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Trintech Reports Strong Third Quarter and Year-to-Date Fiscal Year 2010 Results

Posted on: Wednesday, 25 November 2009, 01:00 CST

DUBLIN and DALLAS, Nov. 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 $10.0 million for the third quarter ended October 31, 2009, an adjusted EBITDA net income of $1.4 million and net income for the quarter of $512,000. For the nine months ended October 31, 2009, the company recorded revenues of $29.1 million, an adjusted EBITDA net income of $3.6 million and net income of $704,000.

Highlights:

• Revenue amounted to $10.0 million for Q3 of the 2010 fiscal year which represented a 1% reduction compared to the same period of the prior year.
• Trintech generated an adjusted EBITDA net income of $1.4 million for Q3 of the 2010 fiscal year compared to an adjusted EBITDA net income of $550,000 for the corresponding period in the prior year representing growth of 159%. Adjusted EBITDA net income per ADS was $0.09 for Q3 of the 2010 fiscal year compared to $0.03 for the same period in the prior year.
• Trintech had cash balances of $18.9 million (including restricted cash of $170,000) at October 31, 2009. The Company generated just over $1.0 million cash in Q3 of the 2010 fiscal year which compared to cash generated of $899,000 in Q3 of the 2009 fiscal year. The cash generated in Q3 of the 2009 fiscal year included once-off proceeds of $920,000 relating to the sale of discontinued operations.
• Gross margin amounted to $6.7 million in Q3 of the 2010 fiscal year, representing 67% of revenue, compared to $6.5 million representing 64% of revenue in Q3 of the prior year.
• Trintech incurred research and development expenditure of $1.3 million in Q3 of the 2010 fiscal year compared with $1.6 million in Q3 of the prior year, a decrease of 20%.
• Trintech reduced expenditure in sales and marketing by 23% from $2.8 million in Q3 in the 2009 fiscal year to $2.2 million in the same quarter in the 2010 fiscal year.
• General and administrative expenses remained relatively flat at $2.3 million in Q3 of the 2010 fiscal year compared to Q3 of the 2009 fiscal year.
• Trintech generated a net income of $512,000 in Q3 of the 2010 fiscal year compared with a net income of $555,000 in Q3 of the 2009 fiscal year. Combined basic and diluted net income per equivalent ADS for the quarter ended October 31, 2009 and for the same period in the prior year was $0.03. The net income in Q3 of the prior year included a once-off gain on sale of discontinued operations of $920,000.

Cyril McGuire, Chief Executive Officer, said "Our trading results in Q3 continued to perform strongly with improved adjusted EBITDA net income of $1.4 million for Q3 and $3.6 million for the nine month period ended October 31, 2009 representing 159% and 208% growth compared to the same periods last year. Operating performance metrics continue to improve with margin growth, profitability, operating costs, and cash generation exceeding our targets. Our management focus in 2009 was to innovate and build market share in the emerging Financial Governance, Risk and Compliance (GRC) and Revenue Cycle Management marketplaces by investing and launching our next-generation integrated software solutions to our clients. During the quarter, we experienced encouraging signs of market confidence in our products in the US with the outlook in some of our international markets also improving. Overall, we believe Trintech is well positioned to capitalize on future market opportunities and to deliver revenue and earnings growth in 2010 as the broader economy recovers."

Paul Byrne, President, added, "Trintech continues to see relatively strong performance with rising adjusted EBITDA and Net Income as CFOs and other senior finance professionals benefit from the strong financial returns our solutions deliver as they seek to reduce costs, strengthen financial processes and reporting whilst ensuring they continue to meet their compliance obligations. We believe that we are capable of further growth in adjusted EBITDA and Net Income as well as being well positioned to benefit from any economic upswing because of increasing awareness of the financial returns that clients are generating across all industry verticals we serve."

Results Overview:

Revenue for the third quarter ended October 31, 2009 was $10.0 million compared with $10.1 million for the corresponding quarter in the prior year, a decrease of 1%.

Software license revenue for the quarter ended October 31, 2009 was $5.4 million compared with $4.8 million for the corresponding quarter in the prior year, an increase of 12%. The increase was primarily due to stronger GRC license sales in the quarter in the US and some international markets. Our European market continues to show signs of weakness due to the continued 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. Maintenance revenues continued to be strong from existing customers in the US.

