for the second quarter and US$24.6 million for the six months ended September 30, 2008, a YoY increase of 14.5% and 28.6%, respectively. Adjusted Operating Margin for the six months ended September 30, 2008, was 51.8%, higher than the Company guidance of 50% for the full year. US GAAP operating income was US$13.5 million for the second quarter and US$20.8 million for the six months ended September 30, 2008, a YoY increase of 2.7% and 14.4%, respectively, from the corresponding year ago periods.
Net Income
Three months ended Six months ended
September September % September September %
30, 2007 30, 2008 Change 30, 2007 30, 2008 Change
(Decrease)
Adjusted Net
Income - US$000s 11,568 16,238 40.4% 17,065 24,065 41.0%
Adjusted Net
Income per
diluted share 0.28 0.31 10.4% 0.42 0.46 9.5%
Adjusted Net Income
- % of revenue 57.8% 57.6% -- 54.3% 50.6% --
US GAAP net
income - US$000s 9,919 14,197 43.1% 14,848 20,284 36.6%
US GAAP net income
per diluted share 0.24 0.27 12.5% 0.37 0.27 (27.0%)
US GAAP net income
- % of revenue 49.6% 50.4% -- 47.2% 42.7% --
Reconciliation between US GAAP Net Income and Adjusted Net Income
Three months ended Six months ended
September September % September September %
30, 2007 30, 2008 Change 30, 2007 30, 2008 Change
(Decrease) (Decrease)
Adjusted
Net Income $11,568 $16,238 40.4% $17,065 $24,065 41.0%
- US$000s
Stock
compensation $180 $1,428 693.3% $442 $2,742 520.4%
Acquisition
related
amortization
and charges $244 $613 151.2% $482 $1,039 115.6%
Loss from
discontinued
operations $1,225 $-- (100.0%) $1,293 $-- (100.0%)
Sub-total $1,649 $2,041 23.8% $2,217 $3,781 70.5%
US GAAP
net income $9,919 $14,197 43.1% $14,848 $20,284 36.6%
Adjusted Net Income for the quarter ended September 30, 2008, of US$16.2 million or US$0.31 per fully diluted share increased 40.4% as compared to Adjusted Net Income of US$11.6 million in the corresponding year ago period, and exceeded Company guidance of US$13.5 million and US$0.25 per fully diluted share. US GAAP net income for the quarter ended September 30, 2008, of US$14.2 million or US$0.27 per fully diluted share increased 43.1% as compared to US GAAP net income of US$9.9 million in the corresponding year ago period. US GAAP and Adjusted Net Income for the quarter ended September 30, 2008, included an $877,000 government subsidy (September 30, 2007: Nil) recorded as other income and a $1.9 million income tax refund (September 30, 2007: Nil).
Adjusted Net Income for the six months ended September 30, 2008, of US$24.1 million or US$0.46 per fully diluted share increased 41.0% as compared to Adjusted Net Income of US$17.1 million in the corresponding year ago period. US GAAP net income for the six months ended September 30, 2008, of US$20.3 million or US$0.27 per fully diluted share increased 36.6% as compared to US GAAP net income of US$14.8 million in the corresponding year ago period. Adjusted and US GAAP net income for the six months ended September 30, 2008 included $1.1 million in exchange losses on US dollar denominated deposits which were in China pending conversion to Renminbi, and included a $877,000 government subsidy (six months end September 30, 2007: Nil) recorded as other income and a $1.9 million income tax refund (six months end September 30, 2007: $795,000).
Unrestricted cash balances at September 30, 2008, were US$209.0 million giving the Company sufficient resources for potential acquisitions in the still fragmented China financial IT services sector.
Commenting on the results, Derek Palaschuk, CFO of Longtop said: "The outstanding results from the fiscal second quarter further solidified Longtop's financial strength. The second quarter's record revenues were supported by robust cash flow from operations, which was US$19.5 million during the quarter. And looking ahead, the strong US$36.0 million in software development revenue backlog from having signed a record number of contracts this quarter, has enabled us to boost once more our current estimate for fiscal 2009 revenues to US$98.5 million and for Adjusted Net Income per fully diluted share to US$0.94, which is up substantially from our original guidance in May 2008 for revenues of US$86.0 million and Adjusted Net Income per fully diluted share of US$0.80."
