EX-99.1 2 c92702exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(LOGO)
LONGTOP FINANCIAL TECHNOLOGIES LIMITED ANNOUNCES UNAUDITED FINANCIAL RESULTS FOR THE
FISCAL QUARTER ENDED SEPTEMBER 30, 2009
•  
Second Quarter Total Revenues of US$42.8 million, Up 52.0% Year-on-Year;
 
•  
Second Quarter Adjusted1 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
Hong Kong, China, November 16, 2009 — 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, 2009, which is the second quarter of its fiscal year ending March 31, 2010.
“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 Weizhou Lian, CEO of Longtop. “This quarter we achieved a number of important operational milestones including winning our first meaningful contract in the securities industry and a Big Four Bank awarding us a BI consulting project over our global competitors. We also continue to strengthen our management and strive for efficiency and better execution to manage our growth. I continue to be optimistic about our prospects, as Longtop’s competitive position is stronger than it has ever been and we have good visibility for continued strong demand.”
FISCAL SECOND QUARTER DETAILED FINANCIAL RESULTS
Revenue
2009 Q2 and 2010 Q2 Revenue — US$000s
                                                 
    Three months ended     Six months ended  
    September 30,     September 30,     %     September 30,     September 30,     %  
    2008     2009     Change     2008     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 %
 
                                        
 
     
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.

 

 

 

Total revenues for the quarter ended September 30, 2009, were US$42.8 million, an increase of 52.0% year-on-year (YoY) from US$28.2 million in the corresponding year ago period, and exceeded company guidance of US$37.5 million. Software development revenues of US$37.0 million increased YoY by 56.9% and exceeded Company guidance of US$34.0 million.
Total revenues for the six months ended September 30, 2009, were US$71.3 million, an increase of 50.1% YoY from US$47.5 million in the corresponding year ago period. Software development revenues, which were 86.5% of total revenues for the six months ended September 30, 2009, amounted to US$61.7 million, a YoY increase of 55.6%.
Software Development Revenues by Customer Type-US$000s
                                                 
    Three months ended     Six months ended  
    September 30,     September 30,     %     September 30,     September 30,     %  
    2008     2009     Change     2008     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 US$17.8 million in the second quarter, an increase of 50.0% YoY, and US$28.8 million for the six months ended September 30, 2009, an increase of 37.0% YoY. Big Four Banks accounted for 46.7% of software development revenues for the six months ended September 30, 2009, as compared to 53.0% in the corresponding year ago period.
Software development revenue from Other Banks was US$12.5 million in the second quarter, a YoY increase of 43.9%, and US$21.9 million for the six months ended September 30, 2009, an increase of 57.1% YoY. Other Banks accounted for 35.4% of software development revenues for the six months ended September 30, 2009, as compared to 35.1% in the corresponding year ago period.
Software development revenue from Insurance was US$5.2 million in the second quarter, a YoY increase of 126.9% and US$7.9 million for the six months ended September 30, 2009, an increase of 148.8% YoY. Insurance accounted for 12.8% of software development revenues in the six months ended September 30, 2009. Sysnet, a leading IT insurance services provider acquired by Longtop in Q1 2010, contributed US$1.9 million in software development revenue for the six months ended September 30, 2009, of which $1.7 million was recorded in Q2 2010.

 

 

 

Software development revenue from Enterprises was US$1.5 million and US$3.1 million for the three and six months ended September 30, 2009, a YoY increase of 101.6% and 105.1% respectively.
Gross Margins
                                                 
    Three months ended     Six months ended  
    September 30,     September 30,     Change     September 30,     September 30,     Change  
    2008     2009     (Decrease)     2008     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 September 30, 2009, as compared to 73.1% and 70.8% in the corresponding year-ago periods. The YoY decline in Adjusted Total Gross Margin is mainly due to a decline in Adjusted Other Services Gross Margin. Adjusted Software Development Gross Margin of 71.6% for the six months ended September 30, 2009, was similar to the previous year of 72.7% even with the inclusion in fiscal 2010 of Sysnet’s business, which has lower gross margins than Longtop’s. Adjusted Other Services Gross Margin for the six months ended September 30, 2009, declined to 31.4% from 61.2% a year ago due to a YoY decline in system integration revenues, which are recorded on a net basis, while system integration department costs, consisting primarily of headcount and allocated overhead, were stable; investment in additional headcount; and a higher mix of lower gross margin ATM revenues resulting from our acquisition during the 2009 fiscal year of Huayuchang, a provider of ATM maintenance services. Adjusted Other Services Gross Margin of 38.7% for three months ended September 30, 2009 significantly improved from 20.2% in the quarter ended June 30, 2009. Full year 2010 Adjusted Total Gross Margin, including the impact of the Sysnet acquisition, which is dilutive to margins but accretive to earnings, is expected to reach the Company’s previous guidance of 67.0%.
Operating Expenses
                                                 
    Three months ended     Six months ended  
    September 30,     September 30,     %     September 30,     September 30,     %  
    2008     2009     Change     2008     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 September 30, 2009, are in line with full year Company guidance of 20.0%. Adjusted Operating Expenses increased by 65.2% YoY in the six months ended September 30, 2009, which was slightly higher than the YoY software development revenue growth of 55.6% primarily due to the inclusion of Sysnet, which has lower operating margins than Longtop.