Service revenue for the quarter ended October 31, 2009 was $4.6 million compared with $5.3 million for the corresponding quarter in the prior year, a decrease of 13%. 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 third quarter ended October 31, 2009 was $6.7 million, an increase of 3% from $6.5 million in the corresponding quarter in the prior year. Gross margin percentage increased to 67% in Q3 of the 2010 fiscal year compared to 64% in the same period of the prior year. The increase in margin percentage was primarily due to a change in the revenue mix.

Total operating expenses for the third quarter ended October 31, 2009 were $6.2 million, a decrease of 15% from $7.2 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 due to the general economic environment.

Adjusted EBITDA operating expenses for the quarter ended October 31, 2009 were $5.5 million, a decrease of 13% compared to adjusted EBITDA operating expenses of $6.3 million for the corresponding period in the prior year.

Adjusted EBITDA net income was $1.4 million for the third quarter ended October 31, 2009 compared to an adjusted EBITDA net income of $550,000 for the corresponding quarter in the prior year. This represented a 159% increase from Q3 in the prior year and reflects the company's lower operating cost base.

Trintech's balance sheet remains strong with cash balances of $18.9 million (including restricted cash of $170,000) as of October 31, 2009. Net cash generated for the three months ended October 31, 2009 was just over $1.0 million.

Recent Highlights include:

During the quarter, Trintech released the following customer, partner and product announcements:

Trintech announced that Hyatt Hotels Corporation had selected the hosted version of its Unity Compliance software for financial process compliance. Unity Compliance 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.

Trintech announced that Amplifon (UK) had selected its ReconNET software for financial process compliance. ReconNET is a component of Trintech's Unity platform. Amplifon, listed on the STAR segment and the FTSE Italia Mid Cap Index of the Milan Stock Exchange, is the worldwide leader in the distribution and fitting of hearing aids and related services.

Trintech announced that OSM Corporate Services AS had selected its AssureNET Express software for financial process compliance. AssureNET Express is a hosted component of Trintech's Unity platform. OSM is an independent marine-services provider founded in 1989. With a fleet of over 400 vessels and operating from 21 global offices, the company employs more than 7000 skilled employees worldwide.

Trintech announced that DTE Energy had selected its AssureNET software for financial process compliance. AssureNET is a component of Trintech's Unity platform. DTE Energy is a Detroit-based diversified energy company involved in the development and management of energy-related businesses and services nationwide.

Trintech announced that it had embedded the Fujitsu Interstage® XWand® XBRL processing engine into the Trintech Unity Xtensible Financial Reporting (XFR) software module, significantly extending the ability of Trintech clients to create, manage and validate XBRL-compliant financial statements, including Edgar Filer Manual (EFM) validation. Fujitsu Interstage XWand software helps companies create, validate, report, collect, and analyze financial data in XBRL, a standard format for disclosing financial information. By facilitating the integration of XBRL within financial processes, Interstage XWand boosts the level of automation and transparency throughout the entire financial reporting cycle.

Trintech announced its next generation of Revenue Cycle Management Solution, ClearContracts(TM) 9.0, which will enhance clients' revenue recovery processes and month-end accounting process. Used by the largest and most sophisticated hospital systems in the U.S., ClearContracts is a web-based suite of software that enables healthcare providers to meet all of their managed care and revenue recovery goals. Concuity's ClearContracts version 9.0 introduces a new level of sophistication and functionality in Payer Compliance and Revenue Management solutions. This new release offers customers a more immediate ROI with significant enhancements to revenue recovery management and expected reimbursement calculations.

Trintech announced the release of a white paper, 'Taking It To The Next Level: Shared Services Centers Move Up the Maturity Curve', which suggests strategies for shared services centers to maintain year-over-year ROI gains using advanced automated technology. The white paper was jointly developed by Trintech and WNS Global Services, a leading global provider of business process outsourcing (BPO) services. Trintech also released a new white paper entitled 'The Business Case for Change' which recommends an automated production platform for financial reporting.

Trintech announced the release of AssureNET GL 5.0, the leading balance sheet reconciliation software solution for automating and controlling the financial close process. AssureNET GL 5.0 helps senior financial accounting managers comply with increasingly complicated regulatory mandates such as the Sarbanes Oxley Act while reducing costs and increasing confidence in financial results.