BUSINESS OUTLOOK
Longtop anticipates for the quarter ending December 31, 2008:
i) Total revenues of US$29.0 million, compared to previous guidance in
August 2008 of US$26 million; representing an increase of 55.9% YoY
from revenues of US$18.6 million in the corresponding year ago period;
ii) Adjusted Net Income guidance of US$15.5 million or US$0.30 per diluted
share, representing an increase of 47.6% YoY from Adjusted Net Income
of US$10.5 million in the corresponding year ago period.
Longtop anticipates for its fiscal year ending March 31, 2009,
i) Total revenues of US$98.5 million, compared to previous guidance in
August 2008 of US$93.0 million, representing an increase of 47.7% YoY
from revenues of US$66.7 million in fiscal year 2008;
ii) Adjusted Net Income to be US$49.5 million, compared to previous
guidance in August 2008 of US$47.0 million, representing an increase
of 46.4% YoY from Adjusted Net Income of US$33.8 million;
iii)Adjusted Diluted Earnings Per Share of US$0.94 per share compared to
US$0.87 previously guided in August 2008.
CONFERENCE CALL AND WEBCAST
Longtop's management team will host a conference call at 7:00 AM ET, November 17, 2008 (or 4:00 AM U.S. Pacific Time on November 17, 2008, and 8:00 PM on November 17, 2008, Beijing/Hong Kong time). To participate in the conference call, please use the dial in numbers below:
U.S Toll Free: 1866 549 1292
China Toll Free: 800 701 1223
Hong Kong and International: +852 3005 2050
Passcode: 765115#
A replay of the call will be available for two weeks following the call and can be accessed on the Company website or by dialing the numbers below:
U.S Toll Free: 1866 753 0743
Hong Kong and International: +852 3005 2020
Passcode: 136397#
A live audio webcast of the conference call, as well as online replay of the call, will be available on Longtop's website at http://www.longtop.com/en .
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. Management believes these non-GAAP financial measures enhance the user's overall understanding of our current financial performance and our prospects for the future and, additionally, uses these non-GAAP financial measures for the general purpose of analyzing and managing the Company's business. 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 Adjusted 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 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: (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.
Non-Cash 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. Further, the amount of share-based compensation expense cannot be anticipated by management and business line leaders and these expenses were not built into the annual budgets and quarterly forecasts, which have been the basis for information Longtop provides to analysts and investors as guidance for future operating performance. 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 non-cash expenses 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 believe that since intangibles represent costs incurred by the acquired company to build value prior to acquisition, they were part of transaction costs. Acquisition proceeds allocated to deferred compensation arises where a portion of the purchase price paid to shareholders who continue to work with Longtop as employees is considered compensation expense rather than purchase price. We believe these costs are part of the transaction costs and amortized within the service period.
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. In some cases, you can identify forward-looking statements by such terms as "believes," "expects," "anticipates," "intends," "estimates," the negative of these terms, or other comparable terminology. Factors that could cause actual results to differ include the effectiveness, profitability, and marketability of the company's solutions; the Company's limited operating history; its reliance on a limited number of customers that continue to account for a high percentage of the Company's revenues; risk of payment failure by any of its large customers, which could significantly harm the Company's cash flows and profitability; the ability of the Company to operate effectively as a public company; future shortage or availability of the supply of employees; general economic and business conditions; the volatility of the company's operating results and financial condition; the company's ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Our actual results of operations for the quarter ended September 30, 2008, are not necessarily indicative of our operating results for any future periods. Any projections in this release are based on limited information currently available to us, which is subject to change.
About Longtop Financial Technologies Limited
Longtop is a leading software development and solutions provider targeting the rapidly growing 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 financial institutions in China. According to the independent market research firm IDC, Longtop is positioned as the "most competitive banking IT solutions provider" in China in 2007, as measured by both development strategy and development capability in the IDC MarketScape analysis model. Longtop has five solution delivery centers, three research centers and thirty-nine service centers located in 20 provinces throughout China. Longtop was founded in 1996 by Xiaogong Jia, Chairman and Weizhou Lian, CEO, as a system integration company focusing on the financial services industry in China and made the transition to a software and solutions provider in 2001. For more information, please visit: http://www.longtop.com .