 

 

 

Operating Income and Net Income
                                                 
    Three months ended     Six months ended  
    September 30,     September 30,     %     September 30,     September 30,     %  
    2008     2009     Change     2008     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 US$20.8 million for the second quarter and US$32.3 million for the six months ended September 30, 2009, a YoY increase of 33.4% and 31.3%, respectively. Adjusted Operating Margin for the six months ended September 30, 2009, of 45.3% was lower than the corresponding period in fiscal 2009 due to the decline in Adjusted Other Services Gross Margin and the inclusion of Sysnet in fiscal 2010.
                                                 
    Three months ended     Six months ended  
    September 30,     September 30,     %     September 30,     September 30,     %  
    2008     2009     Change     2008     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 30,     September 30,     %     September 30,     September 30,     %  
    2008     2009     Change     2008     2009     Change  
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 September 30, 2009, of US$21.4 million or US$0.40 per fully diluted share increased 32.0% as compared to Adjusted Net Income of US$16.2 million in the corresponding year ago period, and exceeded Company guidance of US$19.5 million and US$0.37 per fully diluted share. US GAAP net income for the quarter ended September 30, 2009, of US$18.9 million or US$0.35 per fully diluted share increased 33.2% as compared to US GAAP net income of US$14.2 million in the corresponding year ago period. Adjusted Net Income in Q2 2010 included US$3.0 million (Q2 2009: US$1.9 million) for a refund of the 2008 calendar year income taxes related to qualification as a Key Software Company.

 

 

 

Adjusted Net Income for the six months ended September 30, 2009, of US$32.1 million or US$0.60 per fully diluted share increased 33.5% as compared to Adjusted Net Income of US$24.1 million in the corresponding year ago period. US GAAP net income for the six months ended September 30, 2009, of US$27.3 million or US$0.51 per fully diluted share increased 34.6% as compared to US GAAP net income of US$20.3 million in the corresponding year ago period.
Unrestricted cash balances at September 30, 2009, were US$226.4 million.
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$18.8 million. And looking ahead, with strong demand and US$46.5 million in software development revenue backlog excluding Sysnet, we have increased our estimate for fiscal 2010 revenues from US$145.0 million to US$158.0 million and for Adjusted Net Income of US$70.5 million as compared to our previous guidance of US$65.0 million.”
BUSINESS OUTLOOK
Longtop anticipates for the quarter ending December 31, 2009:
i) Total revenues of US$48.5 million, representing an increase of 47.4% YoY from revenues of US$32.9 million in the corresponding year ago period. Software development revenues are expected to be US$42.7 million, a YoY increase of 47.8% from US$28.9 million in the corresponding year ago period;
ii) Adjusted Operating Income of US$26.0 million, representing an increase of 50.3% YoY from Adjusted Operating Income of US$17.3 million in the corresponding year ago period.
iii) Adjusted Net Income of US$23.5 million or US$0.43 per diluted share (based on an increased share count of approximately 55.3 million shares which assumes 4.0 million new shares issued in Q3 2010), representing an increase of 42.4% YoY from Adjusted Net Income of US$16.5 million in the corresponding year ago period.
Longtop anticipates for its fiscal year ending March 31, 2010:
i) Total revenues of US$158.0 million, representing an increase of 48.6% YoY from revenues of US$106.3 million in fiscal 2009. Software development revenues are expected to be US$137.0 million, a YoY increase of 52.9% from US$89.6 million in fiscal 2009;
ii) Adjusted Operating Income of US$74.5 million, an increase of 41.9% YoY from Adjusted Operating Income of US$52.5 million in fiscal 2009.
iii) Adjusted Net Income of US$70.5 million or US$1.29 per diluted share (based on an increased share count of approximately 54.8 million shares which assumes 4.0 million new shares issued in Q3 2010), an increase of 36.6% YoY from Adjusted Net Income of US$51.6 million in fiscal 2009.

 

 

 

CONFERENCE CALL AND WEBCAST
Longtop’s senior management team will host a conference call and audio web cast at 16:15 PM Eastern Time on November 16, 2009 (or 13:15 PM U.S. Pacific Time on and 5:15 AM Beijing/Hong Kong time on November 17, 2009). The conference call will last for approximately one hour.
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 December 31, 2009 and the fiscal year ended March 31, 2010, efforts taken to improve efficiency, strengthen management, manage the Company’s growth and the Company’s competitive position. 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 growth of the financial services industry in China; the amount and seasonality of IT spending by banks and other financial services companies; competition and potential pricing pressures; our revenue growth and solution and service mix; our ability to successfully develop, introduce and market new solutions and services; our ability to effectively manage our operating costs and expenses; our reliance on a limited number of customers that account for a high percentage of our revenues; a possible future shortage or limited availability of employees; general economic and business conditions; the volatility of our operating results and financial condition; our ability to attract or retain qualified senior management personnel and research and development staff; the outbreak of health epidemics; the planned relocation of our headquarters; People’s Republic of China, or PRC, regulatory changes and interpretations; 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 and year ended September 30, 2009, 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 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 Beijing, Longtop has six solution delivery centers, three research and development centers and 95 ATM service centers located in 27 out of 31 provinces in China.
For more information, please visit: http://www.longtop.com.

 

 

 

Contact us
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 30,     September 30,     September 30,     September 30,  
    2008     2009     2008     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 30,     September 30,     September 30,     September 30,  
    2008     2009     2008     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 markeing
     (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  
 
                        

 

 

 

                                 
    Three Months Ended     Six Months Ended  
    September 30,     September 30,     September 30,     September 30,  
    2008     2009     2008     2009  
    (In U.S. dollar thousands, except share and per share data)  
 
                                
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