Trintech celebrated its "#1" Customer Base during a NASDAQ Opening Bell Ceremony in New York in September 2009. During the ceremony, which celebrated a growing blue chip customer base now exceeding 600, including Microsoft, Google, McKesson, HSBC, Hewlett-Packard and eBay, Trintech also announced the availability of Trintech's new Unity Xtensible Financial Reporting (XFR) solution.

Trintech announced that it had increased the strength of its leadership team with the addition of Chethan Gorur as Director of Interactive Data Services. As part of his duties, Chethan will be tasked with thought leadership, strategy, and product development efforts for Trintech's Unity Xtensible Financial Reporting (XFR) solution, which includes embedded support for the report tagging and output of financial statements with XBRL. Trintech also launched an industry white paper entitled 'A Winning Strategy for Automating XBRL Compliance' which is focused on driving automation in financial reporting.

Trintech announced the release of ReconNET 8.0, its next-generation reconciliation and exception management software. ReconNET 8.0 allows finance teams to automate even the most complex reconciliation and exception management processes. The software expands a customer's ability to interface with external platforms and databases, including Oracle 11g and more recent versions of Microsoft SQL server and Windows operating systems.

Trintech will host a conference call to discuss its financial results and business outlook beginning at 15:30hrs (UK Time) today, Wednesday, November 25, 2009. Please see advisory for information on the call.

A web simulcast of Trintech's conference call reviewing our performance for Q3 of fiscal year 2010 and our business outlook for Q4 fiscal year 2010 will be broadcast live today, Wednesday, November 25, 2009 at 15:30 hrs (UK Time), 10:30 hrs (NY Time) and 07:30 hrs (CA Time) and thereafter for 1 year at 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 use our software 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 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 Trintech's belief that it is well positioned to execute and capitalize on future market opportunities and grow revenue, adjusted EBITDA and earnings in 2010 and that it is well positioned to benefit from any economic upswing. 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 (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 paul.byrne@trintech.com joseph.seery@trintech.com

TRINTECH GROUP PLC CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (U.S. dollars in thousands) October 31, January 31, 2009 2009 ASSETS Current assets Cash and cash equivalents $18,715 $17,363 Restricted cash 170 1,143 Accounts receivable, net of allowance for doubtful accounts of $278 and $267 at October 31, 2009 and January 31, 2009, respectively 4,815 6,021 Prepaid expenses and other current assets 1,355 1,140 Deferred costs 275 296 Net current deferred tax asset 436 252 Total current assets 25,766 26,215 Non-current assets Restricted cash - 170 Property and equipment, net 1,194 1,430 Deferred costs 1,173 261 Intangible assets, net 3,530 5,309 Goodwill 24,003 24,089 Total non-current assets 29,900 31,259 Total assets $55,666 $57,474 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable 695 704 Accrued payroll and related expenses 2,073 1,878 Deferred consideration - 2,970 Income taxes payable 99 161 Other accrued liabilities 1,527 1,730 Deferred revenue 10,460 10,122 Total current liabilities 14,854 17,565 Non-current liabilities Capital leases due after more than one year - 42 Income taxes payable 95 110 Net non-current deferred tax liability 436 252 Deferred rent less current portion 437 537 Total non-current liabilities 968 941 Series B preference shares, $0.0027 par value 10,000,000 authorized at October 31, 2009 and January 31, 2009, respectively None issued and outstanding - - Shareholders' equity: Ordinary Shares, $0.0027 par value: 100,000,000 shares authorized; 33,454,384 shares issued and 33,072,413 and 31,843,333 shares outstanding at October 31, 2009 and January 31, 2009, respectively. 90 90 Additional paid-in capital 253,232 253,076 Treasury shares (at cost, 381,971 and 595,552 at October 31, 2009 and January 31, 2009, respectively) (564) (879) Accumulated deficit (208,663) (209,367) Accumulated other comprehensive loss (4,251) (3,952) Total shareholders' equity 39,844 38,968 Total liabilities and shareholders' equity $55,666 $57,474