CONSOLIDATED BALANCE SHEETS
March June September
31, 2008 30, 2008 30, 2008
(In U.S. dollar thousands, except
share and per share data)
Assets
Current assets:
Cash and cash equivalents $204,526 $201,528 $208,996
Restricted cash 6,733 2,207 10,926
Accounts receivable, net 21,254 26,375 37,488
Inventories 1,351 3,029 3,895
Deferred tax assets 1,517 698 106
Other current assets 3,843 4,844 6,313
Total current assets 239,224 238,681 267,724
Fixed assets, net 8,167 19,171 18,722
Intangible assets, net 7,764 7,471 8,929
Goodwill 14,966 15,315 16,559
Long term investment -- 2,613 2,171
Deferred tax assets 246 1,106 834
Other assets 524 488 1,192
Total assets $270,891 $284,845 $316,131
Liabilities, mezzanine equity and
shareholders' equity
Current liabilities:
Short-term borrowings $512 $633 $619
Accounts payable 4,143 9,196 12,801
Deferred revenue 9,487 11,608 17,037
Amounts due to related parties 54 -- --
Deferred tax liabilities 491 501 504
Accrued and other current
liabilities 18,773 12,824 17,513
Total current liabilities 33,460 34,762 48,474
Long-term liabilities:
Obligations under capital
leases, net of current portion 233 264 220
Deferred tax liabilities 1,863 1,938 2,331
Other non-current liabilities 445 259 259
Total liabilities 36,001 37,223 51,284
Shareholders' equity:
Ordinary shares $0.01 par value
(1,500,000,000 shares authorized,
50,274,126, 50,429,426 and
50,569,341 shares issued and
outstanding as of March 31, June 30,
and September 30, 2008,
respectively) $502 $504 $506
Additional paid-in capital 234,771 236,596 238,287
Retained earnings/(Accumulated
deficit) (14,021) (7,934) 6,263
Accumulated other comprehensive
income 13,638 18,456 19,791
Total shareholders' equity 234,890 247,622 264,847
Total liabilities, mezzanine
equity and shareholders'
equity $270,891 $284,845 $316,131
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
September September September September
30,2007 30,2008 30,2007 30,2008
(In U.S. dollar thousands, except
share and per share data)
Revenues:
Software development $18,126 $23,583 $26,332 $39,652
Other services 1,887 4,605 5,094 7,864
Total revenues 20,013 28,188 31,426 47,516
Cost of revenues:
Software development 2,638 5,962 4,949 11,770
Other services 972 2,541 1,886 3,746
Total cost of
revenues 3,610 8,503 6,835 15,516
Gross profit 16,403 19,685 24,591 32,000
Operating expenses:
Research and
development 471 1,204 921 2,313
Sales and marketing 825 2,616 1,829 4,408
General and
administrative 1,933 2,339 3,616 4,436
Total operating
expenses 3,229 6,159 6,366 11,157
Income from operations 13,174 13,526 18,225 20,843
Other income (expenses):
Interest income 198 1,609 473 3,516
Interest expense (269) (25) (438) (292)
Other income
(expense), net 32 717 66 (295)
Total other income (39) 2,301 101 2,929
Income before income tax
expense 13,135 15,827 18,326 23,772
Income tax expense (1,991) (1,630) (2,185) (3,488)
Income from continuing
operations 11,144 14,197 16,141 20,284
Loss from
discontinued
operations, net of
tax (1,225) -- (1,293) --
Net income 9,919 14,197 14,848 20,284
Net income (loss) per
share:
Continuing
operations $0.28 $0.28 $0.40 $0.40
Discontinued
operations $(0.03) $-- $(0.03) $--
Basic ordinary share $0.25 $0.28 $0.37 $0.40
Continuing
operations $0.28 $-- $0.40 $--
Discontinued
operations $(0.03) $-- $(0.03) $--
Basic preferred
share $0.25 $-- $0.37 $--
Continuing
operations $0.27 $0.27 $0.40 $0.39
Discontinued
operations $(0.03) $-- $(0.03) $--
Diluted $0.24 $0.27 $0.36 $0.39
Shares used in computation
of net income (loss) per
share:
Basic ordinary share 29,745,320 50,491,027 29,725,294 50,406,533
Basic preferred
share 10,244,339 -- 10,231,172 --
Diluted 41,192,580 52,398,944 40,844,608 52,455,884
Includes share-based
compensation related to:
Cost of revenues software
development $3 $419 $6 $779
Cost of revenues other
services -- 63 -- 122
General and administrative
expenses 166 473 414 945
Sales and marketing
expenses 11 371 22 713
Research and development
expenses -- 102 -- 183
UNAUDITED CONSOLIDATED ADJUSTED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
September September September September
30,2007 30,2008 30,2007 30,2008
(In US dollar thousands, except share and
per share data)
Revenues:
Software development 18,126 23,583 26,332 39,652
Other services 1,887 4,605 5,094 7,864
Total revenues 20,013 28,188 31,426 47,516
Software development
revenue adjustments:
Adjusted revenues:
Software development 18,126 23,583 26,332 39,652
Other services 1,887 4,605 5,094 7,864
Total adjusted revenues 20,013 28,188 31,426 47,516
Cost of revenues:
Software development 2,638 5,962 4,949 11,770
Other services 972 2,541 1,886 3,746
Total cost of revenues 3,610 8,503 6,835 15,516
Cost of revenue adjustments:
Share-based compensation
software development (3) (419) (6) (779)
Share-based compensation
other services -- (63) -- (122)
Amortization of
acquired intangible
assets other services (244) (283) (482) (532)
Amortization of
acquired intangible
assets software
development -- (98) -- (140)
Amortization of
acquired deferred
compensation other
services (39) -- (39)
Amortization of
acquired deferred
compensation
software
development (18) -- (18)
Adjusted cost of revenues:
Software development 2,635 5,427 4,943 10,833
Other services 728 2,156 1,404 3,053
Total adjusted cost
of revenues 3,363 7,583 6,347 13,886
Gross profit 16,403 19,685 24,591 32,000
Adjusted gross profit 16,650 20,605 25,079 33,630
Operating expenses:
Research and
development 471 1,204 921 2,313
Sales and marketing 825 2,616 1,829 4,408
General and
administrative 1,933 2,339 3,616 4,436
Total operating
expenses 3,229 6,159 6,366 11,157
Operating expense
adjustments:
Share-based
compensation
research and
development -- (102) -- (183)
Share-based
compensation sales
and marketing (11) (371) (22) (713)
Share-based
compensation
general and
administrative (166) (473) (414) (945)
Amortization of
acquired intangible
assets sales and
marketing -- (136) -- (243)
Amortization of
acquired intangible
assets general and
administrative -- (39) -- (67)
Adjusted operating
expenses:
Research and
development 471 1,102 921 2,130
Sales and marketing 814 2,109 1,807 3,452
General and
administrative 1,767 1,827 3,202 3,424
Total adjusted
operating expenses 3,052 5,038 5,930 9,006
Income from operations 13,174 13,526 18,225 20,843
Adjusted income from
operations 13,598 15,567 19,149 24,624
Other income (expenses):
Interest income 198 1,609 473 3,516
Interest expense (269) (25) (438) (292)
Other income
(expenses), net 32 717 66 (295)
Total other income
(expenses) (39) 2,301 101 2,929
Other income (expenses)
adjustments:
Adjusted other income
(expenses):
Interest income 198 1,609 473 3,516
Interest expense (269) (25) (438) (292)
Other income
(expenses), net 32 717 66 (295)
Total adjusted other
income (expenses) (39) 2,301 101 2,929
Income before income tax
expense 13,135 15,827 18,326 23,772
Adjusted income before
income tax expense 13,559 17,868 19,250 27,553
Income tax expense (1,991) (1,630) (2,185) (3,488)
Income from continuing
operations 11,144 14,197 16,141 20,284
Adjusted income from
continuing operations 11,568 16,238 17,065 24,065
Loss from
discontinued
operations (1,225) -- (1,293) --
Net income 9,919 14,197 14,848 20,284
Adjusted net income 11,568 16,238 17,065 24,065
Net income (loss) per
share:
Continuing
operations $0.28 $0.28 $0.40 $0.28
Discontinued
operations $(0.03) $0.00 $(0.03) $0.00