TRINTECH GROUP PLC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (U.S. dollars in thousands, except share and per share data) Three months Nine months ended October 31, ended October 31, 2009 2008 2009 2008 Revenue License $5,361 $4,777 $15,472 $15,048 Service 4,640 5,337 13,623 15,192 Total revenue 10,001 10,114 29,095 30,240 Cost of revenue License 1,028 619 2,144 1,705 Amortization of purchased technology 181 226 543 668 Service 2,126 2,788 6,651 7,609 Total cost of revenue 3,335 3,633 9,338 9,982 Gross margin 6,666 6,481 19,757 20,258 Operating expenses: Research and development 1,265 1,580 4,135 4,630 Sales and marketing 2,181 2,831 7,119 9,368 General and administrative 2,305 2,286 6,550 7,329 Restructuring charge - 100 253 154 Amortization of purchased intangible assets 412 415 1,236 1,225 Total operating expenses 6,163 7,212 19,293 22,706 Income (loss) from operations 503 (731) 464 (2,448) Interest income, net 5 73 42 265 Exchange gain, net 64 151 291 252 Income (loss) before provision for income taxes 572 (507) 797 (1,931) Provision for income taxes (60) 142 (93) 113 Net income (loss) from continuing operations $512 $(365) $704 $(1,818) Gain on sale of discontinued operations, net - 920 - 920 Net income (loss) $512 $555 $704 $(898) Weighted-average shares used in computing basic and diluted net income (loss) per Ordinary Share Basic 33,022,644 31,947,108 32,906,958 31,916,366 Diluted 33,129,436 33,017,121 32,960,164 31,916,366 Basic and diluted income (loss) per Ordinary Share $0.02 $0.02 $0.02 $(0.03) Basic and diluted income (loss) per equivalent ADS $0.03 $0.03 $0.04 $(0.06)

TRINTECH GROUP PLC RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA NET INCOME (U.S. dollars in thousands, except share per share data) Three months Nine months ended October 31, ended October 31, 2009 2008 2009 2008 Net Income (loss) $512 $555 $704 $(898) Adjustments: Depreciation 140 183 458 575 Amortization of purchased intangible assets 593 642 1,779 1,893 Share-based compensation 126 205 366 744 Restructuring charge - 100 253 154 Interest income, net (5) (73) (42) (265) Income taxes 60 (142) 93 (113) Gain on sale of discontinued operations - (920) - (920) Adjusted Earnings Before Interest, Taxation, Depreciation, Restructuring, Gain on Sale of discontinued operations and Amortization (EBITDA) net income $1,426 $550 $3,611 $1,170 Adjusted Basic and diluted income per Ordinary Share $0.04 $0.02 $0.11 $0.04 Adjusted Basic and diluted income per equivalent ADS $0.09 $0.03 $0.22 $0.07 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 Nine months ended October 31, ended October 31, 2009 2008 2009 2008 Total operating expenses $6,163 $7,212 $19,293 $22,706 Adjustments: Restructuring charge - (100) (253) (154) Depreciation (130) (167) (429) (514) Amortization of purchased intangible assets (412) (415) (1,236) (1,225) Share-based compensation (113) (188) (334) (698) Adjusted EBITDA operating expenses $5,508 $6,342 $17,041 $20,115 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 (U.S. dollars in thousands) Nine months ended October 31, 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $704 $(898) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 458 575 Amortization 1,779 1,893 Gain on sale of discontinued operations, net - (920) Share-based compensation 366 744 Effect of changes in foreign currency exchange rates (226) (120) Changes in operating assets and liabilities: Accounts receivable 2,384 2,063 Prepaid expenses and other current assets (952) (552) Accounts payable (32) 1,018 Accrued payroll and related expenses (230) (616) Deferred revenues (866) 266 Other accrued liabilities (132) (244) Net cash provided by operating activities 3,253 3,209 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (215) (244) Proceeds relating to sale of discontinued operations, net - 920 Decrease (increase) in restricted cash deposits 970 (970) Payments relating to acquisitions (2,883) (8,749) Net cash used in investing activities (2,128) (9,043) CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on capital leases (120) (109) Issuance of ordinary shares 104 124 Repurchase of ordinary shares - (33) Decrease in restricted cash deposits 173 - Net cash provided by (used in) financing activities 157 (18) Net increase (decrease) in cash and cash equivalents 1,282 (5,852) Effect of exchange rate changes on cash and cash equivalents 70 (1,074) Cash and cash equivalents at beginning of period 17,363 23,766 Cash and cash equivalents at end of period $18,715 $16,840 Supplemental disclosure of cash flow information Interest paid $12 $25 Taxes paid $130 $167 Supplemental disclosure of non-cash flow information Acquisition of property and equipment under capital leases $- $(30) Shares issued in connection with acquisition $- $1,239

SOURCE Trintech Group Plc

Source: PR Newswire

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