Basic ordinary share $0.25 $0.28 $0.37 $0.28
Continuing
operations $0.28 $0.00 $0.40 $0.00
Discontinued
operations $(0.03) $0.00 $(0.03) $0.00
Basic preferred
share $0.25 $0.00 $0.37 $0.00
Continuing
operations $0.27 $0.27 $0.40 $0.27
Discontinued
operations $(0.03) $0.00 $(0.03) $0.00
Diluted $0.24 $0.27 $0.36 $0.27
Adjusted net income per
share:
Basic ordinary share $0.29 $0.32 $0.57 $0.48
Diluted $0.28 $0.31 $0.42 $0.46
Shares used in computation
of net income and
adjusted net income per
share:
Basic ordinary share 29,745,320 50,491,027 29,725,294 50,406,533
Basic preferred
share 10,244,339 -- 10,231,172 --
Diluted 41,192,580 52,398,944 40,844,608 52,455,884
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended Six Months Ended
September September September September
30,2007 30,2008 30,2007 30,2008
(In US dollar thousands, except share
and per share data)
Cash flows from operating
activities:
Net income $9,919 $14,197 $14,848 $20,284
Adjustments to reconcile net income
to net cash provided by operating
activities:
Share-based compensation 180 1,428 442 2,742
Depreciation 526 704 854 1,318
Amortization of intangibles 266 602 652 1,073
Provision for doubtful
accounts (133) 156 (4) 46
Impairment of intangible asset 393 -- 393 --
Gain (Loss) on disposal of
fixed assets (7) 41 (2) 42
Changes in assets and liabilities,
net of effects of acquisitions:
Accounts receivable (2,238) (10,030) (1,762) (14,464)
Inventories (811) 694 (1,401) (929)
Other current assets (1,153) (1,495) (2,422) (2,354)
Other non-current assets 36 95 69 194
Other non-current liabilities 20 -- 20 (194)
Accounts payable 849 3,373 (1,858) 8,262
Deferred revenue 444 5,159 881 7,032
Accrued and other current
liabilities (2,171) 3,767 289 (2,490)
Deferred income taxes 42 842 196 871
Net cash provided by operating
activities 6,162 19,533 11,195 21,433
Cash flows from investing
activities:
Change in restricted cash 3,106 (8,719) 3,148 (4,193)
Proceeds from sale of fixed
assets 27 214 32 214
Purchase of fixed assets (181) (1,167) (593) (12,036)
Purchase of intangible assets (1) -- (3) (3)
Long term investment -- (2,171) -- (4,784)
Acquisitions, net of cash
acquired (3,824) (1,378) (3,824) (1,378)
Amounts due from related
parties (54) -- (54) --
Net cash used in investing
activities (927) (13,221) (1,294) (22,180)
Cash flows from financing
activities:
Proceeds from short-term
borrowings 14,643 -- 22,467 --
Repayment of short-term
borrowings (6,629) -- (10,389) --
Dividend paid (6,105) -- (6,105) --
Stock options exercised -- 265 -- 778
Repayments of capital leases
obligations (184) (149) (298) (582)
Amounts due to related parties -- -- -- (54)
Net cash provided by financing
activities 1,725 116 5,675 142
Effect of exchange rates differences 897 1,040 1,805 5,075
Net increase (decrease) in cash and
cash equivalents 7,857 7,468 17,381 4,470
Cash and cash equivalents, beginning
of period 79,444 201,528 69,920 204,526
Cash and cash equivalents, end of
period $87,301 $208,996 $87,301 $208,996
Supplemental disclosure of cash flow
information:
Income taxes paid $828 $788 $444 $2,811
Interest paid $255 $25 $410 $295
Supplemental disclosure of non-cash
investing and financing activities:
Fixed assets purchased under
capital leases $227 $86 $355 $655
Dividends paid in form of assets $18,348 $-- $18,348 $--
Acquisition:
Cash consideration $3,524 $3,549 $3,524 $6,162
Cash consideration payable $-- $1,140 $-- $1,140
Assets acquired $3,524 $4,689 $3,524 $7,302
For more information, please contact:
Longtop Financial Technologies Limited
Charles Zhang
Phone: +86-10-8421-7758
Email: ir@longtop.com
IR Inside BV
Caroline Straathof
Phone: +31-6-5462-4301
Email: caroline.straathof@irinside.com
